Why do market-centric fixes for “unequal exchange” fall short? Sidelining social relations and production power turns colonialism into a pricing problem—and hides the mechanisms that keep uneven development in place.

When Nievas and Piketty published “Unequal exchange and North-South Relations” in early June 2025, many progressive economists were pleased that the colonial foundations of the British Empire were at last being taken seriously in Economics. It was, they thought, long overdue. But the way Nievas and Piketty present, frame and analyze their data on North-South relations perpetuates deeper structural problems with how the discipline deals with colonialism and empire.

There is a vast literature that demonstrates that ‘development’ in the North and ‘underdevelopment’ in the South are closely connected, including through theories of unequal exchange.[1] But Nievas and Piketty empty that concept of its political content. The move is similar to what Piketty did with his book Capital in the 21^st Century, where he took the title from Capital but proceeded to treat capital as wealth rather than as a social relation, as in Marx. It is precisely the social relations underpinning the North-South interactions that is missing in the work. As such, insights into the ways in which value transfers globally reflect the uneven development of productive forces gets lost. With social relations stripped away, the framing of the empirical findings end up reproducing the idea in economics that markets, if properly managed and in the absence of colonial coercion, can produce balanced trade. The ways in which unevenness is reproduced through markets are concealed.

In this piece, I critique the theoretical and methodological foundations of Nievas and Piketty’s study that leads them to this frame of analysis. As I will show, those foundations ensure that even when economists try to grapple with imperial subordination and colonial extraction, their frameworks often prevent them from uncovering the underlying industrial, economic and political realities that produce the observed unequal outcomes. I will particularly draw on radical scholarship on uneven development to contrast it with Nievas and Piketty’s understanding of capitalism. But first let’s unpack their headline findings.

North-South relations seen through the current account

Using a new database developed as a part of their project, Nievas and Piketty find that core European powers had a permanent current account surplus between 1800 and 1914, while the rest of the world had significant deficits (see the current accounts as a percentage of world GDP below). They identify the period between 1800 and 1914, as the ‘first globalization’. However, since the 1970s, in contrast, the main surpluses have come from oil countries in Middle East and North Africa (MENA) as well as from East Asia (driven first by Japan and later China). The only world region in their dataset with a similarly large imbalance as the European core had in the colonial period is North America/Oceania with a structural (US-driven) deficit in the 1990-2025 period. They call this period the ‘second globalization.’ Their whole paper essentially is an analysis of the different elements of the current account for various regions between 1800 and 2025 to explain the shifting nature of North-South relations.

The puzzle they then go on to present is that Europe was in a persistent goods trade deficit between 1800 and 1914. How is this consistent with the observation that Europe had a very high current account surplus in the same period? According to their data, Britain and the other core European countries had surpluses in services, and, more significantly, positive foreign income flows and foreign transfers (see the two graphs below). They find that foreign income inflows – consisting of dividends, interest, royalties and profits from the rest of the world – to the core European countries in the 1880 and 1914 period were so large that no country or region in the world has ever received foreign income inflows approaching that magnitude since. Europe also received significant foreign transfers, consisting of colonial transfers such as one-off tributes and public and private transfers from colonies to the colonizers. Nievas and Piketty then argue that while foreign transfers flowed from South to North in the 1800-1914 period, in recent decades (1970-2025) they flow the opposite way: from North to South. No longer do they consist of colonial transfers but rather of public aid flows, and, most importantly, private remittances sent to countries in the global South from migrants in the global North.

This leads Nievas and Piketty to conclude the following: Under the British Empire, a Britain-led Europe was able to appropriate sufficiently large foreign transfers and income inflows from the rest of the world so that they could transform large trade deficits into large current account surpluses. But in the 1970-2025 period, the US has not been able to do the same. They argue that this can explain some of the “nervousness and aggressivity vis-à-vis the rest of the world observed under the Trump administration in 2025”. They suggest that it seems that Trump would like the kind of financial transfers that Britain received during its imperial period as a compensation for its global leadership, but that the rest of the world is not willing to provide it. This story of shifting current account imbalances is interesting but it tells only part of the story of uneven capitalist development. And in presenting only a partial picture, their paper supports a misleading understanding of capitalism and the balance of forces of our time.

The social relations underpinning uneven development

Nievas and Piketty’s focus on foreign income inflows and transfers is in line with the foundational (implicit) assumption in the Economics discipline that the development of capitalism was a matter of the intensification of existing commercial processes of market exchange, division of labor and technological advancements (a naturalizing view of capitalism). This contrasts with radical understandings of capitalism that take social relations as their starting point. Such understandings recognize that capitalism entailed a structural shift in economic and social organization, from a feudal society to one based on capital employing free labor. This change in social relations started in Britain before the period Nievas and Piketty present data for. Indeed, by the start of their dataset in 1800, Britain is already a capitalist hegemon, and the industrial revolution is well underway. The authors’ suggestions that “foreign transfers play a crucial role in order to start up the process of foreign wealth accumulation” in the early 1800s is therefore historically contested as it dates the ‘start up’ of British capitalist domination much later than what most historians of capitalism would agree to.[2] As such, Nievas and Piketty’s view attributes the accumulated wealth in Britain to income and wealth transfers rather than the global organization of capitalism with Britain at the top of the hierarchy. This is not to say that transfers from the colonies – and before that, from the Transatlantic Slave Trade – were not important for supporting and shaping economic development in Europe. The issue is, rather, that if we take social relations as a starting point, then these transfers can be better understood as reflections of British dominance and not its primary cause.

Radical understandings of uneven development and unequal exchange draw on two key insights which lead to different analyses of capitalism than what Nievas and Piketty put forward. The first is that differences in capital compositions, wages and rates of surplus value across industries and countries generate inequality and value transfers at an international scale, which is has been traditionally called unequal exchange.[3] The second is that if and when value transfers between the North and South exist, they are a consequence of the uneven development of productive forces globally. As such, inequality cannot be understood simply through measuring and reversing income and wealth flows, but, rather, it is the way capital and labor exploitation has been organized globally that must be interrogated. The organization of development at a global scale is important here. Rather than seeing European development as based on technological advancements, cultural traits or hard work, radical scholars argued that development in the global North was – and continues to be – linked to underdevelopment elsewhere.<a href="#_edn4" nam