(*) This short article is the English translation of my piece originally published in Portuguese on the website A Terra É Redonda on January 21st, 2025.

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Value Capture and Value Production in the Global Economy: A Marxian Analysis of Global Value Chains

The global economy underwent significant restructuring between 2000 and 2014, driven primarily by China’s rapid industrial rise and its integration into the World Trade Organization in 2001. This period marked a critical shift in global value chains, as manufacturing relocated from developed countries to Asia. The economic consequences were profound, reshaping wages, employment, and income distribution among nations.

My recent empirical study, published in January 2025 in the journal Environment and Planning A: Economy and Space, estimates the production, realization, and capture of economic value across global value chains in 56 sectors and 43 countries between 2000 and 2014. Grounded in Marxian value theory, this research highlights how value is produced through labor and subsequently transferred or captured across industries and countries. It also examines the causes of value capture, shedding light on global economic disparities.

Conceptual Framework

The analysis is rooted in Marxian value theory, which offers a detailed lens through which to examine the creation and distribution of economic value. Specifically, the study extends the “New Interpretation” of Marxian value theory to the global scale, developing a novel empirical methodology to estimate value production, realization, and capture in the world economy.

Key concepts include:

• Value production: The total (direct and indirect) labor embodied in commodities, including labor used to produce inputs like machinery and raw materials.
• Value realization: The allocation of global value through market transactions at current prices.
• Value capture: The difference between realized and produced value, representing the transfer of value between sectors and countries.

Importantly, Marxian theory distinguishes productive from unproductive activities. Productive activities generate new commodities, whereas unproductive activities do not create new value but instead recirculate and consume the value produced in other sectors. Examples of unproductive activities include finance, real estate (excluding construction), wholesale and retail trade, public administration, national defense, and public security services. This distinction challenges the conventional assumption that all economic activities are inherently productive.

Global Transfers of Value

The empirical analysis in my study reveals that value predominantly flows from labor-intensive to capital-intensive sectors and from productive to unproductive activities.

Labor-intensive sectors such as healthcare, education, construction, agriculture, and services were the largest value donors, transferring significant amounts to capital-intensive industries like manufacturing, mining, and oil extraction. This pattern underscores the economic burden borne by labor-intensive activities, particularly in developing economies.

Between 2000 and 2014, China emerged as the largest value donor in the global economy, while the United States was the largest value capturer. This reflects the substantial relocation of manufacturing to China and the predominance of unproductive activities in the US, such as finance, trade, real estate, and the military.

Unproductive activities play a central role in value capture. Although they do not generate new value, sectors like finance, trade, real estate, and the military extract a substantial share of global value. For example, financial institutions profit from interest and fees, while real estate captures value through rents and administrative charges. These activities exacerbate unequal value flows between countries and sectors, disproportionately benefiting developed economies with advanced financial and commercial infrastructures.

The dominance of the US dollar and American banks in global credit creation allows the United States to capture a significant share of global value flows. In another study, published in 2024 in the journal Structural Change and Economic Dynamics, I estimated that the United States remains the world’s leading value capturer through financial markets.

The data also show a rapid shift in productive activities from the US and Europe to Asia. This relocation has led rich countries to specialize in unproductive activities and developing countries in productive ones, with manufacturing growing particularly rapidly in China.

Dimensions of Exploitation in the Global Economy

Using the definition of exploitation as the unequal exchange of labor, my 2025 study identifies two dimensions of global exploitation:

1. Class exploitation: Within firms, capitalists extract more labor from employees than the labor they themselves contribute to production, resulting in unpaid labor by the employees.
2. Trade exploitation: Globally, capital-intensive industries and countries, or those with a higher concentration of unproductive activities, tend to capture value from labor-intensive industries and countries.

Empirical results show that these dimensions of exploitation are interconnected at the global level. Labor-intensive activities, which exhibit higher exploitation rates, are simultaneously the largest value donors. Conversely, capital-intensive industries capture value and experience lower exploitation rates. This dynamic helps explain global disparities in income and industrial development.

Since realized value differs from produced value, there are effectively two exploitation rates for each economic activity, sector, or country:

• The “rate of exploitation produced” measures unpaid labor based on the value produced.
• The “rate of exploitation realized” measures unpaid labor based on the value realized, which may exceed or fall short of the value actually produced.

The data indicate that capital-intensive activities tend to have lower “rates of exploitation produced” but higher “rates of exploitation realized.” Labor-intensive activities, on the other hand, exhibit higher “rates of exploitation produced” but lower “rates of exploitation realized”. This reflects the economic tendency for value to flow from labor-intensive to unproductive and capital-intensive activities, resulting in the leakage of exploitation and value from labor-intensive productive activities.

Three key mechanisms drive global value capture:

1. Unproductive activities: A significant portion of value produced in productive sectors is consumed by unproductive activities, which, while not creating new value, are essential for value realization (e.g., financial credit enabling productive growth).
2. Capital intensity: Capital-intensive industries capture more value than labor-intensive activities under competitive conditions.
3. Market power and concentration: Larger firms and developed economies leverage market power to capture value from smaller firms and developing countries. This mechanism is facilitated by capital centralization and the hierarchy of international credit systems.

The Hierarchy of Nations

China’s rise as a global manufacturing hub has made it the largest value donor, while the US remains the largest value captor due to its dominance in unproductive sectors.

Labor-intensive activities such as agriculture, education, healthcare, and construction are the largest donors of human labor. Labor-intensive services like healthcare and education transfer value due to their low capital intensity. In competitive markets, profits are typically proportional to capital investment, favoring activities with higher capital intensity over labor intensity.

The data reveal not only a hierarchy between rich and poor economies but also among wealthy nations. For instance, value flows from poorer (labor-intensive) to richer (capital-intensive) countries. At the same time, wealthy countries like Germany, Japan, and France (capital-intensive) transfer value to the US (also capital-intensive but dominated by unproductive activities), reflecting the global dominance of American firms in finance, trade, and real estate.

Implications for Economic Development

The findings underscore the critical role of industrialization and capital intensity in economic development. Developing nations reliant on labor-intensive activities face structural disadvantages, as they transfer value to capital-intensive industries in developed countries. This highlights the need for policies promoting industrial modernization and technological innovation in emerging economies.

Moreover, the dominance of unproductive activities in developed nations raises concerns about the sustainability of value capture mechanisms. While these activities are essential for facilitating trade and investment, their disproportionate share of produced value could potentially hinder long-term economic growth in rich countries.

Rethinking Unequal Exchange Theory

Theoretically, my study aims to advance Marxian value theory for the global economy, offering new insights into value production, realization, and capture.

Empirically, the findings emphasize the structural inequalities inherent in global value chains, where labor-intensive activities and developing nations transfer value to capital-intensive industries and developed countries.

However, my empirical estimates challenge conventional approaches to unequal exchange, which assume that all activities are productive. By incorporating the Marxian classification of productive and unproductive activities, my study provides a more accurate representation of global value transfers. For instance, it reveals that the US captures value not only from developing nations but also from other developed economies, primarily through unproductive activities.

China’s rapid industrialization and its demand for agricultural and mineral products from developing countries have also reshaped global value chains. Countries like Brazil, India, and Indonesia have emerged as value capturers due to their exports to China, highlighting the complexity of contemporary value transfers.

Ultimately, my findings demonstrate that unequal exchange theory is incompatible with the assumption that all economic activities generate value. While the theory can explain global economic dynamics, this is only possible under the Marxian classification of productive and unproductive activities. The results show that the theory of unequal exchange can indeed explain the dynamics of the world economy, but only under the Marxian classification of productive and unproductive activities.

The theory of unequal exchange asserts that rich countries exploit poor countries based on the definition of exploitation as the unequal exchange of labor directly and indirectly embodied in goods and services. Under the assumption that all activities are productive, the data from my study show that China exploits the United States. However, under the assumption that unproductive activities do not generate value, the data show instead that the United States exploits not only China and other poor countries but also other rich countries.

This crucial distinction stems directly from the rapid shift of productive activities to Asia, the fast growth of unproductive activities within rich countries like the United States and European economies, and the hegemony of the U.S. dollar in the international financial market.

Contrary to popular belief, Marxian value theory remains relevant and useful. It provides crucial insights into global value production and capture, offering a robust framework for understanding the world economy.

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