, Greece

Greece

Greece , officially the Hellenic Republic , and historically Hellas or the Republic of Greece in English, is a country in southeastern Europe....

, 1911, died 2001) was an economist who became known in the 1960s and 1970s for his theory of 'unequal exchange'. The theory was an attempt to explain the falling trend in the terms of trade

Terms of trade

In international economics and international trade, terms of trade or TOT is /. In layman's terms it means what quantity of imports can be purchased through the sale of a fixed quantity of exports...

 for underdeveloped countries

Developing country

A developing country, also known as a less-developed country, is a nation with a low level of material well-being. Since no single definition of the term developing country is recognized internationally, the levels of development may vary widely within so-called developing countries...

, while criticising the different approaches of Raúl Prebisch

Raúl Prebisch

Raúl Prebisch was an Argentine economist known for his contribution to structuralist economics, in particular the Singer–Prebisch thesis that formed the basis of economic dependency theory. He is sometimes considered to be a neo-Marxist though this label is misleading...

, Hans Singer

Hans Singer

Sir Hans Wolfgang Singer was a development economist best known for the Singer-Prebisch thesis, which states that the terms of trade move against producers of primary products. He is one of the primary figures of heterodox economics.-Biography:Singer was born in Elberfeld, Germany in 1910...

, and Arthur Lewis to do so as only half-hearted attempts. It stated, contrary to the then conventional Heckscher-Ohlin-Samuelson theory

Heckscher-Ohlin model

The Heckscher–Ohlin model is a general equilibrium mathematical model of international trade, developed by Eli Heckscher and Bertil Ohlin at the Stockholm School of Economics. It builds on David Ricardo's theory of comparative advantage by predicting patterns of commerce and production based...

, that it was politically and historically set wage-levels that determined relative prices, not the other way around, and, contrary to the assumptions of Ricardo's comparative costs, that capital was internationally mobile and the rate of profit

Rate of profit

In economics and finance, the profit rate is the relative profitability of an investment project, of a capitalist enterprise, or of the capitalist economy as a whole...

 correspondingly equalised. What made the theory a heated subject in Marxist and dependendista circles was the theory's implications about international worker solidarity. Emmanuel was not late to point out that his theory fitted well with the observed absence of such solidarity, particularly between high- and low-wage countries, and, in fact, made the nationally enclosed workers movements into the principal cause of unequal exchange. By contrast, all subsequent versions of the theory such as those by Samir Amin

Samir Amin

Samir Amin is an Egyptian economist. He currently lives in Dakar, Senegal.- Biography :Samir Amin was born in Cairo, the son of an Egyptian father and a French mother . He spent his childhood and youth in Port Said; there he attended a French High School, leaving in 1947 with a Baccalauréat...

, Oscar Braun, Jan Otto Andersson, Paul Antoine Delarue, and almost every critic since Charles Bettelheim

Charles Bettelheim

Charles Bettelheim was a French economist and historian, founder of the Center for the Study of Modes of Industrialization at the Sorbonne), economic advisor to the governments of several developing countries during the period of decolonization...

, have preferred to make higher productivity the cause (and thereby justification) of higher wages, and 'monopolies' the cause of unequal exchange.

Emmanuel's theory of unequal exchange was part of a more comprehensive explanation of the post-war capitalist economy

Capitalism

Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...

. In Emmanuel's view, because selling had to take place without the income generated by the sale itself, there was a permanent excess of (the value of) goods over (the purchasing power

Purchasing power

Purchasing power is the number of goods/services that can be purchased with a unit of currency. For example, if you had taken one dollar to a store in the 1950s, you would have been able to buy a greater number of items than you would today, indicating that you would have had a greater purchasing...

 of) income in the normal workings of a market economy

Market economy

A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a state-directed or planned economy. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed...

. This obliged the economy to function below its full potential and made it prone to crises such as the one he had himself experienced during the Great Depression

Great Depression

The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...

. By contrast, the boom of the 'thirty glorious' post-war years indicated that this normal functioning had somehow been evaded, and Emmanuel now offered the institutionalised rise in wages, plus a policy of permanent inflation, as the principal stimulant directing the boom in investments. Since neither the wage- nor the consumption levels of the well-off countries could be internationally equalised - upwards for both ecological reasons and because it would eat up all profits, and downwards for political reasons in the same rich countries - unequal exchange was the necessary consequence, in a sense saving the capitalist economy from itself.

Early Biography

Not much is known about Emmanuel's whereabouts in the years before moving to France. He was born in Patras, Greece, the son of Charalambos Emmanuel and Katina (born Menounou). Studied at the High School of Economics and Commerce from 1927 to 1932 and then at the Faculty of Law until 1934, from where he went on to work in commerce in Athens until 1937. While his later works clearly identify him as a Marxist or communist of sorts, it is still uncertain when and under which circumstances he began considering himself as such. Publishing articles at least from 1928, an interest in Marxist theory

Marxist philosophy

Marxist philosophy or Marxist theory are terms that cover work in philosophy that is strongly influenced by Karl Marx's materialist approach to theory or that is written by Marxists...

 is evidenced in a 1937 article on 'psychoanalysis as a global theory and dialectical materialism', and yet another on gold as an 'unwelcome immigrant' perhaps links to a long-standing concern with gold and the special economic role of the money commodity. No published record of membership in a communist party is familiar, and it was uncommon in Greece until the Resistance years of World War II

Greek Resistance

The Greek Resistance is the blanket term for a number of armed and unarmed groups from across the political spectrum that resisted the Axis Occupation of Greece in the period 1941–1944, during World War II.-Origins:...

, but his later works identified him as a 'paleo-Marxist', both in the historical materialist

Historical materialism

Historical materialism is a methodological approach to the study of society, economics, and history, first articulated by Karl Marx as "the materialist conception of history". Historical materialism looks for the causes of developments and changes in human society in the means by which humans...

 sense and as a supporter of centralised economic planning

Economic interventionism

Economic interventionism is an action taken by a government in a market economy or market-oriented mixed economy, beyond the basic regulation of fraud and enforcement of contracts, in an effort to affect its own economy...

, even on a global scale. Changes in the American immigration

Immigration to the United States

Immigration to the United States has been a major source of population growth and cultural change throughout much of the history of the United States. The economic, social, and political aspects of immigration have caused controversy regarding ethnicity, economic benefits, jobs for non-immigrants,...

 policies closed the traditional Greek safety vault, and under the yoke of depression and General Metaxas

Ioannis Metaxas

Ioannis Metaxas was a Greek general, politician, and dictator, serving as Prime Minister of Greece from 1936 until his death in 1941...

's dictatorship (1936–1941), Emmanuel, in 1937, went to work in commerce in the Belgian Congo

Belgian Congo

The Belgian Congo was the formal title of present-day Democratic Republic of the Congo between King Leopold II's formal relinquishment of his personal control over the state to Belgium on 15 November 1908, and Congolese independence on 30 June 1960.-Congo Free State, 1884–1908:Until the latter...

. In 1942, Emmanuel volunteered for the Greek Liberation Forces in the Middle East, and was active in the April 1944 left-wing uprising of the Middle Eastern forces against the government-in-exile

Government in exile

A government in exile is a political group that claims to be a country's legitimate government, but for various reasons is unable to exercise its legal power, and instead resides in a foreign country. Governments in exile usually operate under the assumption that they will one day return to their...

 in Cairo. In fact, the uprising was not supported by EAM (National Liberation Front) (nor by Stalin), to whom it came rather inconveniently, and it was soon put down by British troops and Emmanuel sentences to death by a Greek court-martial in Alexandria. The mutiny appears to have been directed more immediately against the return of the monarch, so that participation does not in itself suggest communist or Marxist leanings, rather than merely republican, although in Emmanuel's case this would seem probable. By the end of 1945 he was pardoned and returned to the Belgian Congo, where there now had grown a small community of Greeks and Portuguese, in addition to the African and Belgian ones. Here, too, he participated in debates: on colonists and against the common accusation for illegitimate profits on behalf of colonial merchants (to whom Emmanuel and commonly other Greeks belonged). He may even have been in contact with the liberation movement to be organised around Lumumba in Stanleyville, but when the situation hardened in 1957, he prudently departed for France. Observations from the Congos appear frequently in his writings and can probably help explain the peculiarity of his approach and its differences to common French Marxism. After some years as an art student, and in the context of the publication of Frantz Fanon

Frantz Fanon

Frantz Fanon was a Martiniquo-Algerian psychiatrist, philosopher, revolutionary and writer whose work is influential in the fields of post-colonial studies, critical theory and Marxism...

's The Wretched of the Earth

The Wretched of the Earth

The Wretched of the Earth is Frantz Fanon's most famous work, written during and regarding the Algerian struggle for independence from colonial rule...

, Emmanuel began as a graduate student under Charles Bettelheim, the theme being his theory of unequal exchange which was first presented in 1961-1962.

While Bettelheim was certainly inspired by Paul Baran

Paul Baran

Paul Baran was a Polish American engineer who was a pioneer in the development of computer networks.He invented packet switching techniques, and went on to start several companies and develop other technologies that are an essential part of the Internet and other modern digital...

, the same is not evident for Emmanuel. In addition, many other differences were visible from the start, such as Bettelheim's desire to make unequal exchange due to wage differentials a subcategory of unequal exchange due to differences in 'organic composition' (i.e. capital intensity

Capital intensity

Capital intensity is the term in economics for the amount of fixed or real capital present in relation to other factors of production, especially labor...

), which was common enough to Marxist understanding and continues to be the focus of modern 'developments' of the theory of unequal exchange. This distinction was also the cause of some confusion when the theory was eventually debated in the Anglo-Saxon

Anglosphere

Anglosphere is a neologism which refers to those nations with English as the most common language. The term can be used more specifically to refer to those nations which share certain characteristics within their cultures based on a linguistic heritage, through being former British colonies...

 world in the 1970s (among non-Marxists, e.g., Paul Samuelson

Paul Samuelson

Paul Anthony Samuelson was an American economist, and the first American to win the Nobel Memorial Prize in Economic Sciences. The Swedish Royal Academies stated, when awarding the prize, that he "has done more than any other contemporary economist to raise the level of scientific analysis in...

, David Evans

David S. Evans

David S. Evans is the Chairman of the Global Economics Group in the firm’s Boston office, and has broad experience in the economics of antitrust, intellectual property, and financial regulation. Evans has an international practice and has worked on matters in the United States, the European Union,...

).