International Exploitation, Capital Export, and Unequal Exchange

We discuss how international exploitation and unequal exchange emerge in the global economy by focusing on simple economic models with and without credit markets. Free trade of commodities among rich and poor countries results in a transfer of labor time between countries, allowing the citizens of some countries to consume more of the world's social labor than they have contributed. Capital movements across borders together with strong restrictions on the movement of people result in net exporters of capital exploiting (or benefiting from unequal exchange at the expense of) net capital importers. Under perfect competition, mutual benefits from free trade in goods and capital can coexist alongside unequal flows of revenue and labor in the world economy. Market imperfections and the open use of coercion are not necessary for international exploitation to emerge. However, they may be central for it to persist over time.