Gar writes: >Has actually developed an exchange rate table using Arjun Makjani's >basket of goods method? (For those unfamiliar with him, he argues that >market exchange rates are yet another way of cheating poor and third >world countries . One example of his point is that you can buy within >Mexico more with the Mexican peso than the exchange rate with the >dollar would suggest. He suggest a fair currency exchange rate would >compare how many dollars vs. how many pesos it takes to buy a fixed >basket of goods.) Does his basic argument make sense? I reviewed Arjun M's book for MONTHLY REVIEW awhile back. His basic proposition is that exchange rates should be set -- fixed -- equal to the Purchasing Power Parity rates. It's a fun proposal, and it would be no big deal for the advanced capitalist countries. After all, the Bretton Woods system was somewhat like that and it worked for a couple of decades (mas o menos, as they say in Spanish, pues). But if the market exchange rate differs radically from the PPP rate, as he argues it does for Mexico, then the World Monetary Authority (or whatever he called it) would have to work mightily and steadily to negate the effects of market forces. It's a fun proposal, but the balance of world power between the 3rd and 1st worlds would have to change radically in order to make it work. After all, it would shift the distribution of income radically, Radically with a capital R. The 1st world would resist, to say the least. A world income tax -- and negative income tax -- seems more likely and easier to arrange. And currently, in an era where the US is no longer the unchallenged hegemon, even the Bretton Woods system of fixed exchange rates seems infeasible. > Are market currency exchange rates one way the first world extracts surplus value from the second and >third? strictly speaking, in terms of Marxian value theory, the capitalists in the 3rd world (many of whom are based in the 1st world) and what's left of pre-capitalist ruling classes extract surplus value from the workers in the 3rd world. (These days, the East has gone South, so that the 2nd world is part of the 3rd.) Then, the exchange rate mechanism is one part of the redistribution of the surplus-value to the capitalists in the 1st world. I guess. I'll have to think about how Arjun M's theory works a bit more... Jim Devine [EMAIL PROTECTED] & http://clawww.lmu.edu/Departments/ECON/jdevine.html
