Session 16 - Capitalist System here to stay?

Immanuel Wallerstein in his paper “The Rise and Future Demise of the World Capitalist System: Concepts for Comparative Analysis” presents the World System Theory. According to him, the world system can be of two types – world empires and world economies. Wallerstein goes on to describe the different stages of the evolution of the world economy. He maintains that the world economy has three structural positions which are core, semi- periphery and periphery. The core area is the most important area in terms of production of goods and services followed by the semi-periphery and then periphery.   In his analysis of the evolution of the world economy, Wallerstein follows the different countries as they change their structural positions over the course of history.

The start of the world economy can be attributed to Europe mainly where agricultural production began for sale and profit. The author calls it Agricultural capitalism. This newly created world economy successfully resisted to become a world empire and after this became the dominant system.

In the second stage of this world economy, British established its hegemonic status by thwarting attempts of Netherlands and France to overtake it and became the core state in the system. The third stage saw a shift from agricultural capitalism to industrial capitalism which now comprised of a substantial part of the world gross production. This stage also saw the world economy to include the whole of the globe and not just Europe.

The fourth stage which began with the end of the First World War and the Russian Revolution saw a lot of changes in the world economy scenario. These included the decline of Russia from a semi-peripheral country to a periphery country after the World War, rise of the United States, the rise of the European countries which had fallen in decline as well as the reemergence of Russia to become a major player.

After giving a brief history of the evolution of the world economy, Wallerstein points out the contradiction which he sees in the capitalist world system. This is mainly between the short term and long term profit maximization goals and the effects of trying to subdue the oppositional movements which may get stronger over the long term. It remains to be seen whether this system will prevail or some other system will take its place.