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THE TWO PHASES OF STRUCTURAL ADJUSTMENT/167

goods are exported and from which goods are imported: i.e. such

a country gives more objectified labour in kind than it receives,

even though it still receives the goods in question more cheaply

than it could produce them itself. (Marx, Capital, volume III,

pp. 344-5)

It should be noted that Marx is talking about the advantages
that capitalists secure from foreign trade, not only as a result of
unequal trade but also as a way to reduce production costs -
enabling the capitalist system to counterbalance the tendential fall
in the rate of profit.
Marx's analysis of the nineteenth century remains valid today
for understanding unequal exchange between countries with
different levels of productivity - in particular between industri­
alised capitalist countries and the countries of the periphery.
Indeed, the most industrialised countries export to less industri­
alised countries goods that can be sold at a lower price than what
it would cost the countries of the South themselves to produce
them. For example, when capitalists in the most industrialised
countries sell industrial goods to the countries of the South, they
can make surplus profit while still remaining competitive. The only
way for a country of the South to begin to produce industrial goods
without confronting competition from the North, would be to
subsidise domestic industry and erect protectionist barriers - in
the way the US did when it broke from the British Crown in the late
eighteenth century. Such an approach gives less industrialised
countries the time to reach a stage in the cumulative process of
industrialisation where they can produce goods at comparable
levels of productivity to their competitors in the North. This is what
South Korea managed to accomplish for certain types of goods.

Countries of the periphery have faced a twin difficulty: in the first
place, they were pillaged; and in the second, the only path left open
to them was that of entering the world market under the wing of
the centre's main powers. Countries electing to industrialise have
had to do so within the framework of a world market flooded with
Western industrial goods.

In other words, while the world market and global economy

powerfully stimulated the industrialisation of the West from the

sixteenth century to the nineteenth century ... since the end of