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Imperialism in the Twenty-First Century: Globalization, Super-Exploitation, and Capitalism's Final Crisis
Winner of the first Paul A. Baran—Paul M. Sweezy Memorial Award for an original monograph concerned with the political economy of imperialism, John Smith’s Imperialism in the Twenty-First Century is a seminal examination of the relationship between the core capitalist countries and the rest of the world in the age of neoliberal globalization. Deploying a sophisticated Marxist methodology, Smith begins by tracing the production of certain iconic commodities—the T-shirt, the cup of coffee, and the iPhone—and demonstrates how these generate enormous outflows of money from the countries of the Global South to transnational corporations headquartered in the core capitalist nations of the Global North. From there, Smith draws on his empirical findings to powerfully theorize the current shape of imperialism. He argues that the core capitalist countries need no longer rely on military force and colonialism (although these still occur) but increasingly are able to extract profits from workers in the Global South through market mechanisms and, by aggressively favoring places with lower wages, the phenomenon of labor arbitrage.
Meticulously researched and forcefully argued, Imperialism in the Twenty-First Century is a major contribution to the theorization and critique of global capitalism.
Meticulously researched and forcefully argued, Imperialism in the Twenty-First Century is a major contribution to the theorization and critique of global capitalism.
384 pages, Hardcover
First published January 22, 2016
78 people are currently reading
2651 people want to read
About the author
John Smith
1 book10 followersJohn Smith received his PhD from the University of Sheffield and is currently self-employed as a researcher and writer. He has been an oil rig worker, bus driver, and telecommunications engineer, and is a longtime activist in the anti-war and Latin American solidarity movements.
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January 11, 2020
So this took me a while to get through – the book “Imperialism in the 21st century” (2016, Monthly Review Press) is not about the military and political aspects of imperialism but about the economic end of things, specifically the shifts in global production that have marked the neoliberal phase of capitalism. Needless to say that these are linked but it’s possible to analyse them somewhat separately.
The book provides a Marxist critique of conventional, neo-classical concepts of global value chain analyses and the problematic concepts and calculations of value added, productivity, GDP and ‘trade deficits’ which mask value transfers and exploitation of the global south by the club of advanced capitalist economies.
Obviously, the critique is based on Marx’s theory of value which, unlike orthodox economics, allows for the concept (and attempted measuring) of exploitation within global value chains. I guess it’s impossible to overstate the political consequences if looked at global production and trade through this analytical framework (duh!). It’s also impossible to overstate how many years it took me to understand Marx’s theory of value :)
Some take-aways:
1. Neoclassical frameworks and related market based concepts of ‘value’ (value = price) and GDP mask real value transfers. Commodities produced mostly or entirely in low wage countries expand the GDP of the nations where they are consumed by far more than the GDP of the nations where they are produced. For instance, the a t-shirt made in Bangladesh and sold in Germany by H&M for USD 5, will leave less than one dollar in Bangladesh but will add USD 3.50 to Germany’s GDP, including USD 0.80 in tax for the German government (but nearly nothing for the Bangladesh Government). This neoclassical framework of value = price makes it look as if Germany ‘added a value’ of USD 3.50 and Bangladesh’s GDP only captures 95 cent. According to this framework, there is no value transfer or exploitation at work.
2. In other words, modern trade theory and indeed the entire edifice of bourgeois economic theory are based on the fallacious conflation of value and price, the presumption that the price received for a commodity is identical to the value that was generated in its production. This conflation excludes the possibility that a firm’s value added may differ from the value it has added, in other words that part of its value added may represent value generated in other firms; while the conflation can only be implemented by making the production process invisible, creating a world in which prices are not only discovered in the market place but determined there, where the value of commodities, as Marx said, “seem not just to be realized only in circulation but actually to arise from it”.
3. The other (related) major fallacy which the book adresses is the one of ‘productivity’, again measured in value = price terms in the hegemonic neoclassical framework. The (hidden) value transfered from the south to the north would make it seem as if poverty wages in the south are due to lower levels of productivity, especially if compared with the high level of productivity of the high school drop out H&M employee in Berlin :) jokes aside, the most common neoliberal explanation for poverty wages in the global south is that this reflected low productivity and that this is of course only a stage in the process of moving up the global value chain - citing limited pre-neoliberal globalization east asia examples which even the faintest economist will know do not provide evidence that export oriented economic growth is a strategy for poverty reduction for developing countries. But it’s ideological powerful to equate divergent living standards as reflecting divergent levels of productivity in the south and north rather than a global economic model that systematically impoverishes ane exploits the many for the lucky few in the north. This is also reflected, statistically, in low wage nations’ increasing share of manufacturing trade and the much less impressive growth in their share of global manufacturing value-added.
4. A core thesis of the book is that the violent suppression of free movement of working people across the borders between imperialist and low wage countrie lies at the root of vast wage differentials as it enables higher rates of exploitations among large ‘surplus labour’ trapped in the global south. In a truly free market, ‘excess labour’, just like excess capital, would move west and north towards better opportunities (as millions of excess labour migrated to the US, Australia and elsewhere during Europe’s industrialization as a pressure valve). The racist border regimes that trap literally billions in informal and shitty job opportunities (if at all) while cherry picking the skilled migrants for the west is an integral feature of 21st century imperialism and also a structural cause for xenophobia and racism.
5. The book then looks at two key forms of outsourcing under neoliberal capitalism: traditional FDI (where production is moved overseas but kept in-house) and ‘arm’s length outsourcing, where companies outsource part of the production process to formally ‘independent’ entities in the global south. While FDI continue to play a major role, ‘arms length’ outsourcing is really becoming the defining feature of 21st century globalization. Whats important - and contra the mainstream narrative of global competition - is that competition between firms in imperialist and low wage nations is by and large absent - their relationship is complementary, not competitive (there is South-South competition as well as North-North). So while low wage countries’ share in global trade expands, this not at the expense of firms in the north but part of global value chains, heavily dominated by (ever merging and bigger) multinational corporations headquartered in the west.
6. Here the author picks a fight with David Harvey( <3 ) : whereas Harvey sees a decline in the power of imperialist nations due to the increasing role of newly industrialized countries (eg China) in trade, the book argues that the growth of foreign trade reflects an enormous expansion of the power of imperialist TNCs over these countries - and of the increased dependence of these corporations on surplus value extracted from their workers. In other words, outsourcing is a higher form of imperialism rather than its decline. Then follows an interest discussion on these two Marxist interpretations of globalization which I cannot summarize or reproduce here (chapter 7) and left me sitting on the fence.
7. In orher words, while FDI and the export of capital play a key role, arms-length outsourcing is now a more important source of profits than FDI, portfolio investment, and debt (the three components of capital export). In ‘Imperialism, the highest stage of capitalism’ Lenin argued that ‘the export of capital, one of the most essential economic base of imperialism... sets the seal of parasitism on the whole country that lives by exploiting the labour of several overseas countries and colonies”. The book argues that these new forms of imperialism under capitalism’s evolution especially since the 1980s have provided transnational corporations with ways to capture surplus value extracted from workers in low-wage countries without having to export their capital to those countries. Therefore, what is needed to analyse 21st century imperialism is a concept that unites imperialism’s (as theorised by Lenin) economic essence (monopoly capitalism) and its political essence (division of the world into oppressed and oppressor nations); and for both of these to be explained in terms of Marx’s law of value - ie a new synthesis of Marx’s theory of value and Lenin’s theory of imperialism (which is what the book is trying to do).
8. Here he introduces the concept of super-exploitation (reducing wages below the value of labour power - or starvation wages, sometimes referred to by mainstream economists as the ‘wage puzzle’ lol as they cant figure out why Ethiopian garment workers show up for work for USD 27 a month). This is then theorized as a mode of oppressive exploitation - rather than a theory and calculation of trade, we need a theory of international production, one that explains how value ‘independently’ created by super exploited workers in low-wage nations is captured by firms, states and consumers in imperialist nations.
9. Looking ahead/ global crisis (chapter 10): the book argues that the analysis of the global transformation and shift of production is essential to underarstanding the unfolding of the current global crisis. The outcome of the ongoing battle over addressing the crisis is still open and will not only determine the future of humanity but whether humanity has a future (hows that for a dramatic chapter opening!).
10. The roots of the current ‘financial’ crisis are to be found not in finance but in capitalist production linked to the two shifts under neoliberalism sinxe the 1970s: enormous expansion of debt and epochal global shift of production to low-wage countries.
11. Blaming the symptoms - excessive debt, lax regulation, and reckless risk taking - typifies most of the public discourse relating to the financial crisis. Some give a central place to ‘global imbalances’, especially China lending its trade surpluses to deficit countries, in particular the US. The book argues that these imbalances are thenselves symptoms of the deeper transformation of capitalist production. While mainstream explanations often focus on a malicious currency devaluations by exporting emerging economy governments, they omit to mention that about 80% of global trade (in terms of gross exports) is linked to international production networks of TNCs, three-quarter of which 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. In this sense, China could be described as a major export processing zone for western (including Japanese) TNCs.
12. The source of global imbalances lies in the shift in global production driven by TNCs desire to cut costs by cutting labour costs - hence the primacy of production of wealth that courses through the tubes and vesicles of the global financial system. The global financial crisis is a financial crisis in form only with its roots in the imperatives and contradictions that govern the behaviour of powerful capitalist firms, overwhelmingly concentrated in rich countries, and why they responded to them by cutting production costs through shifting to low wage countries.
13. The book then analyses the intimate connection between outsourcing and financialization (another significant feature of the neoliberal era) - highlighting that the crisis is ultimately rooted not in finance but capitalist production. It follows that this is not just another crisis of capitalism but a crisis of imperialism. The 2007 crisis ended the post-war order and marked the beginning of a pre-war order where, once again, imperialist rivalry may well end in war and destruction. In addition, the capitalist destruction of nature means that it’s not just capitalism’s greatest-ever crisis, it’s capitalism’s final crisis, an existential crisis for humanity (how’s that for a dramatic closing line).
The book provides a Marxist critique of conventional, neo-classical concepts of global value chain analyses and the problematic concepts and calculations of value added, productivity, GDP and ‘trade deficits’ which mask value transfers and exploitation of the global south by the club of advanced capitalist economies.
Obviously, the critique is based on Marx’s theory of value which, unlike orthodox economics, allows for the concept (and attempted measuring) of exploitation within global value chains. I guess it’s impossible to overstate the political consequences if looked at global production and trade through this analytical framework (duh!). It’s also impossible to overstate how many years it took me to understand Marx’s theory of value :)
Some take-aways:
1. Neoclassical frameworks and related market based concepts of ‘value’ (value = price) and GDP mask real value transfers. Commodities produced mostly or entirely in low wage countries expand the GDP of the nations where they are consumed by far more than the GDP of the nations where they are produced. For instance, the a t-shirt made in Bangladesh and sold in Germany by H&M for USD 5, will leave less than one dollar in Bangladesh but will add USD 3.50 to Germany’s GDP, including USD 0.80 in tax for the German government (but nearly nothing for the Bangladesh Government). This neoclassical framework of value = price makes it look as if Germany ‘added a value’ of USD 3.50 and Bangladesh’s GDP only captures 95 cent. According to this framework, there is no value transfer or exploitation at work.
2. In other words, modern trade theory and indeed the entire edifice of bourgeois economic theory are based on the fallacious conflation of value and price, the presumption that the price received for a commodity is identical to the value that was generated in its production. This conflation excludes the possibility that a firm’s value added may differ from the value it has added, in other words that part of its value added may represent value generated in other firms; while the conflation can only be implemented by making the production process invisible, creating a world in which prices are not only discovered in the market place but determined there, where the value of commodities, as Marx said, “seem not just to be realized only in circulation but actually to arise from it”.
3. The other (related) major fallacy which the book adresses is the one of ‘productivity’, again measured in value = price terms in the hegemonic neoclassical framework. The (hidden) value transfered from the south to the north would make it seem as if poverty wages in the south are due to lower levels of productivity, especially if compared with the high level of productivity of the high school drop out H&M employee in Berlin :) jokes aside, the most common neoliberal explanation for poverty wages in the global south is that this reflected low productivity and that this is of course only a stage in the process of moving up the global value chain - citing limited pre-neoliberal globalization east asia examples which even the faintest economist will know do not provide evidence that export oriented economic growth is a strategy for poverty reduction for developing countries. But it’s ideological powerful to equate divergent living standards as reflecting divergent levels of productivity in the south and north rather than a global economic model that systematically impoverishes ane exploits the many for the lucky few in the north. This is also reflected, statistically, in low wage nations’ increasing share of manufacturing trade and the much less impressive growth in their share of global manufacturing value-added.
4. A core thesis of the book is that the violent suppression of free movement of working people across the borders between imperialist and low wage countrie lies at the root of vast wage differentials as it enables higher rates of exploitations among large ‘surplus labour’ trapped in the global south. In a truly free market, ‘excess labour’, just like excess capital, would move west and north towards better opportunities (as millions of excess labour migrated to the US, Australia and elsewhere during Europe’s industrialization as a pressure valve). The racist border regimes that trap literally billions in informal and shitty job opportunities (if at all) while cherry picking the skilled migrants for the west is an integral feature of 21st century imperialism and also a structural cause for xenophobia and racism.
5. The book then looks at two key forms of outsourcing under neoliberal capitalism: traditional FDI (where production is moved overseas but kept in-house) and ‘arm’s length outsourcing, where companies outsource part of the production process to formally ‘independent’ entities in the global south. While FDI continue to play a major role, ‘arms length’ outsourcing is really becoming the defining feature of 21st century globalization. Whats important - and contra the mainstream narrative of global competition - is that competition between firms in imperialist and low wage nations is by and large absent - their relationship is complementary, not competitive (there is South-South competition as well as North-North). So while low wage countries’ share in global trade expands, this not at the expense of firms in the north but part of global value chains, heavily dominated by (ever merging and bigger) multinational corporations headquartered in the west.
6. Here the author picks a fight with David Harvey( <3 ) : whereas Harvey sees a decline in the power of imperialist nations due to the increasing role of newly industrialized countries (eg China) in trade, the book argues that the growth of foreign trade reflects an enormous expansion of the power of imperialist TNCs over these countries - and of the increased dependence of these corporations on surplus value extracted from their workers. In other words, outsourcing is a higher form of imperialism rather than its decline. Then follows an interest discussion on these two Marxist interpretations of globalization which I cannot summarize or reproduce here (chapter 7) and left me sitting on the fence.
7. In orher words, while FDI and the export of capital play a key role, arms-length outsourcing is now a more important source of profits than FDI, portfolio investment, and debt (the three components of capital export). In ‘Imperialism, the highest stage of capitalism’ Lenin argued that ‘the export of capital, one of the most essential economic base of imperialism... sets the seal of parasitism on the whole country that lives by exploiting the labour of several overseas countries and colonies”. The book argues that these new forms of imperialism under capitalism’s evolution especially since the 1980s have provided transnational corporations with ways to capture surplus value extracted from workers in low-wage countries without having to export their capital to those countries. Therefore, what is needed to analyse 21st century imperialism is a concept that unites imperialism’s (as theorised by Lenin) economic essence (monopoly capitalism) and its political essence (division of the world into oppressed and oppressor nations); and for both of these to be explained in terms of Marx’s law of value - ie a new synthesis of Marx’s theory of value and Lenin’s theory of imperialism (which is what the book is trying to do).
8. Here he introduces the concept of super-exploitation (reducing wages below the value of labour power - or starvation wages, sometimes referred to by mainstream economists as the ‘wage puzzle’ lol as they cant figure out why Ethiopian garment workers show up for work for USD 27 a month). This is then theorized as a mode of oppressive exploitation - rather than a theory and calculation of trade, we need a theory of international production, one that explains how value ‘independently’ created by super exploited workers in low-wage nations is captured by firms, states and consumers in imperialist nations.
9. Looking ahead/ global crisis (chapter 10): the book argues that the analysis of the global transformation and shift of production is essential to underarstanding the unfolding of the current global crisis. The outcome of the ongoing battle over addressing the crisis is still open and will not only determine the future of humanity but whether humanity has a future (hows that for a dramatic chapter opening!).
10. The roots of the current ‘financial’ crisis are to be found not in finance but in capitalist production linked to the two shifts under neoliberalism sinxe the 1970s: enormous expansion of debt and epochal global shift of production to low-wage countries.
11. Blaming the symptoms - excessive debt, lax regulation, and reckless risk taking - typifies most of the public discourse relating to the financial crisis. Some give a central place to ‘global imbalances’, especially China lending its trade surpluses to deficit countries, in particular the US. The book argues that these imbalances are thenselves symptoms of the deeper transformation of capitalist production. While mainstream explanations often focus on a malicious currency devaluations by exporting emerging economy governments, they omit to mention that about 80% of global trade (in terms of gross exports) is linked to international production networks of TNCs, three-quarter of which 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. In this sense, China could be described as a major export processing zone for western (including Japanese) TNCs.
12. The source of global imbalances lies in the shift in global production driven by TNCs desire to cut costs by cutting labour costs - hence the primacy of production of wealth that courses through the tubes and vesicles of the global financial system. The global financial crisis is a financial crisis in form only with its roots in the imperatives and contradictions that govern the behaviour of powerful capitalist firms, overwhelmingly concentrated in rich countries, and why they responded to them by cutting production costs through shifting to low wage countries.
13. The book then analyses the intimate connection between outsourcing and financialization (another significant feature of the neoliberal era) - highlighting that the crisis is ultimately rooted not in finance but capitalist production. It follows that this is not just another crisis of capitalism but a crisis of imperialism. The 2007 crisis ended the post-war order and marked the beginning of a pre-war order where, once again, imperialist rivalry may well end in war and destruction. In addition, the capitalist destruction of nature means that it’s not just capitalism’s greatest-ever crisis, it’s capitalism’s final crisis, an existential crisis for humanity (how’s that for a dramatic closing line).
March 31, 2021
You're a loose cannon, agent Smith. Your style makes people nervous and I gotta cover your ass for the top brass all the time, but you get the job done.
March 27, 2021
made a bunch of notes on this here. might be useful: https://rentry.co/a3g2h
January 8, 2022
John Smith's Imperialism in the Twenty-First Century begins with a puzzle: how is it that, despite being entirely manufactured in Bangladesh, only 28% of the cost of a H&M T-shirt actually ends up back there? How is it that nearly three-fourths of the profits end up, not merely with H&M, but in Germany more generally, once taxes are taken into account? As Smith puts it: "all data and experience, except for economic data, point to a significant contribution to the profits of Western firms by the workers who work long, hard, and for low wages to produce their commodities. Yet the bulk of the value realized ... appears to originate in the country where they are consumed". It's this 'except for economic data' that's the puzzle here: what's happened with the economic data that it can run counter to 'all data and experience'? How can the act of consumption - certainly not very productive - end up massively contributing to the GDP of a consumer country, and barely anything to the country of manufacture?
So begins Smith's long - and at times arduous - trek into the world of economic measures, each exposed for the ways in which they obscure the enormous amount of productivity that happens in the global South, only to have it all attributed to the global North. From the well-known (GDP, productivity, poverty) to the more obscure (unit labour costs, purchasing power parity, and value-added), each of these measures are given a thorough working-through in order to show the obfuscations involved, all the better to secure the imperial drive of capitalist production. A catalog, in other words, of imperial accountancy tricks. And if a book of accounting doesn't exactly sound all that sexy, Smith's achievement is to show how these numbers - impersonal and abstract - end up governing the lives of literal billions around the globe, assigning place and class to a global division of the economy whose pertinence cannot be overstated.
Underlying these investigations is Smith's deep concern with the question of value: where does it come from? How is, or should it be understood? Key to it all is Smith's distinction between the creation of value, and the capture of value. While 'bourgeois economics' has only ever understood value as the result of goods and services changing hands - that is, in terms of price and exchange - Smith takes pains to show that what is often taken for the creation of value is, in truth, nothing other than the capture of value. In terms of the imperialist division of the world: while value is created in the South, it is captured in the North. Yet, lacking the conceptual capacity to make such a distinction, almost all contemporary measures of economic activity end up attributing value creation to the North, even as that creation remains utterly dependent on production in the South. Indeed, as the central chapter of the book argues, it is only in the context of a theory of value - a Marxist theory of value, no less - that the integral relation between imperialism and capitalism can be made sense of, without which one can only grope in the dark after either.
So strong is Smith's case that it would not be unfair to elevate imperialism to perhaps the central phenomenon of modern capitalism. In the face of the usual, much discussed, symptoms of capitalist dysfunction - the explosion of finance and debt, austerity and the neoliberal revolution, central bank money-printing and the collapse of interest rates - to a name a few - to this list must be added, if not at the very top, the vacuum of value taking place across the globe. In terms of the sheer numbers of people affected, its primacy is hard to doubt. A lesson for me to learn above all else, considering how much closer to home - literally - the former issues are (or at least seem to be), even as imperialism marks - invisibly - nearly everything I touch. Beyond that too, Smith's other lesson - among yet many others - is that insofar as imperialism always occasions a global race to the bottom, the deprivations of the developing world are not some distant shore to be concerned about from afar. That present is ours(?) already, it just may be the case that we don't yet know it. And if we haven't learnt from it by now, we will learn from it soon.
So begins Smith's long - and at times arduous - trek into the world of economic measures, each exposed for the ways in which they obscure the enormous amount of productivity that happens in the global South, only to have it all attributed to the global North. From the well-known (GDP, productivity, poverty) to the more obscure (unit labour costs, purchasing power parity, and value-added), each of these measures are given a thorough working-through in order to show the obfuscations involved, all the better to secure the imperial drive of capitalist production. A catalog, in other words, of imperial accountancy tricks. And if a book of accounting doesn't exactly sound all that sexy, Smith's achievement is to show how these numbers - impersonal and abstract - end up governing the lives of literal billions around the globe, assigning place and class to a global division of the economy whose pertinence cannot be overstated.
Underlying these investigations is Smith's deep concern with the question of value: where does it come from? How is, or should it be understood? Key to it all is Smith's distinction between the creation of value, and the capture of value. While 'bourgeois economics' has only ever understood value as the result of goods and services changing hands - that is, in terms of price and exchange - Smith takes pains to show that what is often taken for the creation of value is, in truth, nothing other than the capture of value. In terms of the imperialist division of the world: while value is created in the South, it is captured in the North. Yet, lacking the conceptual capacity to make such a distinction, almost all contemporary measures of economic activity end up attributing value creation to the North, even as that creation remains utterly dependent on production in the South. Indeed, as the central chapter of the book argues, it is only in the context of a theory of value - a Marxist theory of value, no less - that the integral relation between imperialism and capitalism can be made sense of, without which one can only grope in the dark after either.
So strong is Smith's case that it would not be unfair to elevate imperialism to perhaps the central phenomenon of modern capitalism. In the face of the usual, much discussed, symptoms of capitalist dysfunction - the explosion of finance and debt, austerity and the neoliberal revolution, central bank money-printing and the collapse of interest rates - to a name a few - to this list must be added, if not at the very top, the vacuum of value taking place across the globe. In terms of the sheer numbers of people affected, its primacy is hard to doubt. A lesson for me to learn above all else, considering how much closer to home - literally - the former issues are (or at least seem to be), even as imperialism marks - invisibly - nearly everything I touch. Beyond that too, Smith's other lesson - among yet many others - is that insofar as imperialism always occasions a global race to the bottom, the deprivations of the developing world are not some distant shore to be concerned about from afar. That present is ours(?) already, it just may be the case that we don't yet know it. And if we haven't learnt from it by now, we will learn from it soon.
January 17, 2020
Imperialism offers a well-crafted and insightful analysis of super-exploitation as the basis of globalized imperialism. It was a captivating read.
"Analysis of contemporary imperialism must proceed from, and attempt to explain, a fact of transcendental importance: the systematic international divergence in the rate of exploitation between nations. Wage arbitrage-driven globalization of production corresponds neither to absolute surplus-value—long hours are endemic in low-wage countries, but the length of the working day is not the outsourcing firm’s main attraction—nor to relative surplus-value: necessary labor is not reduced through the application of new technology. Indeed, outsourcing is an alternative to investment in new technology. Raising surplus-value through expanding the exploitation of Southern low-wage labor therefore cannot be reduced to the two forms of surplus-value extraction analyzed in Capital—absolute and relative surplus-value. Global labor arbitrage-driven outsourcing is driven by lust for cheaper labor, and corresponds most directly to the 'reduction of wages below their value.' In other words, global labor arbitrage, the driver of the global shift of production to low-wage nations, is the third form of surplus value recognized by Marx as a most important factor, yet excluded, as we have seen, from his theory of value" (p.238).
... see what I mean!
"Analysis of contemporary imperialism must proceed from, and attempt to explain, a fact of transcendental importance: the systematic international divergence in the rate of exploitation between nations. Wage arbitrage-driven globalization of production corresponds neither to absolute surplus-value—long hours are endemic in low-wage countries, but the length of the working day is not the outsourcing firm’s main attraction—nor to relative surplus-value: necessary labor is not reduced through the application of new technology. Indeed, outsourcing is an alternative to investment in new technology. Raising surplus-value through expanding the exploitation of Southern low-wage labor therefore cannot be reduced to the two forms of surplus-value extraction analyzed in Capital—absolute and relative surplus-value. Global labor arbitrage-driven outsourcing is driven by lust for cheaper labor, and corresponds most directly to the 'reduction of wages below their value.' In other words, global labor arbitrage, the driver of the global shift of production to low-wage nations, is the third form of surplus value recognized by Marx as a most important factor, yet excluded, as we have seen, from his theory of value" (p.238).
... see what I mean!
October 28, 2018
It used to be imperialist nations set up colonies for the production of goods via cheap labor. Now, corporation use contacts to gain the same economic set up of being able to produce goods in cheap labor countries. Corporate contracts have the same appeal as colonies, but without the negative connotations. The corporations do not claim responsibility for the poor conditions in which their contracted firm employs the labor. Control via contacts means that the transnational corporation does not have an ownership stake in the firms’ production operations. The contracted firm become depended on the corporation for which they produce products, creating poor working conditions to keep the corporation satisfied with the timely production, no matter how late a change to the product comes in.
Companies outsource production to cheapest country. As labor is a huge cost of production, the decision is usually based on labor. Cheapest labor usually comes from developing countries (poor countries), as they have poor regulations for safety and labor does not have many other options. This creates an awkward economic reality, were the people responsible for production of the products are paid way less than the non-production components. Non-production may sometimes be necessary for the production, but even the unnecessary non-production earn more than the production components. Part of the price of the product is the tariff on imports, a non-production labor of checking the tariffs are paid more than those who actually create the product.
GDP is supposed to be about production, but it is neither domestic or about production. The countries which actually produce the products are developing economies, with low GDP. What counts for production is the value-added. Based on GDP accounting, there is more value-added where the product is consumed, not produced. A GDP illusion emerges, where what counts more is the value-added of non-production, than the actual production of products.
This book takes the perspective of the classic economics. In this case, Marxist assumptions. For the author, value means labor time. Taking more time for production is supposed to have a more valued product. Which creates a definition problem, because the same product can be valued differently based on how quickly it can be produce, with the longer production time having more value. For Marx, spending more time than necessary would be considered useless labor.
There is no iota of contribution to capital. Capital which decreases time that people can complete tasks does not get credit. Capital is what aids production, gives even poor countries the ability to produce more and diversify their incomes. With this author, spending more time than necessary to sustain is exploitation. Exploitation is a pseudonym for surplus value. The distribution of surplus value was a problem for Marx, not its creation.
This book has an anti-corporation theme. Imperialist countries create incentives for corporations to outsource their costs while poor countries create legal incentive for those low costs. Corporations are blamed for taking the incentives and for being competitive. Not the incentives which create the need to outsource, but the façade. Corporations should take accountability for the conditions of the production operations but blaming the symptoms without getting rid of the root causes, will just let the problem persist with different names. Although the author goes against perfect competition in which corporations know how to best allocate resources, the author has an underlying assumption which is not mentioned, is that the countries know what is best for their people or are victims to corporations. Quoting leaders of communist countries, but no mention of communist countries who strove for equality and committed genocide on their own people. No mention of the poor working conditions in communist countries.
The hard realities which are usually denied by the major international organizations are shown in this book. A decently written book with chapters devoted the complexity and different views on classical economic. Some parts, especially the basic definitions, are contradictory and are poorly explained. To understand much of this book, required prior knowledge on a lot of topics.
Companies outsource production to cheapest country. As labor is a huge cost of production, the decision is usually based on labor. Cheapest labor usually comes from developing countries (poor countries), as they have poor regulations for safety and labor does not have many other options. This creates an awkward economic reality, were the people responsible for production of the products are paid way less than the non-production components. Non-production may sometimes be necessary for the production, but even the unnecessary non-production earn more than the production components. Part of the price of the product is the tariff on imports, a non-production labor of checking the tariffs are paid more than those who actually create the product.
GDP is supposed to be about production, but it is neither domestic or about production. The countries which actually produce the products are developing economies, with low GDP. What counts for production is the value-added. Based on GDP accounting, there is more value-added where the product is consumed, not produced. A GDP illusion emerges, where what counts more is the value-added of non-production, than the actual production of products.
This book takes the perspective of the classic economics. In this case, Marxist assumptions. For the author, value means labor time. Taking more time for production is supposed to have a more valued product. Which creates a definition problem, because the same product can be valued differently based on how quickly it can be produce, with the longer production time having more value. For Marx, spending more time than necessary would be considered useless labor.
There is no iota of contribution to capital. Capital which decreases time that people can complete tasks does not get credit. Capital is what aids production, gives even poor countries the ability to produce more and diversify their incomes. With this author, spending more time than necessary to sustain is exploitation. Exploitation is a pseudonym for surplus value. The distribution of surplus value was a problem for Marx, not its creation.
This book has an anti-corporation theme. Imperialist countries create incentives for corporations to outsource their costs while poor countries create legal incentive for those low costs. Corporations are blamed for taking the incentives and for being competitive. Not the incentives which create the need to outsource, but the façade. Corporations should take accountability for the conditions of the production operations but blaming the symptoms without getting rid of the root causes, will just let the problem persist with different names. Although the author goes against perfect competition in which corporations know how to best allocate resources, the author has an underlying assumption which is not mentioned, is that the countries know what is best for their people or are victims to corporations. Quoting leaders of communist countries, but no mention of communist countries who strove for equality and committed genocide on their own people. No mention of the poor working conditions in communist countries.
The hard realities which are usually denied by the major international organizations are shown in this book. A decently written book with chapters devoted the complexity and different views on classical economic. Some parts, especially the basic definitions, are contradictory and are poorly explained. To understand much of this book, required prior knowledge on a lot of topics.
January 25, 2025
أطروحة لنيل درجة الدكتوراه مُقدَّمة من الاقتصادي الماركسي جون سميث، تتسم بأكاديمية شديدة تتطلب الرجوع إلى مصادر إضافية لفهم بعض المصطلحات المتخصصة. يهدف الكاتب إلى تقديم تعريف جديد للإمبريالية الاقتصادية التي يمارسها رأس المال الشمالي على دول الجنوب، من خلال استغلال العمالة الرخيصة واستخراج أكبر قدر ممكن من فائض القيمة عبر استغلالٍ دموي لحياة العمال.
الإمبريالية الحديثة واستغلال العمالة:
على عكس المفهوم الشائع بأن التكنولوجيا والأتمتة ستقضيان على الطبقة العاملة، تُستخدم التقنيات الجديدة لخفض تكلفة العمالة عبر الاستعانة بمصادر خارجية (Outsourcing). بدلًا من استبدال العمالة بالآلات، يستبدل الرأسماليون العمالة بأخرى أرخص، مما يُطيل عمر عمليات الإنتاج المتقادمة ويُحرر الأرباح للمضاربة في الأصول المالية ذات العوائد الأعلى.
عولمة الإنتاج وفائض القيمة:
الأهمية تكمن في عولمة الإنتاج، وليس استبدال العمال. معظم عمليات إنتاج الشركات متعددة الجنسيات (Multinationals) تتم خارج الوطن الأم لضمان استخراج فائض القيمة من عمال الجنوب وتحويل الأرباح إلى الشمال. السلع الاستهلاكية التي يستهلكها عمال الشمال لم تعد تُنتج في الشمال، بل في الجنوب بأجور منخفضة. إنتاجية وأجور عمال الجنوب تحدد قيمة سلة السلع الاستهلاكية التي تُعيد إنتاج قوة العمل في الدول الإمبريالية.
اندماج عمال الشمال في النظام الرأسمالي:
يوضح سميث كيف أن الطبقة العاملة في الشمال اندمجت كليًّا في النظام الرأسمالي، حيث تعتمد مستويات معيشتها على استغلال عمال الجنوب. تُمارس الإمبريالية عبر حرب شاملة على دول الجنوب، بدعم من مؤسسات مثل صندوق النقد الدولي ومنظمة التجارة العالمية، التي تضمن سهولة استخراج فائض القيمة وتحويل الأرباح.
التراكم الرأسمالي وفائض السكان العاملين:
يكشف سميث أن التراكم الرأسمالي يولد فائضًا نسبيًّا من السكان العاملين يفوق حاجات رأس المال للنمو، مما يخلق أزمات دورية. هذا الفائض النسبي هو قانون سكاني خاص بنمط الإنتاج الرأسمالي، حيث ينتج العمال وسائل تحويلهم إلى فائض دائم.
التصنيع من أجل التصدير:
لا يُعد التصنيع من أجل التصدير طوق نجاة للاقتصادات النامية، بل أداة لتعظيم أرباح الشركات الشمالية عبر التنافس بين دول الجنوب لتوفير عمالة رخيصة وظروف إنتاج مهينة. هذا يفسر ارتفاع قيمة الخدمات مقابل السلع في اقتصاديات الشمال، فيما يُعرف بـ"معضلة بومول".
القيمة المزدوجة للعمل:
يشرح ماركس أن قيمة الخدمات كانت تُحدد سابقًا بأجور العمال المصنِّعين. لكن مع انتقال الصناعة إلى الجنوب، ارتفعت قيمة الخدمات في الشمال بينما انخفضت قيمة السلع. في عصر فائض العرض، أصبح التعهيد الخارجي (Outsourcing) ضرورةً للشركات الشمالية للبقاء في السوق.
October 11, 2017
Brilliant analysis of how imperialism functions in a world of outsourcing, commodity chains and ICT. Along the way, Smith gives a cogent and detailed kick in the head to concepts like GDP, shows how the collection of economic statistics is not neutral but part and parcel of the ideological fraud that is neoclassical economics, savages Euro Marxists for refusing to acknowledge the hyper-exploitation of the third world. Smith provides a cogent linking of Lenin's theory of imperialism to Marx's value theory, thereby reviving both. If coupled with Tony Nordfelts work on financialisation and Jason Moore's work on world ecology, one has the outlines of a theory of the contemporary world economy and a comprehension of the times in which we live - the end days and death throes of capitalism. The real question is: what comes after? As Smith says, it is no longer as Rosa Luxemburg said 'socialism or barbarism" but "socialism or nothing".
October 2, 2022
Clear, well written, convincing, with solid political conclusions - Smith is an impeccable theorist of imperialism and a strong defender of the Leninist tradition.
April 13, 2025
A lot to chew on. Basic take away— multinational companies (MNCs) increasingly rely on outsourcing to cut costs, which enriches MNCs at the cost of 1. leaving workers in developed countries jobless 2. exploiting workers in developing countries (anti-union authoritarian govts + ineffective safety/env/labor/etc. oversight + regressive global migration system --> suppress wages lower than product's value added) & 3. despite often being labeled "investment", failing to deliver capital to developing countries since MNCs mainly outsource to Southern firms via arm's length relationships.
(For more detail, good notes here: https://rentry.co/a3g2h).
Overall, pretty good. Could feel my brain expanding. A bit too much theory for my taste, I would've preferred it if there could've been more case studies and higher empirical-to-theoretical basis for its arguments. Don't know if I see eye to eye on all its points and I probably need a bit more than M1 to really scrutinize it properly, but pretty insightful perspective regardless.
And hey this 2013 book totally predicted 2024's economy of "protracted global depression, competitive currency devaluations, and therefore of trade wars and sharpening inter-imperialist rivalry". Scary accurate. I mean, when the man's right he's right. Sheesh.
(For more detail, good notes here: https://rentry.co/a3g2h).
Overall, pretty good. Could feel my brain expanding. A bit too much theory for my taste, I would've preferred it if there could've been more case studies and higher empirical-to-theoretical basis for its arguments. Don't know if I see eye to eye on all its points and I probably need a bit more than M1 to really scrutinize it properly, but pretty insightful perspective regardless.
And hey this 2013 book totally predicted 2024's economy of "protracted global depression, competitive currency devaluations, and therefore of trade wars and sharpening inter-imperialist rivalry". Scary accurate. I mean, when the man's right he's right. Sheesh.
July 19, 2016
lots of good stuff in here, one of many highlights for me being the section where he devotes all his attention to detailing all the different ways euro marxists liioke david harvey et al are fweaking retarded.
July 12, 2022
This book seeks to update a theory of imperialism to the modern-day; it is able to greatly address modern developments, especially the growing role of imports of intermediary inputs, arms-length outsourcing (over transnational corporations directly owning factories in the global south), etc.
Its analysis of GDP & how it is distorted is extremely useful, showing it as more clearly exemplifying the net *capturing* of wealth over how much is 'created' in each nation; furthermore, it greatly shows the growing role of global south labour to the world economy (& its structure, specifically the role of informal labour in the global south, distorting statistics considerably), the way North-South and North-North trade are distinct, relating to different forms of investments and trading different goods among each other.
I have some issues with some of his conclusions, going farther than his data allows him to (eg on the rising FDI for the global south, however he ignores it's mostly concentrated in a few countries in east asia & per capita it's quite not that much). I find his theory of crisis questionable; I think he is too reliant on the tendency of rate of profit to decline to construct his arguments, as well as some of his assumptions - IMO, not in-depth enough engagement of role of productivity in the first world's declining manufacturing sector, which he notes as auxiliary role but does not centre why outsourcing was more central.
Ultimately, a very important book despite my disagreements, using many statistics to prove its arguments.
Its analysis of GDP & how it is distorted is extremely useful, showing it as more clearly exemplifying the net *capturing* of wealth over how much is 'created' in each nation; furthermore, it greatly shows the growing role of global south labour to the world economy (& its structure, specifically the role of informal labour in the global south, distorting statistics considerably), the way North-South and North-North trade are distinct, relating to different forms of investments and trading different goods among each other.
I have some issues with some of his conclusions, going farther than his data allows him to (eg on the rising FDI for the global south, however he ignores it's mostly concentrated in a few countries in east asia & per capita it's quite not that much). I find his theory of crisis questionable; I think he is too reliant on the tendency of rate of profit to decline to construct his arguments, as well as some of his assumptions - IMO, not in-depth enough engagement of role of productivity in the first world's declining manufacturing sector, which he notes as auxiliary role but does not centre why outsourcing was more central.
Ultimately, a very important book despite my disagreements, using many statistics to prove its arguments.
July 5, 2021
Smith deservedly won a prestigious award for this well conceived exploration of Imperialist Capitalism’s toxic and parasitic impact on countries outside of the G20. His explanation of the Marxist value theory of wages is clear and incisive while serving to support his fascinating hypothesis. Smith introduces his ideas using three products (t-shirts,coffee, and I-Phones)to frame historically and functionally the corrosive nature of the economic impact of the elite Western capitalists on the workers of developing countries. There is much to consider while learning of a globalist corporate dynamic that subverts the economic independence of billions of people to the benefit of the ruling elite. A great read for all who want to better enable critical thinking and an enhanced world view regarding the economic despotism faced by all but a privileged few.
Want to read
March 26, 2022Library-of-Congress HB501
February 23, 2023
a very good book written from a global perspective of the capitalist mode of production broadly and international value transfers specifically. all killer not much filler
April 10, 2020
An incredible and dense analysis of the economics of imperialism. The book is Marxist not only in content, but also a bit in structure - the focus on individual, globally produced commodities in the beginning and the different perspectives from which imperialism is looked at - through statistical data, abstracting from the data and explaining it through theory, and also covering a little bit of history - are all reminiscent of Marx's Capital.
The author also does quite a bit of work critiquing neoclassical, heterodox and even orthodox Marxist analyses of imperialism, which all tend to obscure or explain away the exploitation at the heart of this phenomenon.
The most crucial points in the book (and also the ones I took away as particularly insightful or useful), were (in no particular order):
1. The primary force driving Imperialism is by increasing surplus-value (and thus, the rate of exploitation) by driving wages down below the value of labor-power.
2. The idea that wages are converging between workers in 1st and 3rd world countries is a myth; wage inequality has increased between workers both within and between imperialist and 3rd world countries.
3. The reason for this divergence is because transnational corporations based in imperialist countries compete with each other for cheap labor in the 3rd world, and export-oriented companies in the 3rd world compete with each other to lower wages for workers as much as possible (in order to attract the attention of TNCs), but by and large, companies in the 1st and 3rd world don't compete with each other - they are in a dependent relationship with each other, with 3rd world companies in particular engaged in a "race to the bottom" in terms of their wages.
4. This inequality between rich and poor nations is exacerbated by a "brain-drain" - a surge of migration of skilled workers from the global south to the imperialist countries, further damaging the prospects of development in poor countries.
5. The draconian and restrictive immigration policies in imperialist countries are designed to keep the vast majority of low-skilled labor in the 3rd world. By restricting the mobility of labor, and keeping a vast surplus of labor in the 3rd world, making them redundant, drives down their wages and keeps them super-exploitable. This is crucial to understanding the logic behind racist and xenophobic immigration policies.
6. Patriarchy is baked into the global economy - TNCs and imperialist governments actively search out companies in the global south who employ women in sweatshops and other such firms for wages lower than their male counterparts, taking advantage of women's subservient social roles in these countries. However, as more and more women are injected into the workforce, this acts as a force to further drive down the average wage of all workers.
7. Capitalists have taken advantage of outsourcing production to the global south as an alternative to investment. Now that they're not using their profits to invest, they use their profits to engage in market speculation instead, since they get a higher rate of return on profits from stock buybacks, etc. rather than investing in new technology and hiring more workers. This was the source of a chain of events that led up to the "financial crash" of 2008-9, which was financial only in appearance, but had its roots in the globalization of production.
This book provides many insights into the way our global economy works, seeking to form a theory of imperialism using Marx's labor theory of value and backing it up with empirical evidence. It's really dense, jam-packed with information and makes for a challenging read, but it's well worth the effort.
The author also does quite a bit of work critiquing neoclassical, heterodox and even orthodox Marxist analyses of imperialism, which all tend to obscure or explain away the exploitation at the heart of this phenomenon.
The most crucial points in the book (and also the ones I took away as particularly insightful or useful), were (in no particular order):
1. The primary force driving Imperialism is by increasing surplus-value (and thus, the rate of exploitation) by driving wages down below the value of labor-power.
2. The idea that wages are converging between workers in 1st and 3rd world countries is a myth; wage inequality has increased between workers both within and between imperialist and 3rd world countries.
3. The reason for this divergence is because transnational corporations based in imperialist countries compete with each other for cheap labor in the 3rd world, and export-oriented companies in the 3rd world compete with each other to lower wages for workers as much as possible (in order to attract the attention of TNCs), but by and large, companies in the 1st and 3rd world don't compete with each other - they are in a dependent relationship with each other, with 3rd world companies in particular engaged in a "race to the bottom" in terms of their wages.
4. This inequality between rich and poor nations is exacerbated by a "brain-drain" - a surge of migration of skilled workers from the global south to the imperialist countries, further damaging the prospects of development in poor countries.
5. The draconian and restrictive immigration policies in imperialist countries are designed to keep the vast majority of low-skilled labor in the 3rd world. By restricting the mobility of labor, and keeping a vast surplus of labor in the 3rd world, making them redundant, drives down their wages and keeps them super-exploitable. This is crucial to understanding the logic behind racist and xenophobic immigration policies.
6. Patriarchy is baked into the global economy - TNCs and imperialist governments actively search out companies in the global south who employ women in sweatshops and other such firms for wages lower than their male counterparts, taking advantage of women's subservient social roles in these countries. However, as more and more women are injected into the workforce, this acts as a force to further drive down the average wage of all workers.
7. Capitalists have taken advantage of outsourcing production to the global south as an alternative to investment. Now that they're not using their profits to invest, they use their profits to engage in market speculation instead, since they get a higher rate of return on profits from stock buybacks, etc. rather than investing in new technology and hiring more workers. This was the source of a chain of events that led up to the "financial crash" of 2008-9, which was financial only in appearance, but had its roots in the globalization of production.
This book provides many insights into the way our global economy works, seeking to form a theory of imperialism using Marx's labor theory of value and backing it up with empirical evidence. It's really dense, jam-packed with information and makes for a challenging read, but it's well worth the effort.
This entire review has been hidden because of spoilers.
December 5, 2023
Although certainly important, and providing comprehensive empirical analysis lacking from certain studies of imperialism, the book itself is both dry at points and, unfortunately, somewhat limited/misguided in its conclusions
Read
June 15, 2020A worker’s wages reflect their vulnerability, not productivity, and transnational corporations are responsible for this (super-)exploitation. For this reason, wages will not rise with a future increase in productivity as southern countries industrialize. This fact and others explained in this book combine to mean that the export-oriented model of industrialization pursued by many countries in the Global South will not eventually catch them up to those in the Global North, but they will instead remain poor and exploitable.
As someone with little economic or statistical background, I found this book quite accessible and I would highly recommend it to readers interested in the relation of wealthy countries to poor ones in modern supply-chains and a critique of mainstream economic theory (in addition to thorough criticism, Smith makes many jokes at their expense). The only background I would consider necessary is a passing familiarity with the labor theory of value and I would point readers towards p. 196 in ch. 7, where Smith provides brief explanations of some useful terms, which readers may find helpful to look at before starting, rather than waiting until they have already read the first 200 pages. The first chapter provides a clear overview of the issues to be covered in the subsequent chapters, so they already feel familiar when Smith jumps into the methodological and statistical weeds. These later chapters are less exciting than the first, but they still offer a rewarding theoretical nuance in Smith’s critiques and specifications. The predictions Smith makes in the final chapter, which are previewed in the title but not first chapter, did not strike me as completely convincing (people love to underestimate capitalism’s resilience!), but Smith’s analysis of super-exploitation and critiques of the convergence theory and the GDP as a measurement make this a worthwhile read.
As someone with little economic or statistical background, I found this book quite accessible and I would highly recommend it to readers interested in the relation of wealthy countries to poor ones in modern supply-chains and a critique of mainstream economic theory (in addition to thorough criticism, Smith makes many jokes at their expense). The only background I would consider necessary is a passing familiarity with the labor theory of value and I would point readers towards p. 196 in ch. 7, where Smith provides brief explanations of some useful terms, which readers may find helpful to look at before starting, rather than waiting until they have already read the first 200 pages. The first chapter provides a clear overview of the issues to be covered in the subsequent chapters, so they already feel familiar when Smith jumps into the methodological and statistical weeds. These later chapters are less exciting than the first, but they still offer a rewarding theoretical nuance in Smith’s critiques and specifications. The predictions Smith makes in the final chapter, which are previewed in the title but not first chapter, did not strike me as completely convincing (people love to underestimate capitalism’s resilience!), but Smith’s analysis of super-exploitation and critiques of the convergence theory and the GDP as a measurement make this a worthwhile read.
September 26, 2022
I read John Smith´s Imperialism in the Twenty-First Century in great detail due to a translation effort I started for this book into another language. I think it constitutes a very important if not critical contribution to a current Marxist analysis of fundamental economy processes taking place in the world. The book starts with 3 different product examples that clearly present the mechanisms of super-exploitation of the Global South by financial capital companies. Then, it builds up on previous Marxist analysis to show this exploitation as the main operating mode of imperialist capitalism nowadays. Along the way, Smith is very detailed in identifying those previous thinkers and writers that provided a sound basis of analysis and others that have been rather limited or even lost in regards of the actual brutality and means of the oppressive system. Smith properly revisits both Lenin and Latin American dependency theorists to achieve his objective. He also introduces the analysis of certain aspects that have been traditionally been left aside as not very relevant by others (i.e. technology influence)
This book certainly deserved the Monthly Review award. I also deserves other recognitions as it is fundamental in our current times.
This book certainly deserved the Monthly Review award. I also deserves other recognitions as it is fundamental in our current times.
December 27, 2023
This is a very useful book that updates the framework for imperialist studies to include the global development of capitalism over the past two decades. In more concrete terms, this is a book about the ongoing trend, especially exacerbated by the global financial crash of 2007-2008, of outsourcing production to the “global south”. It’s a study of the rationale behind the wave of transnational companies moving their production and business processing to countries such as China and more recently, Bangladesh, Cambodia, the Philippines, and other post-colonial countries struggling to get by.
On the surface the obvious explanation for this is that labor is cheaper outside the home countries of these TNCs and so it’s natural for them to prefer moving their production facilities there. This is clearly one of the main components to it, but the problems lie deeper than just that. It is often argued in globalist terms that moving one’s production facilities to a poorer country is actually a great thing for them because it gives jobs to locals and benefits their country’s overall economy. However, new methods of outsourcing and manipulation of “profits” on paper have allowed TNCs to extract high amounts of value from local populations in ways that do not benefit the host countries they’re actually in. Revenues get transferred “internally” within a company such that the majority of the money actually made by these TNCs flow back into their main countries of origin while the profits on paper within their countries of production approach zero, and so little taxes get extracted from them.
In recent years, “arm’s length outsourcing” has also become more popular, in which TNCs make contractual agreements with local companies in which the latter has to strictly follow the production guidelines of the TNC but without them being under their technical “ownership”. What this means is that a company like Apple, for example, doesn’t anymore even need to deal with national laws on issues of foreign businesses because it can just contract a local company to do their production for them. The company then bears the brunt of having to deal with the local political logistics and taxes while Apple just pays a fixed amount and gives them orders. This is different, for example, than Apple starting its own factory in a foreign country and having to navigate the local environment and regulations. The production ends up being treated as just another local venture, skipping through all the legal barriers of international business, while keeping everything de facto the same. It also gives Apple the ability to wash their hands clean off any accusations of worker exploitation and so forth because they can just say it wasn’t under their power. It also allows these big TNCs to employ less people in general.
The heart of the book is in exposing the ways in which transnational companies have increased their dominance of global markets by their ever-increasing exploitation of “global south” countries through new methods of outsourcing. The idea is that there is a huge drain in value that is sucked away from the Global South towards the Global North. What this means is that global inequality across countries are getting worse because the trends of exploitation have transformed from the direct imperial one to an economically extractive imperial one. Richer countries have de-industrialized and have thereby turned the countries left behind into their personal giant factories that disproportionately benefit the former in expense of the hard labor of the latter. The majority of the value of the work done by people in the Global South are siphoned off to the TNCs in the Global North. For example, a shirt can be sold in the U.S. for $30 with the labor (from Vietnam, Cambodia, etc.) worked to create it only receiving mere cents to the dollar. And the majority of the rest of the $30 is monopolized by the middle men who reside in the U.S.. This is what is meant by disproportionate siphoning off of value from the South to the North.
The book also exposes the GDP illusion, in which GDP does not actually measure the country’s “gross domestic product,” but it measures the part of the global product that is captured or appropriated by a nation. In other words, a high GDP of a country doesn’t mean that the production that brings it about happens there. A majority of that value is extracted from labor across the world. And so the GDP of a poorer nation won’t necessarily increase just because it has a lot of new factories, because most of the value produced is actually disproportionately captured by TNCs in the North. In the shirt example earlier, it would be as if for every piece sold, the Vietnamese or Cambodian economy might gain a dollar or two to their GDP while the U.S. gets the rest of it. This is the major issue of outsourcing— a lot of which is delved into much deeper in the academic field called “global value chain analysis.”
This is definitely worth reading and I’m looking forward to getting a more comprehensive understanding of the world through the lens of the economics of globalization. The only issues I have here is that the language could be more accessible and that I didn’t find the final chapter’s conclusions convincing in the context of the arguments that preceded it. It almost felt like a different book of arguments condensed into a chapter that felt to me too rushed and out of place with the rest of the work. I would also love to read more books that focus even more on how these experiences are seen from the lens of the Global South itself. Highly recommended.
On the surface the obvious explanation for this is that labor is cheaper outside the home countries of these TNCs and so it’s natural for them to prefer moving their production facilities there. This is clearly one of the main components to it, but the problems lie deeper than just that. It is often argued in globalist terms that moving one’s production facilities to a poorer country is actually a great thing for them because it gives jobs to locals and benefits their country’s overall economy. However, new methods of outsourcing and manipulation of “profits” on paper have allowed TNCs to extract high amounts of value from local populations in ways that do not benefit the host countries they’re actually in. Revenues get transferred “internally” within a company such that the majority of the money actually made by these TNCs flow back into their main countries of origin while the profits on paper within their countries of production approach zero, and so little taxes get extracted from them.
In recent years, “arm’s length outsourcing” has also become more popular, in which TNCs make contractual agreements with local companies in which the latter has to strictly follow the production guidelines of the TNC but without them being under their technical “ownership”. What this means is that a company like Apple, for example, doesn’t anymore even need to deal with national laws on issues of foreign businesses because it can just contract a local company to do their production for them. The company then bears the brunt of having to deal with the local political logistics and taxes while Apple just pays a fixed amount and gives them orders. This is different, for example, than Apple starting its own factory in a foreign country and having to navigate the local environment and regulations. The production ends up being treated as just another local venture, skipping through all the legal barriers of international business, while keeping everything de facto the same. It also gives Apple the ability to wash their hands clean off any accusations of worker exploitation and so forth because they can just say it wasn’t under their power. It also allows these big TNCs to employ less people in general.
The heart of the book is in exposing the ways in which transnational companies have increased their dominance of global markets by their ever-increasing exploitation of “global south” countries through new methods of outsourcing. The idea is that there is a huge drain in value that is sucked away from the Global South towards the Global North. What this means is that global inequality across countries are getting worse because the trends of exploitation have transformed from the direct imperial one to an economically extractive imperial one. Richer countries have de-industrialized and have thereby turned the countries left behind into their personal giant factories that disproportionately benefit the former in expense of the hard labor of the latter. The majority of the value of the work done by people in the Global South are siphoned off to the TNCs in the Global North. For example, a shirt can be sold in the U.S. for $30 with the labor (from Vietnam, Cambodia, etc.) worked to create it only receiving mere cents to the dollar. And the majority of the rest of the $30 is monopolized by the middle men who reside in the U.S.. This is what is meant by disproportionate siphoning off of value from the South to the North.
The book also exposes the GDP illusion, in which GDP does not actually measure the country’s “gross domestic product,” but it measures the part of the global product that is captured or appropriated by a nation. In other words, a high GDP of a country doesn’t mean that the production that brings it about happens there. A majority of that value is extracted from labor across the world. And so the GDP of a poorer nation won’t necessarily increase just because it has a lot of new factories, because most of the value produced is actually disproportionately captured by TNCs in the North. In the shirt example earlier, it would be as if for every piece sold, the Vietnamese or Cambodian economy might gain a dollar or two to their GDP while the U.S. gets the rest of it. This is the major issue of outsourcing— a lot of which is delved into much deeper in the academic field called “global value chain analysis.”
This is definitely worth reading and I’m looking forward to getting a more comprehensive understanding of the world through the lens of the economics of globalization. The only issues I have here is that the language could be more accessible and that I didn’t find the final chapter’s conclusions convincing in the context of the arguments that preceded it. It almost felt like a different book of arguments condensed into a chapter that felt to me too rushed and out of place with the rest of the work. I would also love to read more books that focus even more on how these experiences are seen from the lens of the Global South itself. Highly recommended.
July 27, 2018
Brilliant and much needed analysis of post-crash imperialism. This book is proof that any resurgent socialist movement in the western world must centre itself on a foundation of unwavering anti-imperialism. I find that social democrats are very vocal about things like the NHS, the welfare state etc... Without ever wondering how exactly they are funded, what exactly it is that makes the UK the fifth biggest economy in the world, and which country's working class suffers so that ours can be placated and appeased by a capitalist class.
Read this book.
Read this book.
May 18, 2016
A difficult read for those not fully versed in some of the economics in the book. Still, one of the most important books I have read in a long time, and on course to be my favourite book of the year.
May 28, 2019
Everyone read this book!
June 28, 2025
It's nice to find a fairly accessible book of theory applied in practice. It's also nice to witness conclusions found in practice that cannot be found in theory, such as Smith's insight that the contradiction between measures of productivity —quantity per labor unit of time vs. profit realized per quantity—is identical to the contradiction between use value and exchange value:
Michael Roberts (author of such books as Capitalism in the 21st Century: Through the Prism of Value) called the book "powerful and searing" in a review on his blog (which includes a discussion with Smith in the comments section):
https://thenextrecession.wordpress.co...
Roberts seems a little on the fence about Smith's concept of 'super-exploitation,' perhaps because of its association with Dependency Theory. At any rate, Smith gives a couple of overlapping definitions of 'super-exploitation:' first, which Roberts mentions, is driving wages below the value of labour power—a worker who does not make enough cash to maintain their cost of living. The second is global wage arbitration—fostering wage competition by hiring the lowest bidder, no matter where in the world they can be found.
I don't think it's hard to find real-world evidence of either definition, but I'll defer to your better judgement on the matter, dear reader. All I will add is Smith's reasoning:
But either way, one major point of this project which Roberts did not mention was Smith's outlining of his version of the value theory of imperialism:
This is the one of the most important and interesting parts of the work in my opinion, and is a point I hope to see further fleshed out in future work.
Smith is incidentally also a reader of Evald Vasilyevich Ilyenkov and his classic Dialectics of the Abstract and Concrete in Marx's Capital, which he references a couple of times, and in my opinion can be seen as a positive reference toward his influences.
All in all, this is an ambitious and persuasive work which leaves much to think about. I think Smith left himself a lot of work to fill out everything he's outlined, and I can only hope he does.
Finally, the academics at Groningen introduce confusion when they say "output or productivity relates to a volume measure as it resembles a quantity unit of output." No—by "output" they mean value added, and by "productivity" they mean value added per worker, both of which are value measures, not volume measures. Their terminology is yet another example of the inability of bourgeois economists to recognize the fundamental difference between—and contradiction between—use-value and exchange-value, and the two antithetical definitions of productivity corresponding to them[.]
Michael Roberts (author of such books as Capitalism in the 21st Century: Through the Prism of Value) called the book "powerful and searing" in a review on his blog (which includes a discussion with Smith in the comments section):
https://thenextrecession.wordpress.co...
Roberts seems a little on the fence about Smith's concept of 'super-exploitation,' perhaps because of its association with Dependency Theory. At any rate, Smith gives a couple of overlapping definitions of 'super-exploitation:' first, which Roberts mentions, is driving wages below the value of labour power—a worker who does not make enough cash to maintain their cost of living. The second is global wage arbitration—fostering wage competition by hiring the lowest bidder, no matter where in the world they can be found.
I don't think it's hard to find real-world evidence of either definition, but I'll defer to your better judgement on the matter, dear reader. All I will add is Smith's reasoning:
To the extent that that GDP exaggerates or diminishes the real contribution of individual nations to global wealth, each nation is either a net consumer of wealth produced by the living labor of other nations, or it is a net contributor, producing more wealth than it consumes [in other words producing surplus value in a capitalistic social relation].
But either way, one major point of this project which Roberts did not mention was Smith's outlining of his version of the value theory of imperialism:
To conclude this all-too-brief discussion of Lenin's contribution to the theory of imperialism, what is urgently needed is a concept that unites its economic essence—monopoly capitalism and its political essence—the division of the world into oppressed and oppressor nations; and for both of these to be explained in terms of the law of value developed by Karl Marx in his towering work, Capital. This would be the path to achieving what Andy Higginbottom has called a new synthesis of Marx's theory of value and Lenin's theory of imperialism. To arrive at the necessary starting point for such a synthesis, we now go back another half-century, where we will make a secure connection with Marx's great work.
This is the one of the most important and interesting parts of the work in my opinion, and is a point I hope to see further fleshed out in future work.
Smith is incidentally also a reader of Evald Vasilyevich Ilyenkov and his classic Dialectics of the Abstract and Concrete in Marx's Capital, which he references a couple of times, and in my opinion can be seen as a positive reference toward his influences.
All in all, this is an ambitious and persuasive work which leaves much to think about. I think Smith left himself a lot of work to fill out everything he's outlined, and I can only hope he does.
September 17, 2023
put together a load of notes on this really great study for anyone who might find them useful https://aonchiallach.github.io/posts/...
in overall terms Imperialism in the twenty-first century makes a very convincing argument for i) imperialism as a fundamental component of contemporary capitalism, ii) the necessity of incorporating a Marxist reading of economic literature pertaining to underdevelopment and iii) the provincialism of Euro-Marxists (read: British Trots in the SWP).
Smith's central argument is that the bourgeoisie in the imperial core have begun to reap 'super-profits' by outsourcing large parts of the productive process to ultra low-wage economies such as Bangladesh, Sri Lanka, Kenya and paying workers below the socially necessary rate, which would allow them to maintain their own conditions of existence. The parts of the text that describe the conditions in which millions of people now live and work is harrowing in the extreme. There is an enormous amount of statistics here and serious unpacking of concepts drawn from all three volumes of Capital, which were not as fresh in my mind as I would like, but Smith is highly readable and always has two to three paragraphs summing things up for slower readers. It's a really refreshing and welcome approach for someone who really knows their Marx to take.
Smith's critics have attempted to paint him as a third-worldist or Stalinist recommending variously, cross-class collaboration in the imperial core or 'there is no such thing as a worker in the west'-type positions. This sadly confirms much of his objections to contemporary trends on the organised / academic left which seems largely uninterested in re-evaluating old models in light of new evidence or historical development. At no stage does Smith moralise about the western working class and his criticisms of the failures of the USSR and China to establish a firm and consistent line on national liberation struggles, to see beyond their own short to medium term diplomatic objectives with western powers, are proportionate and accurate. The Cuban revolution, with its impeccable internationalist objectives is the hero of the work, though the broader point is the sketching out of a model that explains why the labour movements in Europe and the United States have never meaningfully opposed their own ruling class on behalf of those in the global south. Any explanation for why the twentieth century took the course it did needs to reckon with that and of course, a particular type of doctrinaire Trotskyist does not. In a bid to better understand some of the material I ran my own analyses on updated datasets and found Smith's empirical basis for arguing that while worker power is being eroded on a global basis rates of exploitation are rising slower within the west, remained robust.
The book is not only worth reading for all the reasons that I've set out here, but I think it's also extremely worthwhile as a reference text. At some length Smith lays out the problems involved with currently existing datasets which purport to represent levels of value-add in manufacturing or wage rates, given their being collected on the basis of neoclassical economic assumptions and how much economic activity simply remains uncaptured, precisely because of the depths of the inequality these trends have brought about. There is also really great evaluations of the works of other Marxists; massive gaps or obfuscations are identified in the works of figures such as David Harvey, Ellen Mieksins Wood, Robert Brenner and Samir Amin. If every book elaborating on Marxist theory was this good we'd be sorted
in overall terms Imperialism in the twenty-first century makes a very convincing argument for i) imperialism as a fundamental component of contemporary capitalism, ii) the necessity of incorporating a Marxist reading of economic literature pertaining to underdevelopment and iii) the provincialism of Euro-Marxists (read: British Trots in the SWP).
Smith's central argument is that the bourgeoisie in the imperial core have begun to reap 'super-profits' by outsourcing large parts of the productive process to ultra low-wage economies such as Bangladesh, Sri Lanka, Kenya and paying workers below the socially necessary rate, which would allow them to maintain their own conditions of existence. The parts of the text that describe the conditions in which millions of people now live and work is harrowing in the extreme. There is an enormous amount of statistics here and serious unpacking of concepts drawn from all three volumes of Capital, which were not as fresh in my mind as I would like, but Smith is highly readable and always has two to three paragraphs summing things up for slower readers. It's a really refreshing and welcome approach for someone who really knows their Marx to take.
Smith's critics have attempted to paint him as a third-worldist or Stalinist recommending variously, cross-class collaboration in the imperial core or 'there is no such thing as a worker in the west'-type positions. This sadly confirms much of his objections to contemporary trends on the organised / academic left which seems largely uninterested in re-evaluating old models in light of new evidence or historical development. At no stage does Smith moralise about the western working class and his criticisms of the failures of the USSR and China to establish a firm and consistent line on national liberation struggles, to see beyond their own short to medium term diplomatic objectives with western powers, are proportionate and accurate. The Cuban revolution, with its impeccable internationalist objectives is the hero of the work, though the broader point is the sketching out of a model that explains why the labour movements in Europe and the United States have never meaningfully opposed their own ruling class on behalf of those in the global south. Any explanation for why the twentieth century took the course it did needs to reckon with that and of course, a particular type of doctrinaire Trotskyist does not. In a bid to better understand some of the material I ran my own analyses on updated datasets and found Smith's empirical basis for arguing that while worker power is being eroded on a global basis rates of exploitation are rising slower within the west, remained robust.
The book is not only worth reading for all the reasons that I've set out here, but I think it's also extremely worthwhile as a reference text. At some length Smith lays out the problems involved with currently existing datasets which purport to represent levels of value-add in manufacturing or wage rates, given their being collected on the basis of neoclassical economic assumptions and how much economic activity simply remains uncaptured, precisely because of the depths of the inequality these trends have brought about. There is also really great evaluations of the works of other Marxists; massive gaps or obfuscations are identified in the works of figures such as David Harvey, Ellen Mieksins Wood, Robert Brenner and Samir Amin. If every book elaborating on Marxist theory was this good we'd be sorted
February 25, 2025
A deeply interesting investigation into the economic relationship between core industrialists (US, Europe, and Japan) and the rest of the world. I particularly liked his insights into the production and split of value - for well-known products like t-shirts, a cup of coffee, and the iPhone. The book can be at times depressing -- starvation wages, unsafe workplaces, violent suppression, the exploitation of people and nature, the rise of a global oligarchy, the distortion & failure of mainstream economic metrics to capture what's truly happening in the world (GDP, FDI, Trade Balances, etc...).
Some takeaways:
- The author sees the growth of foreign trade - and offshoring/outsourcing of industrial manufacturing bases - as reflective of the enormous expansion of transnational corporations from the industrial core over countries with cheap labor. This exists in tension with the view held by many that we are witnessing convergence with the BRICS countries (Brazil, Russia, India, China, and South Africa).
- The violent suppression of free movement of working people across borders lies at the root of vast wage differentials as it enables high rates of exploitation among large surplus labour trapped in the global south. In a world of free movement, many more would migrate to the industrial core. Border regimes trap billions in informal or low wage work while cherry picking skilled migrants -- undermining local development via "brain drain".
- Transnational corporations sometimes offshore production to local entities (17%), but are mostly outsourcing to local contractors at an arms-length (83%) -- this has a number of advantages as it allows them to force contractors to compete (driving down prices), distances them from responsibility (allowing greater exploitation and suppression at less reputational risk), and moves less profitable activities off balance sheet (creating the appearance of greater financial performance), and taps into existing domestic trends towards specialization (companies focus on their "core competency" rather then the full value chain).
- Clear to understanding all of this is the distinction between the creation of value and the capture of value. While mainstream economics focuses on the prices of goods and services exchanges, Smith shows definitively that much of the value captured in transactions in the Global North is created in the Global South
Some takeaways:
- The author sees the growth of foreign trade - and offshoring/outsourcing of industrial manufacturing bases - as reflective of the enormous expansion of transnational corporations from the industrial core over countries with cheap labor. This exists in tension with the view held by many that we are witnessing convergence with the BRICS countries (Brazil, Russia, India, China, and South Africa).
- The violent suppression of free movement of working people across borders lies at the root of vast wage differentials as it enables high rates of exploitation among large surplus labour trapped in the global south. In a world of free movement, many more would migrate to the industrial core. Border regimes trap billions in informal or low wage work while cherry picking skilled migrants -- undermining local development via "brain drain".
- Transnational corporations sometimes offshore production to local entities (17%), but are mostly outsourcing to local contractors at an arms-length (83%) -- this has a number of advantages as it allows them to force contractors to compete (driving down prices), distances them from responsibility (allowing greater exploitation and suppression at less reputational risk), and moves less profitable activities off balance sheet (creating the appearance of greater financial performance), and taps into existing domestic trends towards specialization (companies focus on their "core competency" rather then the full value chain).
- Clear to understanding all of this is the distinction between the creation of value and the capture of value. While mainstream economics focuses on the prices of goods and services exchanges, Smith shows definitively that much of the value captured in transactions in the Global North is created in the Global South
May 13, 2019
I have a ton of thoughts on this, but I read it nearly twice through, and that was two years ago, so I'll be short because I clearly don't have a full review in me. This book seems pretty vital right now. So many popular discourses about imperialism focus on either on the territorial/military aspect or if they do look at the economic side, focus on accumulation by dispossession. As Smith notes, there's a shortage of incisive left-wing analysis that takes in to account how imperialism actually functions economically, and is still relevant from a Marxist analysis standpoint. Fantastic deconstruction of all the various techniques used, such as arms-length suppliers, offshoring, patriarchal labour division and western borders (to create a larger reserve army and lower wages in exploited countries). Absolutely wrecks the foolish idea that there has been any kind of move towards equality between countries. Does a fantastic job at explaining (and critiquing) economic concepts and explaining Marxist ideas.
If you can stomach a bit of political economy, I deeply recommend this. You'll start seeing how underwhelming most western leftists attempts to incorporate analysis of imperialism have been to date.
This article and ensuing back and forth where Smith absolutely wrecks shop on David Harvey (who's still useful, just maybe not in this area) sums up quite a few of the important ideas in the book: http://roape.net/2018/01/10/david-har...
If you can stomach a bit of political economy, I deeply recommend this. You'll start seeing how underwhelming most western leftists attempts to incorporate analysis of imperialism have been to date.
This article and ensuing back and forth where Smith absolutely wrecks shop on David Harvey (who's still useful, just maybe not in this area) sums up quite a few of the important ideas in the book: http://roape.net/2018/01/10/david-har...
May 28, 2022
3.5
A very thorough, very dense book on political economy from the neoliberal era to present day, with a focus on how transnational corporations use "arm's length" relationships (eg outsourcing) to exploit third world labour.
Smith critiques neoclassical (capitalist) theories of capital as well as Marxist ideas--many of the latter which tend to focus more on the social aspect of capital rather than economic (can't blame them, economy is not my strong suit either).
Though I don't agree with Smith's scant critiques of Stalin or Mao's leadership, his key points on the nature of imperialism today are vital to understand. His writings can also be very dry and repetitive at times, though the relatively succinct (and more politically charged) conclusions he ends each chapter with are helpful.
If you have not read Marx's Capital, Lenin's Imperialism: The Highest Stage of Capitalism, and are not very acquainted with Marxist economic theory in general, you will be utterly lost. This is the sole focus of this book.
A very thorough, very dense book on political economy from the neoliberal era to present day, with a focus on how transnational corporations use "arm's length" relationships (eg outsourcing) to exploit third world labour.
Smith critiques neoclassical (capitalist) theories of capital as well as Marxist ideas--many of the latter which tend to focus more on the social aspect of capital rather than economic (can't blame them, economy is not my strong suit either).
Though I don't agree with Smith's scant critiques of Stalin or Mao's leadership, his key points on the nature of imperialism today are vital to understand. His writings can also be very dry and repetitive at times, though the relatively succinct (and more politically charged) conclusions he ends each chapter with are helpful.
If you have not read Marx's Capital, Lenin's Imperialism: The Highest Stage of Capitalism, and are not very acquainted with Marxist economic theory in general, you will be utterly lost. This is the sole focus of this book.
July 1, 2022
The first chapter was perfect introduction to what imperialism is. It is written well and clear. But then it gets more confucing, the writing becomes more dull, with some big word, and some of the chapters I didn't quite understand what do they have to do with imperialism or are they about at all. Most of the time it is this guy says that, that guy sad that, some of them supposed to be wrong, some of them don't, I don't know in the end.
There is this chapters 6 which has some mumbojumbo title "The puPurchasing Power Anomaly and the Productivity Paradox" but it is just about why imperialist countryes have higher wages then global south. And it got me very interested cos I actually never really thought about it, but it kinda didn't explain it. There is again mention of some people who said something, and are portrayed as being wrong or not, it is not very clear, and it kinda comes to some conclusion which I find very vague. I read this chapter twice to try to clear it out but nothing.
Except for the first chapter, most of the book was confusing like that for me.
There is this chapters 6 which has some mumbojumbo title "The puPurchasing Power Anomaly and the Productivity Paradox" but it is just about why imperialist countryes have higher wages then global south. And it got me very interested cos I actually never really thought about it, but it kinda didn't explain it. There is again mention of some people who said something, and are portrayed as being wrong or not, it is not very clear, and it kinda comes to some conclusion which I find very vague. I read this chapter twice to try to clear it out but nothing.
Except for the first chapter, most of the book was confusing like that for me.
July 25, 2018
Reading this book answered a lot of my questions about imperialism today, but left me asking even more questions than I had set out to answer. One of the most important concepts I learned from reading this book is that of the export processing zone. I also learned about many things for which my vocabulary previously did not have a name, such as global labor arbitrage. Great and detailed account and I look forward to learning more about imperialism after reading it.
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