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World-System Theory (Synopsis and Analysis)

Synopsis
Globalization is the process, completed in the twentieth century, by which the capitalist
world-system spreads across the actual globe. Since that world-system has maintained some
of its main features over several centuries, globalization does not constitute a new
phenomenon. At the turn of the twenty-first century, the capitalist world economy is in
crisis; therefore, according to the theory's leading proponent, the current "ideological
celebration of so-called globalization is in reality the swan song of our historical system" (I.
Wallerstein, Utopistics, 1998: 32).
The modern world-system originated around 1500. In parts of western Europe, a long-term
crisis of feudalism gave way to technological innovation and the rise of market institutions.
Advances in production and incentives for long-distance trade stimulated Europeans to reach
other parts of the globe. Superior military strength and means of transportation enabled them
to establish economic ties with other regions that favored the accumulation of wealth in the
European core. During the "long sixteenth century," Europeans thus established an
occupational and geographic division of labor in which capital-intensive production was
reserved for core countries while peripheral areas provided low-skill labor and raw
materials. The unequal relationship between European core and non-European periphery
inevitably generated unequal development. Some regions in the "semiperiphery" moderated
this inequality by serving as a buffer. States also played a crucial role in maintaining the
hierarchical structure, since they helped to direct profits to monopoly producers in the core
and protected the overall capitalist economy (e.g., by enforcing property rights and guarding
trade routes). At any one time, a particular state could have hegemonic influence as the
technological and military leader, but no single state could dominate the system: it is a world
economy in which states are bound to compete. While the Europeans started with only small
advantages, they exploited these to reshape the world in their capitalist image. The world as
a whole is now devoted to endless accumulation and profit-seeking on the basis of exchange
in a market that treats goods and labor alike as commodities.
In the twentieth century, the world-system reached its geographic limit with the extension of
capitalist markets and the state system to all regions. It also witnessed the rise of the United
States as a hegemonic power-one that has seen its relative economic and political strength
diminished since the last years of the Cold War. Newly independent states and communist
regimes challenged core control throughout the century, and some formerly peripheral
countries improved their economic status, but none of this shook the premises of a system
that in fact was becoming more economically polarized. The nineteenth-century ideology of
reform-oriented liberalism, which held out the hope of equal individual rights and economic
advancement for all within states, became dominant in the twentieth but lost influence after
1968. Such twentieth-century developments set the stage for what Wallerstein calls a period
of transition. New crises of contraction can no longer be solved by exploiting new markets;
economic decline will stimulate struggle in the core; challenges to core dominance will
gather strength in the absence of a strong hegemonic power and a globally accepted
ideology; polarization will push the system to the breaking point. While this chaotic
transition may not produce a more equal and democratic world, it does spell the end of

capitalist globalization.
Analysis
Definition. A world-system is any historical social system of interdependent parts that form a
bounded structure and operate according to distinct rules, or "a unit with a single division of
labor and multiple cultural systems" (1974a: 390). Three concrete instances stand out: minisystems, world empires, and world-economies. The modern world-system is a worldeconomy: it is "larger than any juridically defined political unit" and "the basic linkage
between its parts is economic" (1974b: 15). It is a capitalist world-economy because the
accumulation of private capital, through exploitation in production and sale for profit in a
market, is its driving force; it is "a system that operates on the primacy of the endless
accumulation of capital via the eventual commodification of everything" (1998: 10).
Key feature. The capitalist world-economy has no single political center: it "has been able to
flourish precisely because [it] has had within its bounds not one but a multiplicity of political
systems," which has given capitalists "a freedom of maneuver that is structurally based" and
has "made possible the constant expansion of the world-system" (1974b: 348).
Origin. The modern world-system has its origin in the European world-economy created in
the late-fifteenth and early-sixteenth century (1974b: 15), but only consolidated in its current
form by the mid-seventeenth century (1974a: 401). The crisis of feudalism created strong
motivation to seek new markets and resources; technology gave Europeans a solid base for
exploration (1974b: 39). Parts of Western Europe exploited initially small differences, via
specialization in activities central to world commerce, to ultimately large advantage (1974b:
98).
Structure. The system consists of a single division of labor within one world market but
contains many states and cultures. Labor is divided among functionally defined and
geographically distinct parts arranged in a hierarchy of occupational tasks (1974b: 349-50).
Core states concentrate on higher-skill, capital-intensive production; they are militarily
strong; they appropriate much of the surplus of the whole world-economy (1974a: 401).
Peripheral areas focus on low-skill, labor-intensive production and extraction of raw
materials; they have weak states. Semiperipheral areas are less dependent on the core than
peripheral ones; they have more diversified economies and stronger states. In the first
centuries of world-system development, Northwest Europe constituted the core,
Mediterranean Europe the semiperiphery, and Eastern Europe and the Western hemisphere
(and parts of Asia) the periphery (1974a: 400-1). By the end of the twentieth century, the
core comprised the wealthy industrialized countries, including Japan; the semiperiphery
included many long-independent states outside the West; poor, recently independent colonies
mainly constituted the periphery.
How it works.
Strong states in core areas-i.e., those that are militarily strong relative to others and
also not dependent on any one group within the state (1974b: 355)-serve the interests
of economically powerful classes, absorb economic losses, and help to maintain the
dependence of peripheral areas.

Semiperipheral areas are a "necessary structural element" in the system because "they
partially deflect the political pressures which groups primarily located in peripheral
areas might otherwise direct against core-states" (1974b: 349-50), thus preventing
unified opposition.
Shared ideology solidifies the commitment of ruling groups to the system; they must
believe the system's "myths" and feel that "their own well-being is wrapped up in the
survival of the system as such" (1974a: 404). Lower strata need not feel any
particular loyalty; however, they tend to become incorporated into the nationally
unified cultures created by ruling groups, starting in core states (1974b: 349). An
ideology for the system as a whole only developed later: "The ideology of liberalism
has been the global geoculture since the mid-nineteenth century" (1998: 47).
Different forms of labor and labor control suit different types of production,
distributed across the three main zones; historically, they included wage labor, tenant
farming, servitude, and slavery, (1974b: 86-7). Status and rewards match the
hierarchy of tasks: "crudely, those who breed manpower sustain those who grow food
who sustain those who grow other raw materials who sustain those involved in
industrial production" (1974b: 86).
How it changes.
Expansion on the basis of European advantage and structural features of the system.
In the period 1733-1817, the European world-economy "began to incorporate vast
new zones into the effective division of labor it encompassed" (1989: 129)-namely,
the Indian subcontinent, the Ottoman empire, the Russian empire, and West Africa.
"The modern world-system became geographically global only in the latter half of
the nineteenth century, and it has only been in the second half of the twentieth
century that the inner corners and more remote regions of the globe have all been
effectively integrated" (1998: 9). As a result, most goods are market commodities and
most labor is wage labor everywhere.
Cyclical crises that occur when, after periods of innovation and expansion, reduced
profit rates and exhaustion of markets lead to recession and stagnation, to be
followed by a new period of accumulation. These are reflected in multi-decade
"waves" of increasing or declining growth rates.
Shifts in dominance from one power to another due to advances in productivity, the
fragility of monopoly, and success in war (cf. 1995: 26-7). The Netherlands was a
"hegemon" in the mid-seventeenth century, the UK in the mid-nineteenth, the US in
the mid-twentieth (1995: 25). Periods of clear leadership alternate with struggle in
the core.
Resistance by antisystemic movements that can lead to regime change, ideological
shifts, and alternatives to the system. The most notable antisystemic force of the last
two centuries was socialism, which forced core states to redistribute wealth and
supported the formation of states challenging the capitalist world-economy.
Transition from one type of system to another due to contradictions that cannot be
contained. The capitalist world-economy is a historical configuration and therefore
bound to be superseded. More intense crises in a now fully global system that is less
able to meet those crises with traditional means will lead to transformation.

Current situation.
"We have entered into the crisis of this system . . . . an historic transition" (1998: 323). But the direction of the system is not clear: "We are face to face with uncertainty"
(2000: 6). The main reason is that the world economy is in a phase of recession and
stagnation, increasingly reflected in social unrest (1995: 19, 29). "[S]tructural
limitations to the process of endless accumulation of capital that governs our existing
world . . . . are coming to the fore currently as a brake on the functioning of the
system . . . . [They] are creating a structurally chaotic situation . . . [A] new order will
emerge out of this chaos over a period of fifty years" (1998: 89-90).
US hegemony has been in decline since about 1970 (1995: 15ff.), increasing the
likelihood of struggle in the core.
The old antisystemic forces are exhausted, but so is liberalism. In fact, "[t]he true
meaning of the collapse of the Communisms is the final collapse of liberalism as
hegemonic ideology. Without some belief in its promise, there can be no durable
legitimacy to the capitalist world-system" (1995: 242). But no current struggle
against the inequities of capitalism poses a "fundamental ideological challenge"
(1995: 245).
Sources
I. Wallerstein. 1974a. "The Rise and Future Demise of the of the World-Capitalist System:
Concepts for Comparative Analysis." Comparative Studies in Society and History 16: 387415.
--. 1974b. The Modern World-System: Capitalist Agriculture and the Origins of the
European World-Economy in the Sixteenth Century. New York: Academic Press.
__. 1989. The Modern World-System III: The Second Era of Great Expansion of the
Capitalist World-Economy, 1730-1840s. New York: Academic Press.
__. 1995. After Liberalism. New York: The New Press.
__. 1998. Utopistics: Or, Historical Choices of the Twenty-First Century. New York: The
New Press.
__. 2000. "The Twentieth Century: Darkness at Noon?" Keynote address, PEWS conference,
Boston.

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