2. CONDITIONS IN LABOR MARKETS ARE AT LEAST AS IMPORTANT AS CONDITIONS IN PRODUCT AND CAPITAL MARKETS. This first chapter has highlighted the critical importance of conditions in labor markets, as well as product and financial markets, to any understanding of the forces shaping the global political economy. Chapter 4, “Southern Labor: Peripheral No Longer,” examines the economic and social conditions that determine the terms on which Southern workers can sell their labor-power, paying particular attention to the massive structural unemployment and underemployment in low-wage nations and to the violent suppression of the free movement of working people across the borders between imperialist and low-wage countries, arguing that this lies at the root of the vast wage differentials. The role of these characteristic features of so-called development in the promotion of informal, flexible, and precarious labor regimes is analyzed, and the chapter concludes by studying the intersection of patriarchy, class, and imperialism that gives rise to another striking feature of the global transformation of production, one that is highlighted in particular by Bangladesh’s ready-made garment industry: the massive influx of women into wage labor in general and manufacturing production in particular.
3. GLOBAL WAGE DIFFERENTIALS AND THE MYTH OF CONVERGENCE. As chapter 1 has revealed—and as chapters 2 and 3 will confirm—capitalists’ lust for ultra-cheap labor-power is a fundamental determinant of the global shift of production. Chapter 5, “Global Wage Trends in the Neoliberal Era,” attempts to bring global wage trends into focus, singling out three aspects for special attention: international wage differentials, growing in-country wage inequality, and the accelerating decline in labor’s share of national income. Along the way, the accuracy and reliability of data on wages is questioned and found wanting, especially in low-wage countries. Calculation of real wages paid in domestic currency requires their conversion into “purchasing power parity”—adjusted dollars—thereby correcting for the failure of market exchange rates to equalize the purchasing power of “hard” and “soft” currencies. Since this adjustment is large and affects all international comparisons of wages, living standards and much else, it will be examined in some detail.
4. WAGES AND PRODUCTIVITY—GLARING PARADOXES THAT MAINSTREAM AND HETERODOX ECONOMIC THEORY CANNOT EXPLAIN. Chapter 6, “The Purchasing Power Anomaly and the Productivity Paradox,” marks a transition from the analysis of empirical data that preoccupies the first five chapters to the theoretical development and critique presented in chapters 7 to 9. Chapter 6 begins by asking why the purchasing power anomaly exists, discovering that two recurring themes of this book are centrally implicated: international differences in labor productivity (as conventionally defined and measured) and restrictions on the free international mobility of workers. As we discovered in chapter 1 and is further discussed in chapters 2 and 3, supposed international differences in labor productivity are used by mainstream economists and neoliberal apologists to explain and justify global wage differentials. This standard view, an ideological belief with little basis in empirical data, gives rise to a series of paradoxes and absurdities, for instance that the “productivity” of Bangladeshi garment workers is a tiny fraction of the European and North American workers who place the finished goods on shop shelves. Despite its central importance to neoliberal ideology, the “wage reflects productivity” argument has never been systematically criticized by heterodox and Marxist critics of neoliberalism. Examination of mainstream theories claiming to explain the purchasing power anomaly adds a further set of paradoxes and absurdities to this list. The remainder of chapter 6 identifies the source of the problem: the failure of ruling economic theory to distinguish between use-value and exchange-value, a distinction that is the very foundation of Karl Marx’s theory of value. Thus the necessity for a reengagement with this theory is derived from analysis of empirical data and from the failure of mainstream economic theory to explain its key findings.
5. WAGE DIFFERENTIALS AND DIFFERENCES IN THE RATE OF EXPLOITATION. The most important fact revealed by our analysis of three global commodities is the centrality of vast international wage differences in driving and shaping the global transformation of production during the neoliberal era. Chapters 2–6 analyze different dimensions of this, creating the basis for the development of a theoretical concept of it in chapters 7 and 8, in which international wage differentials are seen as a surface manifestation and distorted reflection of international differences in the degree of exploitation. Chapter 7, “Global Labor Arbitrage: Key Driver of the Globalization of Production,” considers attempts by mainstream economists to understand the significance of wage-driven production outsourcing. Finding these to be, at best, purely descriptive, we turn to contemporary Marxist scholarship, and find this, with few but important exceptions, to be astonishingly indifferent to and accepting of bourgeois economists’ argument that international wage differentials merely reflect international differences in labor productivity. The remainder of chapter 7 continues the quest for a concept of international differences in the rate of exploitation by visiting the debate on “dependency” that accompanied the anticolonial national liberation movements of the 1960s and 1970s, while chapter 8, “Imperialism and the Law of Value,” completes the quest by testing the ability of Marx’s theory of value, as presented in Capital’s three volumes, to explain the ancient and modern reality of super-exploitation.
6. HOW IMPERIALIST EXPLOITATION IS OBSCURED BY CONVENTIONAL INTERPRETATIONS OF ECONOMIC DATA. Chapter 9, “The GDP Illusion,” explains one of the most striking paradoxes revealed in the analysis in chapter 1 of the global commodity: commodities produced mostly or entirely in low-wage countries and consumed mostly or entirely in imperialist countries expand the GDP of the nations where they are consumed by far more than the GDP of the nations where they are produced. The source of this optical illusion is found in a fallacy that is at the heart of mainstream bourgeois economic theory and its heterodox variants: the tautological conflation of the value generated in production of a commodity with the price realized by its sale.
7. THE ORIGIN, NATURE, AND TRAJECTORY OF THE GLOBAL ECONOMIC CRISIS—WHY THE “FINANCIAL CRISIS” IS ROOTED IN CAPITALIST PRODUCTION. The first nine chapters of this book analyze the defining transformation of the neoliberal era, namely the outsourcing and global shift of production. Chapter 10, “All Roads Lead into the Crisis,” shows why this transformation, itself a response to the system-threatening crisis of the 1970s, prepared the ground for the reappearance of systemic crisis in 2007. Contrary to the economists’ cozy consensus, this concluding chapter