Unequal Exchange - Criticisms of The Concept of Unequal Exchange

Criticisms of The Concept of Unequal Exchange

Broadly, six main criticisms can be distinguished:

• The first criticism of the concept of unequal exchange is that, even although it may be proved to occur, this of itself has no specific moral or policy implication. "Unequal" does not necessarily imply "unfair". Reference is made here to human choice: if somebody choses to buy or sell above or below what a product is really worth, that is their own choice, and they only have themselves to blame, if they get a bad deal.

• The second criticism is that even although unequal exchange can be proved to occur, it is preferable to no trade at all. At least if trade occurs, everybody can gain something from it, even if it means some gain more than others. If that is accepted by all parties to the trade, it cannot be morally wrong. It may be that a good purchased in one country fetches a much higher price in another, but in good part that higher price is due to the costs involved in the trading process as such. Traders aim to sell goods as competitively as they can, and if the final price is comparatively high, there is not much they can do about that.

• This argument is extended with the idea that people have to learn to "trade up the ladder". Yes, the starting position may be one of inequality, but by "trading up" it is possible to "get even" over time, i.e., over time it is possible to improve one's market position, perhaps with the aid of credit. Inversely, a "trickle down effect" is said to occur whereby the enrichment of some through trade will improve the position of others less fortunate over time. Trading problems should therefore be viewed in terms of a process of development over time, whereby market actors gradually improve their position although unequal positions can never be abolished.

• The epistemic criticism revolves around the idea that it is impossible to specify objectively and/or universally what a fair or equal exchange would be anyway; any such judgement is regarded as either subjective, or biased in favour of some group or other. Any economic exchange will be "unequal" from some point of view. A sub-argument here is, that not less labour exchanges for more labour, but that labour is itself valued differently in different places.

• Fifth, it is argued that if unequal exchange exists, that is only because some groups or countries took the initiative to trade and generate wealth. That gave them an advantage or privileged starting position, sure, but they achieved it through their own initiative, and they justly deserve the benefit of that.

• Finally, it is argued that the market will spontaneously balance itself over time anyway, since, if some group feels hard done by and disadvantaged in trade, they will band together to drive up the price of what they sell in the competitive marketplace. Thus, the market will ultimately adjust to what goods and services are really worth, and market imperfections or rigidities will be ironed out through the process of market competition itself.

All these arguments illustrate that market trade supplies no specific moral norms of its own, beyond the (contractual) obligations necessary to settle transactions. If one is "free to choose" in market trade, one is also able to choose freely what morality to follow, within an accepted or enforced legal framework. Those moralities might clash, but there may exist no neutral arbiter that can adjudicate: it may be that "between equal rights, force decides".

The typical response to these criticisms is that one may be forced to buy or forced to sell, even just for survival - whether one likes that or not, and under unfavourable conditions - both because markets set price levels beyond anyone's control, and because market actors have unequal bargaining power. Thus, it may be impossible ever to reach the position of fair or equal exchange, except through non-market interventions. That is, market trade could be liberating, but it could just as well be very oppressive. If the rich/poor gap widens constantly, and terms of trade deteriorate constantly, the idea of "trading up the ladder" or "trickle down effects" is seriously undermined.