Unequal exchange theory posits that economic growth in the “advanced economies” of the global North relies on a large net appropriation of resources and labour from the global South, extracted through price differentials in international trade. Past attempts to estimate the scale and value of this drain have faced a number of conceptual and empirical limitations, and have been unable to capture the upstream resources and labour embodied in traded goods. Here we use environmental input-output data and footprint analysis to quantify the physical scale of net appropriation from the South in terms of embodied resources and labour over the period 1990 to 2015. We then represent the value of appropriated resources in terms of prevailing market prices. Our results show that in 2015 the North net appropriated from the South 12 billion tons of embodied raw material equivalents, 822 million hectares of embodied land, 21 exajoules of embodied energy, and 188 million person-years of embodied labour, worth $10.8 trillion in Northern prices – enough to end extreme poverty 70 times over. Over the whole period, drain from the South totalled $242 trillion (constant 2010 USD). This drain represents a significant windfall for the global North, equivalent to a quarter of Northern GDP. For comparison, we also report drain in global average prices. Using this method, we find that the South’s losses due to unequal exchange outstrip their total aid receipts over the period by a factor of 30. Our analysis confirms that unequal exchange is a significant driver of global inequality, uneven development, and ecological breakdown.
Unequal exchange of labour in the world economy
Researchers have argued that wealthy nations rely on a large net appropriation of labour and resources from the rest of the world through unequal exchange in international trade and global commodity chains. Here we assess this empirically by measuring flows of embodied labour in the world economy from 1995–2021, accounting for skill levels, sectors and wages. We find that, in 2021, the economies of the global North net-appropriated 826 billion hours of embodied labour from the global South, across all skill levels and sectors. The wage value of this net-appropriated labour was equivalent to €16.9 trillion in Northern prices, accounting for skill level. This appropriation roughly doubles the labour that is available for Northern consumption but drains the South of productive capacity that could be used instead for local human needs and development. Unequal exchange is understood to be driven in part by systematic wage inequalities. We find Southern wages are 87–95% lower than Northern wages for work of equal skill. While Southern workers contribute 90% of the labour that powers the world economy, they receive only 21% of global income.
Labor-Value Commodity Chains: The Hidden Abode of Global Production - Monthly Review
Intan Suwandi is a frequent contributor to Monthly Review. This article is adapted from her book, Value Chains: The New Economic Imperialism, winner of the 2018 Paul M. Sweezy-Paul A.... READ MORE
Doughnut of social and planetary boundaries monitors a world out of balance
The doughnut-shaped framework of social and planetary boundaries (the ‘Doughnut’) provides a concise visual assessment of progress towards the goal of meeting the needs of all people within the means of the living planet1–3. Here we present a renewed Doughnut framework with a revised set of 35 indicators that monitor trends in social deprivation and ecological overshoot over the 2000–2022 period. Although global gross domestic product (GDP) has more than doubled, our median results show a modest achievement in reducing human deprivation that would have to accelerate fivefold to meet the needs of all people by 2030. Meanwhile, the increase in ecological overshoot would have to stop immediately and accelerate nearly two times faster towards planetary boundaries to safeguard Earth-system stability by 2050. Disaggregating these global findings shows that the richest 20% of nations, with 15% of the global population, contribute more than 40% of annual ecological overshoot, whereas the poorest 40% of countries, with 42% of the global population, experience more than 60% of the social shortfall. These trends and inequalities reaffirm the case for overcoming the dependence of nations on perpetual GDP growth4,5 and reorienting towards regenerative and distributive economic activity—within and between nations—that assigns priority to human needs and planetary integrity.
The Profit Paradox
Beyond GDP: Measuring and Valuing What Really Matters
Rethinking the UN’s “beyond GDP” agenda and the case for putting wealth at the centre
Best of times, worst of times: record fossil-fuel profits, inflation and inequality
The 2022 oil and gas crisis resulted in record fossil-fuel profits globally that rehabilitated the oil and gas industry, obstructed the energy transition and contributed to inflation, but their magnitude and beneficiaries have been insufficiently understood. Here we show the size of profits across countries and their distribution across socio-economic groups within the United States, using company income statements, comprehensive ownership data and a network model for propagating profits via shareholdings. We estimate that globally, net income in publicly listed oil and gas companies alone reached US$916 billion in 2022, with the United States the biggest beneficiary with claims on US$301 billion, more than U.S. investments of US$267 billion in the low carbon economy that year. In a network of U.S. shareholdings with 252,433 nodes including privately held U.S. companies, 50 % of profits went to the wealthiest 1 % of individuals, predominantly through direct shareholdings and private company ownership. In contrast the bottom 50 % only received 1 %. The incremental U.S. fossil-fuel profits in 2022 relative to 2021 were enough to increase the disposable income of the wealthiest Americans by several percent and compensate a substantial part of their purchasing power loss from inflation that year, thereby exacerbating inflation inequality. These profits also reinforced existing racial and ethnic inequalities and inequalities between groups with different educational attainments. We discuss how an excess profit tax could be used to both lower inequality and accelerate the energy transition as increasing geopolitical tensions and climate impacts threaten continued volatility in oil and gas markets.
Anthropic Economic Index: Insights from Claude 3.7 Sonnet
The second update from the Anthropic Economic Index
Exocapitalism: economies with absolutely no limits
There is a touch of destiny with this one. We have real…
annotations: Les mécanismes de la malédiction des ressources
traduction française du billet de blog "The economic nature of the resource curse: Mechanisms" de Daron Acemoglu & James Robinson
annotations: La malédiction des ressources naturelles : que nous enseignent les études empiriques ?
traduction française du billet de blog "The economic nature of the resource curse: Evidence" de Daron Acemoglu & James Robinson
RETRACTED ARTICLE: The economic commitment of climate change
Global projections of macroeconomic climate-change damages typically consider impacts from average annual and national temperatures over long time horizons1–6. Here we use recent empirical findings from more than 1,600 regions worldwide over the past 40 years to project sub-national damages from temperature and precipitation, including daily variability and extremes7,8. Using an empirical approach that provides a robust lower bound on the persistence of impacts on economic growth, we find that the world economy is committed to an income reduction of 19% within the next 26 years independent of future emission choices (relative to a baseline without climate impacts, likely range of 11–29% accounting for physical climate and empirical uncertainty). These damages already outweigh the mitigation costs required to limit global warming to 2 °C by sixfold over this near-term time frame and thereafter diverge strongly dependent on emission choices. Committed damages arise predominantly through changes in average temperature, but accounting for further climatic components raises estimates by approximately 50% and leads to stronger regional heterogeneity. Committed losses are projected for all regions except those at very high latitudes, at which reductions in temperature variability bring benefits. The largest losses are committed at lower latitudes in regions with lower cumulative historical emissions and lower present-day income.
Reflect nature’s ‘true value’ in economic policies and decisions, UN chief urges
Nations must start weighing up the cost of economic profit against damage to the environment if they are to have a chance at a sustainable future, UN Secretary-General António Guterres said on Tuesday.
Grassroots Economics — Community-Powered Economies
Empowering communities across the World with community currencies, ecosystem restoration, and commitment pooling since 2010.
The Portfolio Ideal Worker: Insecurity and Inequality in the New Economy
This output contributes to the following UN Sustainable Development Goals (SDGs)
Valuing What Counts: Framework to Progress Beyond Gross Domestic Product: Our Common Agenda Policy Brief 4
