OUTLINE ON WORLD SYSTEM ECONOMY BY IMMANUEL WALLERSTEIN

I. Nature of World System

a) Started in 16 century in some part of Europe and America
b) It is and has always been a world-economy
c) It is and has been a capitalist world-economy
II. Defining World Economy and Capitalism
a) Elements of World System
1. Its origin
2. Its geography
3. Its temporal development and;
4. Its contemporary structural crisis
b) Definition of World System accdg. to Braudel’s Economie-
Monde
1. World system is a large geographical zone within which there is a
division of labor and hence, significant internal exchange of basic or
essential goods as well as flows of capital and labor
2. It is not bounded by a unitary political structure. Rather there are
many political units inside the world economy. Loosely tied together in
modern world-system.
3. World -economy contains many cultures and groups-practicing many
religion, languages, differing in their cultural patterns, which shall be
calling a GEOCULTURE.
4. Homogeneity is not expected or found in world economy, what
unifies the structure is the division of labor which is found within the
system.
c) Defining Capitalism
1. It NOT the mere existence of person or firms producing for sale for
the purposes of gaining profit.
2. Not the existence of person working of r wages sufficient as
definition
3. Capitalist System only when the system gives priority to the endless
accumulation of capital
3.1. Endless accumulation it means the people and firms are
accumulating capital in order to accumulate still more capital, a process
that is continual and endless.
3.2. “Gives Priority” there is existence of structural mechanisms by
which those who act with other motivations are penalized in someway
and eventually eliminated from social scene, whereas those who act
with the appropriate motivations are regarded and if successful,
enriched.
d) World System and capitalist system go together. World Economies
lack of unifying political structure, what holds them together is the
efficacy of the division of labor.
e) The only world economy to survived for a long time has been the
Modern World-System.
f) The capitalist system took loot and became consolidated as its
defining feature
g) Capitalist system cannot exist within any framework except that of a
world economy
III. Relationship between Politics and Economy
a) Capitalist system requires realionship between economic producers
and holders of political power.
b) Strong political power, as in world empire, their interest override
those of the economic producers, and endless accumulation of capital
will prioritize
c) Capitalist needs large market(hence mini-system are too narrow for
hem) and multiplicity of states to gain advantages working with states.
IIII. Defining CAPITALIST WORLD-ECONOMY
a) Capitalist world economy is a collection of many institutions, the
combination of which accounts for its processes and all of which are
intertwined with each other
b) The basic institution of Capitalist World Economy
1.1 Markets
1.2 firms that compete the markets
1.3 the multiple states, within an interstate system
1.4 the households
1.5 classes
1.6 the status-groups(to use Weber’s, which some people in recent
years have named the “identities”)
c) Market is both a concrete local structure in which individuals or firms
sell and buy goods and virtual institution across space where the same
kind of exchange occurs.\
d) Widespread of Virtual market depends on realistic alternatives that
sellers and buyers have at a given time
e) Virtual market exists in the world economy as a whole
f) Virtual creates narrower and more “protected” markets
g) There are several virtual markets for several commodities but there
is a single virtual market despite all the barriers that exist in a free
market.
V. Totally Free Market
a) It functions as an ideology, a myth and a constraining influence, but
never as a day-to-day reality.
1. Totally market would make impossible the endless accumulation of
capital
2. Capitalism cannot function without a market
3. Capitalist regularly say they favor free markets but capitalist favor
not totally free market but rather markets that are only partially free.
b) Perfect Information and Perfect market
1. Perfect information occurs when buyers and sellers knew the exact
state of all costs of production
2. Perfect Market – the buyers would bargain down the sellers to an
absolute minuscule level of profit which would make the capitalist
game uninteresting to producers
3. The sellers will prefer a monolopy to create a relatively wide margin
between the cost of production and selling price, thus realize high
profits.
VI. Nature of Perfect Monopoly
a) It is extremely difficult to create and rare, but quasi monopolies are
not.
b) Ways of creating Quasi-Monology
1. System of Patent – reserves the rights in an “invention” for specified
number of years.
2. Restrictions on imports and exports (Protectionist Measures)
3. Creation of counter-protectionist measures
4. Role of states as large-scale buyers of certain products willing to pay
excessive prices
5. Regulations of large producers exploiting small producers which
increases the degree of oligopoly
c) Two anti-monopolistic Features
1. One producer’s monopolistic advantage is another producer’s loss
2. Not all capitalist entrepreneurs succeed in accumulating capital.
VII. Axial Division of Labor
a) Core-Periphery – relational in concept, the degree of profitability is
directly related to degree of monopolization
b) Periphery – true competitive
c) During exchange occur, competitive products are in a weak position
and quasi monopolized products are in strong position. As a result,
constant surplus-value from producers of peripheral products to the
producers of core-periphery. This has been called UNEQUAL
EXCHANGE.
d) There is also plunder, example is the conquistadores where they
incorporate new regions into world-economy.
e) Core-periphery tend to group themselves in a few states to
constitute the bulk of the production in such state.
f) Peripheral processes tend to be scattered among a large number of
states and to constitute bulk of production activity in these states.
g) Some states mix of core-like and peripheral products or we call them
“semi-peripheral states”