Why Global Trade is Rarely Fair
The finality of production is consumption. This also applies to value. The value added is the value that needs be consumed. In an age of mass (industrial) production, the necessary consumption of all added value can only be achieved by a distribution of wealth. This seems an obvious obstacle to the accumulation of capital. But an obstacle surmounted by merchant nations since the beginning of history.
The industrial revolution put to use the concentrated energy of fossil fuels. And, almost overnight, one person could do the work of hundreds. Human and animal muscles were no longer the driving forces of production and their limitations ceased to be a constraint. Matter could be transformed on an unprecedented scale. Surprisingly, this resulted in mass poverty.
All added value must finally be consumed. But this necessary consumption can take place abroad. A nation can export consumer commodities and import raw materials. Such a nation can add value that it need not consume. Such a nation can accumulate capital investments, without upsetting the balance of consumer supply and demand. On its own national market, that is. The repercussions for its commercial "partners" form a inverted image.
The finality of production is no longer consumption. Production’s raison d’être is the accumulation of capital. This means that consumer goods must be exchanged for raw materials on the world market. But, if some nations export consumer goods and import raw materials, other nations must necessarily do the contrary. And, consequently, they must consume more value than the value they have added.
The exchange of commodities with a high proportion of added value for commodities with little or no added value means that one nation adds more value than it consumes, while the other nation must consume more value than the value it adds.
On the one hand, consumer supply is reduced by exports and demand is reduced accordingly by capital investments. On the other hand, consumer supply is increased by imports but demand is unchanged. And, as the imported commodities are more sophisticated, or simply cheaper, than the locally produced ones and are in competition with them for the same demand, local products are devalued and production stops.
Foreign trade is seldom a balanced affair. Trading nations throughout history have accumulated wealth by exporting their consumption. This has often increased existing rivalries and provoked nations to war. Since the beginning of the free trade movement, laissez faire, laissez passer (Quesnay), the debate over open markets has never been concerned by the nature of the commodities exchanged. The subject is never publicly discussed, as the focus is kept on commodity value and "fair" trade.
The accumulation of capital, by unbalanced trade, deprives a nation’s labour of the fruit of its toil, while it condemns other nations to inactivity and hand-outs, or to war. Britain was the first nation to combine foreign trade and the fossil fuel revolution. During the first half of the 19th century, Britain literally ruled the waves. Then came Germany and Japan (Italy, France, Russia), and the USA. Now it seems to be China’s turn, along with some less powerful nations.
Over the past two centuries a small group of nations has stripped the planet of its productive investments, thereby reducing two thirds of humanity to a hand to mouth existence. This means that the new players of the 21st century can only capitalize at the expense of those nations who capitalized in the past. By exchanging consumer goods for raw materials and technology, China is accumulating capital investments at an unprecedented rate. By combining 19th century working conditions and 21st century financial tools, a nation comprising one fifth of humanity could put most of the other industrial nations out of work. And this is only part of the problem.
Ken Couesbouc can be reached at email@example.com