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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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In contrast to other scholars, world-systems foundational thinkers envision core and periphery as relationships of surplus transfer, not as geographic or national categories. Andre Gunder Frank (1969: 23) conceives the modern world-system as a “hierarchy of core-periphery complexes, in which surplus is being transferred.” Wallerstein (1995a: 31–32) defines core and periphery in terms of the “transfer of part of the total profit (or surplus)” from one zone to another. “Such a relationship is that of corenessperipherality....

We call the losing zone a ‘periphery’ and the gaining zone a ‘core.’ ” He insists that we should define “core” as “those who are living off the surplus value produced by others” and “periphery” as “those who are not retaining all of the surplus value they are producing.” Wallerstein (2000a: 4) is convinced that core growth derived from these surplus drains:

“The shift of surplus towards the core concentrated capital there and made available disproportionate funds for further mechanization, both allowing producers in core zones to gain additional competitive advantages in existing products and permitting them to create ever new rare products with which to renew the process.” Donald A. Clelland 77 What Is a Commodity Chain?

A commodity chain is the most important mechanism for the extraction of surplus across zones, particularly over the past two centuries.4 In contrast to most scholars, I do not view a commodity chain as a network of corporate spaces of production and distribution. On the one hand, the commodity chain is devised to ensure capital accumulation in the core. On the other hand, it is a surplus-extraction chain that is designed to subsidize the endpoint purchases of consumers. In its entirety, a commodity chain encompasses resource extraction, construction of components, assembly, transport, wholesaling, retailing, and service. Within each node, one finds “relations of production,” including the extraction of surplus labor that is not covered by wages. In addition, each point of linkage is a relationship of upward surplus drain, typically through transactions among capitalist firms. As a commodity moves up the chain, each capitalist usually has a greater degree of monopoly than those below. That degree of monopoly is reflected in the capitalist’s ability to constrain the transmission of costs of production from below. By degree of monopoly, I mean the ability to lower costs or raise prices beyond what would be possible in a purely competitive economy. Technically, this is a “degree of oligopsony” in which a few buyers control prices. The large wholesaler or retailer at the end of the chain may hold a true degree of monopoly through control of sales markets. As a result, the commodity chain operates to extract surpluses at all levels of the structure of the worldeconomy. In other words, the relationship that exists between nodes in the commodity chain has the same form as the core/periphery relationship and, in turn, the same form as the relations of production within each node of the chain. This

Abstract

model assumes that all these relationships are typically not between equals (as in the abstract model of neoclassical economics) but between unequals, actors with differing degrees of market power. At all three levels, then, the relationship is one of surplus extraction.

As a general rule, labor costs, resource prices, profit rates, and rents increase with movement up the chain, and a portion of the surplus (potential profit) collected at each node is passed to the node above.5 At each node, capitalists buy cheap and sell “semidear”; that is, full control of realization of the potential surplus is constrained by the relative monopsony power of the buyer. In order to buy cheap, the capitalist lowers costs by externalizing part of the costs of the production process to cheaper producers. Mainstream economists are quite aware that the best strategy that a firm can follow to outperform other competitive firms is “overall cost leadership,” that is, cutting costs of production deeper than the competition (Porter 1980: 35– 36). Thus the firm that is higher in the chain cuts costs by outsourcing part of its internal production. Capitalists lower in the chain sells semidear by 78 Unpaid Labor in Global Commodity Chains passing on part of their potential surplus in the form of a reduced price, allowing the capitalist with a degree of monopoly to buy cheap. In this way, commodity chains are surplus-transfer chains that permit accumulation at multiple levels and ultimately concentrate accumulation in the core.

Extraction of Dark Value th ro ugh Commodity Chains Although there are various forms of surplus drain from periphery to core, I will focus on only one mechanism: the extraction of surpluses through dark value in commodity chains.6 Capitalism is a system of surplus drain that requires an enormous base of extraction of dark value. Dark value emerges at the lowest beginning points of a commodity chain, occurs at every node, and is encapsulated within the commodity when it is sold at the end of the chain. At every node of the chain, dark value arises from “dark energy,” that is, the intrinsic value of cheap and unpaid labor that becomes embedded in commodities. Once dark value is incorporated into a commodity, it never disappears, and it grows as it advances through the chain. By the time a commodity has gone through numerous nodes of a global chain to arrive at the doorstep of the consumer, it has incorporated not only the embedded inputs of Marx’s (1990: vol. 1) paid labor power but also massive amounts of underpaid and unpaid labor. The value of this labor is what I term “dark value.” The term is inspired by the recognition of physicists that imperceptible “dark matter” and “dark energy” account for 95 percent of the universe. Just as invisible and unexplained dark energy provides most of the energy in the cosmos and drives the continuing expansion of the universe, dark, uncosted, and underpaid energy drives the expansion of the capitalist world-system.





What Is Dark Value?

Because dark value is found in all factors of production (capital, labor, land, natural resources, energy, knowledge), hidden transfer occurs any time a capitalist obtains a component of production at less than the average world-market price. Thus dark value is embodied in four types of hidden subsidies to commodity chains: (1) undercompensated formal labor, (2) underremunerated or unpaid inputs from households or the informal sector, (3) cheap natural resources, and (4) ecological and human externalities that are “economically free” to capitalists. Because these transfers are externalized from economic accounting, a full calculation of dark value would require analysis of millions of surplus drains that are derived from unpaid household labor, underpaid labor, undervalued resources, and savings through uncosted human and environmental externalities.

Donald A. Clelland 79 Dark value is deeply embedded in every economic transaction or commodity and thus is the silenced partner that renders every visible documented surplus drain more beneficial. Dark value is distinctive in three ways. First, these surplus drains are “free” inputs to capitalists; that is, they are externalized from calculation of the costs of production. In this way, commodity chains are “efficient” because they minimize production costs by extracting hidden surpluses for the direct profit of capitalists higher in the chain. Second, dark-value drains occur as uncosted contributions to recorded surplus. That is, they represent “opportunity surpluses” that exceed the visible profits that are recorded in company account books. If there is a degree of monopoly, the hidden value may be retained by the capitalist as “extra surplus value” (Marx 1990: 3: 114–117). Alternatively, the dark value may be passed on to the consumer in the form of cheaper commodity prices. It is advantageous to the capitalist to expand the degree of monopoly by underpricing competitors and thereby to increase sales volume and longterm profits. Such a degree of monopoly is most often found near the beginning or the end of a commodity chain. Dark value can be differentiated in a third way. Because dark value is dependent on the existence of mass consumption, its relative economic significance intensifies over time. Logically, the transfer of dark value to the core expands over time as the volume of trade increases. Thus rising consumption in the core triggers deeper extraction of hidden peripheral surpluses by capitalists. More dark value is produced for the benefit of core inhabitants today than ever in the history of the modern world-system.

Dark Value and Unpaid Labor The commodity chain not only extracts surpluses from workers and resources for which capitalists pay but also is a chain for the extraction of value from unpaid and underpaid labor and resources. According to Marx (1990: vol. 1), capitalism constructed a proletariat for the purpose of extracting surplus value and, thus, profit. World-systems analysis derives from this conceptualization but stands in dialectical opposition to it. In worldsystems analysis, the capitalist system is driven by the search for, and the incorporation of, unpaid and underpaid inputs, especially labor (Wallerstein 1995b). Such thinking is not alien to mainstream economists. Indeed, they recognize many of these unpaid costs as “externalities” to production costs (Stewart 2001) but do not integrate these externalized costs into their basic models. In contrast, unpaid costs are not recognized in most Marxist analyses. However, the capitalist system is driven not toward the production of wage labor, but toward the production of unpaid and underpaid labor, that is, toward a semiproletariat that realizes over its lifetime only part 80 Unpaid Labor in Global Commodity Chains of its total livelihood from wages (Mies, Bennholdt-Thomsen, and Werlhof 1988). In short, my argument is that capitalism is dependent on, even driven by, microstructures of “dark energy” in the form of unpaid and underpaid labor that never appears in the accounting of production costs.

How, then, is dark value produced? The full contribution of labor to a commodity consists of the total work hours—costed and unpaid—that are embedded in production and reproduction of labor power. Peripheral workers survive in households that are the provisioning units in the underlying substratum of the capitalist world-economy. Household labor and resources subsidize the below-subsistence wages that are paid to peripheral workers (Dunaway 2012). Capitalists are able to drain hidden surpluses from households because a majority of the world’s workers earn only a portion of their livelihoods from waged labor. Indeed, these semiproletarianized households derive the greater proportion of their resources from nonwaged activities and thus inadvertently encourage capitalists to pay below-subsistence wages (Wallerstein 1995a).

Mechan isms of Dark- Value Extraction from Hou se holds Because the world-systems concept “semiproletariat” assigns economic significance to unpaid labor, its perspective stands in opposition to Marxism.

Perhaps the greatest mistake in Marxist political economy, and its greatest shame, was the decision to take the standpoint of those who drive the system and their apologists, the classical economists (and subsequently the neoclassical theorists). Thus, for Marx (1990: vol. 3), one must understand the “value form” (Wertgestalt) from the vantage point of those who construct and control capitalism. This is the system driven by productive capitalists, those who produce commodities. Success in this system depends on quantifying the source of value, obtaining it, and expanding it. Paying attention to these factors requires the keeping of books. The value form is transformed into the money form and is then entered into the books as costs of production, prices of commodities, and distribution of the ensuing surplus.



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