The constant transfer of labour and ecology from the periphery to the core, it means developing the Global North but impoverishing the Global South’s emerging and developing economies.
That this “unequal exchange” is a key driver of global inequality - with the global 10% capturing 52% of total incomes and owns 76% of household wealth. The bottom 50% owns only 2% of wealth.
And it is increasing:
In a recent paper in New Political Economy, one find that in 2017 the ‘emerging and developing economies’ - as defined by the IMF - lost US$2.2 trillion worth of goods to the advanced economies.
This represents an enormous loss for the South:
These resources could have ended extreme poverty 15 times over, but instead they were transferred gratis to the core.
This windfall is of enormous benefit to the Global North centres of empire. For instance, in 2017 the U.S. gained US$2,634 per person through unequal exchange, while the average Australian citizen received US$3,116 from the South.
Since 1990, the Global North’s annual gains from unequal exchange have set at 5.2% of GDP, considerably higher than the North’s annual growth rate.
In other words, if not for imperialist plunder, aggregate income in the North would have been declining for decades.
The extraordinary levels of material consumption currently enjoyed in the North are predicated upon exploitation and poverty in the periphery.
Figure 1 shows total value transfer since 1960 when the Global South economies have lost US$62 trillion (constant 2011 dollars), equivalent to 97% of its 2017 GDP:
If this surplus had been available to the South, it could have been reinvested in domestic economic development. If we assume this surplus would have grown at the same rate as Southern GDP, it would now be equivalent to US$152 trillion.
The research findings also indicate that this exploitative relationship has worsened over time.
Figure 2 presents a time series showing the annual drain of surplus from the periphery over the post-colonial period.
During the 1960s, the South lost about US$38 billion a year, just over 1% of total Southern output. However, by 2005 drain from the periphery amounted to almost US$3 trillion, or 9% of output.
This increase in the scale of value transfer was driven by a concerted imperialist assault on the third world.
On the one hand, Northern states have intervened to suppress Southern wages and prices. Through the 1960s and 1970s, Western powers violently toppled independent governments, installing military juntas that crushed organized labour, as in the
Congo (1960),
Indonesia (1965), and
Chile (1973).
Similarly, during the 1980s and 1990s, the IMF and World Bank (both controlled by the G7) forced global South countries to de-regulate labour markets and cut-back public sector employment.
At the same time, Northern states have sought to preserve the monopoly power of their own firms, and insulate their high prices from competition.
The IMF, World Bank, and WTO have pressured the South to eliminate tariffs, decimating its indigenous-controlled industrial sector.
This has given the Global North monopoly capital overwhelming control over the international market and the terms of trade.
All those above-mentioned imperialist policies account for the dramatic rise in exploitation since 1960.
Consequently, through a process of financialisation capitalism, and given its military ascendancy and aggression, the United States is uniquely able to externalize its economic crises on other economies, particularly those of the global South: