黑料社区

Photo: do bicycles come from? Source: WDR2020, Figure 1.1, pp. 16.

One of the main effects (I will not say purposes) of orthodox traditional economics was鈥�a plan for explaining to the privileged class that their position was morally right and was necessary for the welfare of society.

鈥擩oan Robinson¹

The recent period of globalization鈥攆ollowing the collapse of the Eastern bloc and the reintegration of China into the world economy鈥攊s one where global value chains have become the dominant organizational form of capitalism. From low to high tech, basic consumer goods to heavy capital equipment, food to services, goods are now produced across many countries, integrated through global value chains. According to the International Labour Organization, between 1995 and 2013 the number of people employed in global value chains rose from 296 to 453 million, amounting to one in five jobs in the global economy.² We are living in a global value chain world.³

The big question is whether this global value chain world is contributing to, or detracting from, real human development. Is it establishing a more equal, less exploitative, less poverty-ridden world? Which political economic frameworks are best placed to illuminate and explain the workings of this world?

Recent critical scholarship has applied monopoly capital concepts and categories to the analysis of global value chains. John Bellamy Foster and others have illuminated how global value chains represent the latest form of monopoly capital on a world scale.⁴ John Smith shows how surplus-value transfer and capture鈥攆rom workers in poorer countries to lead firms in northern countries鈥攊s portrayed by mainstream economists as 鈥渧alue added鈥� by those firms.⁵ Intan Suwandi analyzes how global value chains are enabled by, and also intensify, differential rates of worldwide labor exploitation.⁶

Mainstream advocates of global value chain-based development tend to ignore such critical analyses, and continue to preach the benefits of global value chain integration by drawing on examples and data that support their claims. However, it says much about the anti-developmental dynamics generated by global value chains when a World Bank report advocating global value chain-based development actually provides data that supports the analyses of the aforementioned critical authors.

Here, we interrogate the data used and the claims made in the World Bank鈥檚聽World Development Report 2020, titled聽Trading for Development in the Age of Global Value Chains聽(WDR2020, or 鈥渢he report鈥�).⁷聽While the report portrays global value chains as contributing to poor countries鈥� development through job creation, poverty alleviation, and economic growth, we reveal how its data shows the opposite.⁸

We also juxtapose comparative advantage trade theory (as deployed in WDR2020 to explain the developmental benefits of global value chain integration) to monopoly capital theory, in order to begin to answer which better illuminates and explains the key developmental dynamics generated by the global value chain world. Comparative advantage trade theory is based on the assumption of arms-length market transactions between firms with no power differentials. The existence of global value chains鈥攚here lead firms wield unprecedented economic power over suppliers鈥攊nvalidates this key assumption. While we are not surprised by the report鈥檚 attempts to positively portray global value chain-based development, we are somewhat taken aback by its serious shortcomings, particularly given the intellectual caliber of its authors.

In sum, we provide evidence and theory to support a core claim of the monopoly capital perspective, that 鈥渁s the internationalisation of monopoly capital grows鈥�the result is a worldwide heightening of the rate of exploitation (and of the degree of monopoly).鈥�⁹

The World Development Report and the Ideology of Global Value Chains for Development

WDR2020 represents the culmination of almost two decades of pro-global value chain ideological projection. As the former secretary general of the Organisation for Economic Co-operation and Development 脕ngel Gurr铆a argues: 鈥渆veryone can benefit from global value chains鈥� and 鈥渆ncouraging the development of and participation in global value chains is the road to more jobs and sustainable growth for our economies.鈥�¹⁰ Similarly, the primary position within mainstream academic global value chain analysis is that 鈥渄evelopment requires linking up with the most significant lead firm in the industry.鈥�¹¹ WDR2020 takes this hyperbole to a new level. According to the report, 鈥減articipation in global value chains can deliver a double dividend. First, firms are more likely to specialize in the tasks in which they are most productive. Second, firms are able to gain from connections with foreign firms, which pass on the best managerial and technological practices. As a result, countries enjoy faster income growth and falling poverty.鈥�¹²

According to WDR2020, global value chains are where production takes place in a series of stages, with 鈥渁t least two stages conducted in different countries.鈥�¹³ By 2008, 52 percent of world trade occurred under such arrangements (although the growth rate of global value chain trade has stagnated since then, see chart 1). WDR2020 proclaims that 鈥済lobal value chains boost incomes, create better jobs and reduce poverty.鈥�¹⁴ Given the World Bank鈥檚 promotion of neoliberal globalization, this conclusion is unsurprising. Yet, as the report鈥檚 own data shows, such conclusions are unwarranted. In fact, the report almost admits as much itself. Page 106 of the report, citing an OECD study, states how global value chains 鈥渉ave contributed to lower inflation via downward pressures on labor through heightened competition across countries to attract tasks, in particular when low-wage countries are integrated in supply chains.鈥�¹⁵

Chart 1. The Growth of Global Value Chain Trade

Source: Reproduced from 鈥淔igure 1.2 GVC Trade Grew Rapidly in the 1990s but Stagnated After the 2008 Global Financial Crisis,鈥� in  (Washington DC: World Bank, 2020), 19. Creative Commons Attribution CC BY 3.0 IGO.

The Fallacies of Comparative Advantage Theory

WDR2020 recognizes that 鈥渟uppliers are predominantly in developing countries鈥� and 鈥済ains may be distributed unequally, even across countries in the value chain.鈥�¹⁶ Nevertheless, it reverts to its preferred worldview of comparative advantage trade theory to assert that global value chain-led development generates mutual gains for lead firms (concentrated in developed countries) and supplier firms (concentrated in developing countries). This in turn benefits workers in both rich and poor countries. The so-called comparative advantage of developing countries is their low-cost labor. Accordingly, this perspective shapes its policy recommendations: 鈥淏ecause factor endowments matter, countries should exploit their comparative advantage by eliminating barriers to investment and ensuring that labor is competitively priced, by avoiding overvalued exchange rates and restrictive regulations.鈥�¹⁷

The theory of comparative advantage dates back to David Ricardo鈥檚 classical argument that countries can benefit from trade even if they do not have an absolute advantage in producing any goods, so long as they specialize in goods in which they have relatively higher productivity. If countries pursue this comparative advantage, then trade generates win-win outcomes whereby every country maximizes its income and enjoys cheaper products.¹⁸ Comparative advantage trade theory is a foundational pillar of mainstream development thinking and policy because it promises mutual gains (to trading countries and social classes), through global integration.

The political attractiveness of Ricardo鈥檚 theory to advocates of capitalist development鈥攊n his day and in ours鈥攊s that it naturalizes existing global divisions of labor and capitalist social relations. Every iteration of the theory, as we will argue, is deductive in that it starts from economic assumptions rather than historical experience. For example, Ricardo assumed the existence of a fully globalized world economy in order to make his assumptions about the gains from free trade. Ricardo and his followers also assume the existence of capitalist and laboring classes, and the subordination of the latter to the former, rather than investigating the historical formation of these relations.

Karl Marx, by contrast, explained the historically unique social relations of capitalism as arising out of the co-constitutive processes of mercantile colonialism and so-called 鈥減rimitive accumulation.鈥�¹⁹ Consequently, 鈥渃apital comes [into the world] dripping from head to foot, from every pore, with blood and dirt.鈥�²⁰

In an ingenious ideological twist, Ricardo argued that relative, rather than absolute, productivity determined gains from trade. This enabled his theory to predict that all countries could gain from trade, rather than only those that were more competitive. This intellectual move legitimated Britain鈥檚 incorporation of large swathes of the globe into its imperial-centered division of labor, enabling its advocates to portray such moves as developmentally benign. His classical example (where Britain produced wine and cloth less efficiently than Portugal) painted Britain as the weaker economic power. In reality, Britain had just 鈥渓iberated鈥� Portugal from Napoleon (in 1808), subordinating it to its own 鈥渋mperialism of free trade.鈥�²¹

These tropes鈥攃omparative productivities, the benefits of international exchange, the imperial center acting as a benign actor for the benefit of other regions鈥攊nfused all subsequent theories of comparative advantage.

How Global Value Chain Realities Undermine Comparative Advantage Theory

The deductive basis of comparative advantage trade theory (based on economic assumptions rather than historical evidence) means, however, that it is perilously difficult to apply it accurately to real world conditions. Indeed, models of the theory are only analytically valid under the assumption of 鈥減erfect competition,鈥� and are applicable only when market realities broadly adhere to it.

Perfect competition is a scenario in which small price-taking economic actors transact in a competitive market. Because no power imbalances exist, prices merely reflect supply and demand, and liberalized markets ensure a fair distribution of value through arms-length transactions. According to this idealized scenario, suppliers receive a fair price, buyers earn 鈥渘ormal鈥� profits, and workers receive a fair wage.

However, this ideal of perfect competition bears no resemblance to the realities of global value chains (table 1), in which powerful lead firms establish often exclusive relationships with suppliers, dictating all aspects of production and aggressively negotiating prices. Rather, global value chain trade is the antithesis of perfect competition, contradicting the very conditions under which comparative advantage trade theory has validity.

Table 1. Perfect Competition versus Global Value Chain Realities

Units and Issues of Analysis	Perfect Competition Assumptions	Realities of Relational Global Value Chains
Producers	Many producers operate in each industry	A few large 鈥渟uperstar鈥� firms dominate each industry, coordinating many suppliers
Counterparties	Anonymous buyers and sellers	Interdependent relationships between lead firms and suppliers
Power relations	Equal power between buyers and suppliers	Unequal power wielded by lead firms over suppliers
Coordination of transactions	Market forces	Governed by lead firms
Prices	Determined by balance of supply of demand	Outcome of unequal bargaining between lead firms and suppliers

The dominant Heckscher-Ohlin version of the model reformulates comparative advantage on the basis of 鈥渇actor endowments鈥濃�攖hat is, whether a country is relatively 鈥渁bundant鈥� in either capital or labor. In this model, developed countries are capital abundant and should focus on innovative high-tech production. Conversely, developing states should exploit their advantage in cheap labor with labor-intensive production.²² Poverty alleviation ensues through employment, and national income will be shared between capital and labor, with wages increasing in line with productivity. In this model, factor endowments are assumed to be immobile across borders, despite the evident mobility of capital in the world system (for example, through foreign direct investment). The Stolper-Samuelson version of the model instead defines the two factors as low- and high-skilled labor (rather than capital and labor) (see table 2).

Table 2. Comparative Advantage Trade Theory versus Global Value Chain Realities

Units and Issues of Analysis	Hecksher-Ohlin Model Assumptions	Realities of Relational Global Value Chains
Markets	Perfect competition	(see table 1)
Goods traded	Final goods	Intermediate goods
Technologies	Both countries have identical technologies	Developed countries protect their superior technologies
International factor mobility	Both factors are immobile	Capital is highly mobile, whereas labor is relatively immobile
Theorems	Predictions	Realities of Relational Global Value Chains
Factor-price equalization theorem	The return to labor relative to capital may fall in developed countries, but should rise in developing countries	The share of income going to labor has fallen in both developed and developing countries
Stolper-Samuelson theorem	Inequality between 鈥渟killed鈥� and 鈥渦nskilled鈥� workers may increase in developed countries, but should fall in developing countries	Inequality has increased in both developed and developing countries

Sources: Loukas Karabarbounis and Brent Neiman, 鈥淭he Global Decline of the Labor Share,鈥� Quarterly Journal of Economics 129, no. 1 (2014): 61鈥�103; Elena Meschi and Marco Vivarelli, 鈥淭rade and Income Inequality in Developing Countries,鈥� World Development 37, no. 2 (2009): 287鈥�302.

These models of comparative advantage continue to rely on assumptions that are not compatible with the contemporary reality of global value chains鈥攖hey assume that trade must occur in competitive markets between anonymous parties with equal bargaining power (see tables 1 and 2). For example, WDR2020 references an influential paper by Gene Grossman and Esteban Rossi-Hansburg, which includes the following footnote:

We assume that factor markets are competitive so firms have no monopsony power. We might alternatively assume that firms can keep some of the benefits that result from a reduction in offshoring costs by using their monopsony power in factor markets. Similarly, we might assume that a reduction in offshoring costs enhances firms鈥� market power. Then there would be an additional channel through which offshoring could affect wages. To keep our analysis as simple as possible, however, we maintain the assumption of competitive markets throughout the paper.²³

Despite WDR2020鈥檚 recognition that global value chain trade is not based on arms-length market transactions, it proceeds to use the language of comparative advantage trade theory to explain the benefits of global value chain participation as trade-related specialization.²⁴ Given this dissonance, however, it should be no surprise that the empirical evidence from global value chain trade does not adhere to predictions derived from models of comparative advantage (see table 2).

Monopoly Capitalism

Modern iterations of comparative advantage theory are based on neoclassical assumptions of perfect competition. Such assumptions exclude the theoretical possibility that unequal power relations among firms enable some to influence others, and capture surplus value from them. Consequently, it is no surprise that the WDR deploys the language of comparative advantage theory in order to portray a global value chain world as largely devoid of fundamentally unequal inter- and intra-firm power relations.

Theories of monopoly capitalism, by contrast, are well placed to illuminate and explain the formation and functioning of a world economy rooted in labor exploitation and unequal power relations between firms. While these theories range from Marxist to non-Marxist political economists, they have in common a rejection of the notion of perfect competition and market equilibrium. As Micha艂 Kalecki, one of the foremost theorists within this broad framework, noted, the assumption of perfect competition is 鈥渕ost unrealistic not only for the present phase of capitalism but even for the so-called competitive capitalist economy of past centuries.鈥� This competition was always in general very imperfect.鈥�²⁵ Joan Robinson argued that perfect competition was a myth and that capitalist competition is characterized by a tendency toward monopolistic competition and thus rising rates of labor exploitation.²⁶

The concept of monopoly capital originates in Marx鈥檚 observation that 鈥渃apital grows in one place to a huge mass in a single hand, because it has in another place been lost by many.鈥� The consequences of this for workers are that 鈥渁long with the constantly diminishing number of the magnates of capital, who usurp and monopolise all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation.鈥�²⁷

As part of his analysis of the dynamics of exploitation in production, Marx discusses what happens to surplus value as it is distributed beyond the productive sphere:

The capitalist who produces surplus-value鈥攊.e., who extracts unpaid labour directly from the labourers, and fixes it in commodities, is, indeed, the first appropriator, but by no means the ultimate owner, of this surplus-value. He has to share it with capitalists鈥�who fulfil other functions in the complex of social production. Surplus-value鈥�splits up into various parts鈥�and takes on various mutually independent forms, such as profit, interest, gains made through trade, ground rent, etc.²⁸

Concentration and centralization of capital accelerate and reinforce the transfer of surplus value from weaker to stronger capitals. These dynamics generate tendencies whereby 鈥渢here is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions.鈥�²⁹ As Grace Blakeley points out, 鈥渟maller capitalists without large pools of previous earnings crowd into more competitive sectors as they are unable to compete with incumbents in more developed sectors, leaving larger, more established firms with even more market power.鈥�³⁰

Theorists of monopoly capital explained the globalizing dynamics of the postwar years. For example, Paul Baran and Paul Sweezy argued that what multinational corporations wanted was 鈥�monopolistic control over foreign sources of supply and foreign markets, enabling them to buy and sell on specially privileged terms, to shift orders from one subsidiary to another, to favor this country or that depending on which has the most advantageous tax, labor, and other policies鈥攊n a word, they want to do business on their terms and wherever they choose.鈥�³¹

But monopoly capital theory does not just focus on the dynamics of capital concentration and centralization. It is also concerned with the balance of power between capital and labor, and how it is institutionally mediated. In his Theory of Economic Dynamics, Kalecki introduced the concept of 鈥渢he degree of monopoly.鈥�³² This helped him demonstrate how in sectors characterized by higher degrees of monopoly, surplus value would (1) be increasingly centralized in the hands of a few monopolistic firms at the expense of competitive firms, and (2) preside over increased rates of surplus value appropriation (exploitation) from labor. For Kalecki, the degree of monopoly was conjunctural鈥攄etermined by, among other things, institutional environment and trade union strength.

However, as Malcolm Sawyer argues, such dynamics can also give rise to new opportunities for organized labor, especially when there are large concentrations of workers employed by monopolistic firms.³³ Trade unions鈥� bargaining strategies (as opposed to efforts by isolated and individualized workers) can wrest higher wages from firms, in particular if the latter are in a better position to yield them due to their greater resources. In this dialectical sense, while monopoly capital can lead to higher rates of exploitation, it can also provide opportunities for workers to resist such exploitation. These struggles unfold in historically and contextually specific conditions and their outcomes are always uncertain. Ashok Kumar observes such dynamics in his analysis of workers鈥� struggles and conflictual capital-labor relations in recently emerged giant suppliers such as Yue Yeun (footwear) in China, Arvind (denim) in India, and Fruit of the Loom (T-shirts) in Honduras.³⁴

These then are two perspectives from which global value chains, and the (anti)developmental dynamics they give rise to, can be viewed. The first is based on assumptions of perfect competition and mutual gains. The second is rooted in an observation of labor exploitation and unequal power relations between firms. Which theory does the WDR鈥檚 evidence support? Its authors would like readers to believe that the evidence supports the former, which portrays a world free of power relations and predicts mutual gains for all participants. As we shall see, however, the WDR provides enough evidence to simultaneously undermine its own theoretical vantage point while valorizing the monopoly capital perspective.

WDR2020: Wealth Concentration, Bad Jobs, Wage Repression

The report鈥檚 core argument is that 鈥済lobal value chains boost incomes, create better jobs, and reduce poverty.鈥�³⁵ However, the report itself provides enough evidence to suggest that global value chains concentrate wealth, repress incomes, and create many bad jobs (low-wage, low-skill, low-security, and with poor working conditions).

WDR2020 explains that, for its sample of countries, global value chain firms accounted for only about 15 percent of all trading firms, but capture about 80 percent of total trade.³⁶ Following David Autor, David Dorn, Lawrence F. Katz, Christina Patterson, and John Van Reenen, WDR2020 calls the biggest lead firms 鈥渟uperstars.鈥�³⁷ The report further argues that global value chains accelerate development because 鈥渞elational鈥� global value chain linkages transmit gains from 鈥渟uperstar鈥� lead firms to supplier firms in developing countries and their workers.

It is true that global value chains have ushered in a profit bonanza for lead U.S. firms, who have secured continually rising markups over their costs of production. WDR2020 acknowledges that 鈥済lobal value chains have boosted superstar firms that earn superstar profits and may dominate the market.鈥�³⁸ The report also references Jan De Loecker and Jan Eeckhout鈥檚 analysis of the financial accounts of 70,000 firms across 134 countries, which found that profits have risen substantially since 1980, particularly in the United States and Europe, with average markups over costs of production rising from 1.1 to 1.6 by 2016.³⁹

But are these gains mutual or exclusive? De Loecker and Eeckhout find that firms from developing countries have seen markups stagnate or decline, particularly in South America and China.⁴⁰ WDR2020 is forced to acknowledge that: 鈥淟arge corporations that outsource parts and tasks to developing countries have seen rising markups and profits, suggesting that a growing share of cost reductions from global value chain participation are not being passed on to consumers. At the same time, markups for the producers in developing countries are declining.鈥�⁴¹

In contrast to superstar firms, the report finds that when supplier firms integrate into global value chains, they earn lower markups: 鈥淭he implications of global value chains for the emergence of superstar firms huge in scale, high in market power, and large in profit rates are exacerbated by the disproportionate bargaining power that these large lead firms may have over their suppliers.鈥� Although buyer firms in developed countries are seeing higher profits, supplier firms in developing countries are getting squeezed.鈥�⁴²

Global Value Chains and the Shift of Income from Labor to Capital

One consequence of intensified lead firm concentration and rising transnational corporation profitability within global value chains is a rising share of national income going to capital rather than labor. De Loecker and Eeckhout find that rising markups of large firms has resulted in an increasing share of income going to capital rather than workers: 鈥淗igher markups lead to higher profits, and鈥�they are not driven by higher overhead costs. This further confirms the fact that the increase in markups brings about a distributional change with more of the surplus going to the owners of the firms and less to the workers.鈥�⁴³

As the United Nations Conference on Trade and Development鈥檚 Trade and Development Report 2018 puts it: 鈥淭he rise in the profits of top TNCs [transnational corporations] accounted for more than two thirds of the decline in the global labour income share between 1995 and 2015. Therefore, although the rising share of the profits of top TNCs has come at the expense of smaller enterprises, it has also been strongly correlated with the declining labour income share since the beginning of the new millennium.鈥�⁴⁴

Faced with this growing consensus, WDR2020 acknowledges that: 鈥淚n 63 developed and developing economies, global value chain integration as well as other domestic within-industry forces, such as technology or markups, contributed significantly to the reallocation of value added from labor to capital within countries between 1995 and 2011.鈥�⁴⁵

This has serious implications for the potential of global value chain-led development. Unsurprisingly, given its mutual gains ideology, WDR2020 fails to question whether this might be caused by the impact of global value chains on capital-labor relations. By contrast, Alexander Guschanski and 脰zlem Onaran include this consideration in their extensive econometric study of developing countries.⁴⁶ In it, they find that labor鈥檚 share of income was negatively impacted by a reduction in workers鈥� bargaining power following global value chain integration.

What About Workers?

WDR2020 claims that global value chain participation by supplier firms in developing countries can enhance workers鈥� incomes and livelihoods. The case study of Samsung鈥檚 new factories in Vietnam runs throughout the report. Its opening lines gush about Vietnam鈥檚 integration into the electronics global value chain: 鈥淪amsung makes its mobile phones with parts from 2,500 suppliers across the globe. One country鈥擵ietnam鈥攑roduces more than a third of those phones, and it has reaped the benefits. The provinces in which the phones are produced, Thai Nguyen and Bac Ninh, have become two of the richest in Vietnam, and poverty there has fallen dramatically as a result.鈥�⁴⁷

The report ignores Samsung Vietnam鈥檚 record of labor rights violations. In 2018, UN inspectors found widespread maltreatment of its mainly female workforce: 鈥淩esearchers reported testimonies of dizziness or fainting at work from all study participants and high noise levels that violated legal limits. Miscarriages were reported to be common and workers reported pain in their bones, joints, and legs which they attributed to standing at work for 70 to 80 hours a week.鈥�⁴⁸

The report credits lead firms for implementing 鈥渧oluntary codes of conduct鈥� that improve working conditions within their supply chains.⁴⁹ It also celebrates campaigns by benevolent Western consumers and non-governmental organizations. But it veils workers鈥� own attempts to improve their pay and conditions. For example, it claims that: 鈥淚n response to demands from international buyers, and learning from international best practices, Bangladeshi producers are increasingly recognizing that they must not only improve their practices, but also ensure that improvements can be independently verified by third parties.鈥�⁵⁰ Empirically, however, militant strike action was instrumental in securing permanent pay rises in Bangladesh鈥檚 global value chains: 鈥淏angladesh鈥檚 official wage board has approved a 77% rise in pay for the region鈥檚 garment workers from December [2013] after the world鈥檚 second largest clothing exporter was crippled by strikes and the Rana Plaza disaster.鈥� In September this year, thousands of garment factory workers in Bangladesh protested over low wage rates, resulting in the closure of many factories.鈥�⁵¹

The report鈥檚 authors are so unsure of their own arguments that they misconstrue evidence to fortify their claims.

The report鈥檚 preferred benchmark is wages and employment: 鈥淣ot only do global value chain firms employ more people, but they also pay better.鈥�⁵² However, it presents a highly selective, even misleading, interpretation of the evidence. The report states that 鈥渁cross a sample of developing countries, firms that both export and import pay higher wages than import-only and export-only firms and nontraders.鈥�⁵³ In support, it cites an article by Ben Shepherd and Susan Stone, claiming that their findings show that 鈥渇irms with the strongest international linkages鈥攅xport, import, and foreign-owned鈥攑ay higher wages.鈥�⁵⁴

However, the purpose of Shepherd and Stone鈥檚 study is to provide 鈥渆vidence on the links between Global Value Chains and labor markets, focusing on developing economies, particularly the OECD鈥檚 Key Partner countries (Brazil, India, Indonesia, China, and South Africa).鈥�⁵⁵ These countries account for the majority of workers employed in global value chains.⁵⁶ Shepherd and Stone do find a positive link with wages for a large sample of 108 countries. Crucially, however, when they focus on these five developing economies they find 鈥渘o discernible impact of international linkages on wage rates in these data for the key partner countries.鈥� The effects of global value chains may be primarily felt in emerging markets through increased employment rates rather than higher wages.鈥�⁵⁷ In summary, they discern no association between global value chain employment and higher wages in these countries.

Conclusions

Global value chains are the defining organizational feature of contemporary global capitalism. They have integrated new regions into global circuits of accumulation, generated novel opportunities for capitalist profit, and expanded the size of the global working class. These dynamics have been lauded by many commentators as providing innovative development opportunities for poorer world regions. Such arguments are founded, in part, on the theory of comparative advantage, which claims that global integration through trade generates mutual gains for all concerned.

This is the familiar narrative advanced by the World Bank鈥檚 Trading for Development in the Age of Global Value Chains, and its headline message that 鈥済lobal value chains boost incomes, create better jobs and reduce poverty.鈥� The only problem is that the report actually provides sufficient evidence to suggest the opposite鈥攖hat global value chains concentrate wealth, repress incomes, and create many bad jobs. The attempt by the report鈥檚 authors to shoehorn the unequal realities of the global value chain world into the pristine deductive logic of comparative advantage theory further compounds the problem, as the report鈥檚 evidence also undercuts the assumptions and predictions of the theory.

Monopoly capital theory is better placed to illuminate and decipher the anti-developmental dynamics generated by the global value chain world. The core message of this theoretical perspective, unlike comparative advantage theory, is that workers鈥� collective action, rather than the dynamics of capitalist expansion, are the key to improvements in workers鈥� conditions under capitalism.

Notes

1. Joan Robinson, Essays in the Theory of Employment (New York: Macmillan, 1937), 176.
2. International Labour Organization, World Employment Social Outlook: The Changing Nature of Jobs (Geneva: ILO, 2015).
3. Frederick W. Mayer and Nicola Phillips, 鈥淥utsourcing Governance: States and the Politics of a 鈥楪lobal Value Chain World,鈥欌�� New Political Economy 22, no. 2 (2017): 134鈥�52.
4. John Bellamy Foster, Robert W. McChesney, and R. Jamil Jonna, 鈥�,鈥� Monthly Review 63, no. 2 (June 2011): 1.
5. John Smith, 鈥�,鈥� Monthly Review 64, no. 3 (July鈥揂ugust 2012): 86鈥�102.
6. Intan Suwandi,  (New York: Monthly Review Press, 2019).
7. World Development Report 2020: Trading for Development in the Age of Global Value Chains (Washington DC: World Bank, 2020).
8. Benjamin Selwyn and Dara Leyden, 鈥�,鈥� Competition & Change (2021). For a critique of WDR2020鈥檚 methodology, see: Jennifer Bair, Mathew Mahutga, Marion Werner, and Liam Campling, 鈥�,鈥欌�� Environment and Planning A: Economy and Space 53, no. 6 (2021): 1253鈥�72
9. Foster, McChesney, Jonna, 鈥淭he Internationalization of Monopoly Capital,鈥� 12.
10. Quoted in Marion Werner, Jennifer Bair, and Victor Ramiro Fern谩ndez, 鈥淟inking Up to Development? Global Value Chains and the Making of a Post-Washington Consensus,鈥� Development and Change 45, no. 6 (2014): 1220.
11. Gary Gereffi, 鈥淪hifting Governance Structures in Global Commodity Chains, with Special Reference to the Internet,鈥� American Behavioral Scientist 44, no. 10 (2001): 1622.
12. World Development Report 2020, xii.
13. World Development Report 2020, 265.
14. World Development Report 2020, 3.
15. World Development Report 2020, 106, emphasis added. See also Dan Andrews, Peter Gal, and William Witheridge, 鈥淎 Genie in a Bottle? Globalisation, Competition, and Inflation鈥� (OECD Economics Department Working Paper 1462, Document ECO/WKP 10, Organisation for Economic Co-operation and Development, Paris, March 20, 2018).
16. World Development Report 2020, 141鈥�42.
17. World Development Report 2020, 161, emphasis added. See also pages 42, 48, 69, 126, 137, 148, 185, 195鈥�96, 202.
18. Mankiw, N. Gregory and Mark P. Taylor, 鈥淢acroeconomics: European Edition,鈥� in Macroeconomics: European Edition (New York: Worth Publishers, 2008).
19. Karl Marx, Capital, vol.1. (London: Penguin, 1990); Lucia Pradella, 鈥淣ew Developmentalism and the Origins of Methodological Nationalism,鈥� Competition & Change 18, no. 2 (2014): 180鈥�93.
20. Marx, Capital, vol. 1, 871, 926.
21. John Gallagher and Ronald Robinson, 鈥淭he Imperialism of Free Trade,鈥� Economic History Review 6, no. 1 (1953): 1鈥�15.
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33. Malcolm C. Sawyer, 鈥�,鈥� Journal of Economic Surveys 2, no. 1 (1988): 47鈥�76.
34. Ashok Kumar, Monopsony Capitalism: Power and Production in the Twilight of the Sweatshop Age (Cambridge: Cambridge University Press, 2020).
35. World Development Report 2020, 3.
36. World Development Report 2020, 30鈥�31.
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41. World Development Report 2020, 3, emphasis added.
42. World Development Report 2020, 85.
43. De Loecker and Eeckhout, 鈥淕lobal Market Power,鈥� 10.
44. UNCTAD, Trade and Development Report 2018: Power, Platforms and the Free Trade Delusion (New York: United Nations, 2018), 57.
45. World Development Report 2020, 86.
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48. 鈥�,鈥� United Nations Human Rights, March 20, 2018.
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57. Shepherd and Stone, 鈥淕lobal Production Networks and Employment,鈥� 15.

Benjamin Selwyn is a professor of international relations and international development at the University of Sussex, Brighton, UK. His publications include The Struggle for Development (Polity Press: 2017).

Dara Leyden is a PhD student at the School of Business and Management of Queen Mary University of London.

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