21st CENTURY IMPERIALISM AND UNEQUAL TRADE BETWEEN THE GLOBAL NORTH AND SOUTH
Today I am providing my English translation of an article by Domenico Moro, originally in Italian, published on ComeDonChisciotte.org on Monday 16th June 2025. (All formatting and footnotes original).
Until decolonisation, which began in the mid-20th century, imperialism was based on the possession and direct exploitation of colonies. Today's imperialism, on the other hand, is based on exploitation through “unequal exchange” between central or “core” countries and peripheral and semi-peripheral countries. According to another definition, the latter represent the global South, while the former represent the global North. The North includes countries that, according to the International Monetary Fund's classification, are defined as advanced, in particular North America, Western Europe and Japan, while the South includes the so-called developing and emerging countries.
Unequal exchange
According to some economists, including Arghiri Emmanuel and Samir Amin, unequal exchange is based on the drainage of wealth from the South to the North, through the significant difference in wages, which are much lower in the South than in the North. The theory of unequal exchange is based on Marx's theory of value. According to Marx, the price of a commodity corresponds to its value. The value of a commodity, in turn, is constituted by the socially necessary labour time required for its production. “Socially necessary” means that it is the time required to produce the commodity under certain historical conditions, i.e. given a certain average level of technology. However, in capitalist competition, an entrepreneur may, through technological innovations, succeed in reducing the necessary labour time while continuing to sell his commodity at the same price as others. In this way, the commodity is sold at a price higher than its value and the entrepreneur in question increases his profit, realising a “superprofit” that is higher than the average profit in the sector.
The concept of surplus profit, linked to the mismatch between value and price, is of fundamental importance in explaining unequal exchange, based on the surplus profits made by multinationals in the North. But where does this surplus profit come from? According to Bettelheim and Palloix, the economies of the North benefited from the same mechanism described by Marx with regard to the entrepreneur who introduces technological innovation. In fact, the economies of the North had higher productivity linked to a higher organic composition of capital, i.e. a higher incidence of machinery and technology on total capital, compared to the economies of the South. Therefore, the economies of the North could sell goods to the economies of the South at a price higher than their value.
However, this interpretation was criticised by Emmanuel and Amin, who argued that unequal exchange was primarily due not to a different organic composition of capital but to the existence of much lower wages in the South than in the North. In fact, productivity levels in the North and South have converged, partly because multinationals from the North have introduced advanced production technologies to the South through Foreign Direct Investment (FDI). For example, in recent years in Mexico, productivity in the export manufacturing sector has aligned with that of the US, but wage differences have widened to the detriment of Mexico1. By increasing productivity while wages remain low, the value and therefore the price of goods produced in the South decreases, whereas in the North, when productivity increases, wages also increase. In this way, the benefits of increased productivity are exported from peripheral countries and appropriated by central countries2. This results in unequal exchange because peripheral countries export more value (working time) than they import from the centre.
Therefore, “the problem of unequal exchange is a problem of wealth transfer through the price mechanism”3. In fact, the basis of global asymmetry in unequal exchange lies in the fact that the selling prices of goods are standardised internationally in the global market, despite the fact that labour costs differ enormously between the global North and South. Superprofit derives from the fact that it is possible to buy labour in a country where its average price (wage) is lower than in the country where the goods are sold. In practice, unequal exchange occurs because workers in the South receive a price for their labour power that is lower than its value, i.e. the labour socially necessary for the reproduction of that labour power at the global level, while the goods they produce are sold on the markets of the North at a price equal to or slightly lower than the price at which they would be sold if the wages of those who produce them were equal to those in the North.
As we have already mentioned, the concept of value is at the heart of the theory of unequal exchange. According to this concept, there is a global value of labour on the one hand, and on the other hand, a historical capitalism that has polarised the world system into a centre and a periphery with a corresponding high and low wage level. This difference in the price of labour leads to a transfer of value, hidden in the price structure, when goods are traded between the centre and the periphery of the world system. The central point is not the exchange of goods between the centre and the periphery, but the difference between the global value of labour and the different prices of labour power4.
Therefore, by suppressing wages in the South, exploitation increases, and thus the surplus value extracted ends up being appropriated largely by multinationals in the North, which control global production chains. For this reason, “…the unequal exchange between the global North and the global South, under the protection of US or European transnational corporations, is the backbone of 21st-century imperialism”5.
The case of unequal exchange between Mexico and the United States
In the 1970s, Mexico had become the most advanced Latin American country through a policy of industrial “substitution”, i.e. replacing what was usually imported from abroad with domestic production. In the 1980s, however, the country was hit by neoliberal policies, which reconfigured its economy, lowering wages and transforming it into a production platform geared towards exports to the US market. Also in the 1980s, the crisis led to a massive transfer of jobs from the US to Mexico, accentuated by a foreign investment law that gave foreign multinationals carte blanche and by an agrarian counter-reform, which, by destroying social property, produced a huge mass of unemployed peasants who migrated to the industrialised cities of northern Mexico to work in the maquiladoras, or directly in the US. Finally, the restructuring intensified when NAFTA, the free trade agreement between the US, Mexico and Canada, was implemented. In this way, Mexico became the Latin American country with the lowest labour costs and, at the same time, the largest supplier of manufactured goods to the US market. In particular, Mexico has become a huge automotive manufacturing enclave, dedicated to exporting finished vehicles and car parts to the US.
Trade relations between Mexico and the US are based on huge wage differences. However, analyses that focus on the price of labour and do not understand the difference between price and value fail to grasp the enormous amount of unpaid labour time that is drained from Mexico to the US. Goods manufactured in Mexico are sold in the US at average local prices, while the wages paid to Mexican workers in the export sector do not correspond to those prices but to average Mexican wages. In this way, a huge transfer of value takes place, benefiting US multinationals.
To understand the approximate extent of the value drained from Mexico to the US, Mateo Crossa, in an article in Monthly Review, compares the wages received by Mexican workers in the export sector with what they would earn in the hypothetical case that Mexican wages were equal to those in the US. In particular, he compares two years, 2008 and 2022. The first point to note is that during this period, the number of workers in the Mexican export manufacturing sector grew from 1.5 million to 2.4 million, reflecting how US capital reacted to the 2008 crisis by shifting production to Mexico to counteract the downward trend in the rate of profit. Furthermore, between 2008 and 2022, the productivity of Mexican manufacturing workers increased by 40%, while their wages fell by 25%, contradicting the mainstream economic idea that increased productivity necessarily leads to higher wages and confirming Amin and Emmanuel's idea that unequal exchange is not produced by differences in productivity but by huge wage differences.
Furthermore, Crossa calculates the amount of Mexican wages as if they were aligned with those in the United States and subtracts the amount of wages actually paid from this figure. The difference in 2008 was $44 billion, which grew to $128 billion in 2022, a figure equal to 11% of Mexico's GDP. This is the monetary value of the surplus that was drained from Mexico to the US in one year. This value is not recorded in Mexico's national accounts, despite being generated in Mexico, but appears in the US accounts as added value. Transforming this monetary amount into working time, we find that of the 2,000 hours of work provided by a Mexican worker annually, capitalists appropriate 1,800 hours of work, which constitute surplus labour (i.e. the time the worker works for free for the entrepreneur). The value transferred from Mexico to the US through unequal exchange is three times the monetary value of Mexican manufacturing exports, i.e. 128 billion versus 43 billion [no currency states, but most likely US Dollars]. The figures would be even more striking if we considered exports from all economic activities, starting with agriculture, where hundreds of thousands of day labourers are super-exploited.
Crossa concludes that it is not enough to say that there are differences in labour costs between Mexico and the US, but that we must demonstrate the enormous transfer of socially necessary time produced by unequal exchange. The export industry does not make Mexico a more dynamic economy, but rather a heavily exploited one. As far as we are concerned, we can say that the same unequal exchange relationship between the Mexican automotive manufacturing sector and US multinationals is replicated on a smaller scale in the relationship between the textile export sector in Tunisia and Italy and France. Tunisia's textile factories, controlled by French and Italian multinationals, are dedicated to exports to Europe, particularly to these two advanced countries. Unequal exchange, in this case too, is based on a huge wage difference, despite the fact that wages in Italy have remained stagnant in recent years: in Tunisia, the gross monthly wage of a manufacturing or unskilled worker is $902 at purchasing power parity, while in Italy it is $4,7636.
The relationship between the global North and South through unequal exchange
Emmanuel and Amin's theory of unequal exchange dates back to the late 1960s and early 1970s. Nevertheless, this theory is much more relevant today than it was at that time. In fact, while industrial products accounted for 15% of total exports from peripheral countries in the 1950s, by 2009 this figure had grown to 70%. Thus, today the relationship between countries in the South and North is not limited to an exchange of raw materials and tropical products from the South for industrial products from the North. The current centrality of the concept of unequal exchange also stems from the change in the industrial balance between the North and the South. In 1980, the number of industrial workers in the North and South was equal, but in 2010 there were 541 million workers in the South and only 145 million in the North. Thus, the centre of gravity of industrial production has shifted to the South, while wages continue to be higher in the North, where the greatest consumption capacity is concentrated.
Further confirmation of the existence of unequal exchange and its enormous scale worldwide comes from an important study by Hickel, Hambury Lemos and Barbour7. These researchers have verified that rich economies are based on the net appropriation of labour and resources from the rest of the world through unequal exchange in international trade and global value chains. The states and multinational corporations of the centre use their geopolitical and commercial power to suppress wages, prices and profits in the global South. Price inequalities force Southern states to export more labour and resources incorporated into goods that go to the global North in order to pay for imports from the North, enabling Northern economies to net appropriate value for the benefit of Northern capital.
The dynamics of unequal exchange became more pronounced in the 1980s and 1990s through the imposition by the North on the South of neoliberal adjustment policies, which devalued the currencies of the South, cut public employment, put downward pressure on wages and prices, and reduced investment in technological development, forcing Southern countries to prioritise export-oriented production in a subordinate position within global commodity chains. At the same time, the economies of the North shifted part of their industrial production to the South to benefit from lower production costs and wages. The study in question used a methodology that made it possible to verify that the wage differences between the North and the South are not attributable to differences in the type of work, such as skill level, sector or industrial base.
One of the main conclusions reached by the researchers is that in 2021, the majority of global production working time (on average 90-91%) was provided by workers in the South, who, however, received only 21% of global income in return. Through unequal exchange, the North appropriated 826 billion hours of labour embodied in goods, net of trade. The monetary value of this appropriation of labour was €16.9 trillion in 2021, more than double the figure for 1995. In other words, if workers in the North had provided the same amount of labour in their own countries as the North appropriated, this would have cost €16.9 trillion in wages.
Contrary to what one might think, the largest increase in the South was in high-skilled work, which rose from 66% of the world total in 1995 to 76% in 2021 and accounts for more hours of work (1,124 billion) than all low-, medium- and high-skilled work in the North (971 billion). This data shows that in some countries in the global South, such as China, high-tech production has grown and, with it, the need for highly skilled workers. Other interesting data show that workers in the South work 466 hours more per year than those in the North (26% more) and that working time per employee in the North decreased by 7% between 1995 and 2021, while in the South it increased by 1%. This means that the contribution to global growth has been overwhelmingly sustained by workers in the South.
The research confirms the existence of unequal exchange between countries in the North and South. In 2021, the North imported 906 billion hours of labour embodied in goods and services from the South in exchange for exports of just 80 billion hours (a ratio of 11 to 1). This unequal exchange cannot be explained by differences in sectors or skill levels. For example, the North imports four times more high-skilled labour from the South than it exports. From a temporal perspective, the South's position has worsened in relation to the North. Between 1995 and 2005, the exchange rate rose from 17:1 to 21:1. During this period, the economies of the South were forced to increase their exports of embodied labour by 24% in order to maintain the same level of imports from the North. Between 2005 and 2015, the situation in the South improved, mainly due to wage growth in China, but after 2015, the differences between North and South stabilised. In summary, it can be said that the North consumes roughly twice as much labour as it supplies, thanks to unequal exchange.
As far as wages are concerned, the gap between the centre and the periphery grew between 1995 and 2021, when wages in the South were 83-98% lower than those in the North for jobs of equal skill and in the same sector. Wages in the North increased from €12.60 to €24.95 per hour, while those in the South increased from €0.46 to €1.62 per hour. Finally, the share of GDP going to workers in the North averaged 54.7% between 2017 and 2021, and 47.5% in the South.
This study also emphasises that the difference in physical productivity between the North and South does not explain the unequal exchange, given that in the export industries of the South, production is carried out using modern techniques provided by international capital, and that workers in these industries produce as much or more physical output than their counterparts in the North. In fact, multinationals choose to produce in the South not only because hourly wages are lower, but because wages per physical output are lower. Offshoring occurs because the wage difference between North and South is greater than any difference in physical productivity, even if the latter is greater in the North. In fact, when differences in physical productivity exist, this is because it is more profitable for capital to use labour-intensive rather than capital-intensive production methods, precisely because wages are kept artificially low.
The conclusion of the research by Hickel, Hambury Lemos and Barbour is that the persistence of global poverty and underdevelopment in the South and the inequality between the centre and the periphery are, to a large extent, an effect of appropriation through unequal exchange, which is, in turn, an effect of low wages.
The crisis of imperialism and unequal exchange
As Danish economist Torkil Lauesen8 reminds us, China's rise has caused a crisis in the global imperialist system, reducing unequal exchange for the first time in 150 years. The increase in Chinese wages has been a key factor in this reduction: between 1978 and 2018, the ratio of one hour of US labour to 40 hours of Chinese labour has fallen to one hour to 6.4 hours. China has thus gone from being a source of value transfer to being a competitor of the global North on an industrial level. Furthermore, the centre of the world system no longer has a monopoly on high-tech industrial production and is losing its grip on global trade and finance. To maintain their hegemony, the US is killing the goose that lays the golden eggs, the world market, through sanctions and trade wars, such as those Trump has waged with the introduction of tariffs against many countries and, in particular, against China.
In the 1970s, the new states of the South, emerging from decolonisation, attempted to break free from their dependence on the North, but failed because their economies were determined by the dominant capitalist market. Today, however, the decline of US hegemony, the economic strength achieved by some countries of the South and the rise of a multipolar system open a “window of opportunity” for states and movements that intend to counter imperialist exploitation through unequal exchange. But individual states cannot put an end to unequal exchange. To do so, an anti-imperialist front must be built and, above all, global conditions must be established to enable Southern states to restore popular sovereignty, which had been eliminated by globalisation.
In addition to this, the states of the South should redefine their South-North trade model, moving to a model based on South-South trade. Among other things, these states need to develop their own financial and banking systems in order to avoid dependence on the International Monetary Fund and the World Bank, and to adopt new means of international payment to reduce the power of the dollar on global markets. An example of this is provided by the BRICS (Brazil, Russia, India, China and South Africa), which are certainly not an anti-capitalist organisation but can counterbalance the power of imperialism, represented primarily by the G7 countries (United States, Canada, United Kingdom, France, Italy and Japan).
As Marx said, one system cannot be replaced by another before it has given all it can give in terms of the development of productive forces. Today, we are approaching that point. Capitalism, and in particular its supreme phase, imperialism, is no longer the most effective mode of production for developing productive forces, but has become a global destructive force both at the level of human society and at the environmental level. At the same time, the mode of production in transition from capitalism to socialism has proven to be effective in developing productive forces. It is no coincidence, in fact, that the US is no longer able to compete with China, which is becoming the world's most important innovative economic power.
Mateo Crossa, “Unequal value transfer from Mexico to the United States”, Monthly Review, volume 75, number 6, October 2023.
Eugenio Somaini, Arghiri Emmanuel, Luciano Boggio, Michele Salvati, Salari, sottosviluppo, imperialismo. Un dibattito sullo scambio ineguale, Einaudi editore, Torino 1973, pag. 70.
Idem, p.71.
Torkil Lauesen, “Arghiri Emmanuel and unequal exchange: past, present and future Relevance”, Monthly Review, volume 75, number 10, March 2025.
Mateo Crossa, op. cit.
International Labour Organization, ILOSTAT, earnings.
Jason Hickel, Morena Hambury Lemos, Felix Barbour, Unequal Exchange of labor in the world economy, 29th July 2024. https://www.nature.com/articles/s41467-024-49687-y
Torkil Lauesen, op. cit.
A terrific read and an indispensable article to be read by all in the Global South, and those in the global north who wish to know the Truth about the stolen wealth they are currently feasting on in insidious evil ways that is embedded in the current rotten global order that benefits the global minority aka the global north when they contribute very little to the Global Value Chain and yet are busy sitting on the large part of the gains of the Global South Sweat and Blood
And the kicker? It's mostly their elites who are greedily appropriating most of these wealths and leaving just enough crumbs for the 99.9% to feed so they they are properly bribed and can't question the greed of their minuscule elite raping them and exploiting both them and us in the Global South doing most of the har work on this goddamn planet
But the tide is changing swiftly and the balance of Power has irrevocably shifted to the Global South rightfully and soon the global minorities will learn the harsh reality of life when not propped up by their demonic white supremacy and ill gotten wealth and empty civilization
They will pay for these daylight robbings and exploitations they have been visiting on we in the Global South... And very soon, and they will learn just how brutal this Earth really is when they have to compete fairly with us and inevitably show they are nothing without us.
The time is coming, best be prepared you lot.