Imperialism in the Twenty First Century: Book Review

Michael Roberts blog.

A review of imperialism in the Twenty First century by John Smith, published by Monthly Review Press

John Smith’s book is a powerful and searing indictment of the exploitation of billions of people in what used to be called the Third World and is now called the ‘emerging’ or ‘developing’ economies by mainstream economics (and is called ‘the South’ by Smith).  But the book is much, much more than that.  After years of research including a PhD thesis, John has made an important and original contribution to our understanding of modern imperialism, both theoretically and empirically.  In this sense, his Imperialism is a complement to Tony Norfield’s The City, reviewed previously in this blog – or should I say Tony’s is a complement to John Smith’s.  While Tony Norfield’s book shows the development of finance capital in the modern imperialist countries and the dominance of the financial powers of ‘the North’ (US and UK etc), John Smith shows how it is the ‘super-exploitation’ of wage workers in the ‘South’ that is the foundation of modern imperialism in the 21st century.

The book starts with some examples of how wage workers in the South are ‘super-exploited’ with wages below the value of labour power (Bangladesh textile workers):“The starvation wages, death-trap factories, and fetid slums in Bangladesh are representative of the conditions endured by hundreds of millions of working people throughout the Global South, the source of surplus value sustaining profits and feeding unsustainable overconsumption in imperialist countries” (p10).. and how the surplus-value created by these super-exploited workers is captured by the trans-national corporations and transferred through the ‘value-chain’ to the profits of the imperialist countries of the North (Apple i-phones and Foxconn). “The only part of Apple’s profits that appear to originate in China are those resulting from the sale of its products in that country. As in the case of the T-shirt made in Bangladesh, so with the latest electronic gadget, the flow of wealth from Chinese and other low wage workers sustaining the profits and prosperity of Northern firms and nations is rendered invisible in economic data and in the brains of the economists.” (p22).

Smith points out that “about 80 percent of global trade (in terms of gross exports) is linked to the international production networks of TNCs.”  UNCTAD estimates that “about 60 percent of global trade . . . consists of trade in intermediate goods and services that are incorporated at various stages in the production process of goods and services for final consumption.”(p50).  Smith argues that outsourcing has been a conscious strategy of capitalists, a powerful weapon against union organization, repressing wages and intensifying exploitation of workers at home, and has led above all to a huge expansion in the employment of workers in low-wage countries… “A striking feature of contemporary globalization is that a very large and growing proportion of the workforce in many global value chains is now located in developing economies. In a phrase, the centre of gravity of much of the world’s industrial production has shifted from the North to the South of the global economy.”, as Smith quotes Gary Gereffi.

It is Smith’s main contention that it is wages forced below the value of labour power that is the key characteristic of the profits of modern imperialist operations.  It is not even financial hegemony (Norfield) and certainly not some form of ‘dispossession of capital and wealth’ (Harvey).  “The capitalists’ lust for ultra-cheap labor-power is a fundamental determinant of the global shift of production.”

Smith exposes the neoclassical view that wages are low in the South because productivity is low there.  This view, Smith points out, has “never been systematically criticized by heterodox and Marxist critics of neoliberalism… (and) contemporary Marxist scholarship,… with few but important exceptions…is astonishingly indifferent to and accepting of bourgeois economists’ argument that international wage differentials merely reflect international differences in labor productivity.”  There is a deliberate attempt by neoclassical bourgeois theory to identify wage growth with the productivity of labour and many Marxists go along with this because they confuse use-values (the production of things and services) with their value (the prices of production).  Instead, “wage differences are significantly affected by coercive suppression of labor mobility—in other words, by a factor that is, on the face of it, quite independent of productivity.” (p240).

But mainstream economic theory denies this reality.  This leads to the idea that workers in China receive their ‘fair share’ in wages given their productivity level.  Smith quotes Martin Wolf from his 2005 book, Why globalization works, lauding the benefits of globalisation (Wolf now forgets these perceived benefits of globalisation in his later works). “It is right to say that transnational companies exploit their Chinese workers in the hope of making profits. It is equally right to say that Chinese workers are exploiting transnationals in the (almost universally fulfilled) hope of obtaining higher pay, better training and more opportunities.” (Wolf).

Read full review