World-systems theory

Why take the world rather than the nation as the unit?

Economics and sociology textbooks usually take a country, "the Korean economy" or "British society", as a unit and examine its growth and change. World-systems theory questions this from the start. Countries do not have economies of their own; all are parts of a single world economy. Wallerstein criticised modernisation theory on three counts: its focus on the nation state as the only unit of analysis, its assumption of a single evolutionary path for all countries, and its disregard of the transnational structures that constrain local and national development.

The theory has three main predecessors. The Annales school, represented above all by Fernand Braudel, turned attention to long-term processes and geo-ecological regions as units of analysis; Marxism added social conflict, the process of capital accumulation and class struggle, the transitory nature of social forms and a dialectical sense of motion through contradiction; and dependency theory supplied the key concepts of "core" and "periphery". Wallerstein defined a system as "a unit with a single division of labor and multiple cultural systems". Historical systems divide into "mini-systems" such as bands, tribes and small chiefdoms, and two kinds of world-system: "world-empires" with a single political centre, such as the Roman Empire or Han China, and "world-economies", a large division of labour with many political centres and cultures. The modern world-system is a capitalist world-economy that has not been unified politically into an empire, and by about 1900 it had become the first and only world-system to cover the whole planet.

On this view Wallerstein rejected the notion of a "Third World": there is only one world, connected by a complex network of exchange. For the same reason he wrote that "there are today no socialist systems in the world-economy any more than there are feudal systems because there is only one world system. It is a world-economy and it is by definition capitalist in form." The Soviet Union and the Eastern bloc, in other words, were parts of the capitalist world-economy.

What separates core, semi-periphery and periphery?

The division of labour of the world-economy has three zones. The core has higher-skill, capital-intensive industries, and its businesses, with the support of their states, monopolise the most profitable activities of the division of labour. Core states have diversified economies, strong central governments, bureaucracies and armies, large tax bases, and stand at the forefront of new technologies and industries. The periphery takes low-skill, labour-intensive industry and the extraction of raw materials. Its economies depend on one or two activities, often raw-material exports; its governments and institutions are weak; its bourgeoisie is small and its peasantry large; and inequality is high, with a small upper class that owns most of the land and has profitable ties to multinational corporations.

The semi-periphery lies between them. Struggling to avoid falling into the periphery while striving to join the core, semi-peripheral states apply protectionist policies most aggressively of the three. They export more to the periphery and import more from the core. Declining cores and rising peripheries become semi-peripheries. Spain and Portugal, early leaders in the sixteenth century that overstretched themselves with empire and had to pay for English and French manufactures with American silver and gold, are classic examples; in the twenty-first century Brazil, Russia, India, China and South Africa (the BRICS) are usually considered semi-peripheral. The category is meant to show, unlike the two-tier scheme of dependency theory, that countries can move between tiers. Wallerstein left room for poor countries to improve, but held that there will always be a need for a periphery as long as core states derive resources from it.

How did the modern world-system arise and spread?

Wallerstein traces the origins of the modern world-system to the protracted crisis of feudalism (c. 1290–1450): the stagnation of agricultural production and the growing burden on peasants, the climate of the Little Ice Age, epidemics such as the Black Death, and a feudal economy that had passed the peak of its cycle and entered depression. Capitalism arose as a response, and he regarded its rise as an accidental outcome. In the "long sixteenth century", from the European discovery of the Americas to the English Revolution of 1640, a slight initial advantage in accumulation in Britain, the Dutch Republic and France set off a process of growing expansion.

There have been only three periods in which one core state clearly dominated the modern world-system, each lasting less than a hundred years: the Netherlands in the seventeenth century, Britain in the nineteenth, and the United States after the First World War. According to Wallerstein, hegemony comes about as productivity dominance leads to trade dominance and trade dominance to financial dominance, with military dominance following. Past hegemons rose with fairly small military spending and began to lose their lead as they expanded militarily. In 1800 the old European core claimed 35 percent of the world's territory; by 1914 it claimed 85 percent. From then on a state that wanted peripheries had to take them from another core state, as in the Spanish–American War and the expansion of Germany, Japan and Italy. Wallerstein was mocked for arguing from 1980 that the United States was a "hegemon in decline", but after the Iraq War the argument became widespread. He also saw globalisation as the same process as the spread and development of capitalism over the past 500 years.

What did Giovanni Arrighi add?

The Italian sociologist Giovanni Arrighi met Wallerstein while teaching in Rhodesia and Tanzania and worked with him at the Fernand Braudel Center in Binghamton from 1979. In The Long Twentieth Century: Money, Power, and the Origins of Our Times (1994) he reread the history of capitalism as "systemic cycles of accumulation". As Braudel had already observed, there were structurally similar phases in the first third of the eighteenth century (the end of the Dutch Golden Age) and at the beginning and end of the twentieth century. Each cycle ended with capital withdrawing from production and with the dominance of finance capital, while industrial decline brought rising imports from which other regions profited. Hegemony passed from the Netherlands to Britain and from Britain to the United States.

Within this framework Arrighi foresaw the decline of American hegemony. The United States still held military power but had lost the financial means to remedy its structural weakness, and its attempts to rule the world through "domination without hegemony" had failed. In Adam Smith in Beijing (2007) he held that East Asia, especially China, could become the centre of a fourth cycle of accumulation, and found the basis of China's growth less in the market reforms after 1980 than in the land reform before them and the gains in adult life expectancy and literacy. Intellectually close to Wallerstein, Arrighi gave greater weight to the shift of economic power to East Asia.

What criticisms came from the Marxist side?

Wallerstein himself said criticism came from four directions. Positivists object to over-generalisation and the lack of falsifiable propositions; orthodox Marxists to the insufficient weight given to social class; state autonomists to the blurring of the boundary between state and business; culturalists to the excessive weight given to the economy.

The best-known Marxist criticism came from Robert Brenner, who argued that putting the world market first means neglecting local class structures and class struggles: they fail to take into account "the way in which these class structures themselves emerge as the outcome of class struggles whose results are incomprehensible in terms merely of market forces" (see the entry on the development of underdevelopment). The sociologist Theda Skocpol replied that the interstate system is not a mere superstructure of the capitalist world-economy and, as a transnational structure of military competition, was not created by capitalism. William I. Robinson criticised its nation-state-centred framework for failing to grasp transnational social forces and the rise of globalisation.

There were disagreements within the camp as well. Samir Amin, while using a similar vocabulary, rejected the notion of a semi-periphery and opposed theorising capitalism as cyclical in the manner of Kondratiev. Andre Gunder Frank held that it made no sense to speak of many "world-systems": there is one World System, and it goes back five thousand years. Wallerstein expected in the 1970s that capitalism would be replaced by a socialist economy but reassessed this in the 1980s, concluding that the system or systems that follow the "age of transition" since the 1970s cannot be known in advance. Where Lenin's Imperialism analysed one stage, monopoly capitalism, world-systems theory differs in scope by treating capitalism since the sixteenth century as a whole as a single unequal world division of labour.