Unequal Exchange in International Trade: A General Model

Abstract

Increasing world inequality and mass migration make the topic of unequal exchange ever more important. In literature, two main sources of unequal exchange have been identified: differences in industrial specialization and differences in factors remunerations between countries. Many empirical studies measured the quantitative dimension of value transfers. However, the lack of a coherent theoretical framework limited empirical research. A disaggregated model of world economy with heterogeneous labour and non-specific commodities is presented on the grounds of the New Interpretation of Marx’s LTV. The model is able to explain, within a coherent theoretical framework, all the various forms of international value transfers, without incurring in traditional impasses. The social distribution of benefits/losses of unequal exchange emerges as a pragmatic and historical question rather than a theoretical one. Recent empirical approaches based on the difference between nominal and PPP exchange rates could only partially capture the full extent of unequal exchange in world economy. The operational character of the model provides a consistent theoretical basis for further empirical research on international value transfers deriving from the unfair distribution of value added in trade between countries and between social classes.