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The Limits of Unequal Exchange

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  • Alain de Janvry

    (Department of Agricultural and Resource Economics University of California Berkeley)

  • Frank Kramer

    (Department of Agricultural and Resource Economics University of California Berkeley)

Abstract

This article critically examines unequal exchange, a theory of value transfer from low-wage (periphery) countries to high-wage (center) countries. Unequal exchange differs from other mechanisms of value transfer that are based on restricted trade or differential rates of profit in that it occurs under con ditions of free and competitive trade and equalization of profit rates worldwide. We discuss how various divergences can theoretically occur between relative em bodied labor of commodities and their corresponding relative world market prices. We show that, because unequal exchange is an exchange of unequal quan tities of social value rather than unequal quantities of labor time, it cannot apply to commodities that are nonspecific (i.e., produced in both center and periphery). Its applicability to specific goods is questionable in light of inadequate discus sion of what maintains the initial wage differential when equilibrium in the capi tal market has been obtained. We conclude that the theory is not useful as a gen eral basis for understanding underdevelopment, though in modified form it may be applicable to some products and countries.

Suggested Citation

  • Alain de Janvry & Frank Kramer, 1979. "The Limits of Unequal Exchange," Review of Radical Political Economics, Union for Radical Political Economics, vol. 11(4), pages 3-15, December.
  • Handle: RePEc:sae:reorpe:v:11:y:1979:i:4:p:3-15
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    Cited by:

    1. Andrea Ricci, 2016. "Unequal Exchange in International Trade:A General Model," Working Papers 1605, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2016.
    2. repec:eee:ecolec:v:147:y:2018:i:c:p:422-435 is not listed on IDEAS

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