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You can read our latest paper on the topic entitled ‘Unequal exchange, profit rate and growth: An empirical estimation’ in Environment and Planning A: Economy and Space. journals.sagepub.com/doi/10.1177/...

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References (2): Grossman H (1929). The Law of Accumulation and Breakdown of the Capitalist System, Being Also a Theory of Crises. Pluto Press.

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References (1): Bauer, O. (1907). The Question of Nationalities and Social Democracy. University of Minnesota Press. Emmanuel A. (1972). Unequal Exchange: A Study of the Imperialism of Trade. Monthly Review Press.

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Thus, our paper contributed to the unequal exchange literature by linking international labour-trade asymmetries directly to profit-rate differentials, showing that the main transmission channel operates through the rate of surplus value rather than capital composition. (17/17)

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Moreover, recent papers have analysed trade–profitability linkages without explicitly engaging with the rate of surplus-value, a key determinant of the rate of profit in Marxian theory. By contrast, our research explicitly examines both channels. (16/n)

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The claim that Marxist analyses of unequal exchange ignore the rate of profit is unfounded. A large tradition—from Grossman and Emmanuel to recent value-theoretic work—treats unequal exchange precisely as a mechanism shaping profitability. (15/n)

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The central implication is that unequal exchange cannot be reduced to adverse price movements or sectoral specialization patterns -as suggested by papers focused only on the terms of trade à la Prebisch-Singer. (14/n)

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Our research shows that the profitability effects of unequal exchange are driven mainly by increases in the rate of surplus value, with comparatively weaker effects on the organic composition of capital, pointing to international exploitation rather than capital deepening. (13/n)

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The key implication is not the magnitude itself, but that unequal exchange acts through profitability to structurally shape accumulation paths, making divergence an endogenous outcome of the world market. (12/n)

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We estimate that unequal exchange accounts for around 34% of the shortfall in growth convergence between rich and poor countries during 2000–2014. (11/n)

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By showing that labour-trade asymmetries systematically raise profit rates in the North and depress them in the South, we identify a direct transmission mechanism through which unequal exchange generates self-reinforcing divergence in accumulation and productivity. (10/n)

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The impact of unequal exchange on the rate of profit is central to our explanation of international divergence. From a Marxian perspective, long-run growth differences are mediated by accumulation, which in turn is governed by profitability(the so-called Cambridge Equation)(9/n)

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The main contribution of our paper lies in computing unequal exchange by measuring international differences between labour expended and labour commanded through trade, and in showing how these asymmetries systematically shape international profit-rate differentials. (8/n)

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Consistent with Marx’s treatment of the value of labour-power as exogenous, we assumed that cheap imports may increase the surplus-value rate, spurring in turn the profit rate. Then, UE may alter the profit rate in two ways. (7/n)

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Unlike other research, our focus is not limited to the organic composition of capital; it also considers surplus value. (6/n)

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In our latest research, we begin by discussing the importance of Marx's insight into the essential modification of the law of value, thereby connecting it to the role of foreign trade in counteracting the tendency of the profit rate to fall. (5/n)

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Marx’s claim that foreign trade operates as a counteracting factor must be read in conjunction with his argument that the law of value undergoes an essential modification on the world market: the periphery gives more objectified labour than it receives. (4/n)

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Even classical Marxist authors such as Bauer (1907) and Grossman (1929) already treated foreign trade and international asymmetries as mechanisms sustaining profitability in advanced economies, directly linking international exchange to the dynamics of the rate of profit. (3/n)

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Emmanuel (1972) already conceptualized unequal exchange as a mechanism of international surplus transfer that raises the rate of profit in high-wage economies, making it difficult to sustain claims that Marxist literature ignored this link. (2/n)

Claims that Marxist analyses of unequal exchange have neglected the rate of profit are challenging to sustain in light of recent value-theoretic contributions that explicitly connect unequal exchange, accumulation, and profitability. (1/n)

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Comments, critiques, and constructive discussion are more than welcome.

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Conclusion: international competitiveness and external imbalances reflect structural asymmetries in productivity, wages, and production linkages, reinforcing dynamics of uneven development rather than convergence.

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These findings provide strong empirical support for the theory of absolute cost advantage, while challenging the purchasing power parity hypothesis and mainstream convergence narratives in international trade.

Main results: there is a robust long-run relationship between external competitiveness and declining relative VI-ULCs. Sectors with lower absolute costs systematically gain competitive positions.

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The empirical analysis focuses on manufacturing sectors in the United States and Germany vis-à-vis their partners in NAFTA and the European Union, using WIOD input–output data for the period 2000–2014.

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This is the first empirical application of second-generation panel cointegration techniques—accounting for cross-sectional dependence and slope heterogeneity—to test the relationship between sectoral REERs and VI-ULCs.

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On this basis, the central hypothesis is clear: sectoral real effective exchange rates (REERs) are governed in the long run by relative vertically integrated unit labour costs, not by purchasing power parity or comparative advantage.

Methodologically, the paper adopts Pasinetti’s vertically integrated sectors approach, which captures all the direct and indirect labour embodied in commodities, going well beyond standard, gross-output-based unit labour costs.

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Following Smith and Shaikh, prices are decomposed into direct and indirect wages and profits. This decomposition allows us to derive vertically integrated unit labour costs as the key regulators of relative prices.

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Under real competition, market prices gravitate in the long run toward the prices of production of regulating capitals. This is not Walrasian equilibrium, but a turbulent process shaped by intra- and intersectoral competition, innovation, and cost differentials.

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This article begins with a classical insight: market prices and competitiveness are governed by real competition, as developed by Smith, Ricardo, and Marx and systematized by Anwar Shaikh.

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In my 2021 paper published in Structural Change and Economic Dynamics, we examined how sectoral real effective exchange rates are regulated by vertically integrated unit labour costs, based on the classical-Marxian political economy approach to real competition. www.sciencedirect.com/science/arti...

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These two papers reflect a single research trajectory, from theory to empirics. I invite readers to engage with both—and I very much welcome comments, critiques, and discussion. (14/14)

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The 2021 paper clarified what Marx’s theory allows us to say. The 2025 paper identifies which of those mechanisms actually dominate the dynamics of accumulation and growth. There is no contradiction—only a shift from theoretical reconstruction to causal explanation. (13/n)

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What I initially treated as a relevant explanatory hypothesis became, after further theoretical and empirical work, a dependent outcome of profit rate dynamics. (12/n)

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My position evolved as I moved from a theoretical reconstruction of Marx to an empirical analysis of accumulation. (11/n)

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Taken together, both papers form a single argument: Marx`s critique of political economy explains uneven development from production and accumulation to trade, not the reverse. (10/n)

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There, unequal exchange is treated as a derived outcome, while profit rate differentials, productivity, and competition are shown to drive growth, capital flows, and global asymmetries. (9/n)

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Our 2025 article, Unequal exchange, profit rate and growth, represents the next step: moving from theoretical clarification to the identification of the dominant causal mechanisms. (8/n) journals.sagepub.com/doi/10.1177/...

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At that stage, unequal exchange remained a secondary hypothesis, analytically possible but not central to Marx’s explanation of uneven development. (7/n)

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A deeper engagement with Marx’s theory of value, money, and competition led me to revise this view: Marx’s foreign trade theory is not grounded in unequal exchange, but in productivity, intensified labor, and absolute cost advantage. (6/n)

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A key turning point in this work concerns unequal exchange. Early interpretations often attribute international asymmetries to value transfers via trade prices. (5/n)

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Marx’s monetary theory also implies endogenous credit creation and structural limits to chartalism and Keynesian multipliers: money cannot create value independently of production and profitability. (4/n)

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I show that Marx offers a general theory of money that integrates value, surplus value, credit, and paper money—rejecting money neutrality, Say’s Law, and the quantity theory long before Keynes. (3/n)

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Marx’s value theory resolves the capital measurement problem: capital is not a physical quantity but a social relation expressed in money. This challenges both classical political economy and marginalist production functions. (2/n)

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economyandspace.bsky.social @economyandspace.bsky.social · 08/12/2025

In my article published in Critique (2021), I revisit Marx’s theoretical corpus through the lens of modern economics, arguing that Marx’s theory of value is fundamentally a monetary theory of production—one that anticipates Keynes by decades. (1/n) www.tandfonline.com/doi/abs/10.1...

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Reposted by Fahd Bc

OnlineFirst - "Unequal exchange, profit rate and growth: An empirical estimation" by Pablo R. Liboreiro and Fahd Boundi-Chraki: journals.sagepub.com/doi/abs/10.1...

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Fahd Bc @fahdbc.bsky.social · 04/12/2025

Although our findings are not conclusive, they open a promising line of research focused on examining how unequal exchange shapes Marx’s key variables — the profit rate, the rate of surplus-value, and long-run growth. Comments and constructive criticisms are very welcome. (11/11)