Markets, Productivity, and Happiness in a Historical Perspective

Unequal Exchange between the North and the South

Kuroki Ryuzo, Rikkyo university

Emmanuel's theory (Emmanuel, Arghiri, Unequal Exchange, New Left Books, 1973) thoroughly criticizes and reconstructs Ricardo's trade theory, and concludes that the imposition of international division of labor is the exploitation of developing countries by developed countries. He is considered to belong to the dependency school, which includes G.Frank and S.Amin. The dependency school is the name of the group that argues that the developing countries of the South, or the Third World, have historically been under the control of the developed countries in the capitalist world system, and have been politically and economically subjugated and exploited by the developed countries, thus closing off the possibility of economic development. In order for the developing countries of the South to develop, it is necessary to correct this structure of subordination of the South to the North, and for this, planned development policies and trade policies aimed at economic independence are essential. While Frank and Amin emphasize historical, political, and structural dependencies, Emmanuel chooses to prove exploitation with pure economic theory.  The win-win game of Ricardo's theory of comparative costs is, according to Samuelson, the basis of a correct theory of international division of labor, or free trade theory, based on the relative disparity of productivity among countries. On the other hand, Emanuel's contribution is to prove the unequal exchange and exploitation of value between developed country A and developing country B by using Marx's production price expression.

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Keywords: unequal exchange between developing and developed countries, Ricardo’s theory of comparative costs, Marx’s and Sraffa’s price system

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