The North and South Divide

Imperialist appropriation in the world economy: Drain from the global South through unequal exchange, a peer-reviewed by Jason Hickel, Christian Dorninger, Hanspeter Wieland, Intan Suwandi is being promoted on LI.

The problem with peer-review is that the review is carried out by . . . peers, who all think alike and seem incapable of critical thought applied to one of their own.  So, for those who can’t be bothered to read the article (you don’t have to buy it to read it, but you will need a strong stomach) here is a summary of the problems contained therein.

1 – decarbonisation has nothing to do with colonialism.

2 – the authors are not referring to colonialism, but to free market trade, the buying of goods, raw materials and natural resources in low-cost countries, and their export to high-cost countries.  In other words, this is business as usual.  All countries have been colonies at some point in their history (including Ethiopia and Afghanistan, but not some of the Andaman Islands), so to dwell on colonialism is pure political propaganda. 

3 – the global North and South referred to are not geographic definitions but financial selections, with the “bad” guys the expensive countries and the “good” guys the cheap countries.  Inevitably, North countries with a high cost of living and high wages will import produce from South countries with low cost of living and low wages and easy availability of raw materials.  Even in a South country, goods and services are bought from low cost sources and shipped to locations of relative scarcity where the value is higher.  It would make no sense to do anything else.  Is Saudi Arabia going to buy petrol from Total in France at €2 a litre tax paid, when it can pull a barrel (160 litres) out of the soil for €4 ?  Is Chile going to produce copper from the middle of the Atacama desert where copper is present and where there are few environmental considerations, or buy copper from deep mines in Cornwall and their smelters in South Wales ?

4 – the authors then proceed to total the value of all the goods sent from the South to the North, goods which were paid for at freely-negotiated (market) rates.  They then subtract the actual value of the goods from a theoretical value if the goods had been exploited, processed and produced in the North at prevailing higher northern prices. 

The authors then claim that that difference ($Trillions) is somehow lost to the South, where it could have ended global poverty, cured malaria, and given everybody a swimming pool and a Mercedes-Benz.  They ignore that if there was no price differential, the trade would not take place at all.  All goods are paid for, the South receives cash or other goods (especially arms and ammunition).  The authors do not calculate the investment necessary to produce these goods, or to raise living standards and wages to Northern standards, both of which are legally possible for the South nations in question, but whose governments (mostly democracies) refuse to carry out.

5 – the authors compare this economic drain from the South to the aid received from their Northern partners, but that is irrelevant, as aid is not supposed to alleviate the harm done by such trading practices, but to encourage those governments to maintain the free trade agreements which permit them, and the democratic or pro-North policies which permit Northern countries to grant them aid.

6 – the authors fail to mention any global laws that prevent Southern nations from becoming a Northern power.  Any country can become an industrial powerhouse, as Israel, Taiwan, Singapore and South Korea have all done since 1960.  There is no reason why Argentina, Chile and Brazil could not have copied Australia and New Zealand, all countries with similar agricultural backgrounds and latitudinal geographies, but one group in South and the other in North.

The purpose of this work seems to be to produce a corpus of mutually-reviewed documents, which allow researchers to seek funding from governments, enterprises and agencies seeking to portray themselves in a positive light when audited for social responsibility and ethics.  Governments can use this material to impose ethical taxes on enterprises participating in such business, and grant some of the revenues raised in additional aid, while squandering the rest on war and luxury.  Enterprises can carry out whitewash marketing to go alongside their greenwashing, and promote themselves as more ethical because they “buy in the USA”, for example, even though, as the authors rightly point out, the produce is assembled in the US from components sourced in Bolivia and China.  And aid agencies and the charities that depend on them will scream for more funds while waving this paper in front of politicians who have not read it critically.  Mainly, the South countries can demand reparations and refer to this article, whose authors will receive invitations to speak at many events.  The attempt to link this kind of financial drain to climate change, itself the subject of massive misrepresentation, is just another way of increasing the funds they can claim.

There are many problems associated with this kind of academic bullshit and its uncritical repetition, not least that the real problems of the world go unresolved while resources are squandered on pointless political propaganda.

Saudi Arabia, Qatar, Bahrein are included in the South, while Iceland and Ireland, countries with almost no natural resources, are included in the North.  The authors’ “unequal exchange” produces a financially-quantifiable loss to the South and drives “global inequality, uneven development, and ecological breakdown” demanding some form of reparation.  This conclusion is just preposterous.  Unfortunately, this kind of research is what gives LSE such a bad reputation, at least among those who think clearly.

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