Table of contents
1. Theoretical Argument
Immanuel Wallerstein’s Modern World-System theory is a structural approach to analyse social change. In response to the liberal theory, which differentiated three social spheres (the market, the state, and the civil society) operating according to different logics, Modern World-System theory states that politics and economics cannot be viewed as distinct social spheres, they are two interrelated fields of study (Wallerstein, 2004). Wallerstein sees underdevelopment and development, the status of states in our “globalized” world today, not in the responsibility within the countries themselves, but as a consequence of historical capitalism and the interstate system. Thereby, he regards internal and external factors which describe why the world is how it is today.
This essay will give a short overview about the Modern World-System theory and clarify why the pursuit of profits and power are one and markets are politically structured and maintained. Afterwards, I state the advantages and the disadvantages of Modern World-System theory and finish with a conclusion.
1. Theoretical Argument
Modern World-System theory is a historical approach which describes the last five centuries by a specific single, growing world-system (Shannon). This world-system, separate from a world-empire or a socialist system, represents the structure in which almost every country is integrated today. It is characterized by a capitalist world-economy including a single division of labor but multiple polities and cultures (interstate system). Both, the modern world-economy and the interstate systems follow “one logic”, the ceaseless capital accumulation (Sanderson, 2005). This universal mode of production is not deterministic but it determines the variety of action for political entities. “The interstate system is the political side of capitalism, not an analytically autonomous system, and its survival is dependent on the operation of the institutions which are associated with the capital-accumulation process” (Chase-Dunn). But, the capitalist world-economy needs interstate competition to go on. A single world-empire could destroy the capitalist class because it would not be based on markets in which exchange occurs on the basis of competition. According to Polanyi a world-empire is a redistributive form of organization which overrides the interest of a capitalist class. “The state, and the system of competing states which compose the world policy, constitute the basic structural support for capitalist production relations.” (Chase-Dunn).
Capitalist Mode of Production
Capitalism as a mode of production gives priority to the endless accumulation of capital. A product will be only produced if it brings more money on the market as its production costs have been. The capitalist always wants to get the highest profit out of its product, what is called surplus value. According to Chase-Dunn this “capitalist mode of production exhibits a single logic in which both political-military power and the appropriation of surplus value through production and sale on the world market play an integrated role.” A state in the capitalist world-system can only be successful if it combines effective state power and a competitive advantage in production. It has to respond to the imperative of the endless accumulation of capital which generates a “need for constant technological change, a constant expansion of frontiers – geographical, psychological, intellectual, scientific.” (Wallerstein, 2004) Furthermore, the capitalist nature to exploit labor by the owners of the means of production to gain a high surplus-value leads to a struggle between the working-class and the capitalists which the state has to compensate. So, sovereign states set conditions for the capitalist entrepreneurs when they regulate the relationship between capitalists and workers. Furthermore, states create the rules concerning property rights within their states. They can decide, which parts of the economy are regulated and to what degree. Governments can monopolize economic processes and set conditions of taxation and subsidies within their territory, as they absorb market failures as pollution. With crossing border policies states set restrictions on imports and export to protect national companies from international competition. Moreover, economic powerful states can use their strength to force weaker states to open their markets for the more competitive products. Basically developed countries are setting the rules of the international trade system. Last but not least, the responsibility of states for the extent of, what Lane calls, “protection rents” endorse the central role of states in the world-economy. Protection rents are the difference of costs enterprises have to pay for protection compared to enterprises of other countries. On the one hand, enterprises pay for protection from disruption of violence in the country. On the other hand, states can use its force to establish and secure new markets for the domestic industry. “The use of violence […] is to be considered a productive activity, at least in some cases, and governments would have to be considered producers of a part of the total economic output even if they had no other function than the use and control of violence.” (Lane, 1987) According to Lane, states have been successful when they used force to create protection, as Portuguese did in Brazil, rather than states using force to plunder and to prevent trade of rivals, as the Portuguese did in the pepper trade with India, what lead to diminishing returns in the long-term.
So the role of states within the Modern World-System is the result of the economic policies of states in the interstate system.
The Modern World-System knows three economic zones: the core, the periphery, and the semi-periphery. These three economic zones combine the same mode of production and the same division of labor but they differ in their availability. Whereas core countries feature capital-intensive production with high waged labor and its high technology production involves low labor exploitation and coercion, peripheral countries own labor-intensive production and low-waged labor and its low-technology production involves high labor exploitation and coercion. Semi-peripheral countries stand in between; they combine core-like and peripheral-like activities (Shannon, 1989). The status in the Modern World-System limits the countries in their opportunities because of peripheral exploitation. Whereas core-countries are forced to extent the market for their capitalist economy, peripheral-countries suffer from exploitation through the core and the semi-periphery. The Basis of peripheral exploitation is “unequal exchange” (Shannon, 1989). The reason for the “unequal exchange” is located in the process of exchange of low-wage products from the periphery for high-wage products from the core. Whereas the core receives cheap products from the periphery because of low waging the periphery has to pay relatively expensive products because of high wages in the core. This unequal exchange results in a general transfer of surplus to the core. The consequence is that core states even get stronger whereas weak states’ state-machineries decline (Shannon, 1989). Semi-peripheral states, in between, are also limited in their policies. In their attempt to ascend into the core and not slip into the periphery, they have to protect their markets from more competitive foreign products, while “trying to improve the efficiency of the firms inside so as to compete better in the world market” (Wallerstein, 2004).
Wallerstein (2004:1) states that “concepts can only be understood within the context of their times.” So, an illustration of the advantages of Wallerstein’s Modern World-System theory has to be understood in this context.
World-System analysis is dating back to the publication of the first volume of The Modern World-System in 1974. According to Braudel (1950s/60s), who was criticizing the episodic history approach and the search for timeless, eternal truths of many social scientists, Wallerstein wanted to abandon “such thinking in favor of looking at social evolution as the outcome of particular conditions operating at particular times in the lives of particular individuals” (Sanderson, 1997:97). His “evolutionary materialistic” approach allows room for a variety of more specific theories (Sanderson, 1997) but offers the essential nature of global power and exploitation (Bergesen, 2000). In tradition of, what Bergesen (2000) called, Columbia school, Wallerstein’s World-System theory has made the world-system more tangible. “We think of the world-system as a thing, and not an idea introduced by Wallerstein” (Bergesen, 2000:211). Especially the interdisciplinary view of political economy, as a response to the dominating liberal view of the nineteenth century which claimed a clear distinction between economic, political, and social science, had been a contributing step for the understanding of our world today (Chase-Dunn, 1981; Shannon, 1989). The merely fact that economic globalization exhibits a decisive impact on national politics and the interstate system, makes political economical theory in social science essential. Modern World-System theory as a polit-economical approach has convinced especially in the following arguments: