Session 16- The Capitalist Illusion

Immanuel Wallerstein in this essay has traced the history of Capitalism and has provided detailed information on how Capitalism advanced. From 16^th century onwards many changes took place such as the Industrial Revolution which made the rise of Capitalism more probable as large markets were needed to supply the goods that were being produced rapidly.

He puts forth the idea of the ‘World-Systems Theory’. This theory is a reflection of how the capitalist system is organized and how it functions in the real world. According to this, the world is divided into three main types of nations; core countries, semi-periphery countries, and the periphery countries. The core countries are those countries which are developed, technologically advanced, have a more skilled workforce and engage in capital intensive production. They purchase raw materials from the periphery nations and then manufacture goods in their own. They then sell these goods back at higher prices to the same nations. From this we can then deduce the function of the periphery countries, which is to provide the basic raw materials and agricultural goods to the core nations. On the other hand the semi- periphery countries also engage in low-skill and labor-intensive production, but at times can also use capital intensive techniques. This results in a transfer of wealth from the periphery to the core and it gives rise to hegemons like the US. They use cheap raw material from these countries and then engage in trade to sell their goods in the markets of the peripheral nations.

Furthermore, the World- Systems Theory can be seen as a prototype of the actual capitalist system that prevails in many countries. Just like the Core nations exploit the rest of the world, the Bourgeoisie exploit the Proletariat. It is the workers that produce the goods, however, they are paid as little as the capitalists can get away with and the rest of the surplus in reinvested into the capitalist system. Therefore, we see the level of inequality between the capitalists and workers rising. Similarly we can see the level of inequality between the core and periphery nations rising as well which shows that Wallerstein's theory is a mere reflection of the capitalist system itself.

Nonetheless, Marx predicted that eventually the capitalist system would come to an end as the workers would come out of the state of false consciousness and revolt. However, countries where such revolutions did take place were not true communist nations as the state never ‘withered’ away. Although it is difficult to make conclusions about whether or not capitalism is the best form of system, we can say that perhaps there is something inherently strong about the way capitalism works because despite its flaws it is still surviving today.