Skip to main content
Springer Nature Link
Log in

Rent and Surplus in the Global Production Network: Identifying ‘Value Capture’ from the South

  • Chapter
  • First Online:
Labour Questions in the Global South

  • 417 Accesses

Abstract

This chapter critically reviews the contemporary global production network (GPN) analyses from the perspective of Marxian political economy. The GPN analyses focus on rents created at various nodes of the production network, and it ignores the fact that returns from interventions at specific stages in the value chain are not independent of the entire process of surplus creation and realization. Rents from innovation depend on the movement of the average capital in the particular industry and the way political economy of institutions allow certain ‘scarcities’ remain protected while others being drawn into the realm of competition. The chapter also argues that the GPN analyses hardly explain the dynamics of inclusion and exclusion of firms within such networks. It is argued that the dynamics is primarily governed by the relative position of individual capital and its technical composition with reference to the capital that assumes average levels of technology in that industry at a particular point of time.

Originally published in Agrarian South: Journal of Political Economy, Vol. 6 No. 1 Copyright 2017 © Centre for Agrarian Research and Education for South (CARES), New Delhi. All rights reserved. Reproduced with the permission of the copyright holders and the publishers, SAGE Publications India Pvt. Ltd, New Delhi.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Subscribe and save

Springer+
from €39.99 /Month
  • Starting from 10 chapters or articles per month
  • Access and download chapters and articles from more than 300k books and 2,500 journals
  • Cancel anytime
View plans

Buy Now

Chapter
EUR 29.95
Price includes VAT (Germany)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
EUR 106.99
Price includes VAT (Germany)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
EUR 139.09
Price includes VAT (Germany)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

') var buybox = document.querySelector("[data-id=id_"+ timestamp +"]").parentNode var buyingOptions = buybox.querySelectorAll(".buying-option") ;[].slice.call(buyingOptions).forEach(initCollapsibles) var buyboxMaxSingleColumnWidth = 480 function initCollapsibles(subscription, index) { var toggle = subscription.querySelector(".buying-option-price") subscription.classList.remove("expanded") var form = subscription.querySelector(".buying-option-form") var priceInfo = subscription.querySelector(".price-info") var buyingOption = toggle.parentElement if (toggle && form && priceInfo) { toggle.setAttribute("role", "button") toggle.setAttribute("tabindex", "0") toggle.addEventListener("click", function (event) { var expandedBuyingOptions = buybox.querySelectorAll(".buying-option.expanded") var buyboxWidth = buybox.offsetWidth ;[].slice.call(expandedBuyingOptions).forEach(function(option) { if (buyboxWidth buyboxMaxSingleColumnWidth) { toggle.click() } else { if (index === 0) { toggle.click() } else { toggle.setAttribute("aria-expanded", "false") form.hidden = "hidden" priceInfo.hidden = "hidden" } } }) } initialStateOpen() if (window.buyboxInitialised) return window.buyboxInitialised = true initKeyControls() })()

Institutional subscriptions

Similar content being viewed by others

Notes

  1. 1.

    Rent as originally defined by Ricardo (1973, p. 33) in the Principles of Political Economy and Taxation (Chapter II: ‘On Rent’) as ‘that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil’. Ricardo indicates that rent does not arise because of differential fertility of land but because of differential access to scarce resources. Later on ecnomic rent is referred to any return that a resource attracts over and above the opportunity cost of the use of that resource.

  2. 2.

    Quasi-rents are special type of economic rents that are temporary in nature and arise where the supply of a resource is fixed over the short term but not for a longer term. Discussed in detail in fourth section.

  3. 3.

    In Capital vol. III part II, Marx discusses the distribution of surplus value between competing industrial capitals as well as between other forms of capital including commercial and financial capital and the landowning class. Marx shows how prices are linked to values and can be higher and lower than values. This transformation of values into prices is actually a process of distribution of surplus value between different capitals.

  4. 4.

    For a detailed discussion, see Sheikh (1982).

  5. 5.

    Profit rates within industry and between industry tend to equalize through competition converging towards a general rate of profit for the whole economy in the longer period. This is some average rate of profit accrued by capital that has mean or average composition at a particular point of time. Rent can exist by keeping resources or ‘scarce’ factors away from competition or by restricting access to such resources to other capitals. In fact, the average rate of profit is computed on that portion of social capital which enters the equalization process.

References

  • Ali-Yrkkö, J., Rouvinen, P., Seppälä, T., & Ylä-Anttila, P. (2011). Who Captures Value in Global Supply Chains? Case Nokia N 95 Smartphone. Journal of Industry, Competition and Trade, 11, 263–278.

    Article  Google Scholar 

  • Amin, S. (2010). The Law of Worldwide Value. New York: Monthly Review Press.

    Google Scholar 

  • Appelbaum, R. P., & Gereffi, G. (1994). Power and Profits in the Apparel Commodity Chain. In E. Bonacich, L. Cheng, N. Chinchilla, & N. H. P. Ong (Eds.), Global Production: The Apparel Industry in the Pacific Rim (pp. 42–62). Philadelphia, PA: Temple University Press.

    Google Scholar 

  • Blair, J. (2005). Global Capitalism and Commodity Chains: Looking Back, Going Forward. Competition & Change, 9(2), 153–180.

    Article  Google Scholar 

  • Carrera, I. J. (1998). A Model to Measure the Profitability of Specific Industrial Capitals by Computing their Turnover Circuits (CICP Working Paper). Buenos. Aires: Centro para la Investigación como Crítica Práctica la Investigaci’on como Cr’ıtica Pr’actica.

    Google Scholar 

  • Castells, M., & Henderson, J. (1987). Techno-Economic Restructuring, Sociopolitical Process and Spatial Transformation: A Global Perspective. In J. Henderson & M. Castells (Eds.), Global Restructuring and Territorial Development (pp. 1–17). Newbury Park: SAGE Publications.

    Google Scholar 

  • Czaban, L., & Henderson, J. (1998). Globalisation, Institutional Legacies and Industrial Transformation in Eastern Europe. Economy and Society, 27(4), 585–613.

    Article  Google Scholar 

  • Dicken, P., Kelly, P., Olds, K., & Wai-Chung Yeung, H. (2001). Chains and Networks, Territories and Scales: Towards a Relational Framework for Analyzing the Global Economy. Global Networks, 1(2), 89–112.

    Article  Google Scholar 

  • Fröbel, F., Heinrichs, J., & Kreye, O. (1980). The New International Division of Labour. Cambridge: Cambridge University Press.

    Google Scholar 

  • Gereffi, G. (1994). The Organisation of Buyer-Driven Global Commodity Chains: How US Retailers Shape Overseas Production Networks. In G. Gereffi & M. Korzeniewicz (Eds.), Commodity Chains and Global Capitalism (pp. 95–122). Westport/London: Greenwood Press.

    Google Scholar 

  • Gereffi, G. (1995). Global Production Systems and Third World Development. In B. Stallings (Ed.), Global Change, Regional Response: The New International Context of Development (pp. 100–142). New York: Cambridge University Press.

    Chapter  Google Scholar 

  • Gereffi, G. (1999). International Trade and Industrial Upgrading in the Apparel Commodity Chain. Journal of International Economics, 48(1), 37–70.

    Article  Google Scholar 

  • Gereffi, G. (2001). Beyond the Producer-Driven/Buyer-Driven Dichotomy: The Evolution of Global Value Chains in the Internet Era. IDS Bulletin, 32(3), 30–40.

    Article  Google Scholar 

  • Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The Governance of Global Value Chains. Review of International Political Economy, 12(1), 78–104.

    Article  Google Scholar 

  • Gibbon, P. (2002). At the Cutting Edge? Financialisation and UK Clothing Retailers’ Global Sourcing Patterns and Practices. Competition & Change, 6(3), 289–308.

    Article  Google Scholar 

  • Harvey, D. (2009). The Art of Rent: Globalization Monopoly and the Commodification of Culture. Retrieved from http://www.generation-online.org/c/fc_rent1.htm.

  • Heintz, J. (2006). Low-Wage Manufacturing and Global Commodity Chains: A Model in the Unequal Exchange Tradition. Cambridge Journal of Economics, 30(4), 507–520.

    Article  Google Scholar 

  • Henderson, J. (1989). The Globalisation of High Technology Production. London: Routledge.

    Google Scholar 

  • Henderson, J., Dicken, P., Hess, M., Coe, N., & Wai-Chung Yeung, H. (2002). Global Production Networks and the Analysis of Economic Development. Review of International Political Economy, 9(3), 436–464.

    Article  Google Scholar 

  • Hopkins, T., & Wallerstein, I. (1986). Commodity Chains in the World Economy Prior to 1800. Review, 10(1), 157–170.

    Google Scholar 

  • Hudson, R. (1988). Uneven Development in Capitalist Societies: Changing Spatial Divisions of Labour, Forms of Spatial Organization of Production and Service Provision, and their Impacts on Localities. Transactions of the Institute of British Geographers, New Series, 13(4), 484–496.

    Article  Google Scholar 

  • Kaplinsky, R. (1998). Globalisation, Industrialisation and Sustainable Growth: The Pursuit of the Nth Rent (Discussion Paper No. 365). Brighton: Institute of Development Studies, University of Sussex.

    Google Scholar 

  • Kaplinsky, R. (2000). Spreading the Gains from Globalisation: What Can Be Learned from Value Chain Analysis? (Working Paper No. 110). Brighton: Institute of Development Studies, University of Sussex.

    Google Scholar 

  • Kaplinsky, R. (2005). Globalization, Poverty and Inequality: Between a Rock and a Hard Place. Cambridge: Polity Press.

    Google Scholar 

  • Kaplinsky, R. (2007). Capability Building in SSA: What Difference Do the Asian Drivers Make? (SLPTMD Working Paper Series 10). Oxford: Department of International Development, University of Oxford.

    Google Scholar 

  • Laibman, D. (1973/1974). Values and Prices of Production: The Political Economy of the Transformation Problem. Science and Society, 37(4), 404–436.

    Google Scholar 

  • Lipietz, A. (1980). The Structuration of Space, the Problem of Land and Spatial Policy. In J. Carney, R. Hudson, & J. R. Lewis (Eds.), Regions in Crisis (pp. 60–75). London: Croom Helm.

    Google Scholar 

  • Maizels, A., Berge, K., Crowe, T., & Palaskas, T. B. (1998). Trends in the Manufacturing Terms of Trade of Developing Countries. Oxford: Mimeo, Finance and Trade Policy Centre, Queen Elizabeth House.

    Google Scholar 

  • Marx, K. (1959). Capital (Vol. III). Moscow: Foreign Languages Publishing House.

    Google Scholar 

  • Ngai, P., & Chan, J. (2012). Global Capital, the State, and Chinese Workers: The Foxconn Experience. Modern China, 38(4), 383–410.

    Article  Google Scholar 

  • Palpacuer, F. (2008). Bringing the Social Context Back in: Governance and Wealth Distribution in Global Commodity Chains. Economy and Society, 37(3), 393–419.

    Article  Google Scholar 

  • Porter, M. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. London: Macmillan.

    Google Scholar 

  • Porter, M. (1990). The Competitive Advantage of Nations. London: Macmillan.

    Book  Google Scholar 

  • Prebisch, R. (1962). The Economic Development of Latin America and its Principal Problems. Economic Bulletin for Latin America, 7(1), 1–22.

    Google Scholar 

  • Raikes, P., Jensen, M. F., & Ponte, S. (2000). Global Commodity Chain Analysis and the French Filiere Approach: Comparison and Critique. Economy and Society, 29(3), 390–417.

    Article  Google Scholar 

  • Ricardo, D. (1973; first published 1911). The Principles of Political Economy and Taxation. London: J.M. Dent and Sons.

    Google Scholar 

  • Schmitz, H. (2004). Chain Governance and Upgrading: Taking Stock. In H. Schmitz (Ed.), Local Enterprises in the Global Economy (pp. 349–353). Cheltenham: Edward Elgar.

    Chapter  Google Scholar 

  • Schumpeter, J. (1961). The Theory of Economic Development. Oxford: Oxford University Press.

    Google Scholar 

  • Sheikh, A. (1982). Neo-Ricardian Economics: A Wealth of Algebra, a Poverty of Theory. Review of Radical Political Economics, 14(2), 67–83.

    Article  Google Scholar 

  • Singer, H. W. (1950). The Distribution of Gains between Investing and Borrowing Countries. American Economic Review, 40(2), 473–485.

    Google Scholar 

  • Smith, J. (2012). The GDP Illusion: Value Added Versus Value Capture. Monthly Review, 64(3), 86–102.

    Article  Google Scholar 

  • Smith, J. (2016). Imperialism in the Twenty-First Century: Globalization, Super Exploitation and capitalism’s Final Crisis. New York: Monthly Review Press.

    Google Scholar 

  • Sturgeon, T. J. (2001). How Do we Define Value Chains and Production Networks? IDS Bulletin, 32(3), 9–18.

    Article  Google Scholar 

  • UNCTAD. (2013). Handbook of Statistics. New York/Geneva: United Nations.

    Google Scholar 

  • Whitley, R. (1996). Business Systems and Global Commodity Chains: Competing or Complementary Forms of Economic Organisation? Competition & Change, 1(4), 411–425.

    Article  Google Scholar 

  • Xing, Y., & Detert, N. (2011). How the iPhone Widens the United States Trade Deficit with the People’s Republic of China (Working Paper Series 257). Tokyo: Asian Development Bank Institute.

    Google Scholar 

Download references

Acknowledgements

The author would like to thank the anonymous referees for their valuable comments and suggestions. The usual disclaimer applies.

Author information

Authors and Affiliations

  1. Institute for Studies in Industrial Development, Delhi, India

    Satyaki Roy

Authors
  1. Satyaki Roy
    View author publications

    Search author on:PubMed Google Scholar

Editor information

Editors and Affiliations

  1. Centre for Economic Studies and Planning School of Social Sciences, Jawaharlal Nehru University, New Delhi, India

    Praveen Jha

  2. Sam Moyo African Institute for Agrarian Studies (SMAIAS), Harare, Zimbabwe

    Walter Chambati

  3. Makerere University, Kampala, Uganda

    Lyn Ossome

Rights and permissions

Reprints and permissions

Copyright information

© 2021 The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd.

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Roy, S. (2021). Rent and Surplus in the Global Production Network: Identifying ‘Value Capture’ from the South. In: Jha, P., Chambati, W., Ossome, L. (eds) Labour Questions in the Global South. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-33-4635-2_5

Download citation

  • DOI: https://doi.org/10.1007/978-981-33-4635-2_5

  • Published:

  • Publisher Name: Palgrave Macmillan, Singapore

  • Print ISBN: 978-981-33-4634-5

  • Online ISBN: 978-981-33-4635-2

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics