The theory was an attempt to explain the falling trend in the terms of trade for underdeveloped countries, while criticising the different approaches of Raúl Prebisch, Hans Singer, and Arthur Lewis to do so as only half-hearted attempts. It stated, contrary to the then conventional Heckscher-Ohlin-Samuelson theory, that it was politically and historically set wage-levels that determined relative prices, not the other way around, and, contrary to the assumptions of Ricardo's comparative costs, that capital was internationally mobile and the rate of profit correspondingly equalised.
What made the theory a heated subject in Marxist and dependentista circles was the theory's implications about international worker solidarity. Emmanuel was not late to point out that his theory fitted well with the observed absence of such solidarity, particularly between high- and low-wage countries, and, in fact, made the nationally enclosed workers movements into the principal cause of unequal exchange.
By contrast, all subsequent versions of the theory such as those by Samir Amin, Oscar Braun, Jan Otto Andersson, Paul Antoine Delarue, and almost every critic since Charles Bettelheim, have preferred to make higher productivity the cause (and thereby justification) of higher wages, and 'monopolies' the cause of unequal exchange.
Emmanuel's theory of unequal exchange was part of a more comprehensive explanation of the post-war capitalist economy. In Emmanuel's view, because selling had to take place without the income generated by the sale itself, there was a permanent excess of (the value of) goods over (the purchasing power of) income in the normal workings of a market economy. This obliged the economy to function below its full potential and made it prone to crises such as the one he had himself experienced during the Great Depression. By contrast, the boom of the 'thirty glorious' post-war years indicated that this normal functioning had somehow been evaded, and Emmanuel now offered the institutionalised rise in wages, plus a policy of permanent inflation, as the principal stimulant directing the boom in investments. Since neither the wage- nor the consumption levels of the well-off countries could be internationally equalised - upwards for both ecological reasons and because it would eat up all profits, and downwards for political reasons in the same rich countries - unequal exchange was the necessary consequence, in a sense saving the capitalist economy from itself.
Not much is known about Emmanuel's whereabouts in the years before moving to France. He was born in Patras, Greece, the son of Charalambos Emmanuel and Katina (born Menounou). Studied at the High School of Economics and Commerce from 1927 to 1932 and then at the Faculty of Law until 1934, from where he went on to work in commerce in Athens until 1937.
While his later works clearly identify him as a Marxist or communist of sorts, it is still uncertain when and under which circumstances he began considering himself as such. Publishing articles at least from 1928, an interest in Marxist theory is evidenced in a 1937 article on 'psychoanalysis as a global theory and dialectical materialism', and yet another on gold as an 'unwelcome immigrant' perhaps links to a long-standing concern with gold and the special economic role of the money commodity. No published record of membership in a communist party is familiar, and it was uncommon in Greece until the Resistance years of World War II, but his later works identified him as a 'paleo-Marxist', both in the historical materialist sense and as a supporter of centralised economic planning, even on a global scale.
Changes in the American immigration policies closed the traditional Greek safety vault, and under the yoke of depression and General Metaxas's dictatorship (1936–1941), Emmanuel, in 1937, went to work in commerce in the Belgian Congo. In 1942, Emmanuel volunteered for the Greek Liberation Forces in the Middle East, and was active in the April 1944 left-wing uprising of the Middle Eastern forces against the government-in-exile in Cairo. In fact, the uprising was not supported by EAM (National Liberation Front) (nor by Stalin), to whom it came rather inconveniently, and it was soon put down by British troops and Emmanuel sentences to death by a Greek court-martial in Alexandria. The mutiny appears to have been directed more immediately against the return of the monarch, so that participation does not in itself suggest communist or Marxist leanings, rather than merely republican, although in Emmanuel's case this would seem probable.
By the end of 1945 he was pardoned and returned to the Belgian Congo, where there now had grown a small community of Greeks and Portuguese, in addition to the African and Belgian ones. Here, too, he participated in debates: on colonists and against the common accusation for illegitimate profits on behalf of colonial merchants (to whom Emmanuel and commonly other Greeks belonged). He may even have been in contact with the liberation movement to be organised around Lumumba in Stanleyville, but when the situation hardened in 1957, he prudently departed for France. Observations from the Congos appear frequently in his writings and can probably help explain the peculiarity of his approach and its differences to common French Marxism. After some years as an art student, and in the context of the publication of Frantz Fanon's The Wretched of the Earth, Emmanuel began as a graduate student under Charles Bettelheim, the theme being his theory of unequal exchange which was first presented in 1961-1962.
While Bettelheim was certainly inspired by Paul A. Baran, the same is not evident for Emmanuel. In addition, many other differences were visible from the start, such as Bettelheim's desire to make unequal exchange due to wage differentials a subcategory of unequal exchange due to differences in 'organic composition' (i.e. capital intensity), which was common enough to Marxist understanding and continues to be the focus of modern 'developments' of the theory of unequal exchange. This distinction was also the cause of some confusion when the theory was eventually debated in the Anglo-Saxon world in the 1970s (among non-Marxists, e.g., Paul Samuelson, David Evans).