Revisiting Preobrazhenskii: Non-equivalent Exchange and Its Implications for Value Theory

That the world economy is riven with inequalities is evident. However, the mechanisms which systemically work to construct these inequalities are hidden and opaque. This paper will first review and revise contemporary approaches to mapping the hierarchical nature of the world economy. Second, it will outline and demonstrate the mechanisms of non-equivalent exchange, enforced by structured inequalities in the relative value of national currencies, which constantly create and reinforce this hierarchy.
The theoretical framing of non-equivalent exchange as a mechanism for surplus transfer within the world system was first mooted by Evgenii Preobrazhenskii in his pathbreaking 1926 book, The New Economics. Shortly after that, Preobrazhenskii, like so many others, would be caught up in the web of Stalin’s Great Terror, and he was never again in a position to pursue his 1926 insights. The concept was, however, picked up by others. Importantly, Ranjit Sau developed a methodology for measuring this non-equivalent exchange, and the paper’s methodology is a revised and expanded version of Sau’s methodology, using contemporary data sources. Applying Preobrazhenskii’s theory and the revised version of Sau’s methodology demonstrates the transfer of surplus from the “Global South” to the “Global North”. It also clearly poses the need to revise our understanding of key formulae from Capital Volumes I and III – specifically, formulae on the circulation of commodities and the rate of profit. These modifications are not minor and have implications both economic and political.