The Labour Theory of Value and exploitation in poor countries (including the effects of “socially necessary labour time”)


– Choppam

Labour in sectors operating at around the average intern ational level of productivity is oppressed by capital, which in its turn is driven by the world rate of profit. Competition, aided by market-distorting state pro­tection, sucks surplus value to metropolitan countries from poorer countries with less advanced, more labour-intensive sectors of produc­tion, such as assembly work in China for imperialist monopolies (eg computers, mobile phones, clothes and shoes. The equalization of the rate of profit ensures that the higher surplus value produced by more labour in these sectors is siphoned off to sectors using less labour and therefore producing less surplus value, or simply hijacked by relations of ownership that allow goods produced by workers in poorer countries to be sold by capitalists in the metropolises for astronomical profits.

However competition among capitals to move into these labour-poor but profit-rich sectors imposes a long-term levelling out among sectors. Too much capital flowing into attractive sectors depresses profits there, and conversely too little capital in unattractive sectors raises their profits. But in the short and medium term (say 7-10 years) the price of labour power is depressed, and this means that a “normal” standard of living for a worker in an imperialist metropolis is out of equilibrium with the “normal” standard of living in countries without advanced sec­tors that can syphon off surplus value. In the imperialist metropolises’ advanced sectors very little labour power is needed due to state-of-the-art machinery and automation) and the unskilled labour power they do need is bought where the price is lowest. This is often in enclaves (as in China’s “free zones”), which are run like prison camps to limit the work­ers’ contact with anything but capital as much as possible – to prevent the development of demands relating to unions, labour laws, health, etc.

This situation of artificial separation between technologically intensive and labour intensive sectors can’t be maintained long-term, despite threats, sanctions, wars and compliant, servile governments, because the world economy is just that. All capital, including illicit sectors like drugs and the sex trade, goes into the crucible of world capital that de­mands complete freedom of investment, regardless of the strenuous ef­forts made by individual states to block the flow. Like lava it will flow over and bury any imperialist walls or barrages put in its way.

This all explains why the Chinese bureaucracy’s use of centralized state power to erect a wall against imperialist economicaggression has worked so well.Chinais not essentially bourgeois – as can be seen if we compare bourgeoisIndia’s feeble resistance to imperialism. This is becauseChinais a deformed workers state created by an armed revolu­tion that smashed bourgeois relations of production. This has allowed it to maintain relatively tight control of joint ventures and enclose outside capital in “walled-off” enclaves.Hong Kongand the “One Country, Two Systems” policy shows this, remarkably, at state level.

Chinese emulation of imperialist methods of production has been able to develop in a controlled and protected market – and how the imperial­ists squeal when they are scourged with their own whip!

The Chinese bureaucratic regime is counter-revolutionary to the core like the Stalinist bureaucracy in theUSSR. In exactly the same way, how­ever, it is utterly dependent on the strength of the non-capitalist state to keep its power and privileges. This means it will take an irresistible threat from the workers in the cities and on the land to force its hand in choosing between a non-capitalist state with real democracy for the working people on the one hand, and a bourgeois state with reintro­duced capitalist economic relations on the other.

This threat was looming over the Soviet bureaucracy in the 1980s. But this dilemma was clearly anticipated by Trotsky in 1938, when he wrote:

The political prognosis has an alternative character: either the bureaucracy, becoming ever more the organ of the world bour­geoisie in the workers state, will overthrown the new forms of property and plunge the country back to capitalism; or the work­ing class will crush the bureaucracy and open the way to social­ism.

(The Transitional Programme of the Fourth International)

Now we have the historical record to check this prognosis against. The Soviet bureaucracy capitulated to imperialism and plunged theUSSR, its people and its resources “back to capitalism”. A revolutionary Marxist perspective permitted Trotsky to spell out this development fifty years before the event. The Soviet bureaucracy gambled that its highest strata would be secure enough in their positions of political and economic power to survive the earthquake. It chose the historically catastrophic road of class treason rather than give up power to the workers of the USSR.

Now history is speeding this choice towards the Chinese bureaucracy towards like a tsunami. Or rather, the bureaucracy is driving full tilt to­wards the rock-face of history. The only way it can save itself from be­ing smashed to a pulp is to change its direction drastically. But such a turn could well tear its economic juggernaut to pieces. The gamble of the Chinese bureaucracy will be the same as that made by the Soviet bureaucracy, with the Chinese peoples as the stakes. But the conditions are not quite the same. The bureaucracy has made the historical blunder of revealing to the people the vicious reality of capitalism – unemployment, depopulation of the countryside, millions of uprooted workers flung into city slums, little security and less justice, wage-slavery, and the brutal contrast of all this with the enormous wealth and power of the few – revealing all this before making the final and definitive surrender to imperialism. The Soviet people, demoralized and politically and socially gagged and blindfolded for decades, were full of illusions about Western prosperity and justice for all. The Chinese, however demoralized, gagged and blindfolded they might be, can hardly have many illusions left about Western capitalism.

The above perspectives on imperialism, the capitalist world economy, and the Chinese situation point to a tenable explanation for the impres­sionistic bourgeois labels of 1) globalization, and 2) Chinese exception­alism.


Now, there is a very deep contradiction straining the world market to breaking point – capitalist forces of production push harder and harder for full global freedom of access and movement on the one hand, and on the other this push is resisted by the non-negotiable necessity of na­tional states to use military violence to defend the system and impose their own partial interests on others. But where does this leave the urb­an and rural poor outside the imperialist metropolises?

The Labour Theory of Value can help us understand this if we consider the degree of domination achieved by the capitalist mode of production in non-metropolitan countries. Where this domination is total, market relations have been fully established. Production is for money and not subsistence. In principle, all the poor in both the towns and the coun­tryside have been proletarianized. The brutal replacement of subsist­ence farming by production for profit and agribusiness has driven mil­lions off the land into the slums of megacities, from subsistence farm­ing to absolute penury.

The standard of living of the working poor again depends on the degree of integration with the world economy. In sectors operated by big capit­al they receive in exchange for their labour power what they need to survive. But it’s survival at a low level and subject to intolerable work­ing conditions. This is due to the wages imbalance caused by the cit­adels of imperialism hindering workers organization and international solidarity, and corresponding to the degree of imperialist appropriation of surplus value from dominated countries.

The situation is far worse for workers in countries subject to the world capitalist economy but lacking production using advanced methods and facilities. Their former ability to survive by subsistence farming has been destroyed by the (forcible) penetration of money and the capitalist market. They are reduced to a demeaning scramble for survival at any cost. The mechanism driving this extreme poverty is explained by the way the Labour Theory of Value operates in the capitalist mode of production.

One axis of the grid is the leveling out of the rate of profit, which drives competition and productivity, with each capital trying to get an edge over its rivals and syphon off more surplus value than them. The other is the crucially important, and often disregarded, category of so­cially necessary labour time. Socially necessary labour time is the time needed by an average worker in an average sector of production to pro­duce a given amount of product. If this time is shorter than the average, then the product can be sold above its value – it gets the difference in value incorporated in the products. The opposite goes for labour time that is longer than the average. Since more value is put into the product (more labour) it requires a higher price to break even, but competition denies it the possibility of charging this high price. To be sold at all, it needs to be sold under its value. And if the labour put into a product di­verges too much from the socially necessary labour put into an average product, then it won’t get sold at any price. Antiquated products made with antiquated machines by labour of less than average competence just don’t get sold.

So say you have a job in a sector with less than average productivity, a quarter the average, for example. Then the product of your labour will take four times as long to make (in quantitative terms) or be four times worse (in qualitative terms). Which means that to have any chance of be­ing sold at all, it will have to be sold at or under the going price for such products in the larger market. So the return for the product will be four times less than for more competitive products. This has fatal con­sequences, since you will only receive a quarter of what workers in com­petitive production facilities get to survive and work the next day. Which means you will be four times closer to starvation than they are. In other words, however close they may be to starvation, you are four times closer to death. And, incidentally, four times more vulnerable to ruthless treatment by your employer, as he sucks your blood to main­tain the standard of living he considers to be his right.

In the light of all this, it should be obvious that no amount of charitable tinkering by NGOs will solve anything. Their dismal record over the dec­ades since world war 2 speaks for itself on this. Single-issue campaigns are more useful. They have helped change the situation with regard to nuclear power, the situation of women, and the destruction of the environment. But they have made no impact whatever on the fundamental relations in society.

Partial victories in individual factories or districts or industries or even cities give partial and inspiring solutions, but they are always vulnerable to being clawed back when the bourgeoisie in question feels stronger. The same goes for social rebellion, as in the late sixties in Europe and theUS, fuelled by opposition to the Vietnam war, and on various occa­sions in the Soviet bloc andChina. And in the imperialist system as a whole, the concessions of the New Deal and the Welfare State, which have taken decades for the bourgeoisie to claw back.

It is obvious that dissatisfaction and anger led to these mobilizations and wrung the concessions out of the class enemy. But it should be equally obvious that nothing permanent will be achieved until this dis­satisfaction and anger is organized to get rid of the conditions causing it – to remove the roots of these conditions like a dentist disinfects and removes rotten teeth, roots and all – that is, until it is channelled to re­move the bourgeoisie from state power, and capitalism from social production.

Capitalist exploitation and the imperialist states protecting and enfor­cing it won’t go away of their own accord. Not peacefully, and not drag­ging their feet. They’ll go out spitting fire and spraying poison. But they can only do that as long as people operate their killing machines and the facilities that serve them, and people will only do that as long as they see no alternative, or until they are so afraid for their own skins that they come over to our side. If the Soviet bureaucracy can do it and desert the working class for the bourgeoisie, then the non-capitalist ser­vants of the imperialists can do it too and desert the bourgeoisie for the working class.

Our epoch of crises, wars and revolutions may flummox the bourgeoisie and its hired apologists, its permanently blind and uncomprehending economists, historians, journalists, and media. But the working class has the tools at hand to disperse the fog and filth and see what’s really happening. Once understood, the economic theories of Marx become weapons for the working class smarter than any imperialist smart bombs. Analytical scalpels sharper than any of the instruments wielded by Wall Street mercenaries. And the working class has the revolutionary theories of Lenin and Trotsky and the revolutionary experience of the working classes and toilers ofRussiaandChinaand others.

Capitalism must be abolished, and the bourgeoisie removed from power. This has been done before, it can be done, and it must be done.


One Response to The Labour Theory of Value and exploitation in poor countries (including the effects of “socially necessary labour time”)

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