Relationship Between the Global North & South in the Political Economy

Global Political Economy can be understood by the merits and outcome of globalization, a phenomenon that links people and technology to one another and intertwines ideas across nations and borders. It is within globalization that we begin to understand the engines of market power, the reach of economic might and global development of individual states as well as the holistic lens when viewing the relationship of each state in relation to one another. Globalization’s contribution to Global Political Economy proves itself to be the masterpiece that defines the global status quo of the world today, with capabilities of ideas exported from one hemisphere to the other, transcending an assembly line of productions in one continent then having parts assembled in another to be sold in and to an entirely other country. A relationship building transaction that is molded by the inner workings of parties spanning across the globe dependent on one another from the initial stage of resources to accumulation of capital and the labor behind the production. These linkages of globalization stretch further beyond when globalization first took any shape or form and today it has transformed the market and the global status quo into a powerhouse. Rooted from the dependent relationship of the North and South, a relationship that best describes a collection of developed and wealthy nation states with its partners of developing and underdeveloped states. This marriage of the North and South has been the epitome of relationships and the drive behind Globalization and its contribution to Global Political Economy. To fully understand the accomplishments or perhaps even missteps of Globalization towards Global Political Economy is within the sum of its parts; the relationship between the North and South.

The North and South, often referred to as the Global North and Global South, separating the collection of nation states above and below the equator with many exceptions but simply to group the developed and the developing countries. An aspect driven on the gap of a socio-economic and political divide. The North covering countries of North America, Western Europe, Australia, Brunei as well as the Asian Tigers, and the South as the rest of the world living in the Third World. In understanding the relationship between the countries in the Global North and Global South, would be to analyze the history of the relationship and its evolution into the one today, essentially the dynamics of how its historical past juxtaposed with its contemporary upbringing can affect and provide a clearer understanding of Global Political Economy.

The historical aspect that will be examined will be one that predates post-colonialism and prior to the de-colonialization after the Second World War. If it predates post-colonialism then it’s the history and relationship stir of colonialism itself, one that

“Given colonialism’s deep entrenchment in the power structures of the global political economy, however, the ‘abyssal global lines’ dividing metropolitan and peripheral societies keep on reproducing themselves (Santos 2014B).”

A dependent relationship fueled by Marxist capitalism and its merits on profit-making capabilities with Neoliberalist institutions and agency that entrap and perpetuate the mechanisms of the rooted structures of Immanuel Wallerstein’s World System’s Theory. The World System theory provides structures of the historical relationship between the North and South with motives towards Marxist’s capital accumulation in pursuits of profits. Neoliberalist institutions bound with the World System’s Theory and capital accumulation ensures that the process of exploitation and unequal exchange remain cyclical. Motivated by profits through capitalism, provided by the interconnectedness of the classes; the possessors of capital and that of the laborers, and within this structure, paints a relationship between the North and South as a union of capitalism and dependency.

Capitalism resulted in the possessors and the non-possessors; the capitalists and laborers which created a division in the classes. Understood by the wielders of economic might whom would employ those who would labor the work – wherever at the lowest cost. An ordain that soon exploited the working class into an unequal exchange; profits went to wielders of capital and marginalized amount for the workers. Production and profits meant eliminating costs by all means necessary, a feat that would have to begin at accumulation and production itself. A progress to keep accumulation of capital endless and almost perpetual, and the structure in place guaranteed the turning of spokes in this wheel of capitalism would be exploitation through the already placed structures of colonialism.

“Smith’s elaboration of the labor theory of value allowed him to understand accumulation as a global process, including colonialism and imperialism as constitutive. This theory this laid the premises for conceptualizing historical inter-connectedness, contradicting the assumptions of the stadial theory Smith himself elaborated: a theory that was closely linked to Smith’s free trade doctrine and the interests of the British bourgeoisie at the dawn of the industrial revolution.” (Pradella)

Pradella asserts that Smith’s labor theory understood accumulated on a global scale taking into account colonialism and imperialism as the establishers of accumulation that reflected the interests of the British during the industrial revolution.

A colonial power that relished its dominance over others that can be put under focus in examining a historical and contemporary relationship would be the British Empire. Beginning in the late 17^th and 18^th century, the Empire’s conquest for power sought riches through trade rather than military conquest. Power that led the British Empire to house many colonies under its rule, colonizing countries that even today live on its colonial legacy of once being under the British Empire. The country to focus in this historical relationship is that of India under the British Empire. India was colonized by the Empire from 1858 until its eventual independence in 1947, the rule over the Indian subcontinent was ushered in by the industrial revolution which intertwined the economies of India and Great Britain. It is within this colonial rule of India by the British Empire that will be examined for both the historical and contemporary relationship, from colonial and imperialism to post-colonial legacy. The divide grew from just a distinction in the classes within a society to a transnational class divide between nations, this transitioned from lower wages and exploitation of workers across borders. A ‘ready’ group of laborers were available as colonization took place, the Indian population were taken to be laborers on cotton fields, built railways and bridges, dug canals and operated telegraph links all to facilitate the British power’s efficiency in transport and trade. The transnational class divide through colonialization allotted societies of other nation as laborers. The evolution of the holders of capital from being the elite class over another to that of an elite nation over a lesser,

“capitalism thus seemed to favor one class against another, and the more competitive nation against the less.” (Marx)

Essentially slavery took over as the laboring class of manufacture and reinforced the unequal exchange of transactions but instead of within a society, the scale grew to that of a nation over another. This highlighted the interlinkages between the developments in Europe and the rest of the world, with the cyclical progression of colonialism and capitalism as the mechanism to keep this in motion, a relationship had been forged between the colonizers and the colonized.

Colonialism may have begun as a tool to assert dominance over a lesser state, assimilating societies, accumulating resources but with imperialism; instilling political and societal power, it grew to become a placed structure of exploitation and unequal exchange. The exchange would be of a developed wealthy nation investing capital in a lesser state for the means of production through the use of resources of both materials and human capital – slavery, a traffic in human flesh.

“Marx’s articles on China, show accumulation constantly generates a hierarchy of forms of labor exploitation within the highly integrated British colonial system. Traffic in human flesh, a new form of slave trade,” (Pradella, [1976:378-370])

Colonialism bred slavery and with this instrument drew human capital like never before, no longer was it simply the exploitation of raw materials and resources for production but also of people. The relationship between capitalism and colonialism is that in cutting cost meant using people to the extreme, an instrument of production and an essential cog in machinery to propel the capitalist states into industrial grandeur. It is within this scope that,

 “Marx’s close attention to the relationship between capitalism and colonialism is that direct slavery is just as much the pivot of bourgeois industry as machinery, credit, etc. Without slavery, you have no cotton, without cotton, no industry. It is slavery that gave the colonies their value, it is the colonies that created world trade, and it is world trade that is the precondition of large scale-industry. This slavery is an economic category of the great importance.” (Pradella on Marx, 1976, [1847]:167)

The period before post-colonialism, one that thrived on its predecessor; colonialism and imperialism, was driven by capitalism. The need to accumulate capital and investment to maximize profit making. This interconnectedness branched out globally, with Wallerstein’s World System’s Theory as the

“crucial contribution to understanding global interconnectedness”
(Dussel and Yanez, 1980, 69)

The theory postulates a political superstructure, intertwined in sets of sovereign states defined as well as constrained by their membership in an interstate network system. A system that, given a single state, doesn’t allow for the capability to transform the single world empire or breakage from the interconnectedness. The interconnectedness meant a dependent relationship between the capitalist and the laborers; investment of capital for lost-cost labor and raw materials with the intent for a high value-added element after production. This unequal exchange left laboring nations no choice due to gaps in development and capital, and the perpetual exchange only widen the divide. Food grains transported from the agricultural markets in India to markets as flour increased usability and created a higher value-added essence to the raw material, this unequal exchange left Indians to suffer major famine by the tens of millions during British occupation as colonial administers moved large amounts of food grains for trade.  

Wallerstein, understood the expansion of this Europe-centered World System in terms of market relations and doesn’t stray far from Marxist’s capital accumulation and Adam Smith’s value on labor.

“In the Wealth of Nations, Smith, to respond to the crisis of the First British Empire, proposed a new project of empire expanding in the populous and fertile countries of Asia.” (1961[1776], II:484)

The response to the crisis with a new project of empire sought out countries in Asia as the peripheries and a place to increase production with cost cuttings means, which began this transition to a network of interconnectedness.

The historical relationship between the North and South was built upon the foundations of colonialism driven by capital. It forged a relationship that structured a dependency between the core, the North, with the peripheries, the South, one based on unequal exchange and exploitation for profits. Exploitation of human capital and raw materials for the exchange of development in the South sewn through imperialism. The relationship created a superstructure that allowed for no restructuring and no breakage from the system. This historical aspect explains one half in understanding how the relationship of the North and South affects the Global Political Economy, its counterpart, the contemporary relationship may shed further light.

The contemporary relationship is examined through the postcolonial condition is the flipside of the colonial ensuing coin of the historical past between the North and South. The aftermath of de-colonialization and transformation of the world system to rid of colonialism and its legacy. Colonialism and its legacy created disturbance in the socio-economic and political sphere separating the arbitrary hemispheres in two, the post-colonial condition seeks to stabilize this relationship. In stabilizing the relationship would be to restore inequalities, rid the legacies of colonialism, counter balance power between the North and South beginning with the decolonization after the Second World War. This relationship, juxtaposed to the forged relationship of the historical mold of the dependency between the North and South considerably affects our understanding of the Global Political Economy.

The post-colonialist condition are the particular states of the many colonies that were freed from colonial rule during the second half of the twentieth century and are now living on the legacy of colonialism. The condition itself pertains further to not just simply living in retrospective nostalgia of once being under colonial rule but rather its longevity in instilled culture, structures, societal practices and norms as well as identity. The culture and societal practices of language, music and sports reinforces the legacy of post-colonialism much like of the British rule over India even after gaining independence in 1974.  Structures of institutions like schools and churches reinforces the legacy through religion and instilled beliefs. The reinforcement of legacy through practices, language, music and sports may seem to be mediocre in a globalized world system where everything is accessible through technology, but remains to be predominantly instilled within colonized states. Trades and market power on the other hand asserts itself to be another reinforcement of the legacy left behind by the relationship of the North and South. This legacy of market power translates to core-like activities and dominance over the periphery and semi-periphery evident in the value added profiteering mechanisms that exploit low wages and raw materials from the latter nodes of the world systems still present today.

“Competitive accumulation produces uneven and combined development as it tends to concentrate high value-added production” (Pradella, 2014)

Pradella argues that competitive accumulation or capital accumulation, with Marx’s primitive accumulation, but taken to a global scale results in ‘uneven and combined development’ through high value-added production. The means in having production and manufacture in a periphery or semi-periphery state, then having value-added upon distribution is the unequal exchange resulting from core-like activities through exploitation of the peripheries and the profits spoiled by the core. The argument that the exploitation ensues development for the peripheries and the South is yet another unequal demise. The development in the South is simply to maintain or make efficient of the systems in place must like the British rule over India did spark major infrastructure and development for the Indian subcontinent, but these developments can be accounted on the basis that it was necessary for the British to provide such infrastructure to usher in this economic flourishment. Railways, roads, canals, bridges and even telegraph links were built and established in India to transport cotton to ports in Bombay for shipments to the Empire. The British, “alone can set the East on the path of capitalist development,” this uneven and combined development paints the narrative of colonized India that the developments and infrastructure were simply to further economic gain by the British and the spillovers of capitalism by the British were enjoyed by the colonized. This colonial power’s spillovers weren’t all positive, even after 60 years of occupation, skilled laborers were lacking and superior posts held by Indians accounted for a mere ten percent of the workforce. Human capital was utilized to its full capacity but positions of superiority weren’t taught or relayed to the locals.  

The idealistic pursuit to rid of the legacies of colonialism and instilled structures of imperialism and the reinforced hierarchy of the dependency of World Systems through core-to-periphery activities would be to reset the economic market and history of the world status quo. Such pursuit is limited by the historical relationship embedded between the North and South into one that to restructure the system would be an implausible feat to simply reset and wipe the slate clean. The limitations of the historically forged relationship between the North and South would be the legacy of colonialism itself, and the structures already in place would be an impossibility to rid of when capitalism and accumulation is deeply rooted in society and hierarchical structures of dependency.

“But limits of de-colonialization and modernist/nationalist projects in the South with deep economic inequalities that marked colonial era continued into the present. Post-colonialism highlights continuing legacy of colonialism and imperialism; de-colonialization changed, did not eliminate, this relationship (Loomba 2005).”  

Loomba argues that even with decolonization, the relationship rooted with colonialism, imperialism and the ensuing legacy of both changes nothing and Loomba takes it further in that it cements the relationship built to the one today. One of cyclical processes that ensures that unequal exchange within the Global Political Economy. The legacy of the British Empire in India is evident in aspects of instilled culture such as the English language’s grasp in India as one of the central government’s official languages, spoken by 400 million speakers as well as English taught in schools. As for sports, cricket was introduced during the British rule and remains dominantly played and enjoyed in the country. In terms of trade, India and the UK share a strategic partnership, India stands as the third largest investor in the UK and the historical relationship exhibits the UK as beneficiaries of reversed colonialism where non-Western countries impact the West where the UK considers India as one of the fastest growing economics. The brokerage of a free trade agreement post-Brexit estimates a 50% increase in exports from UK to India and 12% increase in reciprocity. The legacy of colonialism is apparent upon brokerage an FTA between the partners when India insists on an unnegotiable leverage for the UK to welcome higher levels of immigrants. Decolonization issued half a century ago but its legacy remains adamant.

De-colonialization took place in this contemporary state but the relationship between the North and South did not eliminate, the merits and outcomes of such restructuring is the resulting shift in the lens that capitalism and how colonialism is viewed from. No longer is it viewed from the “capitalist narrative” but rather from the economically-ill and inequality driven societies of the South.

The “‘narrative of capital’, turns the violence of mercantile trade, war, genocide, conquest and colonialism into a story of universal progress, development, modernization and freedom,” (Chatterjee, 1993, 235). Chatterjee argues that decolonization did nothing to restructure placed systems of colonialization and imperialism that produced unequal exchange, this narrative of capital remains seamlessly intact. However, the narrative shifts from the North exploiting the South through colonial rule by unfair trade deals, and mismanagement of human capital through slavery into a narrative of development; an opportune moment for the helping hand of the North to aid and provide development and infrastructure for the South. Chatterjee solidifies that the relationship is no different to the one that existed prior to the restructuring and indefinitely exhibits the same relationship of unequal exchange, simply a veil in its place to shroud its true nature. Chatterjee shares Marx’s perception that “the colonial world in his eyes, was a privileged vantage point from which to analyze capitalist society” (Pradella).

The restructure shifted the lens of which capitalism is viewed, no longer is it from the perspective of the North but rather through the South’s, but even with a shift in perspective, the limitations of restructuring a firmly forged relationship is that it eliminates nothing. With nothing changed means the status quo of the Global Political Economic relationship between the North and South remains untarnished by decolonization. Untarnished and in full motion, as Karl Kautsky alludes to a stage-setting transition for imperialism and legacies of colonialism. Colonial domination reflects the relationship of the North and South to be one of total domination, but with this placed structure and de-colonialization and shift in perception Karl Kautsky argues that this domination isn’t dead. Kautsky asserts that imperialism serves as a stage for something more grandeur, ultra-imperialism, based on the hierarchical fixtures of the historical relationship of the North and South driven on capitalism and exploitation, the shift is towards transnationalism.

Leading capitalists, corporations and cartels coming together on a transnational basis to keep fixtures of the World System in place rendering war obsolete as the dependency of the weaker states on the wealthy is stronger than ever. Stronger on the notion of the historically built gap of development and inequality that fueled profit for the capitalist elite and maintained inequality for the labor states. History proves to be the mechanism that maintains this cyclical relationship. This ‘ultra-imperialism’ termed by Kautsky denotes that with the legacies of colonialism, and the instruments of imperialism mounted on the relationship of dependency; a transnational dependency through globalism is the status quo of the Global Political Economy. War may no longer ensue as every nation remains to be dependent on one another, save for an anomalistic country like North Korea.

Another limitation of de-colonialization and the post-colonial condition would be the underestimation of the role of agency. The agency’s crucial role in maintaining the hegemonic power’s, the core node of the world system, and pursuit to reinforce the longevity of the activities of the core to the peripheries in this ironclad relationship. The facilitation of cooperation between bureaucracy, corporations, entrepreneurial sectors and the working class maintains the world system and evolves into the Modern World System of the dependency between nations based on trades and economic interdependence. The agencies the ensure a cyclical relationship would be through free trade agreements, contracts that maintains that trade be prioritized between parties. A prioritization that through the shifted lens, provides trade outlets for developing nations, but through the capitalist narrative, perpetual exchange between core and peripheries. The insistent by the Indian government to accept higher levels of immigrants to birth a free trade agreement post-Brexit is an attempt balance the exchange, one that exhibits aspects of reversed colonialism rooted by the legacy of colonialism. Marx would agree that a push for the movement of immigrants is the importance given to the Labor Value Theory, but rather than the value deemed by the labor put into a good or service, it is the potential of value of labor that is leveraged by India – the exploited periphery to the United Kingdom. The role of the agency alludes faintly to Kautsky’s “ultra-imperialism” in the sense that an interconnectedness of sectors within a society with colonial legacies fuels the transnational dependency between the North and South, clearing a painted grandeur setting Kautsky suggests with “ultra-imperialism” in this transitioned status quo.

The historical and contemporary relationship of the North and South, forged through instruments of colonialism and imperialism created a mechanism for a cyclical relationship based on capitalistic profit for the North at the expense of an economical and societal exploitation of the South. Structured around an iron-clad fixture of an interstate world system that leaves no room for breakage of the core and periphery status quo leading to a unified but unequal global society.

“The social devastation in countries like India and China was the organic concentration on a world scale, but ‘cosmopolitan exploitation’ not just a class but an entire nation could grow rich at the expense of another.” (Pradella)

The cosmopolitan exploitation is no longer the exploitation of a class structure within a society but rather an entire society within the network of the global market, fueled into the World System Theory of the core exploiting the peripheries and the inability to break-free from the dependency.

The historical relationship exhibited through colonialism and imperialism structures an exploitative relationship between the North and South; a transaction of human capital and high value-added to induce profits in production spanning across nations categorizing nations as either wealthy capitalist state or a weaker exploited one. The contemporary seeks to stabilize the manufactured inequality between the two, deemed a failure in stabilization and resulted in a shift in perspective of once a violent means for mercantile trade to one that sought development and prosperity for the exploited. The lens shifted but the relationship remained potent for unequal exchange and exploitation, its inability to restructure this dependency and superstructure is evident that the historical foundations of the relationship influences the contemporary considerably. An influence that sought to right wrongs but instead solidify the pre-existing relationship of unequal exchange. The union between capitalism and dependency of the historical relationship juxtaposed with a perspective lens shift and distancing from colonial legacy understands the Global Political Economy as one that, through Globalization and its instruments of transnationalism, is unified but unequal. The lens examines the relationship between the North and South as one that no longer glorifies slavery but feeds on the dependent behavior that the North provides stability, infrastructure and development for the South in these fair transactions. The Global Political Economy may be headed towards an “ultra-imperialistic” nature of transnationalism where all sectors are engulfed in one single ordeal to maintain this cyclical relationship of dependency for profit from the building blocks of the historical past and mirroring of the contemporary relationship between the North and South plays a crucial role in understanding the Global Political Economy and the Global status quo of today.

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