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Imperialism in the 21st Century: Global Value Chains and International Labour Arbitrage

Originally published: Economic & Political Weekly on Vol. 53, Issue No. 32, August 11, 2018 by Dev Nathan (more by Economic & Political Weekly)  | (Posted Aug 18, 2018)

Starting with the simplest definition of imperialism as the extra-territorial or extra-national extension of power and exploitation, I argue in this paper that imperialism has taken a new form in the 21st century. This is in the shape of what are called global value chains (GVCs) or global production networks (GPNs). The GVCs involve the utilisation by lead firms (from headquarter economies) of differences in international labour costs or international labour arbitrage to earn superprofits or rents. More accurately, the rents are the result of international arbitrage in the overall production costs—not just in labour costs. As the Rana Plaza collapse in Dhaka tragically brings to mind, the cost arbitrage also occurs on account of the lower costs of poorly constructed buildings used for production in the supplier economies. Cost arbitrage also involves a transfer of negative environmental consequences to supplier economies.

If we borrow Richard Baldwin’s (2016) terms, the GVC rents are the superprofits earned by the differences in production costs between production in headquarter economies and supplier economies. These GVC rents are superimposed on earlier forms of imperialism such as unequal trade and the export of capital.

UNCTAD (2013) estimated that more than 80% of world trade is now organised through GVCs, while the International Labour Organization (ILO) has estimated that more than 400 million jobs are related to GVCs in the Organisation for Economic Co-operation and Development (OECD) and Asian economies (ILO 2015). These estimates show the importance of GVCs in the global economic structure, the extent of GVC trade, and thus, of GVC rents. This can be said to be both the novel and the characteristic form of 21st-century imperialism, in the same way that dispossession (Harvey 2003) and unequal trade characterised 19th-century imperialism and the export of capital characterised imperialism in the 20th century (taking some liberties with the notion of a century in history). GVCs are mechanisms of capturing rents that do not even require the direct export of capital. Thus, the evolution of capitalism as imperialism did not end with the export of capital that Lenin identified as a central marker of imperialism.

Before proceeding, it should be pointed out that the concepts of headquarter and supplier economies (Baldwin 2016) are congruent with Immanuel Wallerstein’s notions of the core and periphery, with which the analysis of GVCs (then called global commodity chains or GCCs) was initiated (Hopkins and Wallerstein 1977). However, core and periphery are not fixed and immutable points; neither can they just be modified to the extent of becoming semi-peripheries. New cores or headquarter economies can rise, based on their domination of the general-purpose technologies of the age. The terms “headquarter” and “supplier” economies refer to functional differences. They are preferred to the somewhat misleading terms “global North” and “global South,” because of the quasi-geographical nature of the latter.

This article deals with the economic mechanisms and processes at play in producing various types or forms of imperialism.

Imperialism as Trade

The mechanism of imperialism in trade through deterioration in the terms of trade in primary commodities compared to manufactured goods was analysed in the Prebisch–Singer thesis that pointed to the nature of the market structures involved in the trade of manufactured goods against primary commodities, cloth vs wheat (Prebisch 1950). This is the traditional form of trade in the exchange of commodities. The international market is characterised by monopolies or oligopolies in the case of manufacturers and perfect competition in the case of primary commodities. There are few sellers of manufactured products and also few buyers of primary commodities. The result is that the prices of manufactured goods are kept high while the prices of primary commodities fall to the lowest possible rate. Through this adverse movement in terms of trade, value in primary commodities is captured by these few buyers and the many consumers from the imperialist countries.

The capture of value through trade mechanisms gives us the development of underdevelopment of Andre Gunder Frank (1966) and the dependency school. It can also result in the phenomenon of immiserising growth as analysed in a curiosum by Jagdish Bhagwati (1958). The role of such unequal trade in contemporary imperialism has recently been stressed by Utsa Patnaik and Prabhat Patnaik (2016) in terms of income deflation of primary producers. They make this the characteristic form of contemporary imperialism. As David Harvey points out in his commentary on the Patnaiks, however, their analysis ignores the other and more important monopolies of metropolitan capital in the production of knowledge, organisational forms, etc (Patnaik and Patnaik 2016).

Export of Capital

The next form (which can also be called a phase) of imperialism is that of the export of capital, regarded by Lenin (1917) to be the highest stage of capitalism. Its feature is that monopoly capital, facing declining rates of return in its home country, is exported to less developed countries where the rates of return are higher. This export of capital has taken two forms. One is that of passive investment in frontier or colonial countries, such as that of British capital in railways in the United States (U.S.) or India. A contemporary form of this passive investment is that of foreign institutional investors (FIIs) investing in the share markets of emerging or developing economies. This is a rentier form of imperialism, shifting capital around in search of higher returns instead of keeping it in the metropolitan economies.

The other type of capital export is the active form of foreign direct investment (FDI) where transnational corporations (TNCs) set up branches outside their headquarter economies. This active form of capital export involves the export of technology and consequently some direct development of manufacturing capabilities in the capital-importing countries. In one form or another, the export of capital results in a higher rate of profit for metropolitan capital that is higher than what would have been possible in the metropolis itself.

We now come to a form of production relations that do not require the export of capital; in fact, UNCTAD (2013) characterised it as a non-investment form of external economic influence. This is that of the system of GVCs. Since this is what is being identified as the new form of imperialism, we will deal with it in some detail, including an analysis of the factors that have made it possible.

Outsourcing or the Dispersed Segmentation of Production

The first feature of a GVC is that it involves the splitting up of production by tasks such as design, marketing, manufacturing and branding. This was not the manner in which capitalist production was initially organised. For instance, in the original Ford automobile manufacturing facility, raw materials came into the factory and the finished car went out. The Hindustan Motor factory at Uttarpara in West Bengal was also similarly organised. However, contemporary automobile factories are organised with a lead firm (the brand or assembler) overseeing the process (which may include some manufacturing) along with a large number of component producers located around it that perform specific tasks.

There are two factors that lead to such a segmentation of production. The first is the development of firms with specialised capabilities in the production of various components, leading to the phenomenon of outsourcing. These component producers, specialised in their areas, are able to develop economies of scale and scope in the production of these components. This enables a reduction in the cost of production. However, a Coase analysis of such firms suggests that in order to outsource successfully, along with a reduction of costs in the manufacture of components, it is also necessary that the cost of inter-firm coordination be less than that of intra-firm bureaucratic organisation.

An early example of the segmentation of production is that of the garment industry in the U.S. As pointed out in an analysis of developments in the New York garment industry by Anner, Bair and Blaisi (2014), in the early 20th century, the industry was split between designers who were also retailers and manufacturers. The splitting up of the garment industry between design-cum-retail and what we would now call cut-make-trim (CMT) allowed a change in the distribution of net revenue which was different from what would have occurred in an integrated firm. In an integrated firm, there would be a basic wage level modified by tasks and skills. Any distribution out of profits or rents earned by a monopolist was likely to be shared (to some extent) with workers. As Kalecki’s theory of distribution (1991) points out, where firms earn rents, trade unions are likely to be stronger and workers are more likely to get a share of the profits. However, with the segmentation of production, the designers–retailers were able to contract the products from the manufacturers at lower market prices for the tasks performed. These lower prices were made possible by competition among manufacturers and the abundance of workers with the requisite skills. This monopsonistic trading relationship comes into play with the segmentation of production, and any sharing of profits by designers–retailers will, at best, be with their own workers.

The conditions of employment in the garment manufacturers were of the sweatshop variety (Hapke 2004) and changed only after the struggles of the International Ladies’ Garment Workers’ Union. The disastrous fire in the Triangle Shirtwaist Factory in New York precipitated a three-way agreement between the designers–retailers, manufacturers and workers, whereby the former agreed to pay the manufacturers such prices that would enable a rise in wages and an improvement in working conditions.

The Anner, Bair and Blaisi analysis of the New York garment industry is the first example we have been able to find of the segmentation of an industry by tasks, leading to the creation of value chains with some firms carrying out high value-capturing design–retail tasks and others carrying out low value-capturing manufacturing tasks. Of course, agricultural products have long been organised as GVCs on a regular basis, with raw materials produced in a country being processed, branded and marketed in another country. But the extension of the segmentation of production by tasks to industry makes this a regular method of any production, even that of services such as information technology (IT) software services in the end of the 20th century.

In the market structure in the New York garment industry, there was a monopsonistic structure with few buyers (the designers–retailers) and many sellers (the manufacturers). As will be seen later on, this structure is itself related to the division of knowledge by tasks. Since tasks such as design and retailing required a greater degree of knowledge compared to manufacturing tasks, the manufacturing segment of the value chain could be easily entered unlike the other tasks listed here. This enabled the firms in the design–retail segment to capture more of the value produced in the garment industry than the manufacturers.

From Outsourcing to Offshoring

This segmentation of the New York garment industry took place within a national economy; in this case, labour arbitrage was national. In the post-1975 period, this segmentation has been extended to a global scale, made possible by technological and capability-related developments. The development of information and communication technologies (ICTs) has made possible the detailed coordination of production dispersed across vast distances, making distance almost irrelevant for the co-ordination of production tasks. At the same time, the container revolution decreased the cost of international transport. The third factor was the spread of manufacturing capabilities in developing economies with low wages.

Allied with these technology and capability developments was a change in the thought process of company managers. Prahalad and Hamel (1990) argued for the segmentation of production as a management doctrine that focused on concentrating on a firm’s core competence and outsourcing the rest. The difference between the segmentation of production that took off at the end of the 20th century and that in the early 20th century was that the segmentation of production now took place on a global scale, making it possible to bring in the question of imperialism. Outsourcing within national economies turned into offshoring in the global economy.

What is involved in the offshoring of production from headquarter (developed) to supplier (developing) economies? There are different kinds of international arbitrage (or uses of cost differences) involved in offshoring. One is that of lower wages and labour costs. However, wages are not the only difference. There is also the arbitrage of the lower price of land (in developing economies, land is generally cheaper than land in the developed countries). “Land” here does not just refer to area, but also refers to the built environment of factories and related economic facilities. Part of the lower cost of the built environment in developing economies is due to the neglect of safety considerations. Non-compliance with these safety requirements reduces production costs and also results in tragedies such as the deaths of workers, as seen in the numerous factory collapses and fires both preceding and after the Rana Plaza tragedy.

A third factor leading to lower costs is the arbitrage of non-compliance with environmental requirements. For instance, tanneries in some parts of India that are part of leather products’ GVCs produce beyond the capacity of their common effluent plants. They pump the excess of untreated effluents into groundwater reserves, calling it “reverse boring,” thus contaminating the water and affecting people living in surrounding areas. This is an unaccounted external cost that reduces the cost of production. There is substantial documentation of the manner in which environmental regulations are flouted in GVC production in supplier economies. A good example is Padmini Swaminathan’s account of ecological damage in Tiruppur, one of India’s key garment clusters (Swaminathan 2014). Though environmental regulations are flouted in headquarter economies as well (for example, water contamination in Flint, Michigan, in the U.S.), overall, there is a substantial saving of costs if manufacturing is carried out in poorly regulated supplier economies.

Furthermore, wages are also lower in supplier economies than in headquarter economies. What is the extent of the international labour arbitrage involved? In 2016, the average hourly wage in the U.S. was $23.32, while it was $0.70 in India (ILO 2016). Taking a 30:1 ratio for U.S. to Indian wages and assuming that with the same equipment (for cutting and making of garments), U.S. labour is twice as efficient as Indian labour, that would still make the cost of labour for production of garments in the U.S. 15 times higher than if it was made in India.

Given the high labour surpluses in supplier economies, wages could be held down below the level of living wages. This could be described either in the Lewisian manner of the unfinished transfer of surplus labour from agriculture to industry, or in the Marxian manner of a reserve army of labour. But costing of labour in GVC supply contracts on the basis of minimum and not living wage, as is done, for example, in the apparel and leather GVCs, would mean that the extra profit from wages being below the living wage accrues to the lead firms, the brands and retailers, from the headquarter economies.

When we add up the differences in labour, land and environmental costs between the same product in headquarter economies and supplier economies, what we get is the surplus profit due to the GVC’s segmentation of production. In addition, this surplus profit or rent is earned without any (or, at best, a minimal) investment of capital in manufacturing. Unlike in the case of FDI, brands or retailers do not invest in production facilities. As a result, even the risks of investment in production are passed on to the manufacturers. It is for this reason that Apple or various apparel and shoe brands can be called “manufacturers without factories.”

The key part of the cost arbitrage involved in GVCs, however, is that of labour capabilities. Land and buildings can be put up in many places, but labour capabilities need to exist or be easily transformed if certain manufacturing tasks (and also certain service tasks) are to be located in any particular geographical area. The existence and regular creation of large numbers of software engineers with programming skills and knowledge of the English language, along with the management capabilities to secure work from them, is the reason why India and not, say, Thailand or Malaysia, became the centre for the offshoring of IT services.

In a recent analysis of rents, Davis, Kaplinsky and Morris (2018) distinguish between three types of rents. The first type is product rents, earned due to different or new products. Process rents (the second type) occur due to superior production systems, for example, the Toyota method of “just-in-time” production. These two types can be called Schumpeterian rents, as they form the basis of his analysis of innovation as creative destruction, which is the method of development of the capitalist economy. The third type of rent is that accrued through the presence of resources—scarce or more productive resources—as in the classic Ricardian scarcity rents.

To the three types of rents described in the preceding paragraph, a fourth type needs to be added—GVC or arbitrage rents due to the segmentation of production in order to take advantage of differences in labour, land, overall manufacturing and service supply costs in headquarter and supplier economies. Without using the term, “arbitrage rents,” Wise and Martin identify global labour arbitrage as the key part of restructuring by TNCs and imperialist domination (Wise and Martin 2015: 75).

In the next section we look a little more closely at the nature of international labour arbitrage and compare it with the unequal exchange theories of imperialism (Emmanuel 1972).

Nature of Labour Arbitrage

There is a resemblance between labour arbitrage and unequal exchange. There is a similar set of background factors—the strong monopolistic power of firms from advanced countries, the weak market position of suppliers from developing countries and a labour surplus in developing countries. Whereas the unequal exchange theories deal with trade between manufacturing and primary goods-producing countries, the international labour arbitrage analysis, however, deals with the splintered production system of a commodity—whether product or service. Unlike trade in finished commodities (cloth versus wheat in classic trade theory, for example), international labour arbitrage deals with a world of trade in tasks (cut–make–trim versus design–brand–market) as in the tasks analysis of international trade by Grossman and Rossi-Hansberg (2008).

However, context is not the only difference between unequal exchange theories and the analysis of international labour arbitrage. In Emmanuel’s analysis, profit rates are equalised while wages remain different in the trading countries. Due to this difference in wages, many more units of labour from the developing countries are exchanged against fewer units of labour from the developed countries. Thus there is an unequal exchange involving more labour from developing countries and less labour from developed countries.

International labour arbitrage does not require such an exchange to take place. Even if the lead firms from headquarter economies were to sell all their products in the headquarter economies themselves, international labour arbitrage would be taking place. What happens if the firms from the headquarter economies sell some of their products in supplier economies? iPhones, for instance, are sold not only in the OECD countries but also in China and India. With such sales, what China and India get is not part of the international labour arbitrage rent, which remains with the headquarter-economy firm. If at all they get any portion of the rents, it is so in the case of competitive product markets, where lead firms (say, mass retail brands such as Walmart) pass on some of the rent as consumer surpluses, giving up higher margins for greater sales volume. Thus, international labour arbitrage does not require any notion of unequal trade; inequality in wages and the resulting labour arbitrage are written into the production system. The rent from international labour arbitrage may, however, be redistributed as consumer surpluses in different parts of the world.

An analysis of the U.S. clothing market showed that the prices of clothing (relative to other prices) went down by about 50% between the early 1970s and the end of the 20th century—a mirror image of the growing share of imports in the consumption of clothing in the U.S. (Heintz 2003). The reduction of product prices to promote consumption is part of the political economy of international labour arbitrage.

However, what do lead firms from headquarter economies possess that enable them to lead GVCs? We now turn to this question.

Knowledge Is the Basis

A GVC is composed of various segments. What holds a GVC together, separates various production segments and then brings them together again is the governance system utilised by the lead firm. However, what enables a lead firm to be the lead firm? At the back of the MacBook Pro on which this article is being typed, you will find the inscription, “Designed by Apple in California, Assembled in China.” It is this design function that enables Apple to be the lead firm in the manufacture of MacBook laptops.

The design of a product is based on the utilisation of technology and not necessarily its creation, leading to the differentiation between technological change and innovation stressed upon by Schumpeter (1950). In fact, as Maria Mazzucato (2015) points out, most of what we think of as quintessential Apple technologies was not created by Apple. Whether it was the touch screen or Siri the personal assistant, they were created in projects of the U.S. Department of Defence. However, it was Apple that put them together to create the smartphone. The knowledge embodied in these technologies, and the overall knowledge that created the smartphone and its design is what enables Apple to be the lead firm in this GVC product, while Foxconn in China is the assembler. Knowledge, one may say, is the enabling factor that allows Apple to be a lead firm.

This is a deliberately brief discussion of a complex topic, but the justification for this brevity is that this is a short study that seeks to set out the basis of imperialism in the 21st century. Know–ledge, embodied in technology and design, is the enabling factor that allows utilisation of the mechanisms of GVCs. The inequality in the distribution of this knowledge leads to the market mechanism of very few buyers and many sellers, which results in the unequal capture of rents within GVCs. As argued in Kaplinsky (2005) and Nathan and Sarkar (2011), rents are captured by the lead firms while competitive or minimal profits accrue to the supplier or manufacturing firms.

In this article and also in Nathan (2018), it is posited that the basis of this unequal distribution of rents within GVCs is the unequal distribution of knowledge between firms in GVCs. Knowledge about technology and design is difficult to acquire and is held by a few firms, mainly from headquarter economies; while knowledge about manufacturing and production is both easily acquired and widely distributed among many manufacturers in numerous supplier economies. Within manufacturing too, the knowledge and capabilities for some types of assembly (such as manufacturing garments or shoes) are more easily acquired than those for assembling cars or complex electronic products. Thus, the assembly factories for garments are more widely distributed around the world than those for cars or electronic products.

As in Akeel Bilgrami’s study (2018), this hypothesis adds knowledge to the ownership of capital or other property as a source of inequality. In a sense, this categorises the unequal distribution of knowledge and the ability to capitalise on this unequal distribution as the basis of global inequality working through the current mechanism ofGVCs. Knowledge, however, is not a new factor in global inequality. Hilaire Belloc had quipped, “Whatever happens, we have got/The Maxim gun, and they have not.” This difference in military superiority was itself based on the difference in knowledge between Europe and the rest of the world, as pointed out by Ian Morris (2010).

Having set out the contours of the imperialist mechanism of international labour arbitrage in GVCs, there are two questions that need to be at least briefly considered. These relate to the possibilities of development within GVCs—are supplier firms and supplier economies destined to remain as they are for all time, or can they move on through upgrading and innovation? The second question relates to the possibilities for labour in GVCs. Has the mobility of capital, which is manifested in shifting GVC locations, ended the agential power of labour? The question of development in a GVC world is taken up first.

Passage to Imperialism

At the firm level, there is entry-level participation in a GVC where the firm earns no rent. Firms that carry out process improvements or innovations can then earn some process rents. The next level is that of earning product rents, which itself can be differentiated into lower rents from incremental changes in products and higher rents from altogether new products.

In the domain of knowledge, there is a progression from low- to medium- and finally high-knowledge bases of production. This can also be seen in economy-level changes, depending on the preponderance of different types of firms in the economy. The first step is that of catch-up in production, then the creation of incremental improvements, whether in processes or products, and finally the creation of new products—a basic shift from knowledge utilisation to knowledge creation. This is also the transition from low-income to middle-income and, finally, high-income status. The most difficult change (leading to the difficulty of negotiating the middle-income trap) is from incremental changes to new products to the creation of new technology (and even knowledge creation).

While these sequences have been presented in a somewhat linear fashion, there can well be leap-frogging and advances in both technology and knowledge creation. However, the importance of making the transition from the utilisation of knowledge to the creation of knowledge and technology remains undiminished in order for complete catch-up or complete convergence. As dealt with in more detail in Nathan (2018), what development in a GVC-world requires is the development of lead firms that gain product rents.

However, an important point in such development is that the lead firms that come up through this process will necessarily both export capital and utilise the existing organisation of production in GVCs. They will need this in order to be competitive—and in any case, that is the way of organising production in the world today. Thus, the new lead firms, many of them from China (for example, Huawei, Lenovo and Alibaba) and some from India (for example, Tata and Mahindra) also utilise both the export of capital and labour arbitrage possible with lower-income economies. Besides the well-known examples of new TNCs from emerging countries listed earlier, there are also smaller suppliers from China and India in other industries such as garment manufacture who utilise lower-wage African countries as supply bases. Such a triangular development was evident in the early spread of GVCs from high-wage Korea and Taiwan into low-wage mainland China (Gereffi 2018). It is now occurring with Chinese firms extending this process into South East Asia (Cambodia and Vietnam) and Africa (Sun 2017).

Marx saw the expansion of capital as intrinsic to its existence, driving it to the ends of the earth. This, however, in old and new ways, involves the extension of forms of capturing surplus profits beyond national boundaries. If we wish to label the capture of surplus profits beyond the borders of the headquarter economies as imperialism, then the development of capitalism inevitably becomes imperialism as well. One cannot think of a capitalist development that remains within national boundaries and does not become imperialism.

Possibilities for Labour

Does the mobility of capital with its ability to shift the location of GVC segments end the agency of labour? There are some who think that, with the mobility of capital, labour’s agency has been ended—for example, Michael Burawoy (2010). However, a series of case studies across sectors (garments, fresh fruit, electronics, tourism, automobiles and IT services) and countries in Asia (Bangladesh, China, India and Sri Lanka) showed that there has been not just contestation by labour, but even an improvement in employment conditions at the supplier-end of GVCs (Tewari et al 2016). For example, real wages in garment manufacturing in the low-wage economies went up by 30% in Bangladesh (Ahmed and Nathan 2016) and more recently by 50% in Cambodia. This contradicts those (for example, Burawoy 2010) who predicted that the mobility of capital in and through GVCs would mean the end of labour assertion. How did this come about?

In shifting tasks around the world using labour arbitrage, GVC production has destroyed the old centres of power for workers such as Detroit in the US. However, it has also created new concentrations of workers, such as in the southern coastal region in China around New Delhi in India, Dhaka in Bangladesh, and so on. The associational power of workers—often of women workers—can be created in these new centres of worker concentration. The GVC organisation of production also means that the disruptive potential of worker segments is multiplied as there can be ripple effects across value chains around the globe.

Moral consumer movements in headquarter economies have supported labour advancement in GVCs by putting pressure on lead firms for improved compliance with the ILO’s core labour standards. This pressure has also led to international attempts to link better employment conditions to improved firm performance, such as the ILO’s Better Work programme in many countries (Rossi 2016). New forms of international trade unions have emerged to form regional and international solidarity, such as the Asia Floor Wage Alliance, or across suppliers by particular brands, in the International Framework Agreements (Bhattacharjee and Roy 2015).

In the course of the struggle to improve wages and working conditions there is nevertheless one important constraint that workers in GVCs face, particularly in labour-intensive products. The direct employers are in contractual relations with the lead firms or buyers, who have considerable influence on employment conditions. For instance, supply contracts in garments and leather products estimate labour costs in production segments in supplier countries on the basis of existing nationally determined minimum wages. These minimum wages are well below living wages, ranging from 19% in Bangladesh and Sri Lanka, 26% in India to 46% in China (Asia Floor Wage 2017). Minimum wages, often paid on piece rates, result in the mining of workers’ bodies as workers accept overtime in an attempt to get closer to living wages. A move to labour costing in supplier factories on the basis of living wages is clearly not possible without a redistribution of revenue within the value chain.

One could even go further and say that, as shown in the New York garment industry example mentioned earlier, that this redistribution within the GVC requires that buyers/brands be brought into legally enforceable agreements on wages to be paid in supplier factories (Nathan 2013). There is, as in Kalecki’s theory of distribution, a connection between firm-level product prices, workers’ wages and employment conditions. Closing the sweatshops that exist in some GVC segments will require prices that redistribute some revenue to the supplier firms.

The analysis provided in the preceding paragraph applies particularly to GVCs in labour-intensive products such as garments and leather products, where wages are a higher portion of the costs, than in GVCs where wages are a relatively small portion of costs such as the automotive sector. In the latter, there could be greater scope for increasing wages even without raising the suppliers’ prices. However, the requirement for costing labour on the basis of living wages with skill supplements remains necessary.

Alternatives

So far, we have mentioned the contestation by labour and the struggles to better the condition of labour within the existing system of GVCs. However, there is the other (and much more difficult) quest to find alternatives to the capitalist–imperialist system itself. There can be forms of collectives within the capitalist market economy, for example, those analysed by Elinor Ostrom (1990) or the collective villages still remaining within the Chinese economy as analysed in Nathan and Kelkar (1997). These, however, do not constitute alternatives to the capitalist economy; instead, valuable as they are, they remain as alternatives within the capitalist economy. The task of imagining an alternative to the capitalist system seems somewhat more difficult.


Dev Nathan (nathandev@hotmail.com) is with the Institute for Human Development, India; GPN Studies, India; and the Duke University GVC Center, U.S.

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