“Thirdworldism:” not Marxist, not Leninist, not True

There is an idea that all workers in imperialist countries are exploiters of workers in oppressed countries. The capitalists take money from workers in oppressed countries, and give it to the workers in their own country. Hence, the working class in an imperialist country is no longer the revolutionary class that it was in the time of Marx.
The idea, sometimes called “Third-Worldism,” has been around for a while. It is wrong in theory and in practice. It is worth taking a little time to refute it.
For illustration, a worker in Uruguay is paid $4 per hour, whereas a worker in the United States is paid $18 per hour. The value of an hour of labor-power is taken at $11 per hour in both cases. The difference is due to $7 per hour being taken from the worker in Uruguay and transferred (by capitalists, of all people!) to the worker in the United States.
It is easy to see that “Third-Worldism” is wrong in practice. It divides the working class to the benefit of the exploiter classes. It is nowhere to be seen in actual operation.
That hasn’t prevented this mistaken notion from hanging around and causing confusion. It must be refuted theoretically as well. Partly the idea is based on the fact that workers in developed capitalist countries make more money than workers in oppressed, capital-dependent countries. Marx does not explain national wage differentials by making ideas up off the top of his head.
“Third-Worldism” is incompatible with Marx.
We first take up the idea that transfers of surplus-value account for wage differentials between one country and another. Marx accounts for them scientifically.
Once the capitalist mode of production is established, says Marx, “The means of production are at once changed into means for the absorption of labor of others. It is now no longer the laborer that employs the means of production, but the means of production that employ the laborer. Instead of being consumed by him as material elements of his productive activity, they consume him as the ferment necessary to their own life-process, and the life-process of capital consists only in its movement as value constantly expanding, constantly multiplying itself. Furnaces and workshops that stand idle by night, and absorb no living labor, are a ‘mere loss’ to the capitalist. Hence, furnaces and workshops constitute lawful claims upon the night-labor of the workpeople.” —Capital, Vol. I, Ch. XI
Can the “lawful claims” of the furnaces and workshops on the labor of the workers be altered or abolished so long as capitalism prevails? No, they cannot. The capitalist who alters them by some mysterious “transfer of surplus-value” will not long remain a capitalist. It is as if to say, the furnaces and workshops themselves forbid it.
Differences in between oppressed and imperialist countries are due above all to differences in the development of the forces of production, and consequently, differences in worker productivity. Let us do something foreign to the method of “third worldism” and define some terms explicitly.
Marxist Political Economy: Definitions
Working Day: taken here to be 8 hours. All costs and values in this discussion are daily, unless designated as hourly.
Variable Capital: daily wages, money necessary for the worker to subsist and raise a family for one day (Smith/Ricardo/Marx.) Marx calls it variable because the amount of value it creates varies. Sometimes calls it “necessary capital.”
Wage Rate: the hourly rate, variable capital/working day.
Labor-power: the form in which labor is sold at a time rate to become a commodity.
Necessary Labor Time: duration of labor necessary to replace the cost of Variable Capital, the paid daily labor time.
Working Day minus Necessary Labor Time: unpaid daily labor time
Surplus-Value = (Working Day – Necessary Labor Time)*Wage Rate; value-product of unpaid labor time.
The theory of surplus-value is the defining theorem of Marxist political economy, the dividing line between it and bourgeois political economy. Marx proves that surplus-value springs from the hand of labor at the point of production, and only there. It means the same thing to say that capital expands at the point of production, and only there.
Rate of Exploitation = Surplus-Value/Variable Capital
Rate of Profit = Surplus-Value/Capital Inputs (see table)
Fixed Capital: plant and equipment, computer software, etc., values consumed over time.
Circulating Capital: values consumed immediately in production—rubber, steel, bricks, fertilizer, fuel, etc.
Value-Product: the total value of commodities created in one working day, given as Fixed capital + Circulating Capital + Wage Rate*Working Day
Numbers are chosen for illustrative purposes. Hopefully they bear a reasonably close relation to actual practice.
Rates of Profit in Imperialist Countries and Oppressed Countries
Wages are in general higher in imperialist countries because of the higher level of the forces of production. The forces of production in oppressed countries are held back by the drain of wealth and the distorted patterns of development forced on them by imperialism. Transfer of surplus-value from workers to workers has nothing to do with it.
Imperialist Country: highly developed forces of production; capital-intensive investment; high labor productivity
Wage Rate: $22hr.; necessary labor time: 2 hours. Hence the daily wage is $176, recreated in 2 hours, and the value created by 8 hours of labor-power is $704. The unpaid six hours create $528 in surplus-value.
Capital Inputs Outputs
Fixed Circulating Variable Value-product Surplus-Value Rate of Exploitation Rate of Profit
$1000 4000 176 5704 528 300% 10.2%

Oppressed/Dependent Country
Case I: labor-intensive, i.e., less-developed forces of production, lower labor productivity
This is the typical case of imperialist capital investment in oppressed countries where the level of the forces of production is typically low. Wage Rate: $4/hr; necessary labor time: 2 hours. The daily wage is $32. The value created by labor for the working day is $128. The total value-product is $728. The rate of exploitation is still 300%. In this example the rate of profit is higher, at 15.2%. But: the profit (surplus value) is only $96. That is because wages and productivity are low. Not one cent of surplus value has been transferred anywhere.
Capital Inputs Outputs
Fixed Circulating Variable Value-product Surplus-Value Rate of Exploitation Rate of Profit
$200 400 32 728 96 300% 15.2%

Imperialist investment in dependent countries sometimes yields higher rates of profit, sometimes lower. If the rate of exploitation is taken at 100%, more typical of less developed forces of production, the rate of profit drops to 4.8%. Superprofits are profits “obtained over and above the profits which capitalists squeeze out of the workers of their ‘own’ country.” Whether the rate of profit is higher or lower is beside the point.
Case II: low wage rate, capital-intensive investment, high labor productivity
This illustration is given to show why this pattern of imperialist investment is unlikely.
Wage Rate: $4/hr; necessary labor time: 2 hours, i.e., the rate of exploitation is held constant at 300%. The daily wage is $32; the value-product of the working day is $128.
Capital Inputs Outputs
Fixed Circulating Variable Value-product Surplus-Value Rate of Exploitation Rate of Profit
$1000 4000 32 5128 96 300% 1.9%

Even with a high rate of exploitation the rate of profit is very low precisely because the necessary capital is low. That is why capital-intensive, high-productivity investments are rarely made by imperialist countries in capital-dependent countries. In fact more capital is exported among imperialist countries than to oppressed countries. Lenin points that out in Imperialism. It remains so to this day.
Any edge in profits that might be gained by the combination of high investment and high productivity with lower wages than those in imperialist countries will be wiped out by competition. If one capitalist gains a $5 profit edge from lower labor cost, a second will settle for a $4 edge to gain a pricing advantage. Eventually pricing must settle on the actual labor cost.
Marx gives a general analysis corresponding to the illustrative examples given above. Firstly, he refuses to attempt an explicit general calculation of the value of labor-power (i.e., wage rates), saying only that the value depends
. . . on the conditions under which, and consequently on the habits and degree of comfort in which, the class of free laborers has been formed. In contradistinction therefore to the case of other commodities, there enters into the determination of the value of labor-power a historical and moral element. Nevertheless, in a given country, at a given period, the average quantity of the means of subsistence necessary for the laborer is practically known. (Capital, Vol. I, Ch. 6)
Capital was written before the emergence of modern imperialism, which Lenin dates to the end of the nineteenth century/early twentieth century. Perhaps Marx is out of date because conditions have changed? No, he is not. His thinking, as does that of Lenin, goes not to conditions, but to basis:
“In proportion as capitalist production is developed in a country, in the same proportion do the national intensity and productivity of labor there rise above the international level. The different quantities of commodities of the same kind, produced in different countries in the same working-time, have, therefore, unequal international values, which are expressed in different prices, i.e., in sums of money varying according to international values. The relative value of money will, therefore, be less in the nation with more developed capitalist mode of production than in the nation with less developed. It follows, then, that the nominal wages, the equivalent of labor-power expressed in money, will also be higher in the first nation than in the second; which does not at all prove that this holds also for the real wages, i.e., for the means of subsistence placed at the disposal of the laborer.” – Vol. I, Ch. 22
Marx speaks of relations of labor-power and value, not of relations between countries, whether imperialist or oppressed. It is nonsense to assign the same monetary value to the labor-power of the worker in Ecuador as in the United States, even in the production of commodities of the same kind. The forces of production differ, not the relations of production. The “Third-Worldist” line rests on an elementary confusion of basis and conditions.
Surplus-Value and Non-Productive Labor
Another staple of the “Third-Worldism” is that workers who do not create surplus-value are not proletarians, not part of a revolutionary class. The notion is, as usual, completely at odds with Marxist political economy.
New capital is created at the point of production, and only there. Yet, workers in non-productive sectors are hired only if their labor yields a profit. If there is no new capital created in retail trade, how is it the employer can turn a profit? Marx addresses the question directly in Capital, Vol. I, Ch. 17, “Commercial Profit.”
The answer, it turns out, is surplus value is passed around, even in the absence of capital creation. “Merchant’s capital,” says Marx, “enters the formation of the general rate of profit as a determinant pro rata to its part in the total capital.” For example:
Suppose a General Widgets Gizmotronic sells for $110. Of this, surplus-value accounts for $10. Other than production costs, distribution costs enter into the price. The capital cost per unit is $70 for manufacture, $10 for wholesale distribution, and $20 for retail distribution. The $10 of surplus-value is divided in proportion to the capital costs. That is, the manufacturer keeps $7 of the surplus-value. The wholesaler keeps $1. The retailer keeps $2. The pricing process looks like this:
Capital Advanced/Unit Surplus-Value Retained Unit Price Received
Manufacturer $70.00 $7.00 $77.00
Wholesaler $10.00 $1.00 $88.00
Retailer $20.00 $2.00 $110.00

Thus the burden of unpaid labor-time is shared out among the workers just as is the profit. Following the example above, we have:
Socially average rate of profit, and equal wage rates
Workers Surplus-Value Unpaid Labor Time
Manufacturing 7 $7 7 units
Wholesale 1 $1 1 unit
Retail 2 $2 2 units

What of hairdressers, cashiers, bus drivers, public employees? There are mixed cases like schoolteachers, who are petty bourgeoisie in some ways and like workers in others. The sharing of surplus-value among different types of non-productive labor differs case by case. Further, class boundaries are not hard and fast. In any case it is clear that the distinction between proletarian and non-proletarian is not between production and non-production workers.
“Third-Worldism” is Incompatible with Lenin
We now turn to the question of the labor aristocracy. The concept is due to Lenin. “Third Worldism” holds to the ludicrously unrealistic, anti-Leninist position that the entire working class in imperialist countries belongs to the labor aristocracy, i.e., shares in the exploitation of “third world” workers. (The term “third world” is, of course, undefined.)
In his book Imperialism the Highest Stage of Capitalism, written in 1916, Lenin says the profits gained in oppressed countries are superprofits “since they are obtained over and above the profits which capitalists squeeze out of the workers of their ‘own’ country.” (Ch. V) He also says, “In these backward countries profits are usually high, for capital is scarce, the price of land is relatively low, wages are low, raw materials are cheap.” (Ch. IV) The first statement is definitional. The second is about conditions.
Out of superprofits, Lenin says, “it is possible to bribe the labor leaders and the upper stratum of the labor aristocracy. And the capitalists of the ‘advanced’ countries are bribing them; they bribe them in a thousand different ways, direct and indirect, overt and covert . . . This stratum of bourgeoisified workers, or the “labor aristocracy . . . [are] the principal social (not military) prop of the bourgeoisie. For they are the real agents of the bourgeoisie in the working-class movement, the labor lieutenants of the capitalist class, real channels of reformism and chauvinism.” (Ch. V)
He adds that “Unless the economic roots of this phenomenon are understood and its political and social significance is appreciated, not a step can be taken toward the solution of the practical problems of the Communist movement and of the impending social revolution.”
The same conclusion follows if the economic roots are misunderstood, as they are by “Third-Worldism.”
In Imperialism and the Split in Socialism, Lenin speaks also of superprofits due to monopoly: “monopoly yields superprofits, i.e., a surplus of profits over and above the capitalist profits that are normal and customary all over the world.”
Lenin is precise. Superprofits from oppressed countries are profits gained over and above those that can be squeezed out of workers in the imperialist countries. That is all. He says rates of profit are “usually high,” but we have seen that need not be the case. Those bribed out of superprofits are labor leaders and the upper stratum of the labor aristocracy: they are agents of the bourgeoisie. These can be no more than a small part of the working class.
“Third-Worldism” takes Lenin out to lunch. The bribed workers are not a narrow upper stratum. They are the entire working class of the imperialist countries! Superprofits are repeatedly taken exclusively to mean higher rates of profit, something Lenin does not say.
In 1921 Lenin spoke to the Third Congress of the Communist International. He said, “The proletariat in all the advanced capitalist countries has already formed its vanguard, the Communist Parties, which are growing, making steady progress towards winning the majority of the proletariat in each country, and destroying the influence of the old trade union bureaucrats and of the upper stratum of the working class of America and Europe, which has been corrupted by imperialist privileges.”
That remains the correct proletarian-revolutionary approach to the problem of the worker aristocracy.
A Few Remarks Concerning the Maoist Internationalist Movement
“Third-Worldism” traces to the paper, “Imperialism and Its Class Structure in 1997” published by the Maoist Internationalist Movement (MIM), now defunct. The term “MIM Thought” is used but it means the same thing as “Third-Worldism.”
The misreading of Leninism is based on its botched approach to Marxist political economy. The argument is sometimes made that conditions have changed since Marx’s time. But as we have seen, Marx’s thought goes to basis, not conditions.
The paper’s approach to political economy is a patchwork. Section 4 “Productive vs. unproductive labor,” starts off by giving some examples of unproductive labor (service sector work, etc.), turns willy-nilly to a “vulgar Marxist” question on the labor aristocracy, throws in statistics on military personnel, etc. It lumps together guards, soldiers and lawyers, throwing the class context into chaos. We are told that workers in unproductive sectors “can only preserve or appropriate” surplus-value. Lawyers can appropriate surplus-value through their fees, but salespeople cannot.
The discussion of productive versus non-productive labor is interjected where it does not belong, as a question of proletarian class standing. The authors say, “We believe that Marx held that exploited non-productive sector workers were sometimes counted as proletarians and sometimes not.” Where ever does Marx say a worker can be exploited but still not be a proletarian?
They further say there is a “possibility” that there are workers in non-productive sectors who are exploited “but they do not exist in imperialist countries while they do exist in oppressed nations extensively.” Why start a sentence with a “possibility” only to end it with a definite statement of existence? This is not class analysis, it is guesswork and muddle of a kind found throughout.
Finally the narrative gets to the heart of it: MIM does not recognize the existence in imperialist countries of exploited workers, even in productive sectors!, “because we believe the transfer of value from oppressed nations makes these workers have no net surplus labor-time in the working day.”
“Transfer of value” is quantified, in the case of oppressor nations, as: wages = necessary labor time + superprofits. If we plug in some arbitrary numbers the equation becomes $200 = 2 hours + $180. It is not even properly formed. “Necessary labor time” should read, “necessary capital.” Marx, by “necessary capital,” means wages. Now the equation reads wages = wages + superprofits. Hmm. What could that possibly mean? If the capitalists extract surplus-value by holding wages to the level necessary to reproduce labor-power, no more and no less, why would they give away capital and lessen profits in this way? If capitalist A gives away $7 per hour of superprofits, what is to stop capitalist B from giving away $5 per hour, thus to gain a competitive advantage? “Bribery” doesn’t cover it.
What stops the workers from taking up as capitalists themselves? Evidently they have: “In the imperialist countries this happens to such an extent that many workers buy their monopoly capitalist corporations, as some airlines, car-rental and grocery chain stores are in the United States.” No examples are given. The concentration of wealth and income in the United States, leaving one sixth living in poverty, nearly half close to poverty, the largest prison population in the world, thousands dying annually due to inability to buy medications, all indicate the phenomenon is of little importance, if it exists at all. In any case MIM Thought bears no relation to Marx.
It goes no better with oppressed nations. Here we have: necessary labor time – wages = superprofits. Or, something like: 4 hours – $32 = superprofits. Labor time minus the value of labor time? It’s incomprehensible.
These formulations, apart from their unpardonable sloppiness, add another layer of absurdity—an “analysis” of surplus-value without any reference to the actual production process, the development of the forces of production, or the level of productivity. Marxist political economy is first and foremost an analysis of production. But never mind, who is concerned with such mundane details!
How can non-productive workers be exploited when they create no surplus value? Why do workers in imperialist countries usually get higher wages than workers in oppressed countries? With no adequate examination of production MIM can only offer assertions.
What a mess!
—13 August 2014

Advertisements

Post-Adam Smith Capitalism

Post-Adam Smith Capitalism

Gallery

One year since the September 24 FBI raids and Grand Jury subpoenas

By Committee to Stop FBI Repression | September 23, 2011 The Committee to Stop FBI Repression (CSFR) is asking you to build the movement against political repression on the one-year anniversary of the Sept. 24, 2010 FBI raids on anti-war … Continue reading

Gallery

India – Sowing Confusion

This gallery contains 1 photos.

By Gautam Navlakha September 13, 2011 It would be churlish to dismiss Team Anna’s mass mobilization and its assertion of our collective right to protest, in support of freedom of expression. More so in view of the fact that chances … Continue reading