chapter  6
34 Pages

Markets and exchange

Stephen Hawking once said “the histories of the universe depend on the precise question asked.” Following that logic, I am convinced that the most fundamental questions in world-systems analysis are: What is surplus drain? Why, how, and where does it happen? What are its consequences? The central idea of this perspective is the notion that world-systems are systems of surplus drain. Thus, the history of civilization is the history of surplus drain from one area to another. The first two sections that follow provide a theoretical overview of the concepts of surplus and surplus drain and explain how capitalist surplus extraction differs from previous systems. The third section focuses on those visible mechanisms of surplus drain that have been most often analyzed by world-systems thinkers. In the fourth section, I revise and extend earlier conceptualizations by focusing on those elements of surplus drain that capitalists render invisible.

Baran and Sweezy (1966: 29) define economic surplus as “the difference between what a society produces and the costs of producing it.”Their surplus is not the same thing asMarx’s (1967) surplus value, that is, the value added to commodities by labor power that is greater than the costs of reproducing that labor through provision of basic survival necessities. I am convinced that these ground-breakers did not go far enough in their conceptual challenge and that we must push their ideas in five additional directions. First, the economic surplus should be viewed as a foundational component of the capitalist world-system as a whole. By its very nature, such a system is driven toward continuous expansion of the surplus. Second, we need to pinpoint the origins of surpluses. On the one hand, surplus can be extracted from any of the factors of production (land, resources, labor, energy, knowledge, technology, capital). On the other hand, we must recognize that the bulk of surplus extraction is realized through degrees of monopoly (Kalecki 1954), not through the competitivemarkets emphasized by Braudel (1982). By degree of monopoly, I mean the control of any mechanism that reduces the costs of production or increases sales prices, in variance from a fully competitive market. The capitalist world-economy is a degree of monopoly system because capitalists seek to avoid competition through the construction of quasi-monopolistic commodity chains. Third, we must rethink how we calculate surplus to reflect the points of origins of the hidden surpluses that capitalists expropriate to sustain their degrees of monopoly. In actuality, the total world surplus is far greater that the cumulative GDPs. To arrive at a realistic estimate of surplus, we must take into account the value of all reproductive costs. We should think of the