The modern world-economy is a capitalist world-economy, organized to maximize profit and to accumulate capital for the international bourgeoisie. The bourgeoisie seeks to maximize exploitation of labor in order to maximize profit and accumulation of capital, and this exploitation of labor takes two forms. First, there is exploitation in the sense defined by Marx, where the workers are paid less than the value of what they produce. Secondly, there is superexploitation, where the workers are paid less than what they need in order to live. Both exploitation and superexploitation are central to the functioning of the capitalist world-economy.
Historically, the world capitalist economy confronted a dilemma: Effectiveness in keeping wages low limits the capacity of the workers to buy the products that the system produces. Hence the capitalists’ interest in keeping wages to a minimum places restraints on the capacity of the system to expand. The modern world-system developed in a form that resolved this dilemma. There emerged a division in the labor market between workers in the core, who function to consume as well as to produce, and workers in the periphery, who function to produce primarily, with their consumption important only in relation to surplus manufacturing.
Thus, in both core and periphery, the international bourgeoisie seeks to minimize labor costs, but it does so in accordance with different rules in the two regions. In the core, the workers have organized unions, organizations, associations, and political parties that promote the interests of workers. As a result of workers' struggles through such organizations, they have attained basic political and civil rights, and a majority of workers in the core have been able to obtain wages sufficient to acquire the basic necessities of life. The capitalist class made these concessions because of pressure applied by workers’ action, and especially important was the weapon of the strike. But such concessions also had the effect of expanding domestic markets in the core, and thus they were consistent with systemic needs in the long term. Most core workers, then, are exploited, in that they receive in wages less than the value of what they produce. But they are not superexploited, in that, for the majority of core workers, wages are sufficient to sustain a life with adequate nutrition, housing, clothing, and access to education and health care.
For the workers in the periphery, however, there is a different reality. In the peripheral regions historically, slavery and other mechanisms of brute force were used to obtain labor for the exportation of raw materials to the core. As the system evolved, and as more and more land was used for plantations and mines, the majority of people had no option but to work in the plantations and mines, and coercion became more economic than physical. Sharecropping, tenant farming, and low-wage labor on plantations and mines became the norm, which continues to the present day. Basic political and civil rights, such as the right to organize unions and political parties, were not recognized until well into the twentieth, and they often have been nullified by military dictatorships and political repression.
Thus the majority of workers in the periphery are superexploited. Their wages for full-time work are insufficient to acquire the basic necessities of life. They survive through a variety of strategies: working two or three jobs; using several workers from the same household, including children; cultivating food on subsistence plots; and constructing simple huts or shacks with their own hands. And they do without. A majority is malnourished. Many do not have electricity or piped water. The great majority has very limited access to education or health care. They die at birth more frequently than in the core, and they do not live as long. The majority does not think about acquiring products that workers in the core take for granted, such as a car or a telephone.
The unequal wage level between core and periphery establishes unequal exchange,in which the amount of products that a core worker receives for a given quantity of labor is many times greater than the amount of products that a peripheral worker receives in exchange for an equal quantity of labor (Wallerstein 1979:71). So labor is performed throughout the core and peripheral regions to make the products marketed in the world-economy, but the sale and consumption of these products is concentrated in the core.
Since 1980, the capitalist class has been more aggressive in the pursuit of its interests in relation to core workers, as a consequence of the profound and systemic crisis in which the system has entered. This breaking of the social contract between management and labor in the core is shortsighted, because the relatively high wages of core workers have functioned to provide political stability to the world-system. The shortsighted response of the capitalist class to the crisis is one of the signs of the depth of the crisis and of the incapacity of the system to resolve it. The breaking of the social contract has led to erosion in the standard of living of core workers, thus undermining the legitimacy of core governments and creating a degree of social instability. Nevertheless, by global standards, the wages of core workers remain relatively high, and the majority of workers in the core have the basic necessities of life.
Wallerstein, Immanuel. 1979. The Capitalist World Economy. New York: CambridgeUniversity Press.
Key words: Third World, revolution, colonialism, neocolonialism, imperialism, democracy, national liberation, sovereignty, self-determination, socialism, Marxism, Leninism, Cuba, Latin America, Wallerstein, world-system, world-economy, unequal exchange