Absorbing Global Surplus Labor

Hartmut Elsenhans

The ANNALS of the American Academy of Political and Social Science, 1987, vol. 492, issue 1, 124-135

Abstract: Capitalist economies need rising wages to keep up demand for increasing output. But the increasing availability of Third World surplus labor for world-market production threatens to uncouple wages from the development of productivity and to create, thus, a global deficit of demand that will profoundly disturb the growth mechanism of the capitalist world economy. None of the counterarguments that are brought up in the debate on the low-wage danger stands up to a closer examination. In order to check this danger, surplus labor in the Third World must be absorbed through inward-looking development. This requires that LDC demand structure be adjusted in a government-controlled way to the LDC supply potentials—relatively simple goods for mass consumption. The North should push such strategies in the South according to the leitmotiv “resources for reform—reforms against resources†thus strengthening reformist Southern elites.

Date: 1987
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Persistent link: https://EconPapers.repec.org/RePEc:sae:anname:v:492:y:1987:i:1:p:124-135

DOI: 10.1177/0002716287492001011

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