Measuring Exploitation in the Global Economy

there can be some very strong incentives or reasons to have some kinds of redistributive policy in order to diminish the exploitation and unequal relations that people have between each other. And we then, you know, kept working on this idea and you know, found that it actually has wide application. So, not only can exploitation intensity be used to look at inequality within a country, either between individuals, between households, or other groups, it can also apply at the global level to look at inequalities between countries. I'm Jonathan Cogliano. I'm the economics department at the University of Massachusetts at Boston. In the context of what we call imperialistic international relations, exploitation means that there are countries or group of countries that have power over others. So, there is what we could consider a core group of exploiter countries that are able through lending capital to relatively less wealthy countries, they are able to extract transfers of surplus in order to, you know, basically exploit these relatively less wealthy countries on what we call the periphery. And so, in terms of exploit the, you know, the whole idea of exploitation in imperialistic international relations effectively means that there are flows of labor between nations and wealthy countries by controlling capital are able to extract more labor from the global economy than they themselves basically put in. The exploitation intensity index that I've developed with my frequent collaborators and co-authors, Roberto Veneziani and Naoki Yoshihara we've developed this index over a few a series of papers and what this measures is this measures the labor that one puts into the economy versus what they basically get out or the labor that they get out in terms of their own income. So, the exploitation intensity index is a ratio of the labor one contributes and by one this could be a household, it could be an individual, it could be a country. So, it's how much labor one contributes to the economy versus the labor embodied in what they get out of it or their income. And we talk about income, we're talking about both the sum of their labor income and their capital income that they might derive from owning wealth. And if one puts more labor into the economy than they get out, they are exploited. If one gets more labor out of the economy than they put in, they are an exploiter. In terms of the criticisms leveled at theories of exploitation, um they're usually theories of exploitation are usually charged with being either overly metaphysical, incoherent, or given their history and connection to what's called the labor theory of value where labor is seen as the source of all value created in an economy, uh they're usually seen as not relevant because there's a lot of doubt cast on that idea of the labor theory of value. Uh so, the measure of exploitation intensity or the work that I've done on exploitation serves kind of a counter to this by showing that exploitation theories can be coherent, consistent, and they can be very empirically operational and relevant, uh especially in this, you know, this particular paper and the series of papers kind of coming before it, we show how the exploitation intensity index is able to capture uh it types of inequalities that exist in capitalist economies that other approaches to inequality cannot. So, in if one is an exploiter in or considered an exploiter, they're extracting more labor from the economy than they put in, the way that that happens or occurs is by owning wealth or having capital. By owning wealth, one can derive capital income. If you can derive a lot of capital income, you can basically get more labor out of the economy than you put in. And so, inequalities in wealth are going to be a key driver of exploitation or what exploitation status looks like across an economy, whether it's a individual economy or if we're talking about the global economy and relations exploitation between nations or countries. Um And so, looking at inequality and exploitation not only capture captures what one contributes what people contribute to the economy in addition to market outcomes, right? Their income, the wealth that they have or they get out of the economy. Whereas a lot of traditional approaches to studying inequality focused on income and wealth inequality, we would see or I would see these as focused more strictly or closely on market outcomes. So, our exploitation intensity index allows us to develop this measure or approach to studying inequality that factors in contributions to the economy. And we're able to see or identify things or see inequality in a slightly different way. By doing this, it highlights some kind of key inequities of capitalism, we think. Popular answer for people who study the kinds of things that I do, it's usually that capitalism has to seem unsustainable based on all the kind of contradictions or internal contradictions within it and um However, capitalism has seemed to be pretty resilient even though it's, you know, and as human history goes, it has not been here that long. We maybe haven't seen it through entirely yet. But I think we do, especially at this moment, we do see a lot of the tensions in capital internal to capitalism or embedded in capitalism that really emerge um uh and can you know disrupt people's lives in a lot of you know really fundamental ways and um so we have to question whether or does make one wonder whether this can go on or how long this can go on without some kind of either correction or um you know people collectively deciding that we can alter the course of where we're headed. One of the key drivers of the of exploitation and how my co-authors and I study this uh is differential ownership of wealth or the fact that wealth inequality exists. So because different people own different amounts of wealth and people relate to wealth or capital differently, this is the source or what generates exploitative social relations. By owning wealth or controlling capital some people are able to exploit others. Uh they can get more out of the economy than they themselves put into it and uh it because in the context of international imperialistic international relations, uh this you know applies at the country levels. Uh so this would mean that certain countries are able to get more out of the global economy than they themselves put in and this is based on global wealth inequalities that exist. So you could have capital rich or relatively capital rich countries because they control capital and can lend to relatively less wealthy countries, they're able to have power over them. They're able to exploit them uh and they're able to get more out of the economy than they put in and this contributes to patterns of uneven development um and you know kind of the traditional in unequal exchange in the kind of traditional sense that where you know you have these unequal relations between countries that are really embedded in capitalism itself. Thinking about exploitation or why people should care about this, um I think the idea reflects on some level that people maybe aren't getting everything or being fully compensated rewarded for what they contribute to the economy or to society. Um some people are effectively generating wealth for others. Uh and in some sense we would this can be viewed as an injustice um and a kind of the kind of fundamental injustice of capitalism. And this is uh you know, I think people should care about this. It may not be possible to eliminate exploitation entirely. For instance, one of the things we've studied is that if you try to look at if you use exploitation intensity or exploitation as a measure of inequality, if you were to have some kind of redistributive policies to eliminate exploitation, uh if people have different skills and abilities are able to contribute different amounts of labor to the economy, then if you have equal wealth or equal income, you still have other inequalities because some people might be contributing more than others. So, this does highlight important policy issues of you know, maybe some of the aims might be to reduce exploitation through you know, trying to diminish the differentials in skills or privilege or position that people might have, uh creating more kind of a general equality among people in a very kind of holistic sense of the term. So, I think in terms of specific policy debates, uh a lot of our our work on exploitation um can be seen as you know, highlighting some things that might be lost in debates about our arguments along the lines of we should have more equal wealth, we should have or more equal distribution of wealth, we should have a more equal distribution of income. So, thinking about inequality in terms of exploitation highlights how if you have what could be considered this kind of simple egalitarianism, you can actually create inequalities of other kinds. So, if people have if wealth were equally distributed, people with different skills, some people who are very skilled might be contributing more to the economy than they're getting out. Uh you know, and vice versa. And this, you know, still might be unpalatable to some people. Um so, I think our work on exploitation intensity shows that, you know, it's not just about necessarily like compressing income and wealth distributions, although that might may be helpful or might be something we want to aim for. Um one aim might be trying to diminish the, you know, inequality and exploitation, the differential of how much people contribute to society versus how much they get out of it. And in terms of international relations or imperialistic international relations and the unequal exchange between countries, uh diminishing exploitative relations between countries would mean, you know, having more uh having better ways to ensure that there's not just, you know, better distribution of global wealth, but also that there aren't uh you know, uneven distributions of technologies across countries, allowing or kind of facilitating or fostering further uneven development. Um it would mean making sure that at a global level there more opportunities for people to, you know, be educated, to, you know, contribute more to the economy, to have the same opportunities or similar opportunities across countries that others might. Right now, what we're probably seeing in terms of AI, whether it's worse exacerbating inequality or um kind of improving inequality, meaning diminishing inequality, I I think right now we might be in the risk of it worsening inequality to be honest because with a powerful tool like AI, I think we're seeing certain people who hold lots of wealth and power attempting to gain control over AI or to corner market in this or we might see more of that. Um in terms of AI's ability to diminish inequality, it could be there. I think it's going to depend on who's able to have control or exert control over AI. Is this going to something that's going to become uh you know, available to society at large? Is going to be something like a public good uh because of all the positive, you know, externalities it can generate? Or is this something that's going to become part of you know, capital? Is going to be controlled and used? Um so I think there's we're in you know, the risk is there of still going in either direction. I think we have to kind of decide which way we want to go with this collectively. This current paper uh that I'm discussing, the dynamics of international exploitation, it's recently been published in environment and planning A economy and space. Uh this is a the paper that's in a kind of a series of papers that I've been working on with my frequent co-authors, Roberto Veneziani and Naoki Yoshihara. Uh where over a series of papers in a number of years at this point, we have been developing a computational approach to studying exploitation and classes and a very kind of broad and general sense. Um we first do started developing this class of models uh to study uh you know, how exploitation status or exploitation intensity as we you know, develop the concept, um how it uh can be used as a measure of inequality and how it evolves in uh when we consider things like technological change, population growth, uh what kinds of different exploitation might people experience in these scenarios and growing economies. Um And we've developed this over a number of papers, um, and in addition to, you know, developing that concept just as a measure of or novel measure of exploitation, um, we then implemented it as or developed it as a measure of inequality, um, where exploitation intensity, you know, can be used to capture or measure different types of inequalities that we see in capitalism rather than a narrow narrower focus on things like income and wealth inequality. So, our measure of exploitation intensity, when treated as a measurement of inequality, uh, captures, you know, contributions to the economy in addition to what people get out of the economy. So, it's kind of an interesting measure of inequality and highlights certain things that other approaches can't cannot. And studying this in a using a computational simulation framework, we can see how this different treatment of inequality compares to standard treatments of income and wealth inequality, how it behaves or what happens as we have things like technological change, uh, population growth, changes in bargaining power that, uh, you know, different like workers might have against capitalists or vice versa. And so, we've developed this over a few papers where we first looked at measure or developing a framework to look at exploitation, exploitation intensity, uh, geared, uh, kind of tuned to the US distribution of income and wealth. And we're able to show it some interesting things about how this compares to, you know, conventional income and wealth inequality in the US. Uh, one thing that I think is particularly interesting about the measure of exploitation intensity is that it shows that there is there can be some very strong incentives or reasons to have some kinds of redistributive policy, uh, in order to diminish the exploitation and unequal relations that people have between each other. And we then, you know, kept working on this idea and uh, you know, found that it actually has wide application. So, not only can exploitation intensity be used to look at inequality within a country, either between individuals, between households, or other groups, it can also apply at the global level to look at inequalities between countries. And it can be used to measure or as a measurement of unequal exchange. And this like kind of circles back on or revives this classic literature in the Marxian tradition looking at uneven development and unequal exchange between countries. Where in these kind of classic treatments of unequal exchange, the unequal relations between countries exist because you have differences in or deviations between prices and what are called labor values or some measure of the labor content of commodities. One of the things that's nice about our measure of exploitation intensity as a measure of unequal exchange is that it doesn't rely on these kinds of market distortions or any kind of non-competitive distortions. It's a very kind of simple, easy to implement measure and it maps very well onto kind of classic understanding of this core periphery structure of the global economy.