Last week the annual conference of the Association for Heterodox Economics (AHE) took place in London. I quote from the AHE website: “Formed in 1999 to provide an annual conference where all heterodox (that is, Post Keynesian, Marxian, Sraffian, Institutional-evolutionary, social, Austrian, and feminist) economists could gather and hear each other presenting papers on theoretical, applied, and policy topics and issues that utilized their heterodox economics”. So the AHE is an academic forum for economists not considered part of the mainstream. But that does not mean heterodox economics, as opposed to ‘orthodox’ economics, is socialist or even anti-capitalist.
For me, there are three schools of economic thought: mainstream, heterodox and Marxist. As I put it in a presentation to a Rethinking Economics conference back in 2019, “there was one thing that unites the mainstream and the heterodox (in every form) and one thing in which Marxian economics stands out: namely the labour theory of value and surplus value. The neoclassical and all the heterodox from Keynes to Kalecki, Robinson, Minsky, Keen and the MMTers deny the validity and relevance of Marx’s key contribution to understanding the capitalist system: that is it is a system of production for profit; and that profits emerge from the exploitation of labour power – where value and surplus value arises.”
But let’s move on. The very well organised AHE 2025 conference brought together economists from all schools and from many parts of the world to present a myriad of papers along with plenary sessions on key geopolitical issues. And here I must make an apology. I was invited to participate in a panel of authors providing chapters in a new book on radical economics. But I failed to attend – succumbing to a heatwave (at least by UK standards) on the day. That’s the first time I have missed a committed meeting. I shall return to the book later in this post.
The conference paper sessions were divided into various streams, one of which was entitled Imperialism and Dependency in the 21st century. I made a presentation in one of these session, called Catching up of falling behind? in which I tried to answer the question: were the poor peripheral countries of the Global South catching up and closing the gap in living standards with the rich imperialist countries of the Global North? I tried to answer that question using three different measures: per capita incomes; levels of labour productivity; and indexes of ‘human development’. On all three measures, I show that the Global South is not closing the gap, with the possible exception of China.
I also considered some explanations for this. In my view, the Marxist explanation was two-fold: first, it was because of substantial imperialist transfers of income (profit, rent and interest) from the South to the North; and second, fast falling profitability of capital accumulation in the South, leading to a slowdown in labour productivity growth. I also considered two alternative explanations. There was the World Bank’s, which reckoned the gap was not being closed because of the lack of sufficient investment in the South and the lack of an infusion of technology from the North, leading to a lack of ‘Schumpeter’-like innovation (the WB referred to Schumpeter). And then there was the mainstream explanation, as provided by recent ‘Nobel’ prize winners Acemoglu et al, that the Global South countries did not follow the democratic path adopted by North America and Europe which was the main driver of their successful prosperity.
Finally, I briefly considered why China appeared to be the exception to the rule in catching up. In my projections of trend per capita income growth, I found that none of the so-called BRICS, the largest ‘Global South’ economies would catch up to the high-income country level in the next 20 years, except China. The 2023 average real per capita income in the high income economies was $41278. China would reach that by 2041 and would match the projected level for the high-income countries by 2046.
Source World Bank, author’s projections
My main conclusion was that the countries of the Global South (6bn people) are not ‘catching up’ with the Global North (2bn people) because wealth (value) is being persistently transferred from the South to the North AND falling profitability in the Global South is reducing labour productivity growth. China may be the exception because its investment growth is less determined by profitability than in any other major Global South economy.
Source: EPWT 7.0 series, author’s calculations
My presentation was mainly empirical. But my fellow presenters in the session concentrated on the theory of imperialist exploitation. John Smith emphasised the importance and relevance of Lenin’s five points on the nature of modern imperialism in his book of 1915. The export of capital by European and US capital in the 21st century was, as Lenin put it, due to the ‘lack of profitable investment opportunities’ domestically; ie. the falling rate of profit at home forced capital to seek higher profits in the cheap labour areas of the world. The attempt of many Global South countries to develop their own independent industrial base during the 20th century was destroyed by the multi-nationals from the North. So industrialisation in South was based on high rates of surplus value created by low wages. It was not so much that the South were ‘commodity producers’ and the North had industrialised, but that in the late 20th century, industrialisation in the South was based on the exploitation (and super-exploitation) of labour there.
Conrad Herold from Hofstra University, Long Island presented an insightful summary of Marxist approaches to explaining imperialist exploitation over the last 100 years since Lenin, starting with Henryk Grossman in 1929 and then Bettelheim and Emmanuel, going onto so-called dependency theory mainly coming from Ruy Marini in South America. Conrad rejected the structuralist theories of such as Pereira that the Global South did not develop because of ‘premature industrialisation’, thus turning the Global South into commodity producers under a regime of currency exchange rates that benefited the North. In summary, Herold said, there is more work to be done on developing a robust Marxist theory of imperialist exploitation.
In that session, there was some debate about whether the transfer of profit, rent and income through international trade and capital proceeds was mainly the result of higher rates of surplus value (due to lower wages) in the Global South or mainly due to higher rates of technological superiority in the companies of the Global North. Previous Marxist theorists like Emmanuel looked to higher rates of surplus value; while Bettelheim looked to higher levels of capital composition. For me, both are relevant and in work done jointly with Guglielmo Carchedi, we found that differing rates of organic composition of capital and surplus value both contributed to the transfer of value from South to North.
And in another session, Patrick Mokre from the Austrian Federal Chamber of Labor and Guney Isikara of New York University presented an important new piece of empirical research that covered this issue. Using multi-regional input-output tables (MRIOT), they estimated value transfers for 159 industries, from 1995-2020. They found that there were international value transfers of 5.9% of gross global production annually over the period with total cumulative transfers of over 70 trillion euros. Not surprisingly, the biggest net gainers were Japan, Europe and the US and the biggest losers were Brazil, Mexico, Indonesia and Russia.
What was surprising and important was that China has turned from being a significant net loser in value transfers in the 1990s to a net gainer especially since the Great Recession of 2008 hit the Global North. No wonder US imperialism and its allies are out to strangle China’s economic and technical development at all costs.
But also note that, according to Mokre and Isikara, the effects of better capital composition (VCC) and a higher rate of surplus value (RSV) had equal importance in value transfers, a similar result to our own analysis. In the case of China, the switch from net loser to net gainer was almost entirely due to high investment and technological advances ie a rising capital composition (VCC).
In another session Tomas Rotta at Goldsmiths College presented further work on global exploitation rates. In previous work, Rotta and Rishabh Kumar from the University of Massachusetts had shown that Marx’s law of profitability operates: capital intensity rises faster than the rate of exploitation and so the global profit rate declines. They also found that the rate of surplus value is higher in poor countries. In this new paper, Rotta finds that the unequal exchange of labour is very substantial. Most value production takes place in the periphery but gets transferred to the imperialist North through international trade and capital income. The US share of captured value per employee continues to rise at the expense of peripheral countries like India and China, although, as in Mokre and Isikara’s analysis, China’s loss has narrowed significantly since the Great Recession.
At the AHE conference, there were several other sessions on imperialism that I cannot cover here. And there were some sessions on the causes of China’s phenomenal emergence as an economic power and its wider implications. Ho-fung Hung of Johns Hopkins University presented the conclusions of his book, Clash of Empires. In this book, Ho-fung Hung argues that China’s state-backed corporations turned increasingly aggressive as they expanded in both domestic and global markets. This was at the expense of US corporations, who then halted their previously intense lobbying for China in Washington. Simultaneously, China’s export of industrial overcapacity provoked geopolitical competition with the United States. The resulting dynamic, Hung argues, resembles the inter-imperial rivalry among the great powers at the turn of the twentieth century before WW1. Overall, Hung’s analysis seems to lay the blame for growing geopolitical conflct between the US and China on the latter’s ‘aggressive policies’, perhaps not an unsurprising conclusion from an academic in an American mainstream university.
In another session, Sean Kenji Starrs of King’s College London, starting from the premise that China was a capitalist economy like any other, oddly argued that the capitalist rise of China had strengthened US global hegemony. Starr reckoned that, because it is capitalist, the Chinese state will not engage in international revolution to overthrow imperialism and so it keeps US hegemony in place – (so not so aggressive after all). The solution was for Chinese workers to initiate another socialist revolution to remove capitalism from China, in collaboration with revolutions around the world. For me, it does not follow that China is just another capitalist state, even if Starr’s revolutionary objectives are correct.
At a conference for heterodox economics, Marxist analysis does not dominate and the post-Keynesian theories of ‘financialisation’ remain prolific. I have never been a supporter of financialisation as either a useful description of 21st century capitalism or as the cause of crises in capitalism. But one of the main plenary speakers, Ramaa Vasudevan of Colorado State University is a well-known advocate of ‘financialisation’. In a recent presentation called The Global Dollar and Financialisation in the Global South, Ramaa Vasudevan emphasised the role of finance as the cause of imbalances globally and dominance of the Global South. Moreover, crises are increasingly the result of weakening dollar dominance. Crises in the accumulation and production process of capitalism is absent from her analysis.
And in one of the financial sessions, Gustavo Vargos and Albino Luna developed a financialisation thesis claiming that the principal cause of the slow growth of the Mexican economy was income concentration. “By favoring corporate profits and high income classes, successive governments neglected the domestic market and social welfare.” The result was a lack of effective demand (Keynesian style). So the weakness of the Mexican economy is not so much to do with imperialist exploitation or the falling profitability of Mexican capital, but to do with rising income inequality causing low demand. Here is my view.
That brings me to the panel session on the new book, Radical Political Economy: Principles, Perspectives and Postcapitalist Futures edited by Mona Ali and Ann Davis, to which I and many others contributed chapters.
One of the authors in that book was Ramaa Vasudevan in which she makes it clear that “financialization is not simply the expansion of finance but the generalized subordination of economic interactions and inter- relations to the abstract logic of interest- bearing capital that has fundamentally restructured the way economic activities are organized “ quoting Professor Ben Fine from 2013. According to Vasudevan, the dominance of finance is seen to have engineered “a fundamental transformation of the economy – marking an epochal shift”. My reply to that can be summed by the critiques of the financialisation hypothesis, both theoretically (Mavroudeas and Papadatos 2018) and empirically (Turan Subasat and Stavros Mavroudeas 2023).
Also in the book is a chapter by Paolo dos Santos who attended the panel that I missed. In the book, Dos Santos emphasises that political economy can only be effective in explaining the world if it rests on historical materialism. Economic analysis is a lynchpin of social and historical inquiry because it can cast light on how relations of production and distribution shape the social, political, institutional, and cultural realities that condition the nature and historical development of human groups. “Stubborn patterns of underdevelopment and differences in labor productivity, living standards, and political power across national economies, have persisted across the history of capitalist development. For radical political economy, those differences are a feature of global capitalism, not a “bug” due to the idiosyncrasies of developing economies.”
In another chapter of the book, Jason Moore stresses that global warming and environmental destruction are not existential disasters external to capitalism. “Such externalist conceptions of capitalism are hallmarks of bourgeois thought, and a far cry from Marx’s emphasis on the metabolic labor process as a class struggle in the web of life.”
My own chapter concentrated on explaining that capitalist production never developed harmoniously and steadily, but always in cycles of boom and slump, driven by recurring crises of accumulation. Financial crashes arise from these regular crises in production. It is not possible to separate crises in the financial sector from what is happening in the production sector. I finished my chapter by considering whether capitalism could yet have a new lease of life based on innovation like AI. “That depends on the trend in profitability. These new innovations will only be applied sufficiently to raise the productivity of labor and launch a new long- term boom if average profitability in the major economies rises enough to make it worthwhile for capitalists to invest. Up to now, average profitability has remained at all- time lows and productivity growth is weak. According to Marx’s theory of crises, what is needed is a sufficiently deep destruction of existing capital values to raise profitability, i.e., a large fall in the denominator (C+v) in Marx’s profit formula. This is what Schumpeter called “creative destruction”. That can happen if there is a slump or a series of slumps that reduce capital values – as in the depression of the late 19th century; or in the physical destruction of capital during WWII. Either way, a new lease for capital will be at the expense of labor.”
The struggle against the ideology and theories of the mainstream continues and the AHE makes an important contribution. Let me quote Ann Davis, the co-editor of Radical Political Economy book. “Radical Political Economy will make clear the political choices, while mainstream economics will claim that there are none. Whatever the outcome, proponents of both sides will defend their respective positions and seek to attract adherents to their views.”