The economic foundations

of imperialism
Guglielmo Carchedi and Michael Roberts
HM London November 2019
Many aspects of imperialism
• Imperialism is primarily an economic mechanism and not a political
mechanism. Its basic aim is not political dominance but economic
exploitation. The former is a means to achieve the latter and not a
cause.
Focus on the transfer of value
• Its economic exploitation mechanism (international value transfers)
works via normal capitalist competition and not only in monopolist
competition (i.e. imperialist surplus-value extraction exists
irrespectively of the existence of monopolist super-profits).
• Value flows from the dominated countries to the imperialist countries
in a number of ways.
Ways to transfer value
• Unequal exchange through international trade

• Global value chain flows (transfer pricing) within multi-nationals

• Factor income flows (primary income from debt, equity and property)

• Seignorage (dollar is king)

• Capital flows (FDI inflows and portfolio flows)

The long-term appropriation of value
• By economic imperialism we mean the long-term international appropriation of
value by the imperialist countries from subaltern countries.
• In the appropriation of surplus value, the level of technological development
plays the central role. Imperialism refers first to the appropriation of surplus
value by high technology companies from low technology companies in different
countries. But imperialism refers also to flows of value between countries.
• So imperialist countries can be defined as those with a persistent high number of
high technology companies as measured by their high national average OCC and
thus whose average technological development is higher than the national
average of other countries, which are thus economically dominated on this
account.
Stratification of imperialism
• Imperialist countries tend to form blocs around themselves.
• Both the imperialist and the dominated countries are stratified. There
is a hierarchy of imperialist countries (on the basis of the hierarchical
structure of the OCCs) and a hierarchy of dominated countries.
• Most countries, including the US as the hegemonic imperialist nation,
are both expropriators and expropriated of surplus value by virtue of
the structure of their technological development.
• The difference is that the imperialist countries are net appropriators of
surplus value for long periods, due to their persistently higher level of
technological efficiency, especially in the high technology sectors.
Imperialism and sub-imperialism
• The well-established imperialist powers still sit at the top of the
primary income pole. The vast majority of countries are forced to
remain in a dominated role – paying out much more than receiving in
primary income.
• In our definition, there are no ‘sub-imperialist’ countries, because the
notion of sub-imperialism fails to focus on international differences in
productivity differentials and misses the lack of persistent
technological superiority.
Net primary income flows
Net primary income ($m) Net primary income for BRICS 1994-2017 $m
600,000 50,000

500,000 0

400,000 Japan
Can -50,000 South Africa
300,000 Ita China
Fra -100,000 India
200,000
Ger Russ
UK -150,000 Bra
100,000
US TOTAL
0 Total -200,000

-100,000 -250,000

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016
1975
1977

1985
1987
1989

1995

1999
2001
2003

2009
2011
2013
1979
1981
1983

1991
1993

1997

2005
2007

2015
2017
 10.0
12.0
14.0
16.0
18.0
20.0
22.0
24.0

0.0
2.0
4.0
6.0
8.0
US
N e th
Ja p a n
C h in a
UK
G e rm a n y
F ra n ce
Lu xe m b o u rg
S w it z e r la n d
Ir e la n d
Canada
It a ly
S p a in
R u s s ia
Sw eden
A u s t r a lia
K o re a
In d ia
H u n g a ry
P o la n d
B r a z il
M e x ic o
P h ilip p in e s
Share of total gross primary income %

C h ile
US: the hegemonic economic power

In d o n e s ia
S A f r ic a
T u rk e y
C o lo m b ia
A r g e n ti n a
N ig e r ia
M a la y s ia
V ie t n a m
 1000
1500
2000
2500
3000
3500
4000
4500
5000

0
500
Sw eden
UK
US
F ra n c e
G e rm a n y
Canada
Ja p a n
A u s t r a lia
H u n ga ry
S p a in
It a ly
K o re a
C h ile
R u s s ia
P o la n d
C h in a
C o lo m b ia
Imperialism and the also rans

S A fr ic a
P h ilip p in e s
Primary income credit/person $

M a la y s ia
M e x ic o
A r g e n ti n a
T u rke y
B r a z il
N ig e r ia
In d o n e s ia
In d ia
V ie t n a m
Imperialism owns the assets
Foreign direct investment stock ($trn)
20
18
16 G8 includes Netherlands
14
12
10
8
6
4
2
0

G8 BRICS
Unequal exchange (UE)
• The main way to appropriate surplus value for imperialist countries
from the periphery is through unequal exchange in international
trade.
• UE is the gain/loss of value when the producers sell at internationally
determined production prices. If the market price deviates from the
production price, there is a further loss/gain of value.
 Transfer of value
•North: 80c + 20v + 20s =120V.  Rate of profit = 20/(80c+20v) = 20%
Rate of exploitation = 20s/20v = 100%
•South: 40c + 60v + 60s= 160V.  Rate of profit = 60/(40c+60v) = 60%
Rate of exploitation = 60s/60v = 100%
•Total: 120c + 80v + 80s= 280V.
Average rate of profit = 80s/(120c+80v) = 40%.
•The capitalists in the South get 160V in value out of their workers, while the capitalists in the
North get 120V.  The rate of profit in value terms in the North would only be 20% while it
would be 60% in the South.  But competition in the market equalizes the average rate of
profit at 40%.  
•So the market price of production for the North and South is now 140 and the North gets a
transfer of value of 20 from the South.  Thus the capitalists of the North get some of the
value created by the workers in the South through price competition equalizing the rate of
profit on the global market.
•North = 80c + 20v + 40s = 140P (compared to 120V), so transfer gain of 20.
•South = 40c + 60v + 40s = 140P (compared to 160V), so transfer loss of 20.
Method of computing UE
• To work out the country national output (in labour hours)
• P = C + V + S where
• C = No 11 (K) capital stock x depreciation ratio 13 as above
= C consumed in annual production
• V = (N) no of employees (No 6) x w average real wage (No 21) as above.
• P = X Real GDP (no 10)
• S = P-(C+V)
• Then to adjust for the export sectors only; we adjust C +V +S by the share of exports to GDP for the bilateral trade.
• Source: World Bank for exports to GDP and IMF for direction of trade shares.
• Then we have C’+V’+S’ = EXPORT P for each country’s export trade with the other.
• Assuming C,V,S are known for the export sectors. We compute the average rate of profit (ARP) = total surplus value
divided by total capital invested in the export sectors. The market price (MP) is the value of the output before
equalization in each country, i.e. MP = C+V+S. The production price (PP) = total capital invested (C+V) + (C+V)R.
Finally, UE = PP (after equalization) – MP (before equalization), i.e. loss or gain due to equalization.

Source: Penn Extended World Tables 4. developed by Adalmir

Marquetti from the Penn World tables
Transfer of value to G7 from dominated
countries
140
• Transfer of value from the
dominated bloc to the G7 rises 120
*Dominated
= Brazil,
from $20bn a year in the 1960s; 100
India, China,
South Africa,
Mexico,
to $90bn in the 1970s, dropping Turkey
80
off to $50bn in the 1980s. Then
with China becoming the great 60

trading force, there is a take-off 40

from the late 1990s to reach over
$120bn by the time of the Great 20

Recession.  0

1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
The hit to GDP
• The transfer of value is much higher UE value transfer in trade between G7 and dominated economies as
% of GDP
as a share of GDP for the dominated 0.10
countries (5-10% of GDP) than for 0.05
the G7 (2-3%) although the negative 0.00
transfer of value for the dominated -0.05
has been declining.  -0.10
Ricci*: Over the period, the global amount of value -0.15
transfers, corresponding to the 1.8 percent of global value
added… for developing economies, the relative size of -0.20
outflow transfers was very consistent, ranging from 10 to -0.25
20 percent of the domestic value added.
-0.30
*Unequal Exchange in the Age of Globalization, Review of

1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
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2007
Radical Political Economics 2019, Vol. 51(2) 225 –245
G7 Dominated
Higher composition of capital…..
• From Marx’s value theory, Organic composition of capital relative to the US (=100)
we would expect the 90
82
imperialist countries to 80
71
have significantly higher 70

organic composition of 60

capital and labour 50

productivity than 40
30
peripheral economies. 17
20 16
10
0
G7 BRICS
1963 2008
….higher productivity of labour
Labour productivity level relative to the US (=100)
90
81
80
70 64
60
50
40
30
21
20 15
10
0
G7 BRICS
1963 2008
Super-exploitation
• The question of super-exploitation in the ‘less developed nations’, as
revealed by extremely low levels of poverty, has taken a prominent role
in discussions over imperialism since the 1970s.
• In the lower technology countries (LTC), the OCCs are usually lower and
the rate of profit (before global equalization) higher than in higher
technology countries (HTC) because of lower productivity in LTCs.
• After the equalization of profit rates in trade, a part of the profits
generated in LTCs (with lower OCCs) is lost to HTCs (with higher OCCs).
So the rate of profit falls in the former. Capital in LTCs reacts by slashing
wages, through the use of “slaves and coolies”.
Transfer of value with super exploitation
• North = 80c + 20v + 20s = 120V.  Rate of profit 20s/(80c+20v) = 20%
Rate of exploitation 20s/20v = 100%
• South = 40c + 30v + 90s = 160V.  Rate of profit 90s/(40c+30v) = 130%
Rate of exploitation 90s/30v = 300%
• Total = 120c + 50v + 110s = 280V. Average rate of profit 110s/(120c+50v) = 65%
• Through the transfer of values in the global market, the capitalists of the North now get an extra 45V
out of the super-exploited workers of the South.  Super-exploitation in the South increases profits for
the North.  Total surplus value in the North and South has risen from 80 in the first case to 110 in the
super-exploitation case.
• North = 80c + 20v + 65s = 165P (compared to 120V), so transfer gain of 45.
• South = 40c + 30v + 45s = 115P (compared to 160V), so transfer loss of 45.
• MOST OF THE EXTRA SURPLUS VALUE FROM SUPER EXPLOITATION GOES TO THE NORTH. THE NORTH
NOW GETS 65S COMPARED TO 40S BEFORE.
• BUT THE SOUTH ALSO GETS A HIGHER SURPLUS VALUE THAN BEFORE (45S COMPARED TO 40S BEFORE)
THROUGH DRIVING WAGES BELOW THE VALUE OF LABOUR POWER.
Lower wages, higher rate of exploitation
• Wage levels in the G7 countries Rate of surplus value relative to the US (%)
are about 70-80% of the US, 5.0
4.5
while they are less than 20% in
4.0
the BRICS. The lower wage level 3.5
increases the rate of 3.0
exploitation in those countries. 2.5
2.0
1.5
1.0
0.5
0.0
UK Ger Fra Ita Can Jap G7 Bra Ind Chin Russ SAFr BRICS
1963 2008
Exploitation depends on two factors not one
• The rate of surplus value is determined both by labor’s productivity and
by the wages level. It is mistaken to focus exclusively either on the one
or on the other.
• These two factors do not have the same importance; one is determinant
and the other determined. Lower wages are a countervailing reaction to
the lower labour productivity and OCC in LTCs.
• Through international trade, surplus value flows from the low wage
countries to the high wage countries not because wages are lower in
the former than in the latter, but because in the low wage countries the
rate of surplus value is higher.
There is no international average
• Each country has its own value of labour power. Given the
technologically determined necessary and surplus labour, the national
values of labour power and the rate of surplus value fluctuate
according to the power relation between the two fundamental classes
in each country. Historically, specific features play also a role.
• What matters is the rate of surplus value between countries not
relative to some international average rate of surplus value.
Value transfer with a trade surplus
• North = 80c + 20v + 20s = 120V.  
• Rate of profit 20s/(80c+20v) = 20% Rate of exploitation 20s/20v = 100%
• South: 80c + 120v + 120s= 320V.  
• Rate of profit = 120/(80c+120v) = 60% Rate of exploitation = 60s/60v = 100%
• Trade surplus for South rises from 40V to 200V
• Total: 160c + 140v + 140s = 440V
Average rate of profit = 140s/(160c+140v) = 46%.
• Transfer of value:
• North 80c + 20v + 47s = 147
• South 80c + 120v + 94s= 294
• North gains 27s and South loses 27s in value even though trade surplus rises by 160V
 2016
2013
2010
2007
2004
Ratio of productivity of labour China-US (%)
China runs a huge surplus in trade with the

2001
1998
1995
1992
1989
1986
1983
US but has much lower productivity

1980
1977
1974
1971
1968
1965
1962
1959
1956
1953
1950
5

0
25

20

15

10

_x0004_2017
_x0004_2015
_x0004_2013
_x0004_2011
_x0004_2009
US deficit on trade with China $m

_x0004_2007
_x0004_2005
_x0004_2003
_x0004_2001
_x0004_1999
_x0004_1997
_x0004_1995
_x0004_1993
_x0004_1991
_x0004_1989
_x0004_1987
_x0004_1985

-100000

-150000

-200000

-250000

-300000

-350000

-400000
0

-50000
China transfers value to the US in trade
• The US gains more value UE transfer of value US-China $bn
through UE with China in spite 50

of China’s greater economic 40

growth and exports because
China’s economy and thus its 30

exports are at a lower level of 20

productivity.   10

-10

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007
Summary of UE results
• The productivity of labour is key to the transfer of value in trade between
imperialist countries and the periphery
• The major cause of UE between imperialist countries is technological
superiority. Differences in the rates of surplus value are significant but play a
lesser role.
• Between the imperialist and the dominated countries, the main factor in UE
is the different rate of surplus value.
• Exclusive emphasis on only one of these two factors is misleading. In the
last analysis, the result depends on whether the ratio of the two rates of
surplus value is greater or smaller than the ratio of the two organic
compositions of capital
Imperialism rules
• The evidence shows that imperialism is an inherent feature of modern
capitalism. Capitalism’s international system mirrors its national
system (a system of exploitation): exploitation of less developed
economies by the more developed ones.
• The imperialist countries of the 20th century are unchanged – it’s the
G7-10. There are no ‘sub-imperialist’ economies.
• China is not imperialist on these measures.
• The transfer of value from the periphery to the imperialist core is
rising.