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«I ask you to redirect your thinking away from claims of “value added” at various nodes of a global production network. Contrary to that view, ...»

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Chapter Four

Unpaid Labor as Dark Value in

Global Commodity Chains

Donald A. Clelland

I ask you to redirect your thinking away from claims of “value added” at

various nodes of a global production network. Contrary to that view, commodity chains are surplus-extraction chains that are grounded in massive

transfers of what I term “dark value.” The drain of dark value, which includes vast hidden extractions of unpaid household and informal-sector labor, is a necessary and intrinsic component of commodity chains. Exploitation is “the expropriation of surplus value” from a worker or household

that produces greater surplus than she, he, or it consumes (Folbre 1982:

318). This exploitation is the dark value I seek to conceptualize and measure. At every node of a commodity chain, dark value is embedded as a hidden surplus that is externalized from prices. Consequently, commodity chains are dark-value-extraction chains. These value drains benefit not only the capitalists who have constructed the world-system but also core consumers of all classes and thus legitimize the structure of the system. In the first three sections of this essay, I will conceptualize (1) surplus and surplus drain in the modern world-system, (2) extraction of dark value through commodity chains, and (3) mechanisms of dark-value extraction from households. By exploring the Brazilian coffee commodity chain in the final section, I explain how both capitalists and consumers extract dark value.

What Are Surpluses in the Mo d ern World- System?

Let me begin by returning to the roots of the foundational question: what is meant by the concept “modern world-system”? The history of modern capitalism is the history of the appropriations of surpluses by elites who replaced political mechanisms with the extraction of surpluses by means of commodities. Such transfers occur both within and across political boundaries. In other words, surplus drain is a driving force in the explanation of the origins and reproduction of the world-system as we know it. These surplus drains occur through control over the means of monopoly power that Donald A. Clelland 73 allows the capitalist to exploit labor, ecological resources, knowledge, and technology (Clelland 2012). Through the process of commodification, the modern world-system transfers a large portion of the global surplus from the periphery to the core. However, capitalists first expropriate much of that aggregated surplus from peripheral households through hidden mechanisms that operate within commodity chains. In order to lay the basis for my argument about the linkages among uncosted household labor, dark value, and commodity chains, I need to revisit a few foundational concepts.

What Is Surplus?

The first question that needs a brief review is what is meant by “surplus.” Baran and Sweezy (1966: 29) define economic surplus as “the difference between what a society produces and the costs of producing it.” In simplest terms, the surplus is the value of goods, services, and money that remains after the reproduction needs of any system have been met.1 I am convinced that the groundbreaking work of Baran and Sweezy did not go far enough in its conceptual challenge and that scholars must push their ideas in five additional directions. First, the economic surplus should be viewed as a foundational component, not just of societies, but of firms, households, and the capitalist world-system as a whole. Each of these systems is driven toward continuous expansion of its surplus. Second, we need to pinpoint the origins of surpluses. On the one hand, surplus is extracted from any of the factors of production, not just from labor power (as in classical Marxism), but also from land, resources, energy, knowledge, technology, and capital.

On the other hand, we must recognize that the bulk of surplus extraction is realized through degrees of monopoly (Kalecki 1954), not through the competitive markets emphasized by mainstream economists and classical Marxists. By degree of monopoly, I mean the control of any mechanism that reduces the costs of production or increases sales prices in variance from a fully competitive market. The capitalist world-economy is a degreeof-monopoly system because capitalists seek to avoid market competition through “competitive advantage.” Third, we must rethink how we calculate surplus to reflect the points of origins of the hidden surpluses that capitalists expropriate to sustain their degrees of monopoly. In actuality, the total world surplus is far greater that the cumulative GDPs. To arrive at a realistic estimate of surplus, we must take into account the value of all reproductive costs. We should think of the modern world-system as an iceberg economy (Mies, Bennholdt-Thomsen, and Werlhof 1988) in which uncosted labor and resources make up the thicker submerged ice layers that are blocked from view beneath a thin top stratum that is counted as the visible official economy.

74 Unpaid Labor in Global Commodity Chains Fourth, we need to determine who collects the surplus, how it is expropriated, and how it is used. Because everyone wants a share, struggles to obtain the surplus are at the heart of real-world economics and politics. The capitalist world-system is structured to ensure the concentration of surplus into the hands of capitalists and state elites (in the form of profit, rents, interest, and taxes). On the one hand, these groups are motivated to expand the surplus in order to broaden their consumption of luxury goods. On the other hand, the key to the continuation of the world-system is reinvestment of surplus into expanded reproduction of the system, that is, accumulation. In addition, capitalists share part of the surplus with members of the managerial-professional class who perform the functions of capital and with segments of the working class (Wallerstein 1995a). Fifth, capitalists may surrender opportunities for surplus by passing on hidden surplus in the form of lower prices to commodity buyers. I will return to this key point later.

What Is Surplus Drain?

The second concept that needs to be revisited is “surplus drain.”2 Without surplus drains, there is no core, no periphery, no world-system as we know it (Clelland 2012). However, neither mainstream economists nor most Marxists have integrated surplus drain into their theories. The concept of international “economic drain” was central to parliamentary debates about the East India Company in the late eighteenth century and to the Indian independence movement beginning in the late nineteenth century (Karmakar 2001).

However, these theories are generally rejected or ignored by orthodox Marxists and by mainstream economists and social scientists who employ the nation-state as their basic unit of analysis. Both classical and neoclassical economists make “free trade” and “equal trade” basic assumptions of their models and thus deny the importance of unequal exchange and asset seizure. In its focus on the industrial proletariat, the Marxist theory of revolution also ignores the importance of surplus drain for understanding capitalism. One is reminded of the thought of Upton Sinclair (1934: 107) from a century ago: “It is difficult to get a man to understand something when his salary depends on his not understanding it.” Sinclair’s notion is directly applicable to mainstream economists and can be applied to those Marxists whose revolution depends on their not understanding it. Before Baran (1957), forty years of Marxist and heterodox thought about development, imperialism, and dependency largely produced blockage theories whose underlying assumptions were not that different from those of modernization theories.

Classical Marxist theories of imperialism did not lead to the discovery of surplus drain.3 These were largely theories of emerging national corporate Donald A. Clelland 75 and financial monopolies gaining control of states that then violently competed for the control of colonies that supplied access to markets, resources, and cheap labor (Fieldhouse 1961). In other words, these were theories about the core. In the 1940s, heterodox Latin American economists argued that the world was structured as an industrial core and an agricultural periphery, and the terms of trade between the sectors deteriorated for the periphery. Surplus drain, however, was viewed as a consequence of differing levels of productivity gains rather than as a long-term project of the core.

Economic Commission for Latin America and the more radical dependistas viewed peripheries as dependent on the core and emphasized the numerous ways in which the core blocked peripheral development, still with little clear conceptualization of surplus drain (Love 1980; Chilcote 1982; Prebisch 1984).

Surplus-drain theories are neo-Marxist extrapolations from Marx’s (1990: vol. 3) theory of surplus value. Paul Baran (1957) introduced the concept of economic surplus (as distinct from surplus value) as key to Marxist analysis of economic growth, and he contended that loss of portions of the economic surplus is an important cause of underdevelopment.

Andre Gunder Frank (1969) expanded on this idea with his thesis that the satellite/metropole nexus is an intentionally structured development of underdevelopment for the purpose of ensuring the transfer of surplus to the core. In focusing on surplus transfer, Baran (1957) and Frank (1979) ignored the linkages between cheap labor and surplus drain and chose instead to prioritize commodity sales and repatriation from investment and  taxation as sources of surplus transfer. In making this conceptual choice, they moved away from the orthodox Marxist emphasis on the linkage between labor exploitation and surplus creation. It was not until Emmanuel’s (1972) theory of unequal exchange that international wage differentials were recognized as major sources of surplus drain. Subsequently, Amin (1974) incorporated this notion into his analysis of “accumulation on a world scale.” Concurrently, Wallerstein (1974) introduced worldsystems analysis, a perspective in which a unitary multistate capitalist system is driven by surplus drain, particularly the value extracted from underpaid labor throughout the system. At the birth of world-systems analysis, Terence Hopkins and Immanuel Wallerstein (1977: 49) identified the most significant question that needs to be answered through commodity chain analysis: “If one thinks of the entire chain as having a total amount of surplus value that has been appropriated, what is the division of this surplus value among the boxes of the chain?” Historically, all world-systems have been driven by relations of surplus transfer. Precapitalist systems structured mechanisms of surplus drain between regions, primarily through plunder and tribute. What, then, distinguishes the 76 Unpaid Labor in Global Commodity Chains capitalist world-system as a structure of surplus drain? In contrast to earlier systems, the capitalist world-system is characterized by the highly rationalized extraction of surplus by means of commodities. World polarization into rich and poor zones is a consequence of routine forms of quasimonopolistic commodity production and distribution across regions. Foundational thinkers (A. Frank 1969, 1979; Amin 1974; Wallerstein 1974) emphasize surplus drain as the driving force that causes impoverishment and dependency of the periphery in order to accumulate wealth and dominance at the core. Capitalists and core states structure the world-economy to ensure the continuous flow of economic surplus from peripheral zones, including internal peripheries. Semiperipheral zones are drained by the core and, in turn, extract surpluses from peripheries.

A second distinguishing feature of capitalist surplus drain is the need to widen the reach of the system in order to ensure its growth and survival.

Commodified production requires territorial expansion. Thus capitalism was borne of colonialism and incorporation of noncapitalist arenas.

Capitalism is a system both of cheap factors of production and of nearmonopoly capital markets. For that reason, the zones of the trimodal structure of the modern world-system are defined by exploitative relationships. The system is based on minimizing costs of production in order to maximize profits. Capitalists are driven to identify and integrate locations where they can take advantage of the lowest costs of production to generate commodities for marketing in areas where prices are highest. Thus transnational capitalists want to buy or produce cheap in the periphery and sell dear in the core.

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