who hand-pick the fresh cherries. In all of our three archetypical global commodities, gross profits, that is, the difference between their cost of production and their retail price, are far in excess of 50 percent, flattering not only Northern firms’ profits but also their nations’ GDP.79
Squeezing wages allows markups to increase. Thus UNCTAD reports that “clothing, footwear, textiles, furniture, miscellaneous manufacturers (which includes toys) and chemicals all experienced import price declines (relative to U.S. consumer prices) over two decades of more than 1 percent per year on average, or 40 percent over the period 1986–2006.”80
THIS CHAPTER’S INVESTIGATION INTO THE SOCIAL relations embodied in three global commodities yields some important paradoxes and anomalies requiring further analysis and a series of distinct dimensions that need to be investigated separately before they can be brought together in a synthesis, a theory of the latest stage of capitalism’s imperialist evolution. Together they shape the book’s overall structure, and can be resolved into seven themes that will be addressed in the following sequence:
1. THE GLOBAL SHIFT OF PRODUCTION TO LOW-WAGE COUNTRIES. The T-shirt, the iPhone, and the cup of coffee are representative examples of the universe of global commodities, i.e., the products of global value chains and globalized production networks. Chapters 2 and 3 turn the telescope around, so to speak, and survey the transformation and global shift of production that these archetypical commodities are representative of. Chapter 2, “Outsourcing, or the Globalization of Production,” analyzes neoliberal globalization’s most important transformation: the globalization of production processes, discovering its antecedents, its proportions, its qualities, its dynamism, and its driving force: the hunger of Northern capitalists for low-wage labor corralled in Southern nations. Chapter 3, “The Two Forms of the Outsourcing Relationship,” continues the study of global outsourcing by analyzing three aspects of particular importance: the differences and similarities between the two forms of the outsourcing relationship—“in-house” and the increasingly favored “arm’s length” relations with an independent supplier; the peculiar structure of world trade, in which firms in low-wage nations compete with each other in export markets, as do firms in imperialist nations, but competition between firms in imperialist and low-wage nations is by and large absent, their relationship is complementary, not competitive; and the divergence between the low-wage nations’ increasing share of manufacturing trade and the much less impressive growth in their share of global manufacturing value-added.
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
