(CHAPTER 2 Contemporary Globalisation and Valuc Systems: What Gains for Developing Countries? Praveen Jha and Paris Yeros INTRODUCTION ‘Among the much-discussed dimensions of contemporary capitalism happens to be the phenomenon. variously described as Global Commodity Chains (GCCs), Global Value Chains (GVCs), Global Supply Chains _(GSCs), Global Production Networks (GPNs), Global Value Networks _ (GYNs), cte., which essentially seck to highlight the growing signif- cance of global interactions and connectedness of present day jc¢/accumulation regimes. Our own preference is for yet another viz., Global Value Systems (GVSs), and in some of our earlier 3536 P. JHA AND P. YEROS publications (Jha & Yeros, 2019, 2021) we have examined the analytical advantage of doing so. Essentially, our claim is that the other above- noted terms, generally speaking, remain confined to the most visible relationships of contemporary accumulation regimes, and do not engage adequately with the immanent tendencies central to the evolution of ‘combined and uneven’ trajectories of global capitalism, leading to the current phase of ‘globalised /transnationalised’ production and appropri _ation systems. To understand the phenomenon at hand, and its intrinsic ties, we think it is better to adopt a Marxist political economy rk, which investigates the systemic determinants of contempo- -finance capitalism and their consequences. The crux of ‘definition of contemporary global value systems refers to the world economy in which: “components of a single ty/final output are conceived, designed, produced, essed in different parts of the globe, before being ta specific destination for ultimate consumption, a global reach” (Jha & Yeros, 2019, p. 15). be stressed that the transnationalisation of accu- ition is almost as old as capitalism, beginning with through a modus operandi that Marx designated mulation, although particular historical phases ‘own specificities and peculiarities. Economic and countries, almost invariably inscribed 1 the course of the Industrial Revolution, WVSs. The era of neoliberal capitalism, proximately the 1970s onwards, has ation regime in profound ways of markets; accelerated advances anisms); growing dominance of mentally on profits through circu- ‘scramble by the North for natural etc.) and other assets in the global reserves of labour largely d context that we need to locate Titerature, there has been a tries to a few chosen desti-38 P SHA AND P. YEROS (GV$s), these are hardly new; on the contrary, as noted above, transna- tional accumulation regimes are as old as capitalism itself. An appropriate contextualisation of these requires their location in systemic tendencies of capitalism, and the system’s evolution since its inception approximately hundred years ago. Of course, while the current phase of GVSs is characterised by several distinct features and we highlight a couple of the ‘most critical attributes in the subsequent discussion, it hardly needs to ‘emphasised that capitalism has evolved as a ‘combined and uneven ee its course, In fact, s Marx often emphasised, the tran- jtalism. Before we come to the important features of ry phase of GVSs, a couple of words on its historical carly prototypes of globally intertwined value ‘commodities. For instance, in the case of cotton sed intermediates were procured by Europe luction of finished goods destined for at and beyond. In general, there was a ‘these industrial raw materials, which could available in the cold temperate climate of ich riches was a powerful driver, apart rand plunder, underlying the colonial into tropical and sub-tropical regions. ‘was through outright appropriation or ‘exploitative strategies was employed by ends. These are very well known and jowever a point worth emphasising is included ‘undisguised looting, root in Europe, capitalism was wide: first, through ‘external’2. CONTEMPORARY GLOBALISATION AND VALUE SYSTEMS... 39. processes of primitive accumulation and, second, through systemic incor- poration into the ‘circuit of capital’, generally on uneven terms, and often with the use of brute force. ‘Although we do not intend to pursue the relevant details relating to the above hinted issues in this chapter, it is important to note here that contemporary developing countries, in terms of simple and standard indi- ators of economic performance, were certainly not inferior and in all likelihood notably ahead of currently developed countries around the time of the latter's transition to capitalism, and well after that as well. Raychaudhuri (1985) reports that as per the estimates arrived at by Simon Kuznets, per capita incomes in modern industrialised countries, prior to ‘their pre-industrial phase, were lower than the ‘traditional societies of ‘Although assessments of comparative cconomic performance going nto the past are fraught with statistical difficulties, there is over- widence to support the view that around the middle of the h century, taking the contemporary Third World and First World ‘groups of countries, the former was ahead, in terms of tant indicators such as gross income, per capita income, tion, ete. (Bairoch, 1995; Maddison, 2007). It is markable statistic that in 1750, the estimated share of /together in global manufacturing output was around ther significant countries from the contemporary figure would be closer to 80%. In short, till the th century, the economic geography of the world it from the picture we get for the subsequent ly towards the end of the cighteenth century that above-noted gap and starts surging ahead of the Faccelerated pace from the second quarter of ie middle of the twentieth century, the Third tind; to illustrate it with just one number, the ng to the West galloping ahead of the and bitterly contested domain. Si40 P. JHA AND P. YEROS central conclusions emerging from the relevant literature is straight- rd: the economic stranglehold that European powers got over the continents of Asia, Africa and Latin America, from the sixteenth ds for almost four hundred years, typically through coloni- dates and junctures, resulted in unprecedented plunder fof the countries in these continents. Apart from mass ‘underlying processes resulted in their massive struc- rther, via multiple channels, this stranglehold facili- capitalism and accelerated its momentum, across colonies of white settlement. at that we are advancing here, pertaining nts including forced incor- ‘of the supply/commodity chains that days of capitalism, when major trading ¢ played key roles in shaping global trade course, as capitalism transitioned from ‘to an industrial capital-driven stage in by the late cighteenth to early nine- systems was deindustrialisation ‘of the North, and massive > two blocs. These outcomes were with specific nodes in these global -of choice for the South. A related the trends pertaining to both the accelerated towards the closing capitalism in the North entered verful economic actors calling, ts especially in industry and sation of capital have grown by with massive and unprece- hich we highlight later in tion of capitalism, we have tion Marxist scholars tional corporations2 CONTEMPORARY GLOBALISATION AND VALUE SYSTEMS 4) (MNCs/TNCS), and shedding light on systemic transformations in the dynamics of value generation and appropriation globally. Absolutely bril- liant analyses by Lenin (1917), Bukharin (1929 [1950]) and Luxemburg (1913 [2003]), among several others, illuminate the evolving mecha- hisms of accumalation and exploitation on a global scale, along with the strengthening of imperialism through GVSs, with TNCs acquiring muscle gs preeminent. economic actors in the global arena. We take the liberty of citing a passage from the Preface that Lenin wrote for Bukharin’s classic study, Imperialism and the World Economy, in which he captures some of these features, and future tendencies, in remarkable ways. To quote Lenin: [ilt is highly important to have in mind that this change was caused by nothing but the direct development, growth, continuation of the deep-seated and fundamental tendencies of capitalism and production ‘of commodities in gencral. The growth of commodity exchange, the growth of large-scale production are fundamental tendencies observable for centuries throughout the whole world. At a certain stage in the “development of exchange, at a certain stage in the growth of large- "scale production, namely, at the stage that was reached approximately at of the ninetcenth and the beginning of the twenticth centuries, exchange had created such an internationalisation of economic , and such an internationalisation of capital, accompanied by such increase in large-scale production, that free competition began to ‘by monopoly. The prevailing types were no longer enter- freely competing inside the country and through intercourse between .s, but monopoly alliances of entrepreneurs, trusts. The typical ruler world became finance capital, a power that is peculiarly mobile flexible, peculiarly intertwined at home and internationally, peculiarly ividuality and divorced from the immediate processes of eculiarly casy to concentrate, a power that has already made strides on the road of concentration, so that literally several s and millionaires hold in their hands the fate of the of TNCs, deepening of imperialism and a host ve important implications for the evolution of ta couple of critical dimensions pertaining to nt since the 1970s), it is important to recallP. JHA AND P. YEROS ‘economic system was profoundly impacted, especially after Revolution and in the backdrop of the Great Depression of ‘major developments such as consolidation of the socialist ion of much of the Third World, the post-WWII phase of complex terrain with several themes that are indeed d canvas of the global value system, but we can ociated with the above hinted developments was a | the functioning of ‘spontancous’ capitalism, which rospects for relatively autonomous economic trans- of the South; of course, the trajectories of st bloc were radically different and premised tion of capitalism. In general, however, the | was characterised by a widespread critical ideology, especially outside metropolitan coun- ing, this was the ‘Bandung Moment’ which to the ‘Berlin Moment’, with the collapse the Berlin Wall and other developments that ? firmly in the saddle again across much jon to pursue these issues any further berween the above-noted metaphorical sted by TNCs, and of course imperialism fs in GVSs and implied considerable of countries in the South. We take respect to the so-called ‘catching-up" ¢ section. [NCs h noon of the post-WWII dirigiste on the contrary, siphoning of continued and the TNCs from epening their entrenchment in focused on these issues during -periphery connections and high. capitalism. Apart from Baran’s of Growth, several scholars during this period (e.g, stein, 1986, among others), nd underdevelopment’. This2 CONTEMPORARY GLOBALISATION AND VALUE SYSTEMS 43 “dominant streams of ‘developmentalism’ and ‘modernisa- s, while examining machinations of TNCs and imperialism hold on global capitalism. Marxist analysts were often during this period, capital was already waiting in the economic space through an explicit, full-scale, assault, lism. As we know very well, the early 1970s became to launch such an onslaught, with Allende’s mili- ch of neoliberalism gathered momentum, with ‘brating the so-called ‘Washington Consensus’, referred to as the ‘Berlin Moment’ by approx- ‘The demise of the Soviet Union, China’s nted economic reforms and neoliberal globali- lapse of the ‘legitimacy’ of regulated capitalist South were touted as the ultimate proofs of | capitalism. The rage of triumphalism was all a’s (1992) utterly ill-conceived but much y; the ideological warfare had been won d to substantive engagements with facts or ns. The above-noted themes have generated ‘hardly begin to investigate here; the point fly is to provide a sense of the backdrop of at became ascendant since the 1970s and r contemporary GVCs/GYSs. We now ‘a couple of its critical specificities and half a century has been continu- rised by many important and novel “of ways across regions and coun- and flag three crucial features,globalisation has been accompanied by an unprecedented ey and dominance of capital-as-finance; one of the most implications of such a development is lack of synergy, Ang conflict, between capital-as-finance and capital-in- » fact, arguably the most important hallmark of this ig financialisation of the global accumulation regime, nal finance capital as the key actor, driven by a ‘casino huge adverse implications for almost all economic te measure due to significant squeezes on capital-in- more importantly, on overall economic policy 1¢ South. There is a very impressive literature 1 Marxian political economy and heterodox the scale and mechanisms of the depreda~ se’ on overall macroeconomic outcomes. oad range of issues pertaining to contempo- ed with major, indeed dramatic, transforma- and information technology (IT) sectors, 1g the post-WWII cra and were signif- the 1970s; these developments are very ed any recounting, here. Essentially, break- yn sector, stich as container technology, fing costs, etc., have ensured that bulk trade has increased. All this s-distance transactions have contin- inge of economic activities across tury or so. Likewise, in the IT nt systems, deep machine learning iy2 CONTEMPORARY GLOBALISATION AND VALUE SYSTEMS. 45 deepening in terms of the scale, intensity and speed of interac tions. Thus, it is hardly surprising that measures of interdepen dencies pertaining to major macroeconomic indicators, such as Gross Domestic Product (GDP), trade, employment, etc., show very impressive increases for several countries during recent decades, with ‘some of them often considered as ‘poster boys and girls’ in terms of economic performance. Statistics marshalled by all the well-known ‘major international institutions, such as the UNCTAD, OECD, WTO, ILO, etc., report substantial acceleration and improvements in the share of GVCs for each one of these indicators during the Fecent years. For instance, UNCTAD (2013) reported that incomes and India between 1995 and 2009, and for developing | a whole, GVC trade contributed approximately 30% more than 80% was through GVCs (UNCTAD, of employment, the ILO (2016) apportions more jobs to GVCs in the OECD and Asia region ds to be stressed that all these numbers are ny to the fact of significantly advanced global n labelled as ‘Made-in-the-World’, under- larly with respect to methodolo- of countries and sectors, but we do al globalisation has been organically of their unfolding, as with several contemporary GVSs. However, as 1 markers of the current ind systemic tendencies that have d at great length in Marxian omic-analytic traditions, and2. CONTEMPORARY GLOBALISATION AND VALUE SYSTEMS. 37 ‘Shift of production from the North to the South has happened through ‘foreign direct investments (FDI) to the latter, but much more impor- tantly, through increased incorporation of domestic actors in a whole range of economic activities including in worldwide arrangements of lue creation and appropriation, which are typically controlled by the “powerful economic actors (c.g. transnational corporations); in such “system, by and large, economic entities from the South are mere suppliers. “The current juncture reinforces Stephen Hymer’s (1970, p. 441) claim, half a century ago, that “multinational corporations were ming substitute for the market” in the organisation of international i¢ transactions, We may add that the giant monopolies of today, headquartered in the North, are the drivers of contemporary capitalism and it is increasingly evident that devel- tries typically get incorporated into the international system ch ate seriously unequal, given the nature of asymmetric ‘themselves are consequent on a range of structural ‘many of which are analysed as laws of motion of in this article are two-fold: first, to sketch an analyt- bbe helpful in underpinning the key conceptual GVSs, while flagging, very briefly, its histor- it to its current juncture; second, to reflect jc implications, particularly for developing ‘current phase of the global production and since the 1970s. There is a large and ‘these broad themes covering several issues; as a survey of all the important contribu- t with divergent views in the relevant jective here is to offer some theoretical ‘economy perspective, on the above- the next two sections before we close the es of production and appropria- value /supply/commodity/production fer to call global value systems2 CONTEMPORARY GLOBALISATION AND VALUE SYSTEMS... 47 fact, increased fragmentation and segmentation of production and yalori- is the second notable attribute of contemporary economic arrange- . It is almost akin to a state of paradise for the virtuous ‘division of by Adam Smith as one of the major (if not most impor- Fs of economic progress! ‘Thus, economic activities connected ction and realisation of a final good or service, are not najor segments such as design, manufacturing, marketing, ‘of these get further segmented into specialised sub- and are dispersed to different locations, many of be, but often within a centralised command struc- models of so-called Fordist/Taylorist assembly increasingly ceded significant spaces to models of as if ‘global connectedness? has arrived with a y with currently widespread models of dispersed | production and accumulation. Rather, we have lation regimes as major reconfiguration of teractic since the carly days of capitalism. that the current architecture of interdepen- hierarchical and uneven, as typically it ks, in terms of their share in value, which are many top-end tasks are the preserves of jonomies’, primarily in non-fabrication and as R&D, up-market retail, cte., and of ll come back to this very briefly in a moment, | to flag a couple of numbers connected tionalisation in recent years. d the mid-twentieth-century coun- almost insignificant with respect icultural output, specifically in manu- : from the UN Statistical Division, 21), show that the top ten countries bal manufacturing output (shown as 1 (28.7), USA (16.8), Japan (7.5), ith Korea (3.0), Italy (2.1), France “These numbers convey a very element of which is the ctory of the world’, The rise ¢ is a complex phenomenonrequire a separate and careful attention that is not possible ‘of the present paper, The important point to note of a few countries in the South in manufacturing, fon in general, in the overall transformation 1¢ globe. Around the time that China became “the P, India had taken giant steps towards emerging as P by taking advantage of its capabilitics through IT- In general, quite a few countries in the Global South t destinations fo: offshoring, outsourcing, procure: 1ultiplc transnational webs of different kinds. ‘Thus, that there has been a very significant shift in the jal workers between the North and the South in important to emphasise that the producers and h have integrated into a whole range of high of course the relevant issues to be examined ‘returns pertaining to such integration, ‘order here regarding the major drivers under- a the content and form of GVSs over time, in phase. As one would expect, there is a Wg across different theoretical /political here; rather, we reflect on one impor t has drawn substantial attention across . including Marxian political economy. ices in wage costs, or unit labour ‘task across countries. The commonly , often attributed to the erst ley, Stephen Roach, is considered a ed North-South transnationalisation systems. hierarchy’ as a major considera- of capital has a long history, and [took explicit note of it: “A study ng class reveals that in order ‘bring workers from abroad ‘where there is cheap labour ). Several writings of Marx issue, and these were devel fs; in particular, several major ct & Muller, 1974; Hymer,2 CONTEMPORARY GLOBALISATION AND VALUE SYSTEMS 49 § 1966) highlighted the critical role of global vage hierarchy as a key clement in oligopolistic rivalry. The above noted ‘suggested that in a context of growing challenges to the investments in the North, and the impressive muscle and had acquired through concentration and centralisation ‘mobility of capital in search of super profits and ‘the Third World, became powerful components of tion strategies. Broadly this trajectory of enquiry has d extended further, through a large number of impor- 1 ‘Marxian political economy. Several of these | careful evidence to show that comparable unit th are generally a small fraction, typically in single ‘of those in the North (Ness, 2015; Suwandi, clearly seems to be an important mobility of capital and differences in unit ‘weapon in the arsenal of TNCs in ‘accumulation in recent decades, in partic: of super-profits and rents. However, as we in unit labour costs across countries have al capitalism for most of its life, without ee from the core to the periphery. wn that until the recent episode of global- ‘abundant availability of raw materials as implying potentially much lower capital chose not to invest in the phoning, of surplus from the footing and plundering, which to the division of the world ‘In other words, without adequate ational labour arbitrage” remains a it juncture, appropriate connec- ‘of neoliberal transition since the critical, To put it differently, including labour arbitrage, nature-regulation arbitrage” in the current architecture2 CONTEMPORARY GLOBALISATION AND VALUE SYSTEMS 51 CONCLUDING REMARK thrust of our arguments in this chapter is that the curre ineeds to be located in the broader context of imperialism creased power of TNCs, mostly located in the North "African intellectual and liberation hero Amilcar Cabral d imperialism as ‘piracy on dryland’; we would only ft juncture, it is a piracy in every conceivable sphere, ‘and stratosphere. The so-called GVCs are s at the disposal of contemporary imperi- st corporations and global financial institutions es to subjugate humanity at large, workers ‘the South. We end with an indicator that ued deepening of the divide between the : sm: using the World Bank database, Xu n constant US dollar (2021), in terms of the the top 20 countries in 1960 were 32 times the bottom 20 slots (World Bank, 1960- denoting the gap between them in 2015 scale. Monthly Review Press. (of globalisation: The management of nrth, Monthly Review Press. ‘peach: The power of multinational kets and the growth prospects of 656-669. ‘the world economy. Merlin Pr ©. (2020). Opportunities for alue chains? A cros-sectoral and sper 140/2020, Berlin School of Political Economy, Berlin. selopment in Latin America