Wallerstein Immanuel - World Systems Analysis - Cap1al 3 y 5

WORLD-SYSTEMS ANALYSIS An Introduction
Immanuel Wallerstein
DUKE UNIVERSITY PRESS D urham and London 2004

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P rin te d in the U n ite d States o f A m e ric a o n a c id -fre e p a p e r 00
T y p e se t in M in io n b y K ey sto n e T y p e se ttin g , Inc.
L ib r a r y o f C o n g re ss C a ta io g in g -in -P u b iic a lio n D ata a p p e a r
o n th e last p rin te d p ag e o f this b o o k .
CONTENTS
A cknow ledgm ents vii
To Start: U nderstanding the World in W hich We Live Lx
1 H istorical O rigins o f W orld-System s Analysis: From Social

Science D isciplines to H istorical Social Sciences 1
2 T h e M odern W orld-System as a C apitalist W orld-Econom y:

Production, Surplus-Value, and Polarization 23
3 The Rise o f the States-System : Sovereign Nation-States, Colonies,

and the Interstate System 42
4 The C reation o f a G eoculture: Ideologies, Social M ovem ents,

Social Science 60
5 T h e M odern W orld-System in Crisis: Bifurcation, Chaos,

and Choices 76
G lossary 91
Bibliographical G uide 101
Index J 05
TO START U nderstanding the World In Which We Live
T h e m e d i a , a n d in d e e d the social scientists, constantly tell us that two

things dom inate the w orld we have been living in since the last decades o f
the twentieth century: globalization and terrorism . Both are presented to us
as substantially new phenom ena—the first filled with gloriou s hope and the
second w ith terrible dangers. The U.S. governm ent seem s to be playing a
central role in furthering the one and fighting the other. B ut o f course these
realities are not m erely A m erican but global. W hat underlies a great deal o f
the analysis is the slogan o f M rs. Thatcher, w ho was Great B ritain’s prim e
m inister from 1979 to 1990: tina (There Is No Alternative). We are told that
there is no alternative to globalization, to w hose exigencies all governm ents
m ust subm it. A n d we are told that there is no alternative, if we w ish to
survive, to stam ping out terrorism ruthlessly in all its guises.
T his is not an untrue picture but it is a very partial one. If we lo o k at
globalization and terrorism as phenom ena that are defined in lim ited tim e
and scope, we tend to arrive at conclusions that are as ephem eral as the
newspapers. B y and large, we are not then able to understand the m eaning
o f these phenom ena, their origins, their trajectory, and m ost im portan tly
where they fit in the larger schem e o f things. We tend to ignore their history.
We are unable to put the pieces together, and we are constantly surprised
that our short-term expectations are not met.
H ow m any people expected in the 1980s that the Soviet U nion w ould
crum ble as fast and as bloodlessly as it did? A nd how m any people expected
in 2001 that the leader o f a m ovem ent few had ever heard of, al-Q aeda,
could attack so boldly the Twin Towers in N ew York and the Pentagon on
Septem ber 11, and cause so m uch dam age? A nd yet, seen from a longer
perspective, both events fo rm part o f a larger scenario w hose details we
m ight not have know n in advance but w hose broad outlines were quite
predictable.
Part o f the problem is that we have studied these phenom ena in separate
boxes to w hich we have given special nam es—politics, econom ics, the social
structure, culture—w ithout seeing that these boxes are constructs m ore o f
our im agination than o f reality. The phenom ena dealt w ith in these separate
boxes are so closely interm eshed that each presum es the other, each affects
the other, each is incom prehensible w ithout taking into account the other
boxes. A nd part o f the problem is that we tend to leave out o f our analyses o f
w hat is and is not “ new ” the three im portant turning points o f our m odern
w orld-system : (1) the long sixteenth century durin g w hich our m odern
w orld-system cam e into existence as a capitalist w orld -econom y; (2) the
French Revolution o f 1789 as a w orld event w hich accounts for the sub se
quent dom inance for two centuries o f a geoculture for this w orld-system ,
one that was dom inated by centrist liberalism ; and (3) the w orld revolution
o f 1968, w hich presaged the long term inal phase o f the m odern w orld-
system in w hich we find ourselves and w hich underm ined the centrist liberal
geoculture that was holding the w orld-system together.
The proponents o f w orld-system s analysis, w hich this book is about, have
been talking about globalization since long before the w ord was invented—
not, however, as som ething new b ut as som ething that has been basic to the
m odern w orld-system ever since it began in the sixteenth century. We have
been arguing that the separate boxes o f analysis—w hat in the universities are
called the disciplines—are an obstacle, not an aid, to understanding the
w orld. We have been arguing that the social reality w ithin which we live and
w hich determ ines what our options are has not been the m ultiple national
states o f w hich we are citizens but som ething larger, w hich we call a w orld-
system . We have been saying that this w orld-system has had m any institu
tions—states and the interstate system , p roductive firm s, households, classes,
identity groups o f all sorts—and that these institutions form a m atrix w hich
perm its the system to operate but at the sam e time stim ulates both the
conflicts and the contradictions which perm eate the system. We have been
arguing that this system is a social creation, w ith a history, w hose origins
need to be explained, w hose o ngoing m echanism s need to be delineated, and
whose inevitable term inal crisis needs to be discerned.
In arguing this way, we have not on ly gone against m uch o f the official
w isdom o f those in power, but also against m uch o f the conventional kn ow l
edge put forth b y social scientists for two centuries now. For this reason, we
x W orld-System s Analysis
have said that it is im portant to look anew not only at how the w orld in
w hich we live w orks but also at how we have com e to think about this world.
W orld-system s analysts see them selves therefore as engaging in a fundam en
tal protest against the ways in w hich we have thought that we know the
w orld. But we also believe that the em ergence o f this m ode o f analysis is a
reflection of, an expression of, the real protest about the deep inequalities o f
the w orld-system that are so politically central to o u r current times.
I m yself have been engaged in and w riting about w orld-system s analysis
fo r over thirty years. I have used it to describe the h istory and the m echa
nism s o f the m odern w orld-system . I have used it to delineate the structures
o f knowledge. I have discussed it as a m ethod and a point o f view. But I have
never tried to set dow n in one place the totality o f what I mean by world-
system s analysis.
O ver these thirty years, the kind o f w ork that comes under this rubric has
becom e m ore com m on and its practitioners more w idespread geograph
ically. Nonetheless, it still represents a m in ority view, and an oppositional
view, w ithin the w orld o f the historical social sciences. I have seen it praised,
attacked, and quite often m isrepresented and m isinterpreted—som etim es
by hostile and not very w ell-in form ed critics, but som etim es b y persons
w ho consider themselves partisans or at least sym pathizers. I decided that
I w ould like to explain in one place what I consider its prem ises and p rin
ciples, to give a holistic view o f a perspective that claim s to be a call for a
holistic historical social science.
This book is intended for three audiences at once. It is written for the
general reader w ho has no previous specialist knowledge. This person may
be a beginn ing undergraduate in the university system or a m em ber o f the
general public. Secondly, it is w ritten for the graduate student in the histori
cal social sciences w ho w ants a serious introduction to the issues and per
spectives that com e under the ru bric o f w orld-system s analysis. A nd finally
it is w ritten for the experienced practitioner w ho wishes to grapple with m y
particular view point in a young but grow ing com m unity o f scholars.
The b ook begins by tracing what m any readers w ill think a circuitous
path. T he first chapter is a discussion o f the structures o f knowledge o f the
m odern w orld-system . It is an attem pt to explain the historical origins o f
this m ode o f analysis. It is only w ith chapters 2 - 4 that we discuss the actual
m echanism s o f the m odern w orld-system . And it is on ly in chapter 5, the
last, that we discuss the possible future we are facing and therefore our
con tem porary realities. Som e readers w ill prefer to jum p to chapter 5 im m e
diately, to m ake chapter 5 into chapter 1. If I have structured the argum ent in
the order that I have, it is because I believe very strongly that to understand
the case for w orld-system s analysis, the reader (even the young and begin-
U nderstanding the W orld xi

ning reader) needs to “ un th in k” m uch o f w hat he o r she has learned from
elem entary school on, w hich is reinforced daily in the mass m edia. It is only
by confronting directly h ow we have com e to think the w ay we do that we
can begin to liberate ourselves to think in ways that I believe perm it us to
analyze m ore cogently and m ore usefully our con tem porary dilem m as.
Books are read differently by different people, and I assum e that each o f
the three groups o f readers for w hom this book is intended will read the
book differently. I can only hope that each group, each individual reader,
w ill find it useful. This is an introduction to w orld-system s analysis. It has no
pretension o f being a sum nra. The b ook seeks to cover the w hole range o f
issues, but no doubt som e readers w ill feel that som e things are m issing,
other things overem phasized, and o f course som e o f m y argum ents sim ply
w rong. The book intends to be an introduction to a w ay o f thinking and
therefore is also an invitation to an open debate, in w hich I hope all three
audiences will participate.
xii W orld-System s A nalysis

W O R L D - S Y S T E M S A N A L Y S I S
i H isto rical O rigins o f W o rld -System s A nalysis
From Social Science Disciplines to Historical Social Sciences
W o r l d - s y s t e m s a n a l y s is originated in the early 1970s as a new per

spective on social reality. Som e o f its concepts have been in use for a long
tim e and som e are new or at least new ly nam ed. Concepts can only be
understood w ithin the context o f their times. This is even m ore true o f
w hole perspectives, w hose concepts have their m eaning prim arily in terms
o f each other, o f how they m ake up a set. N ew perspectives are, in addition,
generally best understood if one thinks o f them as a protest against older
perspectives. It is always the claim o f a new perspective that the older, and
currently m ore accepted, one is in som e significant w ay inadequate, or
m isleading, or tendentious, that the older one therefore represents m ore a
barrier to apprehending social reality than a tool for analyzing it.
Like any other perspective, w orld-system s analysis has built on earlier
argum ents and critiques. There is a sense in which alm ost no perspective can
ever be entirely new. Som eone has usually said som ething sim ilar decades or
centuries earlier. Therefore, w hen we speak o f a perspective being new, it
m ay only be that the w orld is ready for the first time to take seriously the
ideas it em bodies, and perhaps also that the ideas have been repackaged in a
way that makes them m ore plausible and accessible to m ore people.
The story o f the em ergence o f w orld-system s analysis is em bedded in the
history o f the m odern w orld-system and the structures o f knowledge that
grew up as part o f that system. It is m ost useful to trace the beginning o f this
particular story not to the 1970s but to the m id-eighteenth century. The
capitalist w orld -econom y had then been in existence for som e two centuries
already. The im perative o f the endless accum ulation o f capital had gener
ated a need for constant technological change, a constant expansion o f
frontiers—geographical, psychological, intellectual, scientific.
There arose in consequence a felt need to know how we know, and to
debate how we m ay know. The m illennial claim o f religious authorities that
they alone had a sure w ay to know truth had been under challenge in the
m odern w orld-system for some tim e already. Secular (that is, nonreligious)
alternatives were increasingly well received. Philosophers lent them selves to
this task, insisting that hum an beings could obtain knowledge by using their
minds in some way, as opposed to receiving revealed truth through som e
religious authority or script. Such philosophers as Descartes and Spinoza—
however different they were from each other—were both seeking to relegate
theological knowledge to a private corner, separated from the main stru c
tures o f knowledge.
W hile philosophers were now challenging the dictates o f the theologians,
asserting that hum an beings could discern truth directly by the use o f their
rational faculties, a grow ing group o f scholars agreed about the role o f
theologians but argued that so-called philosophical insight was just as a rb i
trary a source o f truth as divine revelation. These scholars insisted on giving
priority to em pirical analyses o f reality. W hen Laplace in the beginning o f
the nineteenth century w rote a book on the origins o f the solar system,
Napoleon, to w hom he presented the book, noted that Laplace had not
m entioned G od once in his very thick book. Laplace replied: “ I have no need
o f that hypothesis, Sire.” These scholars w ould now com e to be called scien
tists. Still, we m ust rem em ber that at least until the late eighteenth century,
there was no sharp distinction between science and philosophy in the ways
in w hich knowledge w as defined. At that tim e, Im m anuel Kant found it
perfectly appropriate to lecture on astronom y and p oetry as well as on
metaphysics. He also w rote a book on interstate relations. K now ledge was
still considered a unitary field.
About this tim e in the late eighteenth century, there occurred what som e
now call the “divorce” between philosophy and science. It was those defend
ing em pirical “ science” w ho insisted upon this divorce. T h ey said that the
only route to “ truth” was theorizing based on induction from em pirical
observations, and that these observations had to be done in such a way
that others could subsequently replicate and thereby verify the ob serva
tions. T hey insisted that m etaphysical deduction was speculation and had no
“ truth” -value. T hey thus refused to think o f themselves as “ philosophers.”
It was just about this tim e as well, and indeed in large part as a result o f
this so-called divorce, that the m odern university was born. Built upon the
fram ew ork o f the m edieval university, the m odern university is really quite a
2 W orld-System s Analysis
different structure. U nlike the m edieval university, it has full-tim e, paid
professors, w ho are alm ost never clerics, and w ho are grouped together not
m erely in “ faculties” but in “ departm ents” or “ chairs” w ithin these faculties,
each departm ent asserting that it is the locus o f a particular “ discipline.” A nd
the students pursue courses o f study w hich lead to degrees that are defined
by the departm ent w ithin w hich they have studied.
The m edieval university had had four faculties: theology, m edicine, law,
and philosophy. W hat happened in the nineteenth century was that alm ost
everyw here, the faculty o f philosophy was divided into at least two sepa
rate faculties: one covering the “ sciences” ; and one covering other subjects,
som etim es called the “ hum anities,” som etim es the “ arts” or “ letters” (or
both), and som etim es retaining the old nam e o f “ philosophy.” The un iver
sity w as institutionalizing w hat C. P. Snow w ould later call the “ two cu l
tures.” A nd these two cultures were at w ar w ith each other, each insisting
that it was the only, or at least the best, w ay to obtain knowledge. The
em phasis o f the sciences was on em pirical (even experim ental) research and
hypothesis testing. The em phasis o f the hum anities was on em pathetic in
sight, what later was called herm eneutic understanding. The only legacy we
have today o f their erstwhile unity is that all the arts and sciences in the
university offer as their highest degree the PhD , doctor o f philosophy.
The sciences denied the hum anities the ability to discern truth. In the
earlier period o f unified knowledge, the search for the true, the good, and
the beautiful had been closely intertw ined, if not identical. But now the
scientists insisted that their w ork had nothing to do w ith a search fo r the
good or the beautiful, m erely the true. They bequeathed the search for the
good and the beautiful to the philosophers. A nd m any o f the philosophers
agreed to this division o f labor. So, the division o f knowledge into the two
cultures cam e to m ean as well creating a high barrier between the search for
the true and the search for the good and the beautiful. This then justified the
claim o f the scientists that they were “ value-neutral.”
In the nineteenth century, the faculties o f science divided them selves into
m ultiple fields called disciplines: physics, chem istry, geology, astronom y, zo
ology, m athem atics, and others. The faculties o f hum anities divided them
selves into such fields as philosophy, classics (that is, G reek and Latin, the
w ritings o f Antiquity), art history, m usicology, the national language and
literature, and languages and literatures o f other linguistic zones.
The hardest question was into w hich faculty one ought to place the study
o f social reality. The urgency o f such a study was brought to the fore b y the
French Revolution o f 1789 and the cultural upheaval it caused in the m odern
w orld-system . The French Revolution propagated two quite revolutionary
ideas. O ne was that political change was not exceptional or bizarre but
H istorical O rigins 3
norm al and thus constant. The second was that “ sovereignty” —the right o f
the state to m ake auton om ous decisions w ithin its realm —did not reside in
(belong to) either a m onarch or a legislature but in the “ people” w ho, alone,
could legitim ate a regim e.
Both o f these ideas caught on and becam e w idely adopted, despite the
political reversals o f the French Revolution itself. If political change w as now
to be considered n orm al and sovereignty was to reside in the people, it
suddenly becam e im perative for everyone to understand w hat it was that
explained the nature and pace o f change, and how the “ people” arrived at,
could arrive at, the decisions they were said to be m aking. This is the social
origin o f w hat we later cam e to call the social sciences.
But w hat were the “ social sciences” and how did they situate themselves in
the new w ar betw een the “ two cultures” ? These are not easy questions to
answer. Indeed, one m ight argue that these questions have never been satis
factorily answered. Initially w hat one saw is that the social sciences tended to
place them selves in the m iddle between the “ pure sciences” and the “ h u
manities.” In the m iddle, but not com fortab ly in the m iddle. For the social
scientists did not evolve a separate, third w ay o f know ing; rather they d i
vided them selves between those w ho leaned tow ard a “ scientific” or “ scien
tistic” view o f social science and those w ho leaned toward a “ hum an istic”
view o f social science. The social sciences seem ed tied to two horses straining
in opposite directions, and pulled apart by them .
The oldest o f the social sciences is o f course history, an activity and a
label that go back thousands o f years. In the nineteenth century there oc
curred a “ revolution” in historiography associated w ith the name o f Leopold
Ranke, w ho coined the slogan that history should be w ritten w ie es eigentlich
gewesen ist (as it really did happen). W hat he was protesting against was the
practice o f historians to engage in hagiography, telling tales that glorified
m onarchs or countries, including invented tales. W hat R anke was proposing
was a m ore scientific history, one that eschewed speculation and fable.
Ranke was also proposing a specific m ethod b y which such history m ight
be w ritten—by searching for docum ents describing events that were written
at the tim e o f the events. Eventually, such docum ents w ould com e to be
stored in what we call archives. It was the assum ption o f the new historians
w hen they studied the docum ents in the archives that actors at the time had
not been w riting for future historians but were revealing w hat they really
thought at the tim e or at least what they wanted others to believe. O f course,
the historians acknow ledged that such docum ents had to be handled care
fully, to verify that there was no fraud, but once verified, these docum ents
were considered largely exempt from the intrusive bias o f the later historian.
To m inim ize bias further, historians would insist that they could write his
tory only o f the “ past” and not o f the “ present,” since w riting about the
present inevitably bore the im prin t o f the passions o f the m om ent. In any
case, archives (w hich were controlled by the political authorities) were sel
dom “ open” to the historian until a long period had passed (fifty to a
hundred years), so they norm ally did not have access in any case to the
im portant docum ents about the present. (In the late twentieth century,
m any governm ents cam e under pressure from opposition politicians to
open their archives m uch m ore quickly. A nd while this openness has had
som e effect, it seem s also true that governm ents have found as well new ways
o f guarding their secrets.)
N onetheless, despite this more “ scientific” bent, the new historians did
not choose to be located in the faculty o f science, but rather in the faculty o f
hum anities. This m ight seem strange, since these historians were rejecting
the philosophers because o f their speculative assertions. In addition they
were em piricists, and thus one m ight have thought they w ould feel sym pa
thetic vibration s for the natural scientists. But they were em piricists who
were b y and large suspicious o f large-scale generalizations. They were not
interested in arrivin g at scientific laws or even form ulating hypotheses, often
insisting that each particular “event” had to be analyzed in terms o f its own
particular history. T hey argued that hum an social life was quite unlike the
physical phenom ena studied by the pure scientists, because o f the factor o f
hum an w ill, and this em phasis on what we today call hum an agency led
them to think o f themselves as “ hum anists” rather than “ scientists.”
But w hich events were w orthy o f their regard? H istorians had to make
decisions about objects o f study. That they were relying on written docu
m ents from the past already biased w hat they could possibly study, since the
docum ents in archives were w ritten largely by persons linked to political
structures—diplom ats, civil servants, political leaders. These docum ents re
vealed little about phenom ena that were not m arked by political or diplo
m atic occurrences. Furtherm ore, this approach presum ed that the histo
rians were studying a zone in w hich there existed w ritten docum ents. In
practice, historians in the nineteenth century tended therefore to study first
o f all their own country, and secondarily other countries w hich were consid
ered “ historical nations,” which seemed to m ean nations w ith a history that
could be docum ented in archives.
But in w hich countries were such historians located? The overw helm ing
m ajority (probably 95 percent) were to be found in only five zones: France,
Great Britain, the U nited States, and the various parts o f w hat w ould later
becom e G erm an y and Italy. So at first, the history that was written and
taught was prim arily the history o f these five nations. There was in addition
a further question to decide: W hat should be included in the history o f a
country like France or Germ any? W hat are its boundaries, geographic and
temporal? M ost historians decided to trace back the story as far as they
could, using the territorial boundaries o f the present, or even the boundaries
as they were claim ed at present. The history o f France was thus the history o f
everything that had happened within the boundaries o f France as defined in
the nineteenth century. This was o f course quite arbitrary, but it did serve
one purpose—reinforcing contem porary nationalist sentim ents—and it was
therefore a practice encouraged by the states themselves.
Still, it followed from the historians’ practice o f restricting themselves to
studying the past that they had little to say about the contem porary situa
tions facing their countries. A nd political leaders felt in need o f m ore in for
mation about the present. New disciplines therefore grew up for this p ur
pose. There were m ainly three: economics, political science, and sociology.
Why, however, would there be three disciplines to study the present but only
one to study the past? Because the dom inant liberal ideology o f the nine
teenth century insisted that modernity was defined by the differentiation o f
three social spheres: the market, the state, and the civil society. The three
spheres operated, it was asserted, according to different logics, and it was
good to keep them separated from each other—in social life and therefore in
intellectual life. They needed to be studied in different ways, appropriate to
each sphere—the market by economists, the state by political scientists, and
the civil society by sociologists.
Again the question arose: H ow can we arrive at “ objective” knowledge
about these three spheres? Here, the response was different from that given
by the historians. In each discipline, the view that came to dom inate was that
these spheres o f life—the m arket, the state, and the civil society—were gov
erned by laws that could be discerned by em pirical analysis and inductive
generalization. This was exactly the sam e view as that which the pure scien
tists had about their objects o f study. So we call these three disciplines
nomothetic disciplines (that is, disciplines in search o f scientific laws) as
opposed to the idiographic discipline w hich history aspired to be—that is, a
discipline that is predicated on the uniqueness o f social phenom ena.
Again, the question would be posed, where should one focus the study o f
contem porary phenom ena? The nom othetic social scientists were located
prim arily in the same five countries as the historians, and in the sam e way
studied prim arily their ow n countries (or at most they made com parisons
am ong the five countries). This was to be sure socially rewarded, but in
addition the nom othetic social scientists put forw ard a m ethodological ar
gument to justify this choice. They said that the best w ay to avoid bias was to
use quantitative data, and that such data were most likely to be located in
their own countries in the im m ediate present. Furtherm ore, they argued
6 W orld-Systems Analysis
that if we assume the existence o f general laws governing social behavior, it
w ould not matter where one studied these phenom ena, since what was true
in one place and at one time was true in all places at all times. W hy not then
study phenom ena for w hich one had the most reliable data—that is, the
m ost quantified and replicable data?
Social scientists did have one further problem . The four disciplines to
gether (history, econom ics, sociology, and political science) studied in effect
only a small portion o f the world. But in the nineteenth century, the five
countries were im posing colonial rule on m any other parts o f the world, and
were engaged in commerce and som etim es in warfare with still other parts
o f the world. It seemed im portant to study the rest o f the w orld as well. Still,
the rest o f the world seemed som ehow different, and it seemed in appropri
ate to use four West-oriented disciplines to study parts o f the world that
were not considered “ m odern.” As a result, two additional disciplines arose.
One o f these disciplines was called anthropology. The early anthropolo
gists studied peoples who were under actual or virtual colonial rule. T hey
worked on the prem ise that the groups they were studying did not enjoy
m odern technology, did not have w riting systems o f their own, and did not
have religions that extended beyond their own group. They were genericnlly
called “ tribes” : relatively small groups (in terms o f population and the area
they inhabited), w ith a com m on set o f custom s, a com m on language, and in
som e cases a com m on political structure. In nineteenth-century language,
they were considered “ prim itive” peoples.
One o f the essential conditions for studying these peoples was that they
fell under the political jurisdiction o f a m odern state, w hich guaranteed
order and the safe access o f the anthropologist. Since these peoples were
culturally so different from those who studied them, the principal m ode ot
investigation was what was called “ participant observation,” in w hich the
investigator lives am ong the people for some time, seeking to learn the
language and discern the whole range o f their custom ary ways. He or she
often made use o f local interm ediaries as interpreters (both linguistically
and culturally). This exercise was called w riting an ethnography, and it was
based on “ fieldw ork” (as opposed to library w ork or archival work).
It was assumed that the peoples had no “ history,” except one follow ing the
im position o f rule b y m odern outsiders w hich had resulted in “ culture
contact” and therefore som e cultural change. This change meant that the
ethnographer norm ally tried to reconstruct the custom s as they existed
before the culture contact (which usually was relatively recent), and these
custom s were then assumed to have existed from time im m em orial up to the
im position o f colonial rule. Ethnographers served in m any ways as the
prim ary interpreters o f their peoples to the m odern outsiders w ho governed
Historical O rigins 7
them. They recast in language understandable to these outsiders the ra
tionale behind the custom ary ways. They were thus useful to the colonial
rulers by offering inform ation that could make the governors more cog
nizant o f what they could and could not do (or should not do) in their
adm inistration.
The w orld was however made up o f m ore than just the “ m odern” states
and these so-called prim itive peoples. There were large regions outside the
pan-European zone which had what was called in the nineteenth century a
“ high civilization” — for exam ple, China, India, Persia, the Arab world. All
these zones had certain com m on characteristics: w riting; a dom inant lan
guage which was used in the writing; and a single dom inant “ w orld” religion
which however was not Christianity. The reason for these com m on features
was o f course very simple. All these zones had been in the past, and som e
times continued to be even in the present, the location o f bureaucratic
“ w orld-em pires” that had embraced large areas, and therefore developed a
com m on language, a com m on religion, and m any com m on customs. This is
what was meant when they were called “ high civilizations.”
These regions all shared another feature in the nineteenth century. They
were no longer as strong m ilitarily or technologically as the pan-European
w orld. So the pan-European w orld considered that they were not “ modern.”
Still, their inhabitants clearly did not meet the description o f “ prim itive”
peoples, even by pan-European standards. The question then was how they
m ight be studied and what had to be studied about them. Since they were
culturally so different from Europeans, and since they had texts written in
languages that were so different from those o f their European investigators,
and since their religions were so different from Christianity, it seemed that
those who were to study them required long, patient training in esoteric
skills if they were to understand very much about them. Philological skills
were particularly useful in deciphering ancient religious texts. The people
who acquired such skills began to call themselves O rientalists, a name de
rived from the classic West-East distinction which had existed for a long
time within European intellectual traditions.
And what did the Orientalists study? In one sense, it might be said that
they also did ethnographies; that is, they sought to describe the range o f
custom s they discovered. But these were not for the m ost part ethnographies
based on fieldwork, but rather derived from reading the texts. The persistent
question that was in the back o f their minds was how to explain that these
“ high civilizations” were not “ m odern” like the pan-European world. The
answer the Orientalists seemed to put forth was that there was som ething in
the com posite culture o f these civilizations which had “ frozen” their history,
and had m ade it im possible for them to move forw ard, as had the Western
Christian world, to “ m odernity.” It followed that these countries thus re
quired assistance from the pan-European world if they were to move for
w ard to modernity.
The anthropologists-ethnographers studying prim itive peoples and the
Orientalists studying high civilizations had one epistemological com m onal
ity. They were both em phasizing the particularity o f the group they were
studying as opposed to analyzing generic hum an characteristics. Therefore
they tended to feel more com fortable on the idiographic rather than the
nom othetic side o f the controversy. For the most part, they thought o f
themselves as being in the hum anistic, herm eneutic cam p o f the two-culture
split rather than the science camp.
The nineteenth century saw the spread and replication, more or less, o f
the departm ental structures and emphases outlined here—in university after
university, country after country. The structures o f knowledge were taking
form and the universities offered them a home. In addition, the scholars ill
each discipline began to create extra-university organizational structures
to consolidate their turf. They created journals for their discipline. They
founded national and international associations for their discipline. They
even created library categories to group together the books presumably
belonging to their discipline. By 1914 the labels had become rather standard.
They continued to spread and largely prevail until at least 1945, in m any ways
right into the 1960s.
In 1945, however, the w orld changed in very im portant ways, and as a
result this configuration o f the social science disciplines came under signifi
cant challenge. Three things occurred at that time. First, the United States
became the unquestioned hegem onic power o f the world-system , and thus
its university system became the most influential one. Secondly, the coun
tries o f what was now being called the Third World were the locus o f politi
cal turbulence and geopolitical self-assertion. Thirdly, the com bination o f
an econom ically expanding w orld-econom y and a strong increase in dem oc
ratizing tendencies led to an incredible expansion o f the w orld university
system (in terms o f faculty, students, and num ber o f universities). These
three changes in tandem wreaked havoc on the neat structures o f knowledge
that had evolved and been consolidated in the previous 100 to 150 years.
Consider first o f all the impact o f U.S. hegem ony and Third World self-
assertion. Their joint occurrence meant that the division o f labor within the
social sciences—history, economics, sociology, political science to study the
West; anthropology and O rientalism to study the rest—was worse than use
less to policym akers in the United States. The United Stales needed scholars
who could analyze the rise o f the Chinese C om m unist Party m ore than it
needed scholars who could decipher Taoist scriptures, scholars who could
Historical Origins 9
interpret the force o f African nationalist m ovem ents or the growth o f an
urban labor force m ore than scholars who could elaborate the kinship p at
terns o f Bantu peoples. A nd neither O rientalists nor ethnographers could
help very m uch in this regard.
There was a solution: train historians, economists, sociologists, and polit
ical scientists to study what was going on in these other parts o f the world.
This was the origin o f a U.S. invention—“ area studies” —w hich had an en o r
mous im pact on the university system in the United States (and then the
world). But how could one reconcile what seemed to be relatively “ idio-
graphic” in nature—the study o f a geographic or cultural “ area” —and the
“ nom othetic” pretensions o f economists, sociologists, political scientists,
and by now even som e historians? There emerged an ingenious intellectual
solution to this dilem m a: the concept o f “ developm ent.”
Developm ent, as the term cam e to be used after 1945, was based on a
fam iliar explanatory m echanism , a theory o f stages. Those w ho used this
concept were assum ing that the separate units—“ national societies” —all
developed in the same fundam ental way (thus satisfying the nom othetic
dem and) but at distinct paces (thus acknowledging how different the states
seemed to be at the present tim e). Presto! One w ould then be able to intro
duce specific concepts to study the “ others” at the present time w hile arguing
that eventually, all states w ould turn out m ore or less the same. This sleight
o f hand had a practical side as well. It m eant that the “ m ost d eveloped” state
could offer itself as a m odel for the “ less developed” states, urging the latter
to engage in a sort o f m im icry, and prom ising a higher standard o f living
and a more liberal governm ental structure (“ political developm ent” ) at the
end o f the rainbow.
This obviously was a useful intellectual tool for the United States, and its
government and foundations did all they could to encourage the expansion
o f area studies in the m ajor (and even the m inor) universities. O f course, at
that time there was a cold war between the United States and the Soviet
Union. The Soviet U nion knew a good thing w hen it saw one. It too adopted
the concept o f stages o f developm ent. To be sure, Soviet scholars changed
the term inology for rhetorical purposes, but the basic model w as the same.
They did however make one significant change: the Soviet U nion, not the
United States, was used as the m odel state in the Soviet version.
N ow let us see what happens w hen we put together the im pact o f area
studies with the expansion o f the university system. Expansion meant more
persons seeking the PhD degree. This seemed a good thing, but rem em ber
the requirement that a doctoral dissertation be an “ original” contribution to
knowledge. Every additional person doing research meant a m ore and more
difficult search for originality. This difficulty encouraged academ ic p oach
10 W orid-System s Analysis
ing, since originality was defined as being located w ithin the disciplines.
Persons in each discipline began to carve out subspecialties in subjects that
previously had belonged to other disciplines. This led to considerable over
lapping and erosion o f the firm boundaries between disciplines. There were
now political sociologists and social historians and every other com bination
o f w hich one could think.
The changes in the real w orld affected the self-definition o f the scholars.
The disciplines that form erly specialized in the non-W estern w orld found
themselves looked upon w ith political suspicion in the countries they had
traditionally studied. As a result, the term “ O rientalism ” gradually disap
peared, its form er practitioners often becom ing historians. A nthropology
was forced to redefine its focus rather radically, since both the concept o f the
“ prim itive” and the reality it was supposed to reflect were disappearing. In
som e ways, anthropologists “ cam e hom e,” beginning to study as well the
countries from w hich the m ajority o f them originated. As for the four other
disciplines, they now for the first time had faculty mem bers specializing in
parts o f the w orld w ith w hich their curricula had not previously been co n
cerned. The w hole distinction between m odern and non-m odern zones was
disintegrating.
A ll this on the one hand led to increasing uncertainty about traditional
truths (what was som etimes called the “ confusion” w ithin disciplines) and
on the other hand opened the way for the heretical calling into question o f
som e o f these truths, especially by the growing num ber o f scholars who
cam e from the non-W estern w orld or who were part o f the cadre o f newly
trained Western scholars bred by area studies. In the social sciences, four
debates in the period 19 4 5-70 set the scene for the em ergence o f w orld-
systems analysis: the concept o f core-periphery developed by the United
Nations Econom ic C om m ission for Latin A m erica (e c l a ) and the subse
quent elaboration o f “ dependency theory” ; the utility o f M arx’s concept o f
the “Asiatic m ode o f production,” a debate that took place am ong co m m u
nist scholars; the discussion am ong historians o f western Europe about the
“ transition from feudalism to capitalism ” ; the debate about “ total h istory”
and the trium ph o f the Armales school o f historiography in France and then
in m any other parts o f the world. N one o f these debates were entirely new,
but each becam e salient in this period, and the result was a m ajor challenge
to the social sciences as they had developed up to 1945.
Core-periphery was an essential contribution o f Third World scholars.
True, there had been som e Germ an geographers in the 1920s who had sug
gested som ething similar, as had Rom anian sociologists in the 1930s (but
then Rom ania had a social structure sim ilar to that o f the Third W orld). But
it was only when Raúl Prebisch and his Latin Am erican “ young Turks” at the
ecla got to w ork in the 1950s that the theme becam e a significant focus o f so
cial science scholarship. The basic idea was very sim ple. International trade
was not, they said, a trade between equals. Som e countries were stronger
econom ically than others (the core) and were therefore able to trade on
terms that allowed surplus-value to flow from the w eaker countries (the
periphery) to the core. Som e w ould later label this process “ unequal ex
change.” This analysis im plied a rem edy for the inequality: actions by the
states in the periphery to institute m echanism s that w ould equalize the
exchange over the m iddle run.
O f course, this sim ple idea left out an im m ense am ount o f detail. And it
therefore led to vigorous debates. There were debates between its advocates
and those w ho held to a m ore traditional view o f international trade notably
propounded by D avid Ricardo in the nineteenth century: that if all follow
their “ com parative advantage,” all w ill receive m axim al benefits. But there
were also debates am ong the advocates o f a core-periphery m odel them
selves. H ow did it work? W ho really benefited from the unequal exchange?
W hat measures w ould be effective to counteract it? A n d to w hat degree did
these m easures require political action m ore than econom ic regulation?
It was on this latter theme that “ dependency” theorists developed their
am ended versions o f core-periphery analysis. M any insisted that political
revolution w ould be a prerequisite for any real equalizing action. D epen
dency theory, as it developed in Latin Am erica, seemed on the surface to be
prim arily a critique o f the econom ic policies practiced and preached by the
Western powers (especially the U nited States). Andre G under Frank coined
the phrase “ the developm ent o f underdevelopm ent” to describe the results
o f the policies o f large corporations, m ajor states in the core zones, and
interstate agencies which prom oted “ free trade” in the w orld-econom y. U n
derdevelopm ent was seen not as an original state, the responsibility for
which lay w ith the countries that were underdeveloped, but as the conse
quence o f historical capitalism .
But the dependency theories were m aking as well, even perhaps to a
greater extent, a critique o f Latin A m erican com m unist parties. These par
ties had espoused a theory o f stages o f developm ent, arguing that Latin
A m erican countries were still feudal or “ sem i-feudal” and therefore had not
yet undergone a “ bourgeois revolution,” which they said had to precede a
“ proletarian revolution.” They deduced that Latin Am erican radicals needed
to cooperate with so-called progressive bourgeois to bring about the b ou r
geois revolution, in order that subsequently the country m ight proceed to
socialism . The dependistas, inspired as m any were by the C uban revolution,
said that the official com m unist line was a mere variant o f the official U.S.
governm ent line (build liberal bourgeois states and a m iddle class first). The
dependistas countered this line o f the com m unist parties theoretically, by
arguing that Latin A m erican states were already part and parcel o f the
capitalist system and that therefore what was needed was socialist revolu
tions now.
M eanwhile, in the Soviet U nion, in the east European com m unist states,
and w ithin the French and Italian com m unist parties, a debate was com
m encing about the “Asiatic m ode o f production.” W hen M arx had, quite
briefly, outlined the set o f stages o f econom ic structures through which
hum anity had evolved, he added a category w hich he found difficult to place
in the linear progression he was describing. He called it the “Asiatic mode o f
production,” using this term to describe the large, bureaucratic, and auto
cratic em pires that had grown up historically in C hina and India at least.
These were exactly the “ high civilizations” o f the Orientalists, whose w rit
ings M arx had been reading.
In the 1930s Stalin decided that he did not like this concept. He apparently
thought it could be used as a description both o f Russia historically and o f
the regim e over which he then presided. He undertook to revise M arx by
sim ply elim inating the concept from legitimate discussion. This om ission
created a lot o f difficulties for Soviet (and other com m unist) scholars. They
had to stretch argum ents to m ake various m om ents o f Russian and various
Asian histories fit the categories o f “ slavery” and “ feudalism ,” which re
m ained legitimate. But one didn’t argue with Joseph Stalin.
W hen Stalin died in 1953, m any scholars seized the occasion to reopen the
question and to suggest that maybe there was som ething in M a rx ’s original
idea. But doing that reopened the question o f inevitable stages o f develop
m ent and therefore o f developm entalism as an analytic fram ew ork and
policy directive. It forced these scholars to reengage w ith non-M arxist so
cial science in the rest o f the w orld. Basically, this debate was the schol
arly equivalent o f the speech in 1956 by Khrushchev, then general secre
tary o f the C om m unist Party o f the Soviet Union (cp su ), at the XXth
Party Congress in which he denounced the “ personality cult” o f Stalin and
acknowledged “ errors” in what had previously been unquestioned policy.
Like K hrushchev’s speech, the debate about the Asiatic m ode o f production
led to doubts, and cracked the rigid conceptual inheritances o f so-called
orthodox M arxism . It made possible a fresh look at the analytic categories o f
the nineteenth century, eventually even those o f M arx himself.
Sim ultaneously, a debate was going on am ong Western econom ic his
torians about the origins o f m odern capitalism . Most o f the participants
thought o f themselves as M arxists, but they were not bound by party con
straints. The debate had its origins in the publication in 1946 o f M aurice
D obb’s Studies in the D evelopm ent o f Capitalism. D obb was an English
M arxist econom ic historian. Paul Sweezy, an A m erican M arxist econom ist,
wrote an article challenging D obb’s explanation o f what both o f them called
“ the transition from feudalism to capitalism .” After that, m any others en
tered the fray.
For those on D obb’s side o f this debate, the issue was posed as endoge
nous versus exogenous explanations. Dobb found the roots o f the transition
from feudalism to capitalism in elements internal to the states, specifically in
England. Sweezy was accused by D obb and his supporters w ith crediting
external factors, particularly trade flows, and ignoring the fundam ental role
o f changes in the structure ot production, and therefore o f class relations.
Sweezy and others responded by suggesting that England was in fact part o f a
large European-M editerranean zone, whose transform ations accounted for
what was occurring in England. Sweezy used em pirical data from the w ork
o f H enri Pirenne (n on-M arxist Belgian historian and a forefather o f the
Annales school o f historiography, who had fam ously argued that the rise o f
Islam led to a breakdow n o f trade routes with western Europe and to its
econom ic stagnation). Those who supported D obb said that Sweezy was
overem phasizing the im portance o f trade (a so-called external variable) and
neglecting the crucial role o f the relations o f production (a so-called internal
variable).
The debate was im portant for several reasons. First o f all, it seemed to
have political im plications (like the argum ents o f the dependistas). C onclu
sions about the m echanism s o f the transition from feudalism to capitalism
m ight have im plications about a putative transition from capitalism to so
cialism (as indeed som e o f the participants explicitly pointed out). Secondly,
the whole debate pushed m any persons w ho were econom ists by training
into looking m ore closely at historical data, which would open them up to
some o f the argum ents that were being put forth by the Annales group in
France. Thirdly, the debate was essentially about the unit o f analysis, al
though this language was never used. The Sweezy side was raising questions
about the m eaningfulness o f using a country, projected backw ard in time, as
the unit within w hich social action should be analyzed, rather than som e
larger unit within which there was a division o f labor (such as the European-
M editerranean zone). Fourthly, just like the debate about the Asiatic m ode
o f production, this debate had the consequence o f breaking the crust o f a
version o f M arxism (analyzing relations o f production only, and only within
a state’s borders) that had becom e m ore an ideology than a scholarly argu
ment open to debate.
Those involved iit this debate were alm ost all Anglophone scholars. The
Annales group, by contrast, originated in France and for a long tim e had
resonance only in those areas o f the scholarly w orld w here French cultural
influence was great: Italy, Iberia, Latin Am erica, Turkey, and certain parts
o f eastern Europe. The Annales group had emerged in the 1920s as a p ro
test, led by Lucien Febvre and M arc Bloch, against the highly idiographic,
highly em piricist bent o f dom inant French historiography, w hich was fu r
therm ore alm ost exclusively devoted to political history. The Annales group
argued several counterdoctrines: H istoriography should be “ total” —that is,
it should look at the integrated picture o f historical developm ent in all social
arenas. Indeed, the econom ic and social underpinnings o f this developm ent
were thought to be m ore im portant than the political surface, and fu rth er
m ore it was possible to study them systematically, not always in the archives.
And long-term generalizations about historical phenom ena were in fact
both possible and desirable.
In the interw ar years, the influence o f Annales was quite m inim al. Sud
denly, after 1945 it blossom ed, and under the direction o f the second-
generation leader Fernand Braudel, it came to dom inate the historiographi
cal scene in France and then in m any other parts o f the world. It began for the
first time to penetrate the A nglophone world. Institutionally, the Annales
group presided over a new university institution in Paris, an institution built
on the premise that historians had to learn from and integrate the findings o f
the other, traditionally m ore nom othetic social science disciplines, and that
these in turn had to becom e m ore “ historical” in their work. The Braudelian
era represented both an intellectual and an institutional attack on the trad i
tional isolation o f the social science disciplines front each other.
B raudel put forw ard a language about social times that cam e to inflect
further w ork. H e criticized “ event-dom inated” or episodic history (histoire
événem entielle), by w hich he meant traditional idiographic, em piricist, p o
litical historiography, as “ dust.” It was dust in a double sense: that it spoke
about ephem eral phenom ena; and that it got into our eyes, preventing us
from seeing the real underlying structures. But Braudel also criticized the
search fo r timeless, eternal truths, considering the purely nom othetic w ork
o f m any social scientists as m ythical. In between these two extrem es, he
insisted on two other social tim es that the two cultures had neglected: stru c
tural tim e (or long-lasting, but not eternal, basic structures that un der
lay historical systems), and the cyclical processes within the structures (or
m edium -run trends, such as the expansions and contractions o f the w orld-
econom y). Braudel also em phasized the issue o f the unit o f analysis. In his
first m ajor w ork, he insisted that the sixteenth-century M editerranean,
w hich he was studying, constituted a “ w orld-econom y” (économ ie-m onde),
and he m ade the history o f this w orld-econom y the object o f his study.
All four o f these debates occurred essentially in the 1950s and 1960s. T hey
largely occurred separately, w ithout reference one to the other, and often
unbeknown one to the other. Yet collectively, they represented a m ajor
critique o f the existing structures o f knowledge. This intellectual upheaval
was follow ed by the cultural shock o f the revolutions o f 1968. A n d those
events brought the pieces together. The w orld revolution o f 1968 o f course
p rim arily concerned a series o f m ajor political issues: the hegem ony o f the
United States and its w orld policies, w hich had led it into the V ietnam w ar;
the relatively passive attitude o f the Soviet U nion, w hich the 1968 revolution
aries saw as “ collusion” w ith the United States; the inefficacy o f the tradi
tional Old Left m ovem ents in opposing the status quo. We shall discuss these
issues later.
In the process o f the upheaval, however, the revolutionaries o f 1968, who
had their strongest base in the w o rld ’s universities, also began to raise a
num ber o f issues about the structures o f knowledge. At first, they raised
questions about direct political involvem ent o f university scholars in w ork
that supported the w orld status quo—such as physical scientists w ho did
war-related research and social scientists who provided m aterial for co u n
terinsurgency efforts. Then they raised questions about neglected areas o f
w ork. In the social sciences, this m eant the neglected histories o f m any
oppressed groups: w om en, “ m in ority” groups, indigenous populations,
groups with alternative sexual dispositions or practices. But eventually, they
began to raise questions about underlying epistem ologies o f the structures
o f knowledge.
It is at this point, in the early 1970s, that people began to speak explicitly
about world-system s analysis as a perspective. W orld-system s analysis was
an attem pt to com bine coherently concern with the unit o f analysis, con
cern w ith social tem poralities, and concern w ith the barriers that had been
erected between different social science disciplines.
W orld-system s analysis m eant first o f all the substitution o f a unit o f
analysis called the “ w orld-system ” for the standard unit o f analysis, which
was the national state. On the whole, historians had been analyzing national
histories, econom ists national econom ies, political scientists national p o
litical structures, and sociologists national societies. W orld-system s ana
lysts raised a skeptical eyebrow, questioning w hether any o f these objects
o f study really existed, and in any case whether they were the most useful loci
o f analysis. Instead o f national states as the object o f study, they substi
tuted “ historical system s” w hich, it was argued, had existed up to now in
only three variants: m inisystem s; and “ w orld-system s” o f two kinds—w orld-
econom ies and w orld-em pires.
Note the hyphen ill w orld-system and its two subcategories, w orld-
econom ies and w orld-em pires. Putting in the hyphen was intended to
underline that we are talking not about systems, econom ies, em pires o f the
(whole) world, but about systems, econom ies, em pires that area w orld (but
quite possibly, and indeed usually, not encom passing the entire globe). This
is a key initial concept to grasp. It says that in “ world-system s” we are dealing
with a spatial/tem poral zone w hich cuts across m any political and cultural
units, one that represents an integrated zone o f activity and institutions
which obey certain system ic rules.
Actually, o f course, the concept was initially applied prim arily to the
“ m odern w orld-system ” which, it is argued, takes the form o f a “ w orld-
economy.” This concept adapted Braudel’s usage in his book on the M edi
terranean, and com bined it w ith the core-periphery analysis o f ecla . The
case w as m ade that the m odern w orld-econom y was a capitalist w orld-
econom y—not the first w orld-econom y ever but the first w orld-econom y to
survive as such for a long period and thrive, and it did this precisely by
becom ing fully capitalist. If the zone that was capitalist was not thought to
be a state but rather a w orld-econom y, then D obb’s so-called internal expla
nation o f the transition from feudalism to capitalism made little sense, since
it im plied that the transition occurred m ultiple times, state b y state, within
the same world-system .
There w as in this way o f form ulating the unit o f analysis a further link to
older ideas. Karl Polanyi, the H ungarian (later British) econom ic historian,
had insisted on the distinction between three form s o f econom ic organiza
tion w hich he called reciprocal (a sort o f direct give and take), redistributive
(in w hich goods went from the bottom o f the social ladder to the top to
be then returned in part to the bottom ), and market (in which exchange
occurred in m onetary form s in a public arena). The categories o f types
o f historical system s—m inisystem s, w orld-em pires, and w orld-econom ies—
seemed to be another w ay o f expressing Polanyi’s three form s o f economic
organization. M ini-system s utilized reciprocity, world-em pires redistribu
tion, and w orld-econom ies m arket exchanges.
The Prebisch categories were incorporated as well. A capitalist world-
econom y was said to be m arked b y an axial division o f labor between
core-like production processes and peripheral production processes, which
resulted in an unequal exchange favoring those involved in core-like produc
tion processes. Since such processes tended to group together in particular
countries, one could use a shorthand language by talking o f core and pe
ripheral zones (or even core and peripheral states), as long as one rem em
bered that it was the production processes and not the states that were core
like and peripheral. In w orld-system s analysis, core-periphery is a relational
concept, not a pair o f term s that are reified, that is, have separate essential
meanings.
What then makes a production process core-like or peripheral? It came to
be seen that the answer lay in the degree to which particular processes were
relatively m onopolized or relatively free m arket. The processes that were
relatively m onopolized were far m ore profitable than those that w ere free
m arket. This made the countries in which m ore core-like processes located
wealthier. A nd given the unequal pow er o f m onopolized products vis-à-vis
products w ith m any producers in the market, the ultimate result o f exchange
between core and peripheral products was a flow o f surplus-value (m eaning
here a large part o fth e real profits from m ultiple local productions) to those
states that had a large num ber o f core-like processes.
B raudel’s influence was crucial in two regards. First, in his later w ork on
capitalism and civilization, Braudel w ould insist on a sharp distinction be
tween the sphere o f the free market and the sphere o f m onopolies. He called
only the latter capitalism and, far from being the same thing as the free
market, he said that capitalism was the “ anti-m arket.” This concept marked
a direct assault, both substantively and term inologically, on the conflation
by classical econom ists (including M arx) o f the m arket and capitalism . And
secondly, B rau d el’s insistence on the m ultiplicity o f social times and his
emphasis on structural tim e—what he called the longue durée—becam e cen
tral to world-system s analysis. For world-system s analysts, the longue durée
was the duration o f a particular historical system. Generalizations about the
functioning o f such a system thus avoided the trap o f seem ing to assert
timeless, eternal truths. I f such systems were not eternal, then it followed
that they had beginnings, lives during which they “ developed,” and term inal
transitions.
On the one hand, this view strongly reinforced the insistence that social
science had to be historical, looking at phenom ena over long periods as well
as over large spaces. But it also opened, or reopened, the whole question o f
“ transitions.” D obb and Sweezy had put forw ard quite different explanations
o f the transition from feudalism to capitalism , but they shared the sense that
whatever explained the transition, it was an inevitable occurrence. This
conviction reflected the Enlightenm ent theory o f progress, w hich had in
form ed both classical liberal thought and classical M arxist thought. W orld-
systems analysts began to be skeptical about the inevitability o f progress.
They saw progress as a possibility rather than a certainty. They wondered
whether one could even describe the construction o f a capitalist world-
econom y as progress. T heir skeptical eye allowed them to incorporate w ithin
an account o f hum an history the realities o f those systems that had been
grouped under the label “Asiatic m ode o f production.” One didn’t need to
w orry any longer whether these structures were located at som e particular
point on a linear historical curve. A nd one could now ask w hy the transition
r8 W orld-System s Analysis
from feudalism to capitalism occurred at all (as though the possibility that it
m ight not have occurred were a real alternative), and not assume its inevita
bility and look m erely at what were the im m ediate causes o f the transition.
The third elem ent in w orld-system s analysis was its lack o f deference to
the traditional boundaries o f the social sciences. W orld-system s analysts
analyzed total social systems over the longue durée. Thus they felt free to
analyze m aterials that had once been considered the exclusive concern o f
historians or econom ists or political scientists or sociologists, and to analyze
them within a single analytical fram e. The resulting w orld-system s analysis
was not m ultidisciplinary, since the analysts w ere not recognizing the intel
lectual legitim acy o f these disciplines. T h ey w ere being unidisciplinary.
O f course, the triple set o f critiques—w orid-system s rather than states
as units o f analysis, insistence on the longue durée, and a unidisciplinary
approach— represented an attack on m any sacred cows. It was quite expect
able that there w ould be a counterattack. It cam e, im m ediately and vig
orously, from four cam ps: nom othetic positivists, orthodox M arxists, state
autonom ists, and cultural particularists. The m ain criticism o f each has been
that its basic prem ises have not been accepted by w orld-system s analysis.
This is o f course correct but hardly an intellectually devastating argument.
Nom othetic positivists have argued that world-system s analysis is essen
tially narrative, its theorizing based on hypotheses that have not been rigor
ously tested. Indeed, they have often argued that m any o f the propositions o f
w orid-system s analysis are not disprovable, and therefore inherently invalid.
In part, this is a critique o f insufficient (or nonexistent) quantification o f the
research. In part, this is a critique o f insufficient (or nonexistent) reduction
o f com plex situations to clearly defined and simple variables. In part, this is a
suggestion o f the intrusion o f value-laden prem ises into the analytic work.
O f course, this is in effect the reverse o f the critique by world-system s
analysis o f nom othetic positivism . W orld-system s analysts insist that rather
than reduce com plex situations to sim pler variables, the effort should be
to com plexify and contextualize all so-called sim pler variables in order to
understand real social situations. W orld-system s analysts are not against
quantification per se (they would quantify what can usefully be quantified),
but (as the old joke about the drunk teaches us) they feel that one should not
look for the lost key only under the street lam p just because the light is better
(where there are m ore quantifiable data). One searches for the m ost appro
priate data in function o f the intellectual problem ; one doesn’t choose the
problem because hard, quantitative data are available. This debate can be
what the French call a dialogue o f the deaf. In the end, the issue is not an ab
stract issue about correct m ethodology but is about whether w orld-system s
analysts or rather nom othetic positivists can offer m ore plausible explana
tions o f historical reality and therefore throw m ore light on long-term ,
large-scale social change.
If nom othetic positivists som etim es give the im pression o f insisting on a
cram ped and hum orless set o f intellectual constraints, so-called orthodox
M arxists can give them a run for their m oney. O rthodox M arxism is m ired
in the im agery o f nineteenth-century social science, w hich it shares with
classical liberalism : capitalism is inevitable progress over feudalism ; the fac
tory system is the quintessential capitalist production process; social p ro
cesses are linear; the econom ic base controls the less fundam ental political
and cultural superstructure. The critique b y Robert Brenner, an orthodox
M arxist econom ic historian, o f w orld-system s analysis is a good exam ple o f
this point o f view.
The M arxist criticism o f w orld-system s analysis is therefore that in dis
cussing a core-peripheral axis o f the division o f labor, it is being circulation-
ist and neglecting the productionist base o f surplus-value and the class
struggle between the bourgeoisie and the proletariat as the central explana
tory variable o f social change. W orld-system s analysis is charged with failing
to treat non-w age-labor as anachronistic and en route to extinction. Once
again, the critics are inverting criticism s leveled at them. W orld-system s
analysts have insisted that w age-labor is only one o f the m any form s o f labor
control w ithin a capitalist system, and not at all the m ost profitable one from
the point o f view o f capital. T hey have insisted that the class struggle and all
other form s o f social struggle can be understood and evaluated only within
the w orld-system taken as a whole. And they have insisted that states in the
capitalist w orld-econom y do not have the autonom y or isolation which
makes it possible to label them as having a particular m ode o f production.
The state-autonom ist critique is a bit the obverse o f the orthodox M arxist
critique. W hereas the orthodox M arxists argue that world-system s analysis
ignores the determ ining centrality o f the m ode o f production, the state-
autonom ists argue that world-system s analysis makes the political sphere
into a zone whose realities are derived from , determ ined by, the econom ic
base. The critiques o f the sociologist Theda Skocpol and the political scien
tist Aristide Zolberg argue this case, inspired by the earlier w ork o f the
Germ an historian Otto Hintze. This group insists that one cannot explain
what goes on at the state level or the interstate level sim ply by thinking o f
these arenas as part o f a capitalist w orld-econom y. The m otivations that
govern action in these arenas, they say, are autonom ous and respond to
pressures other than behavior in the market.
Finally, with the rise o f the various “ post” -concepts linked to cultural
studies, w orld-system s analysis has been attacked with argum ents analogous
to those used b y the state-autonom ists. W orld-system s analysis is said to
derive the superstructure (in this case, the cultural sphere) from its eco
nom ic base and to disregard the central and autonom ous reality o f the cul
tural sphere (see for exam ple the critique o f the cultural sociologist Stanley
Aronow itz). W orld-system s analysts are accused o f having the faults both o f
nom othetic positivism and o f orthodox M arxism , although world-system s
analysts see them selves as critics o f both these schools o f thought. World-
systems analysis is charged w ith being just one more version o f “grand
narrative.” Despite the claim that w orld-system s analysis is devoted to “ total
history,” it is taxed with econom ism , that is, w ith giving priority to the
econom ic sphere over other spheres o f hum an activity. Despite its early and
strong attack against Eurocentrism , it is accused o f being Eurocentric by not
accepting the irreducible autonom y o f different cultural identities. In short,
it neglects the centrality o f “ culture.”
O f course, w orld-system s analysis is indeed a grand narrative. World-
systems analysts argue that all form s o f knowledge activity necessarily in
volve grand narratives, but that som e grand narratives reflect reality more
closely than others. In their insistence on total history and unidisciplinarity,
w orld-system s analysts refuse to substitute a so-called cultural base for an
econom ic base. Rather, as we have said, they seek to abolish the lines b e
tween econom ic, political, and sociocultural modes o f analysis. Above all,
world-system s analysts do not wish to throw the baby out with the bath. To
be against scientism is not to be against science. To be against the concept o f
timeless structures does not mean that (tim e-bound) structures do not exist.
To feel that the current organization o f the disciplines is an obstacle to
overcom e does not m ean that there does not exist collectively arrived-at
knowledge (however provisional or heuristic). To be against particularism
disguised as universalism does not mean that all views are equally valid and
that the search for a pluralistic universalism is futile.
What these four critiques have in com m on is the sense that world-system s
analysis lacks a central actor in its recounting o f history. For nom othetic
positivism , the actor is the individual, homo rationalis. For orthodox M arx
ism, the actor is the industrial proletariat. For the state-autonom ists, it is
political m an. For cultural particularists, each o f us (different from all the
others) is an actor engaged in autonom ous discourse w ith everyone else. For
world-system s analysis, these actors, just like the long list o f structures that
one can enum erate, are the products o f a process. They are not prim ordial
atom ic elements, but part o f a system ic m ix out o f which they emerged and
upon which they act. They act freely, but their freedom is constrained by
their biographies and the social prisons o f which they are a part. Analyzing
their prisons liberates them to the m axim um degree that they can be liber
H istorical Origins 21
ated. To the extent that we each analyze our social prisons, we liberate
ourselves from their constraints to the extent that we can be liberated.
Lastly, it must be em phasized that for w orld-system s analysts, time and
space—or rather that linked com pound Tim eSpace—are not unchanging
external realities w hich are som ehow just there, and within whose fram es
social reality exists. Tim eSpaces are constantly evolving constructed realities
whose construction is part and parcel o f the social reality we are analyzing.
The historical systems w ithin which we live are indeed systemic, but they are
historical as well. T h ey rem ain the same over time yet are never the same
from one minute to the next. This is a paradox, but not a contradiction. The
ability to deal w ith this paradox, w hich we cannot circum vent, is the prin
cipal task o f the historical social sciences. T his is not a con undrum , but a
challenge.
2 T h e M o d ern W orld-System as a Capitalist W o rld -E con o m y
Production, Surplus Value, and Polarization
T h e w o r l d in w h ic h we are now living, the m odern w orld-system , had

its origins in the sixteenth century. This world-system was then located in
only a part o f the globe, prim arily in parts o f Europe and the Am ericas. It
expanded over time to cover the w hole globe. It is and has always been a
world-ecoriomy. It is and has always been a capitalist w orld-econom y. We
should begin by explaining what these two terms, w orld-econom y and capi
talism, denote. It w ill then be easier to appreciate the historical contours o f
the m odern w orld-system —its origins, its geography, its tem poral develop
ment, and its contem porary structural crisis.
W hat we m ean by a w orld-econom y (Braudel’s econontie-nionde) is a
large geographic zone w ithin w hich there is a division o f labor and hence
significant internal exchange o f basic or essential goods as well as flows o f
capital and labor. A defining feature o f a w orld-econom y is that it is not
bounded by a unitary political structure. Rather, there are m any political
units inside the w orld-econom y, loosely tied together in our m odern w orld-
system in an interstate system. A nd a w orld-econom y contains m any cul
tures and groups—practicing m any religions, speaking m any languages, d if
fering in their everyday patterns. This does not m ean that they do not evolve
som e com m on cultural patterns, w hat we shall be calling a geoculture. It
does mean that neither political nor cultural hom ogeneity is to be expected
or found in a world-econom y. W hat unifies the structure m ost is the d ivi
sion o f labor which is constituted w ithin it.
Capitalism is not the m ere existence o f persons or firm s p roducing for sale
on the market with the intention o f obtaining a profit. Such persons or firms
have existed for thousands o f years all across the w orld. N or is the existence
o f persons w orking for wages sufficient as a definition. W age-labor has also
been known for thousands o f years. We are in a capitalist system only when
the system gives p riority to the endless accum ulation o f capital. Using such a
definition, only the m odern w orld-system has been a capitalist system. E n d
less accum ulation is a quite sim ple concept: it means that people and firms
are accum ulating capital in order to accum ulate still m ore capital, a process
that is continual and endless. I f we say that a system “ gives p riority” to such
endless accum ulation, it m eans that there exist structural m echanism s by
which those who act with other m otivations are penalized in som e way, and
are eventually elim inated from the social scene, whereas those w ho act with
the appropriate m otivations are rewarded and, if successful, enriched.
A w orld-econom y and a capitalist system go together. Since world-
econom ies lack the unifying cem ent o f an overall political structure or a
hom ogeneous culture, what holds them together is the efficacy o f the divi
sion o f labor. And this efficacy is a function o f the constantly expanding
wealth that a capitalist system provides. Until m odern times, the world-
economies that had been constructed either fell apart or were transform ed
manu m ilitnri into w orld-em pires. H istorically, the only w orld-econom y to
have survived for a long time has been the m odern w orld-system , and that is
because the capitalist system took root and becam e consolidated as its defin
ing feature.
Conversely, a capitalist system cannot exist w ithin any fram ew ork except
that o f a w orld-econom y. We shall see that a capitalist system requires a very
special relationship between econom ic producers and the holders o f politi
cal power. If the latter are too strong, as in a w orld-em pire, their interests
will override those o f the econom ic producers, and the endless accum ula
tion o f capital w ill cease to be a priority. Capitalists need a large market
(hence m inisystem s are too narrow for them) but they also need a m ulti
plicity o f states, so that they can gain the advantages o f w orking with states
but also can circum vent states hostile to their interests in favor o f states
friendly to their interests. O nly the existence o f a m ultiplicity o f states within
the overall division o f labor assures this possibility.
A capitalist w orld-econom y is a collection o f m any institutions, the com
bination o f which accounts for its processes, and all o f which are inter
tw ined with each other. The basic institutions are the m arket, or rather the
m arkets; the firms that compete in the m arkets; the m ultiple states, within
an interstate system ; the households; the classes; and the status-groups (to
use Weber’s term , which some people in recent years have renamed the
“ identities” ). They are all institutions that have been created within the
fram ew ork o f the capitalist w orld-econom y. O f course, such institutions
have some sim ilarities to institutions that existed in prior historical systems
to which we have given the same or sim ilar nam es. But using the same name
to describe institutions located in different historical systems quite often
confuses rather than clarifies analysis. It is better to think o f the set o f
institutions o f the m odern world-system as contextually specific to it.
Let us start w ith m arkets, since these are norm ally considered the essential
feature o f a capitalist system. A market is both a concrete local structure in
which individuals o r firm s sell and buy goods, and a virtual institution
across space where the same kind o f exchange occurs. H ow large and w ide
spread any virtual m arket is depends on the realistic alternatives that sellers
and buyers have at a given time. In principle, in a capitalist w orld-econom y
the virtual market exists in the w orld-econom y as a whole. But as we shall
see, there are often interferences with these boundaries, creating narrower
and m ore “ protected” markets. There are o f course separate virtual markets
for all com m odities as well as for capital and different kinds o f labor. But
over time, there can also be said to exist a single virtual world market for all
the factors o f production com bined, despite all the barriers that exist to its
free functioning. One can think o f this com plete virtual market as a magnet
for all producers and buyers, whose pull is a constant political factor in the
decision-m aking o f everyone—the states, the firms, the households, the
classes, and the status-groups (or identities). This com plete virtual world
m arket is a reality in that it influences all decision m aking, but it never
functions fully and freely (that is, without interference). The totally free
m arket functions as an ideology, a myth, and a constraining influence, but
never as a day-to-day reality.
O ne o f the reasons it is not a day-to-day reality is that a totally free market,
were it ever to exist, w ould make im possible the endless accum ulation o f
capital. This m ay seem a paradox because it is surely true that capitalism
cannot function without markets, and it is also true that capitalists regularly
say that they favor free markets. But capitalists in fact need not totally free
markets but rather markets that are only partially free. The reason is clear.
Suppose there really existed a w orld market in which all the factors o f
production were totally free, as our textbooks in econom ics usually define
this—that is, one in which the factors flowed without restriction, in which
there were a very large num ber o f buyers and a very large num ber o f sellers,
and in w hich there was perfect inform ation (m eaning that all sellers and all
buyers knew the exact stale o f all costs o f production). In such a perfect
market, it w ould always be possible for the buyers to bargain down the
sellers to an absolutely m inuscule level o f profit (let us think o f it as a penny),
and this low level o f profit w ould make the capitalist game entirely un
The M odern W orld-System 25

interesting to producers, rem oving the basic social underpinnings o f such
a system.
W hat sellers always prefer is a m onopoly, fo r then they can create a
relatively wide m argin between the costs o f production and the sales price,
and thus realize high rates o f profit. O f course, perfect m onopolies are
extrem ely difficult to create, and rare, but quasi-m onopolies are not. What
one needs m ost o f all is the support o f the m achinery o f a relatively strong
state, one w hich can enforce a quasi-m onopoly. There are m any ways o f
doing this. One o f the most fundam ental is the system o f patents which
reserves rights in an “ invention” for a specified num ber o f years. This is what
basically makes “ new ” products the most expensive for consum ers and the
most profitable for their producers. O f course, patents are often violated and
in any case they eventually expire, but by and large they protect a quasi
m onopoly for a time. Even so, production protected b y patents usually
rem ains only a quasi-m onopoly, since there m ay be other sim ilar products
on the market that are not covered by the patent. This is w hy the norm al
situation for so-called leading products (that is, products that are both new
and have an im portant share o f the overall w orld m arket for com m odities) is
an oligopoly rather than an absolute m onopoly. O ligopolies are how ever
good enough to realize the desired high rate o f profits, especially since the
various firms often collude to m inim ize price com petition.
Patents are not the only w ay in which states can create quasi-m onopolies.
State restrictions on im ports and exports (so-called protectionist measures)
are another. State subsidies and tax benefits are a third. The ability o f strong
states to use their muscle to prevent weaker states from creating counter
protectionist m easures is still another. The role o f the states as large-scale
buyers o f certain products w illing to pay excessive prices is still another.
Finally, regulations which im pose a burden on producers m ay be relatively
easy to absorb by large producers but crippling to sm aller producers, an
asym m etry which results in the elim ination o f the sm aller producers from
the market and thus increases the degree o f oligopoly. The m odalities by
which states interfere with the virtual m arket are so extensive that they
constitute a fundam ental factor in determ ining prices and profits. W ithout
such interferences, the capitalist system could not thrive and therefore could
not survive.
Nonetheless, there are two inbuilt anti-m onopolistic features in a capi
talist world-econom y. First o f all, one producer’s m onopolistic advantage is
another producer’s loss. The losers w ill o f course struggle politically to
remove the advantages o f the winners. They can do this by political struggle
w ithin the states w here the m onopolistic producers are located, appealing to
doctrines o f a free m arket and offering support to political leaders inclined
to end a particular m onopolistic advantage. O r they do this by persuading
other states to defy the w orld m arket m onopoly b y using their state pow er
to sustain com petitive producers. Both m ethods are used. Therefore, over
tim e, every quasi-m on opoly is undone b y the entry o f further producers
into the market.
Q uasi-m onopolies are thus self-liquidating. But they last long enough
(say thirty years) to ensure considerable accum ulation o f capital by those
w ho control the quasi-m onopolies. W hen a quasi-m on opoly does cease to
exist, the large accum ulators o f capital sim ply m ove their capital to new
leading products o r w hole new leading industries. The result is a cycle o f
leading products. Leading products have m oderately short lives, but they are
constantly succeeded b y other leading industries. Thus the gam e continues.
As fo r the once-leading industries past their prim e, they becom e m ore and
m ore “ com petitive,” that is, less and less profitable. We see this pattern in
action all the time.
Firm s are the m ain actors in the m arket. Firm s are norm ally the com peti
tors o f other firm s operating in the same virtual m arket. T hey are also in
conflict with those firm s from w hom they purchase inputs and those firm s
to w hich they sell their products. Fierce intercapitalist rivalry is the nam e o f
the gam e. A nd only the strongest and the m ost agile survive. One m ust
rem em ber that bankruptcy, or absorption by a m ore pow erful firm , is the
daily bread o f capitalist enterprises. N ot all capitalist entrepreneurs succeed
in accum ulating capital. Far from it. I f they all succeeded, each w ould be
likely to obtain very little capital. So, the repeated “ failures” o f firm s not only
weed out the weak com petitors but are a condition sine qua non o f the
endless accum ulation o f capital. That is what explains the constant process
o f the concentration o f capital.
To be sure, there is a dow nside to the growth o f firm s, either horizontally
(in the same product), vertically (in the different steps in the chain of
production), or what might be thought o f as orthogonally (into other p ro d
ucts not closely related). Size brings down costs through so-called econo
m ies o f scale. But size adds costs o f adm inistration and coordination, and
m ultiplies the risks o f m anagerial inefficiencies. As a result o f this contradic
tion, there has been a repeated zigzag process o f firm s getting larger and then
getting smaller. But it has not at all been a sim ple up-and-dow n cycle.
Rather, w orldw ide there has been a secular increase in the size o f firm s, the
w hole historical process taking the form o f a ratchet, two steps up then one
step back, continuously. The size o f firm s also has direct political im plica
tions. Large size gives firm s m ore political clout but also m akes them m ore

vulnerable to political assault—by their com petitors, their em ployees, and
their consum ers. But here too the bottom line is an upward ratchet, toward
m ore political influence over time.
The axial division o f labor o f a capitalist w orld-econom y divides p ro duc
tion into core-like products and peripheral products. C ore-periphery is a
relational concept. W hat we mean b y core-periphery is the degree o f profit
ability o f the production processes. Since profitability is directly related to
the degree o f m onopolization, w hat we essentially m ean by core-like p ro
duction processes is those that are controlled by quasi-m onopolies. Pe
ripheral processes are then those that are truly com petitive. W hen exchange
occurs, com petitive products are in a w eak position and quasi-m onopolized
products are in a strong position. As a result, there is a constant flow o f
surplus-value from the producers o f peripheral products to the producers o f
core-like products. This has been called unequal exchange.
To be sure, unequal exchange is not the only way o f m oving accum ulated
capital from politically weak regions to politically strong regions. There is
also plunder, often used extensively during the early days o f incorporating
new regions into the w orld -econom y (consider, for exam ple, the conquista-
dores and gold in the Am ericas). But plunder is self-liquidating. It is a case o f
killing the goose that lays the golden eggs. Still, since the consequences are
m iddle-term and the advantages short-term , there still exists m uch plunder
in the m odern w orld-system , although we are often “ scandalized” when we
learn o f it. W hen Enron goes bankrupt, after procedures that have m oved
enorm ous sums into the hands o f a few m anagers, that is in fact plunder.
W hen “ privatizations” o f erstwhile state property lead to its being garnered
by m afia-like businessm en w ho quickly leave the country w ith destroyed
enterprises in their wake, that is plunder. Self-liquidating, yes, but only after
m uch dam age has been done to the w orld ’s productive system , and indeed to
the health o f the capitalist w orld-econom y.
Since quasi-m onopolies depend on the patronage o f strong states, they
are largely located—juridically, physically, and in terms o f ow nership—
w ithin such states. There is therefore a geographical consequence o f the
core-peripheral relationship. Core-like processes tend to group themselves
in a few states and to constitute the bulk o f the production activity in such
states. Peripheral processes tend to be scattered am ong a large num ber o f
states and to constitute the bulk o f the production activity in these states.
Thus, for shorthand purposes we can talk o f core states and peripheral
states, so long as we rem em ber that we are really talking o f a relationship
between production processes. Some states have a near even m ix o f core-like
and peripheral products. We m ay call them sem iperipheral states. They
have, as we shall see, special political properties. It is however not m eaning
ful to speak o f sem iperipheral production processes.
Since, as we have seen, quasi-m onopolies exhaust themselves, what is a
core-like process today w ill becom e a peripheral process tom orrow. The
econom ic history o f the m odern w orld-system is replete with the shift, or
dow ngrading, o f products, first to sem iperipheral countries, and then to
peripheral ones. If circa 1800 the production o f textiles was possibly the
preem inent core-like production process, by 2000 it was m anifestly one o f
the least profitable peripheral production processes. In 1800 these textiles
were produced prim arily in a very few countries (notably England and some
other countries o f northwestern Europe); in 2000 textiles were produced in
virtu ally every part o f the w orld-system , especially cheap textiles. The p ro
cess has been repeated w ith m any other products. T hink o f steel, or auto
m obiles, or even com puters. T h is kind o f shift has no effect on the structure
o f the system itself. In 2000 there were other core-like processes (e.g. aircraft
production or genetic engineering) w hich were concentrated in a few coun
tries. There have always been new core-like processes to replace those which
becom e m ore com petitive and then m ove out o f the states in which they
were originally located.
The role o f each state is very different vis-à-vis productive processes de
pending on the m ix o f core-peripheral processes within it. The strong states,
w hich contain a disproportionate share o f core-like processes, tend to em
phasize their role o f protecting the quasi-m onopolies o f the core-like pro
cesses. The very weak states, which contain a disproportionate share o f
peripheral production processes, are usually unable to do very m uch to
affect the axial division o f labor, and in effect are largely forced to accept the
lot that has been given them.
The sem iperipheral states w hich have a relatively even m ix o f production
processes find themselves in the m ost difficult situation. Under pressure
from core states and putting pressure on peripheral states, their m ajor con
cern is to keep themselves from slipping into the periphery and to do what
they can to advance themselves toward the core. Neither is easy, and both
require considerable state interference with the w orld market. These sem i
peripheral states are the ones that put forw ard m ost aggressively and most
publicly so-called protectionist policies. They hope thereby to “ protect” their
production processes from the com petition o f stronger firm s outside, while
trying to im prove the efficiency o f the firm s inside so as to compete better in
the w orld market. They are eager recipients o f the relocation o f erstwhile
leading products, which they define these days as achieving “ econom ic de
velopm ent.” In this effort, their com petition comes not from the core states

but from other sem iperipheral states, equally eager to be the recipients o f
relocation w hich cannot go to all the eager aspirants sim ultaneously and to
the same degree. In the beginning o f the tw enty-first century, som e obvious
countries to be labeled sem iperipheral are South Korea, Brazil, and India—
countries with strong enterprises that export products (for exam ple steel,
autom obiles, pharm aceuticals) to peripheral zones, but that also regularly
relate to core zones as im porters o f m ore “ advanced” products.
The norm al evolution o f the leading industries—the slow dissolution o f
the quasi-m onopolies—is what accounts for the cyclical rhythm s o f the
w orld-econom v. A m ajor leading industry w ill be a m ajor stim ulus to the
expansion o f the w orld-econom y and w ill result in considerable accum ula
tion o f capital. But it also norm ally leads to m ore extensive em ploym ent in
the w orld-econoniy, higher w age-levels, and a general sense o f relative pros
perity. As m ore and m ore firm s enter the m arket o f the erstwhile quasi-
m onopolv, there w ill be “overproduction” (that is, too m uch production for
the real effective dem and at a given time) and consequently increased price
competition (because o f the dem and squeeze), thus low ering the rates o f
profit. At som e point, a buildup o f unsold products results, and conse
quently a slowdown in further production.
W hen this happens, we tend to see a reversal o f the cyclical curve o f the
w orld-econom y. We talk o f stagnation or recession in the world-econom y.
Rates o f unem ploym ent rise worldwide. Producers seek to reduce costs in
order to m aintain their share o f the w orld m arket. O ne o f the m echanism s is
relocation o f the production processes to zones that have historically lower
wages, that is, to sem iperipheral countries. This shift puts pressure on the
wage levels in the processes still rem aining in core zones, and wages there
tend to becom e lower as well. Effective dem and w hich w as at first lacking
because o f overproduction now becom es lacking because o f a reduction in
earnings o f the consum ers. In such a situation, not all producers necessarily
lose out. There is obviously acutely increased com petition am ong the d i
luted oligopoly that is now engaged in these production processes. They
fight each other furiously, usually w ith the aid o f their state m achineries.
Some states and som e producers succeed in “ exporting unem ploym ent”
from one core state to the others. Systemically, there is contraction, but
certain core states and especially certain sem iperipheral states m ay seem to
be doing quite well.
The process we have been describing—expansion o f the w orld-econom y
w hen there are quasi-m onopolistic leading industries and contraction in
the w orld-econom y w hen there is a low ering o f the intensity o f quasi
m onopoly—can be drawn as an up-and-dow n curve o f so-called A- (expan
sion) and B- (stagnation) phases. A cycle consisting o f an A-phase followed
by a B-phase is som etim es referred to as a K ondratieff cycle, after the econo
m ist w ho described this phenom enon with clarity in the beginning o f the
twentieth century. K on dratieff cycles have up to now been m ore or less fifty
to sixty years in length. Their exact length depends 011 the political measures
taken by the states to avert a B-phase, and especially the m easures to achieve
recuperation from a B-phase on the basis o f new leading industries that can
stimulate a new A-phase.
A K ondratieff cycle, when it ends, never returns the situation to where it
was at the beginning o f the cycle. That is because w hat is done in the B-
phase in order to get out o f it and return to an A-phase changes in some
im portant w ay the param eters o f the w orld-system . The changes that solve
the im m ediate (or short-run) problem o f inadequate expansion o f the
w orld-econom y (an essential element in m aintaining the possibility o f the
endless accum ulation o f capital) restore a m iddle-run equilibrium but begin
to create problem s for the structure in the long run. The result is what we
m ay call a secular trend. A secular trend should be thought o f as a curve
whose abscissa (or x-axis) records time and whose ordinate (or y-axis)
measures a phenom enon by recording the proportion o f som e group that
has a certain characteristic. I f over time the percentage is m oving upw ard in
an overall linear fashion, it m eans by definition (since the ordinate is in
percentages) that at som e point it cannot continue to do so. We call this
reaching the asym ptote, or 100 percent point. No characteristic can be as
cribed to m ore than 100 percent o f any group. This m eans that as w e solve
the m iddle-run problem s b y m oving up on the curve, we w ill eventually run
into the long-run problem o f approaching the asym ptote.
Let 11s suggest one exam ple o f how this works in a capitalist w orld-
economy. O ne o f the problem s we noted in the K ondratieff cycles is that at a
certain point m ajor production processes becom e less profitable, and these
processes begin to relocate in order to reduce costs. M eanw hile, there is
increasing unem ploym ent in core zones, and this affects global effective
dem and. Individual firm s reduce their costs, but the collectivity o f firm s
finds it m ore difficult to find sufficient custom ers. O ne w ay to restore a
sufficient level o f w orld effective dem and is to increase the pay levels o f
ordinary w orkers in core zones, som ething which has frequently occurred at
the latter end o f K ondratieff B-periods. This thereby creates the kind o f
effective dem and that is necessary to provide sufficient custom ers for new
leading products. But o f course higher pay levels m ay m ean lesser profits for
the entrepreneurs. At a w orld level this can be com pensated for by expand
ing the pool o f wage w orkers elsewhere in the w orld, w ho are w illing to w ork
at a lower level o f wages. This can be done by drawing new persons into the
w age-labor pool, for w hom the lower wage represents in fact an increase in

real incom e. But o f course every time one draws “ new ” persons into the
w age-labor pool, one reduces the num ber o f persons rem aining outside the
w age-labor pool. There w ill come a tim e when the pool is dim inished to the
point where it no longer exists effectively. We are reaching the asym ptote. We
shall return to this issue in the last chapter when we discuss the structural
crisis o f the tw enty-first century.
O bviously, a capitalist system requires that there be w orkers w ho provide
the labor for the productive processes. It is often said that these laborers are
proletarians, that is, w age-w orkers w ho have no alternative m eans o f su p
port (because they are landless and w ithout m onetary o r property reserves).
This is not quite accurate. For one thing, it is unrealistic to think o f w orkers
as isolated individuals. Alm ost all workers are linked to other persons in
household structures that norm ally group together persons o f both sexes
and o f different age-levels. Many, perhaps most, o f these household stru c
tures can be called fam ilies, but fam ily ties are not necessarily the only m ode
by which households can be held together. H ouseholds often have com m on
residences, but in fact less frequently than one thinks.
A typical household consists o f three to ten persons who, over a long
period (say thirty years or so), pool m ultiple sources o f incom e in order to
survive collectively. H ouseholds are not usually egalitarian structures inter
nally nor are they unchanging structures (persons are born and die, enter or
leave households, and in any case grow older and thus tend to alter their
econom ic role). W hat distinguishes a household structure is som e form o f
obligation to provide incom e for the group and to share in the consum ption
resulting from this incom e. H ouseholds are quite different from clans or
tribes or other quite large and extended entities, w hich often share ob liga
tions o f m utual security and identity but do not regularly share incom e. Or
if there exist such large entities which are incom e-pooling, they are dysfunc
tional for the capitalist system.
We first must look at what the term “ incom e” covers. There are in fact
generically five kinds o f incom e in the m odern w orld-system . And alm ost all
households seek and obtain all five kinds, although in different proportions
(which turns out to be very im portant). One obvious form is w age-incom e,
b y w hich is m eant paym ent (usually in m oney form ) b y persons outside the
household for w ork o f a m em ber o f the household that is perform ed outside
the household in som e production process. W age-incom e m ay be occasional
or regular. It m ay be paym ent by tim e em ployed or by w ork accom plished
(piecework). W age-incom e has the advantage to the em ployer that it is
“ flexible” (that is, continued w ork is a function o f the em ployer’s need),
although the trade union, other form s o f syndical action by workers, and
state legislation have often lim ited em ployers’ flexibility in m any ways. Still,
em ployers are alm ost never obligated to provide lifetime support to particu
lar w orkers. Conversely, this system has the disadvantage to the em ployer
that when m ore workers are needed, they may not be readily available for
em ploym ent, especially if the econom y is expanding. That is, in a system o f
wage-labor, the em ployer is trading not being required to pay w orkers in
periods when they are not needed for the guarantee that the workers are
available when they are needed.
A second obvious source o f household incom e is subsistence activity. We
usually define this type o f w ork too narrowly, taking it to m ean only the
efforts o f rural persons to grow food and produce necessities for their own
consum ption w ithout passing through a market. This is indeed a form o f
subsistence production, and this kind o f w ork has o f course been on a sharp
decline in the m odern w orld-system , which is w hy we often say that subsis
tence production is disappearing. By using such a narrow definition, we are
however neglecting the num erous ways in which subsistence activity is actu
ally increasing in the m odern world. W hen som eone cooks a meal or washes
dishes at hom e, this is subsistence production. W hen a hom eow ner assem
bles furniture bought from a store, this is subsistence production. And when
a professional uses a com puter to send an e-m ail which, in an earlier day, a
(paid) secretary w ould have typed, he or she is engaged in subsistence pro
duction. Subsistence production is a large part o f household incom e today
in the m ost econom ically wealthy zones o f the capitalist w orld-econom y.
A third kind o f household incom e we m ight generically call petty com
m odity production. A petty com m odity is defined as a product produced
w ithin the confines o f the household but sold for cash on a w ider market.
O bviously, this sort o f production continues to be very w idespread in the
poorer zones o f the w orld-econom y but is not totally absent anywhere. In
richer zones we often call it free-lancing. This kind o f activity involves
not on ly the m arketing o f produced goods (including o f course intellec
tual goods) but also petty m arketing. W hen a small boy sells on the street
cigarettes or matches one by one to consum ers w ho cannot afford to buy
them in the norm al quantity that is packaged, this boy is engaged in petty-
com m odity production, the production activity being sim ply the disassem
b ly o f the larger package and its transport to the street market.
A fourth kind o f incom e is w hat we can generically call rent. Rent can be
drawn from som e m ajor capital investm ent (offering urban apartm ents for
rent, or room s within apartm ents) or from locational advantage (collecting
a toll on a private bridge) or from capital ownership (clipping coupons on
bonds, earning interest on a savings account). What makes it rent is that it is
ow nership and not w ork o f any kind that makes possible the income.
Finally, there is a fifth kind o f incom e, which in the m odern w orld we call

transfer paym ents. These m ay be defined as incom e that com es to an in di
vidual by virtue o f a defined obligation o f som eone else to provide this
incom e. The transfer paym ents m ay com e from persons close to the house
hold, as when gifts o r loans are given from one generation to the other at the
time o f birth, m arriage, or death. Such transfer paym ents between house
holds m ay be m ade on the basis o f reciprocity (which in theory ensures no
extra incom e over a lifetim e but tends to sm ooth out liquidity needs). Or
transfer paym ents m ay occur through the efforts o f the state (in w hich case
one’s own m oney m ay sim ply be returning at a different m om ent in time),
or through an insurance scheme (in which one m ay in the end benefit or
lose), or through redistribution from one econom ic class to another.
As soon as we think about it, we all are fam iliar with the incom e-pooling
that goes on in households. Picture a m iddle-class Am erican family, in
which the adult m ale has a job (and perhaps m oonlights at a second), the
adult female is a caterer operating out o f her hom e, the teenage son has a
paper route, and the twelve-year-old daughter babysits. Add in perhaps the
grandm other w ho draws a w idow ’s pension and who also occasionally baby
sits fo r a small child, and the room above the garage that is rented out. Or
picture the w orking-class M exican household in which the adult male has
migrated to the United States illegally and is sending hom e money, the adult
female is cultivating a plot at hom e, the teenage girl is w orking as a dom estic
(paid in m oney and in kind) in a wealthy M exican’s hom e, and the subteen
boy is peddling sm all items in the town market after school (or instead o f
school). Each o f us can elaborate m any m ore such com binations.
In actual practice, few households are w ithout all five kinds o f income.
But one should notice right away that the persons w ithin the household who
tend to provide the incom e m ay correlate w ith sex or age categories. That is
to say, m any o f these tasks are gender- and age-defined. W age-labor was for a
long time largely considered the province o f males between the ages o f
fourteen or eighteen to sixty or sixty-five. Subsistence and petty-com m odity
production have been fo r the m ost part defined as the province o f adult
w om en and o f children and the aged. State transfer incom e has been largely
linked to wage earning, except fo r certain transfers relating to child rearing.
M uch political activity o f the last hundred years has been aim ed at over
com ing the gender specificity o f these definitions.
As we have already noted, the relative im portance o f the various form s o f
incom e in particular households has varied widely. Let us distinguish two
m ajor varieties: the household where w age-incom e accounts for 50 percent
or m ore o f the total lifetim e incom e, and the household where it accounts
for less. Let us call the form er a “ proletarian household” (because it seems to
be heavily dependent on w age-incom e, which is what the term proletarian is
supposed to invoke); and let us then call the latter a “ sem iproletarian house
hold” (because there is doubtless at least som e w age-incom e for most m em
bers o f it). I f we do this, we can see that an em ployer has an advantage in
em ploying those w age-laborers w ho are in a sem iproletarian household.
W henever w age-labor constitutes a substantial com ponent o f household
incom e, there is necessarily a floor fo r how m uch the w age-earner can be
paid. It m ust be an am ount that represents at least a proportionate share o f
the reproduction costs o f the household. This is what we can think o f as an
absolute m inim um wage. If, however, the w age-earner is ensconced in a
household that is only sem iproletarian, the w age-earner can be paid a wage
below the absolute m inim um wage, w ithout necessarily endangering the
survival o f the household. The difference can be m ade up by additional
incom e provided from other sources and usually by other m em bers o f the
household. W hat we see happening in such cases is that the other producers
o f incom e in the household are in effect transferring surplus-vaiue to the
em ployer o f the w age-earner over and above w hatever surplus-vaiue the
w age-earner h im self is transferring, b y perm itting the em ployer to pay less
than the absolute m inim um wage.
It follows that in a capitalist system employers w ould in general prefer to
em ploy w age-workers com ing from sem iproletarian households. There are
how ever two pressures w orking in the other direction. One is the pressure o f
the w age-w orkers themselves w ho seek to be “ proletarianized,” because that
in effect m eans being better paid. And one is the contradictory pressure on
the em ployers themselves. Against their individual need to lower wages,
there is their collective longer-term need to have a large enough effective
dem and in the w orld-econom y to sustain the m arket for their products. So
over time, as a result o f these two very different pressures, there is a slow
increase in the num ber o f households that are proletarianized. Nonetheless,
this description o f the long-term trend is con trary to the traditional social
science picture that capitalism as a system requires p rim arily proletarians as
w orkers. If this were so, it w ould be difficult to explain why, after four to five
hundred years, the proportion o f proletarian workers is not m uch higher
than it is. Rather than think o f proletarianization as a capitalist necessity, it
w ould be m ore useful to think o f it as a locus o f struggle, whose outcom e has
been a slow i f steady increase, a secular trend m oving toward its asym ptote.
There are classes in a capitalist system, since there are clearly persons who
are differently located in the econom ic system with different levels o f incom e
who have differing interests. For exam ple, it is obviously in the interest o f
w orkers to seek an increase in their wages, and it is equally obviously in the
interest o f em ployers to resist these increases, at least in general. But, as we
have just seen, w age-workers are ensconced in households. It makes no sense

to think o f the workers belonging to one class and other m em bers o f their
household to another. It is obviously households, not individuals, that are
located w ithin classes. Individuals w ho wish to be class-m obile often find
that they m ust w ithdraw from the households in which they are located and
locate them selves in other households, in order to achieve such an objective.
This is not easy but it is by no m eans im possible.
Classes how ever are not the only groups w ithin which households locate
themselves. T h ey are also m em bers o f status-groups or identities. (If one
calls them status-groups, one is em phasizing how they are perceived by
others, a sort o f objective criterion. If one calls them identities, one is
em phasizing how they perceive themselves, a sort o f subjective criterion. But
under one nam e or the other, they are an institutional reality o f the m odern
w orld-system .) Status-groups or identities are ascribed labels, since we are
born into them, o r at least we usually think we are born into them. It is on
the w hole rather difficult to jo in such groups voluntarily, although not
im possible. These status-groups or identities are the num erous “ peoples” o f
which all o f us are m em bers—nations, races, ethnic groups, religious co m
m unities, but also genders and categories o f sexual preferences. M ost o f
these categories are often alleged to be anachronistic leftovers o f pre-m odern
times. This is quite w rong as a prem ise. M em bership in status-groups or
identities is very much a part o f m odernity. Far from dying out, they are
actually grow ing in im portance as the logic o f a capitalist system unfolds
further and consum es us m ore and m ore intensively.
I f we argue that households locate themselves in a class, and all their
m em bers share this location, is this equally true o f status-groups or identi
ties? There does exist an enorm ous pressure w ithin households to m aintain
a com m on identity, to be part o f a single status-group or identity. This
pressure is felt first o f all by persons who are m arrying and who are required,
or at least pressured, to look within the status-group or identity for a part
ner. But obviously, the constant m ovem ent o f individuals w ithin the m od
ern w orld-system plus the norm ative pressures to ignore status-group or
identity m em bership in favor o f m eritocratic criteria have led to a consid
erable m ixing o f original identities w ithin the fram ew ork o f households.
Nonetheless, what tends to happen in each household is an evolution toward
a single identity, the emergence o f new, often barely articulated status-group
identities that precisely reify what began as a m ixture, and thereby reunify
the household in terms o f status-group identities. One elem ent in the de
m and to legitimate gay m arriages is this felt pressure to reunify the identity
o f the household.
W hy is it so im portant for households to m aintain singular class and
status-group identities, or at least pretend to m aintain them? Such a hom og
enization o f course aids in m aintaining the unity o f a household as an
incom e-pooling unit and in overcom ing any centrifugal tendencies that
m ight arise because o f internal inequalities in the distribution o f consum p
tion and decision m aking. It w ould however be a mistake to see this ten
dency as prim arily an internal group defense m echanism . There are im por
tant benefits to the overall world-system from the hom ogenizing trends
w ithin household structures.
H ouseholds serve as the prim ary socializing agencies o f the world-system .
T hey seek to teach us, and particularly the young, knowledge o f and respect
for the social rules by which we are supposed to abide. They are o f course
seconded by state agencies such as schools and arm ies as well as by religious
institutions and the m edia. But none o f these com e close to the households
in actual impact. W hat however determines how the households will social
ize their m em bers? Largely how the secondary institutions fram e the issues
for the households, and their ability to do so effectively depends on the
relative hom ogeneity o f the households—that is, they have and see them
selves as having a defined role in the historical social system. A household
that is certain o f its status-group identity—its nationality, its race, its reli
gion, its ethnicity, its code o f sexuality—knows exactly how to socialize its
m em bers. One w hose identity is less certain but that tries to create a h om og
enized, even if novel, identity can do alm ost as well. A household that would
openly avow a perm anently split identity w ould find the socialization fu nc
tion alm ost im possible to do, and m ight find it difficult to survive as a group.
O f course, the powers that be in a social system always hope that socializa
tion results in the acceptance o f the very real hierarchies that are the product
o f the system. T hey also hope that socialization results in the internalization
o f the myths, the rhetoric, and the theorizing o f the system. This does
happen in part but never in full. H ouseholds also socialize members into
rebellion, w ithdraw al, and deviance. To be sure, up to a point even such
antisystemic socialization can be useful to the system by offering an outlet
for restless spirits, provided that the overall system is in relative equilibrium .
In that case, one can anticipate that the negative socializations m ay have at
most a lim ited im pact on the functioning o f the system. But when the
historical system comes into structural crisis, suddenly such antisystemic
socializations can play a profoundly unsettling role for the system.
Thus far, we have m erely cited class identification and status-group iden
tification as the two alternative modes o f collective expression for house
holds. But obviously there are m ultiple kinds o f status-groups, not always
totally consonant one with the other. Furtherm ore, as historical time has
moved on, the num ber o f kinds o f status-groups has growm, not diminished.
In the late twentieth century, people often began to claim identities in terms
The M odern W orld-Systcm 37

o f sexual preferences which were not a basis for household construction in
previous centuries. Since we are all involved in a m ultiplicity o f status-
groups or identities, the question arises whether there is a priority order o f
identities. In case o f conflicts, w hich should prevail? W hich does prevail?
Can a household be hom ogeneous in terms o f one identity but not in terms
o f another? The answer obviously is yes, but what are the consequences?
We must look at the pressures 011 households com ing from outside. M ost
o f the status-groups have some kind o f trans-household institutional e x
pression. A nd these institutions place direct pressure on the households not
m erely to conform to their norm s and their collective strategies but to give
them priority. O f the trans-household institutions, the states are the m ost
successful in influencing the households because they have the most im m e
diate weapons o f pressure (the law, substantial benefits to distribute, the
capacity to m obilize m edia). But w herever the state is less strong, the re
ligious structures, the ethnic organizations, and sim ilar groups m ay becom e
the strongest voices insisting on the priorities o f the households. Even when
status-groups or identities describe themselves as antisystem ic, they m ay still
be in rivalry with other antisystem ic status-groups or identities, dem anding
priority in allegiance. It is this com plicated turm oil o f household identities
that underlies the roller coaster o f political struggle within the m odern
world-system.
The com plex relationships o f the w orld-econom y, the firm s, the states,
the households, and the trans-household institutions that link m em bers
o f classes and status-groups are beset by two opposite—but s y m b io tic -
ideological themes: universalisnt on the one hand and racism and sexism on
the other.
Universalism is a theme prom inently associated with the m odern w orld-
system. It is in m any ways one o f its boasts. Universalism means in general
the priority to general rules applying equally to all persons, and therefore the
rejection o f particularistic preferences in most spheres. The only rules that
are considered perm issible w ithin the fram ew ork o f universalism are those
which can be shown to apply directly to the narrowly defined proper func
tioning o f the world-system .
The expressions o f universalism are m anifold. I f we translate universalism
to the level o f the firm or the school, it m eans for exam ple the assigning o f
persons to positions on the basis o f their training and capacities (a practice
otherwise know n as m eritocracy). I f we translate it to the level o f the house
hold, it implies am ong other things that m arriage should be contracted for
reasons o f “ love” but not those o f wealth or ethnicity or any other general
particularism . I f we translate it to the level o f the state, it m eans such rules as
universal suffrage and equality before the law. We are all fam iliar with the
m antras, since they are repeated with som e regularity in public discourse.
T hey are supposed to be the central focus o f our socialization. O f course, we
know that these m antras are unevenly advocated in various locales o f the
w orld-system (and we shall w ant to discuss w hy this is so), and we k now that
they are far from fully observed in practice. But they have becom e the official
gospel o f m odernity.
U niversalism is a positive norm , which m eans that m ost people assert
their belief in it, and alm ost everyone claim s that it is a virtue. Racism and
sexism are just the opposite. T hey too are norm s, but they are negative
norm s, in that m ost people deny their b elief in them . A lm ost everyone
declares that they are vices, yet nonetheless they are norm s. W hat is m ore,
the degree to w hich the negative norm s o f racism and sexism are observed is
at least as high as, in fact for the most part much higher than, the virtu ous
norm o f universalism . This m ay seem to be an anomaly. But it is not.
Let us look at what we m ean by racism and sexism. Actually these are
terms that cam e into widespread use only in the second h alf o f the tw en
tieth century. Racism and sexism are instances o f a far w ider ph en om
enon that has no convenient name, but that m ight be thought o f as anti-
universalism , or the active institutional discrim ination against all the
persons in a given status-group or identity. For each kind o f identity,
there is a social ranking. It can be a crude ranking, with two categories, or
elaborate, with a w hole ladder. But there is always a group on top in the
ranking, and one or several groups at the bottom . These rankings are both
w orldw ide and m ore local, and both kinds o f ranking have enorm ous conse
quences in the lives o f people and in the operation o f the capitalist w orld-
economy.
We are all quite fam iliar w ith the w orldw ide rankings w ithin the m o d
ern world-system-. m en over w om en, W hites over Blacks (or non-W hites),
adults over children (or the aged), educated over less educated, hetero
sexuals over gays and lesbians, the bourgeois and professionals over workers,
urbanites over rural dwellers. Ethnic rankings are m ore local, but in every
country, there is a dom inant ethnicity and then the others. Religious ran k
ings vary across the w orld, but in any particular zone everyone is aware of
w hat they are. Nationalism often takes the form o f constructing links be
tween one side o f each o f the antinom ies into fused categories, so that, for
exam ple, one might create the norm that adult W hite heterosexual males o f
particular ethnicities and religions are the only ones w ho w ould be con sid
ered “ true” nationals.
There are several questions which this description brings to our attention.
W hat is the point o f professing universalism and practicing anti-universalism
sim ultaneously? W hy should there be so m any varieties ofanti-universalism ?
T h e M odern W orld-System 39
Is this contradictory antinom y a necessary part o f the m odern world-system ?
Universalism and anti-universalism are in fact hoth operative day to day, but
they operate in different arenas. Universalism tends to be the operative
principle most strongly for what we could call the cadres o f the w orld-
system —neither those w ho are at the very top in term s o f power and wealth,
nor those w ho provide the large m ajority o f the w orld ’s workers and ordi
n ary people in all fields o f w ork and all across the w orld, but rather an in-
between group o f people w ho have leadership or su p ervisory roles in various
institutions. II is a norm that spells out the optim al recruitm ent m ode for
such technical, professional, and scientific personnel. This in-between group
m ay be larger or sm aller according to a cou n try’s location in the world-
system and the local political situation. The stronger the cou n try’s econom ic
position, the larger the group. W henever universalism loses its hold even
am ong the cadres in particular parts o f the w orld-system , however, o b
servers tend to see dysfunction, and quite im m ediately there em erge political
pressures (both from within the country and from the rest o f the world) to
restore som e degree o f universalistic criteria.
There are two quite different reasons for this. On the one hand, universal
ism is believed to ensure relatively com petent perform ance and thus make
for a m ore efficient w orld-econom y, which in turn im proves the ability to
accum ulate capital. Hence, norm ally those who control production p ro
cesses push for such universalistic criteria. O f course, universalistic criteria
arouse resentm ent when they com e into operation only after some p ar
ticularistic criterion has been invoked. If the civil service is only open to
persons o f som e particular religion or ethnicity, then the choice o f persons
within this category m ay be universalistic but the overall choice is not. If
universalistic criteria are invoked only at the time o f choice while ignoring
the particularistic criteria by w hich individuals have access to the necessary
prior training, again there is resentment. W hen, however, the choice is truly
universalistic, resentm ent m ay still occur because choice involves exclusion,
and we m ay get “ populist” pressure for untested and unranked access to
position. Under these multiple circum stances, universalistic criteria play a
m ajor social-psychological role in legitim ating m eritocratic allocation. T hey
make those w ho have attained the status o f cadre feel justified in their
advantage and ignore the ways in w hich the so-called universalistic criteria
that perm itted their access were not in fact fully universalistic, or ignore the
claims o f all the others to material benefits given prim arily to cadres. The
norm o f universalism is an enorm ous com fort to those w ho are benefiting
from the system. It makes them feel they deserve what they have.
On the other hand, racism , sexism, and other anti-universalistic norm s
perform equally im portant tasks in allocating work, power, and privilege
w ithin the m odern w orld-system . T h ey seem to im ply exclusions from the
social arena. Actually they are really m odes o f inclusion, but o f inclusion at
inferior ranks. These norm s exist to justify the lower ranking, to enforce the
lower ranking, and perversely even to make it som ewhat palatable to those
w ho have the low er ranking. Anti-universalistic norm s are presented as
codifications o f natural, eternal verities not subject to social m odification.
T h ey are presented not m erely as cultural verities but, im plicitly or even
explicitly, as biologically rooted necessities o f the functioning o f the hum an
animal.
T h ey becom e norm s for the state, the w orkplace, the social arena. But
they also becom e norm s into w hich households are pushed to socialize their
m em bers, an effort that has been quite successful 011 the whole. They justify
the polarization o f the w orld-system . Since polarization has been increasing
over time, racism , sexism , and other form s o f anti-universalism have be
com e ever m ore im portant, even though the political struggle against such
form s o f anti-universalism has also becom e more central to the functioning
o f the w orld-system .
The bottom line is that the m odern world-system has made as a central,
basic feature o f its structure the sim ultaneous existence, propagation, and
practice o f both universalism and anti-universalism . This antinom ic duo is
as fundam ental to the system as is the core-peripheral axial division o f labor.

3 The Rise o f the States-System
Sovereign Nation-States, Colonies, and the Interstate System
T h e m o d e r n S T A T E i s a sovereign state. Sovereignty is a concept that was

invented in the m odern w orld-system . Its prim a facie m eaning is totally
autonom ous state power. But m odern states in fact exist w ithin a larger
circle o f states, w hat we have com e to call the interstate system. So we shall
have to investigate the degree and the content o f this presum ed autonom y.
The historians talk o f the emergence o f the “ new m onarchies” in England,
France, and Spain at the end o f the fifteenth century, at just the m om ent o f
onset o f the m odern w orld-system . As for the interstate system, its ancestry
is usually attributed to the developm ent o f Renaissance diplom acy on the
Italian peninsula, and its institutionalization is usually thought to be the
Peace o f Westphalia in 1648. W estphalia, signed b y m ost o f the states o f
Europe, codified certain rules o f interstate relations that set limits to as well
as guarantees o f relative autonom y. These rules were elaborated and ex
panded later under the rubric o f international law.
The new m onarchies were centralizing structures. That is, they sought
to ensure that regional pow er structures were effectively subordinated to
the overall authority o f the m onarch. A nd they sought to ensure this by
strengthening (really by creating) a civil and m ilitary bureaucracy. M ost
crucially, they sought to give themselves strength by securing som e signifi
cant taxing powers with enough personnel actually to collect the taxes.
In the seventeenth century, the rulers o f these new m onarchies declared
themselves “ absolute” m onarchs. This seems to suggest that they had un
limited power. In actual fact they lacked not only unlim ited pow er but
very m uch power at all. Absolute m onarchs m erely claim ed the right to
have unlim ited power. The term “ absolute” com es from the Latin absolutus,
w hich m eant not that the m onarch is all-pow erful but that the m onarch is
not subject to (is absolved from ) the laws and therefore cannot be legiti
m ately constrained by any hum an from doing w hat the ruler thinks best.
This allowed for arbitrary power, but it didn’t mean that the m onarch had
effective power, w hich as we have said was relatively low. To be sure, the
states sought through the centuries to overcom e this lack o f real power, and
they had a certain am ount o f success in achieving this. Consequently, one o f
the secular trends o f the m odern w orld-system from its beginning (at least
until about the 1970s, as we shall see) w as a slow, steady increase in real state
power. I f we com pare the real pow er (ability to get decisions actually carried
out) o f Louis X IV o f France (w ho reigned 16 6 1-17 15 ), usually taken as the
arch-sym bol o f absolute power, w ith say the prim e m inister o f Sweden in the
year 2000, we will see that the latter had m ore real power in Sweden in 2000
than Louis in France in 1715.
The m ajor tool that the m onarchs used to increase their effective pow er
was the construction o f bureaucracies. A nd since they at first did not have
the tax revenues with w hich to pay for bureaucracies, they found a solution
in the sale o f offices, w hich gave the m onarchs an increase in both b u
reaucrats and revenue—and therefore som e additional power, albeit less
than if they had been able to recruit bureaucrats directly, as they w ould at
later times. Once the rulers had a m inim al bureaucracy in place, they sought
to use it to give the states control over all sorts o f political functions: tax
collection, the courts, legislation, and enforcem ent agencies (police and
arm y). At the same time, they sought to eliminate or at least lim it the
autonom ous authority o f local notables in all these fields. T h ey also sought
to create an inform ational network to make sure that their intentions were
respected. The French elaborated the institution o f prefects—persons w ho
represented the central state and were resident in the various parts o f the
cou ntry—and this institution was em ulated in various ways by alm ost all
m odern states.
Sovereignty was a claim o f authority not only internally but externally—
that is, vis-à-vis other states. It w as first o f all a claim o f fixed boundaries,
within w hich a given state was sovereign, and therefore w ithin w hich no
other state had the right to assert any kind o f authority—executive, legisla
tive, judicial, or military. To be sure, these claims o f the states that other
states should not “ interfere” in their dom estic affairs have always been m ore
honored in the breach than sedulously observed. But the m ere claim has
nonetheless served to constrain the degree o f interference. N o r have borders
been unchanging. Border claims between states have been constant and
The Rise o f the States-System 43

recurrent. Nonetheless, at any given m om ent there alm ost always exist de
facto realities about the borders w ithin w hich sovereignty is exercised.
There is one further fundam ental feature o f sovereignty. It is a claim , and
claim s have little m eaning unless they are recognized by others. Others m ay
not respect the claim s, but that is in m any ways less im portant than that they
recognize them form ally. Sovereignty is m ore than anything else a m atter o f
legitimacy. And in the m odern w orld-system , the legitim acy o f sovereignty
requires reciprocal recognition. Sovereignty is a hypothetical trade, in w hich
two potentially (or really) conflicting sides, respecting de facto realities o f
power, exchange such recognitions as their least costly strategy.
Reciprocal recognition is a fundam ent o f the interstate system. There have
often been entities that have proclaim ed their existence as sovereign states
but failed to receive the recognition o f most other states. But w ithout such
recognition, the proclam ation is relatively worthless, even if the entity re
tains de facto control o f a given territory. Such an entity is in a perilous
condition. However, at any given tim e most states are recognized b y all other
states. There are usually nonetheless a few putative states w hich are recog
nized by no one, or som etim es by only one or two other states (which in
effect are protector states). The m ost difficult situation is that in which a
state is recognized by a significant num ber o f other states but is also not
recognized by a significant number. This situation m ay occur in the wake
o f secessions or revolutionary changes in regimes. Such a split in the rec
ognition process creates a dilem m a and a tension in the interstate system
w hich the states concerned eventually will try to resolve, in one direction or
the other.
We can easily find three exam ples o f the variety o f possible situations in
the w orld-system in the first decade o f the twenty-first century. The United
States and Cuba, although politically hostile to each other, did not contest
each other’s sovereignty, nor did other countries. In a second case, in C hina,
the proclam ation o f the People’s Republic in 1949—with the new govern
m ent gaining de facto control o f the m ainland and the previous governm ent
effectively retreating to Taiwan while still claim ing nonetheless to be the
sovereign authority o f the Republic o f China as a w hole—created one o f
those m iddle situations in which part o f the w orld recognized one govern
ment and part the other as the sovereign authority o f all o f China. This
situation was largely resolved in the 1970s, w hen the U nited Nations recog
nized the credentials o f the People’s Republic o f China for China’s seat in the
G eneral Assem bly and Security C ouncil and w ithdrew the credentials o f the
Republic o f China (which controlled de facto only Taiwan). This step o c
curred at about the same tim e as the U nited States and then m any other
countries recognized the legitim acy o f the People’s Republic as the sole
governm ent o f “ one C hina,” w hile not disturbing de facto control o f Taiwan
b y the erstwhile governm ent o f China. After that, there remained only a
few (m ostly sm all) countries which continued to recognize the Republic o f
C hina as the legitimate governm ent o f the w hole o f China, but the over
w helm ing balance was on the side o f the People’s Republic. The third situa
tion was that o f the Turkish Republic o f N orthern Cyprus. It claim ed to be a
sovereign state and had de facto authority on the northern half o f the island.
But it was recognized as sovereign only by Turkey. It therefore had no
international legitimacy, the rest o f the w orld still acknowledging the theo
retical sovereignty o f C yprus over the land area occupied by the Turkish
Republic o f N orthern C yprus. Were it not for the strong (ultim ately m ili
tary) support o f Turkey, the Turkish Republic o f Northern C yprus would
have soon ceased to exist. We see in these three instances the crucial role o f
reciprocal recognition.
We m ight look at one hypothetical, but plausible, situation. Suppose,
w hen the Parti Québécois first came to power in Quebec in 1976, it had
im m ediately declared Quebec to be a sovereign state (which was after all the
principal program o f the party), and suppose that the Canadian governm ent
had vigorously opposed this, politically and perhaps militarily. Suppose then
that France had recognized Quebec, Great Britain had refused to do so, and
the U nited States had tried to rem ain neutral. W hat might have happened,
and w ould Quebec have been a sovereign state?
Reciprocity also operates internally, although we conventionally use a
different language to describe it. Local authorities must “ recognize” the
sovereign authority o f the central state, and in a sense the central authority
m ust recognize the legitim ate authority and define the sphere o f the local
authorities. In m any countries, this m utual recognition is enshrined in a
constitution or in specific legislation that specifies the division o f power
between center and localities. This agreem ent can and often does break
down. If the breakdow n is serious, we have w hat is called a civil war. Such a
war m ay be won by the center. But it m ay also be w on by the local authority
or authorities, and in this case, there m ay be either a revision o f the rules
governing the division o f powers in the existing state boundaries or the
creation o f one or m ore new sovereign states through secession, w hich then
poses the issue for the new ly created states o f obtaining recognition in the
interstate arena. The breakup o f Yugoslavia is a good example o f this, a
breakup which left som ewhat unresolved several questions o f boundaries
and autonom ies, such that a decade after the breakup there existed de facto
boundaries which were still being contested.
Sovereignty thus is a legal claim with m ajor political consequences. It is
because o f these consequences that issues involving sovereignty are central

to political struggle, both internally within states and internationally b e
tween states. From the point o f view o f entrepreneurs operating in the
capitalist w orld-econom y, the sovereign states assert authority in at least
seven principal arenas o f direct interest to them: (1) States set the rules on
whether and under what conditions com m odities, capital, and labor m ay
cross their borders. (2) T hey create the rules concerning p roperty rights
within their states. (3) T hey set rules concerning em ploym ent and the com
pensation o f employees. (4) They decide which costs firm s must internalize.
(5) They decide what kinds o f econom ic processes m ay be m onopolized, and
to what degree. (6) They tax. (7) Finally, w hen firm s based within their
boundaries m ay be affected, they can use their pow er externally to affect the
decisions o f other states. This is a long list, and just looking at it makes one
realize that from the point o f view o f firm s, state policies are crucial.
The relationship o f states to firm s is a key to understanding the fu nction
ing o f the capitalist w orld-econom y. The official ideology o f m ost capitalists
is laissez-faire, the doctrine that governm ents should not interfere with the
working o f entrepreneurs in the m arket. It is im portant to understand that
as a general rule, entrepreneurs assert this ideology loudly but do not really
want it to be im plem ented, or at least not fully, and certainly do not usually
act as though they believed it was sound doctrine.
Let us start with boundaries. A sovereign state has in theory the right to
decide what m ay cross its boundaries, and under what conditions. The
stronger the state, the larger its bureaucratic m achinery and therefore the
greater its ability to enforce decisions concerning tran s-boun dary trans
actions. There are three principal kinds o f trans-boundary transactions: the
m ovement o f goods, o f capital, and o f persons. Sellers w ish for their goods
to traverse boundaries w ithout interference and w ithout taxation. O11 the
other hand, com peting sellers w ithin the boundaries being entered m ay very
much want the state to interfere by im posing quotas or tariffs, or by giving
subsidies to their ow n products. A n y decision that the state takes favors one
entrepreneur or the other. There does not exist a neutral position. The same
is true o f capital flows.
The trans-boundary m ovem ent o f persons has always been the most
closely controlled, and o f course concerns firm s in that it concerns workers.
In general, the influx o f w orkers from one country to another is a market
plus for entrepreneurs in the receiving country and a m arket m inus for
those already resident in the receiving country, if one uses a sim ple short-
run supply and dem and m odel. This leaves out o f the picture two elements
that may very much be central to the debate: the im pact on the internal
social structure o f any given country o f im m igration; and the long-run
econom ic im pact o f im m igration (which m ight be quite positive even if the
short-run impact is quite negative, at least for som e persons). Once again,
there exists no neutral position.
Property rights are o f course the centerpiece o f the capitalist system.
There is no way to accum ulate capital endlessly unless one can hold on to the
capital that one has accum ulated. Property rights are all those laws which
limit the ways in which the state can confiscate the money, extended kin can
lay claim to a share in the money, and others can steal the money. In
addition, the capitalist system operates on the basis o f a m inim um level o f
reciprocal trust in the honesty o f transactions, and thus preventing fraud is a
m ajor social requirem ent. This is all so obvious that it seems scarcely w orth
saying. But o f course the key actor in this protection o f property rights is the
state, w hich alone has the legitim ate right to set the rules. O bviously, none o f
these rights arc without som e lim its. A nd o f course there are m any actions
w hose description as protected property rights is a m atter o f debate. D iffer
ences lead to conflicts w hich m ust then be adjudicated—by the courts o f the
states. But without som e state-guaranteed protections, the capitalist system
cannot function at all.
Entrepreneurs have long acted, and still often do act, as if the arena in
which they are m ost anxious that the state abstain from setting rules is the
w orkplace. They are particularly concerned about all m atters governing
their relation to those they em ploy—levels o f recom pense, conditions o f
w ork, length o f the w ork week, assurances o f safety, and m odes o f hiring and
firing. W orkers, on the contrary, have long dem anded that the state interfere
in precisely these questions to help them achieve what they consider reason
able w ork situations. O bviously such state interference tends to strengthen
workers in the short run in their conflicts with em ployers, so their ap p rob a
tion is usually a given. B ut m any entrepreneurs have also seen that in the
long run, state interference m ay be o f use to them as well. Ensuring lo n g
term labor supply, creating effective dem and, and m inim izing social d is
order m ay all be in part consequences o f such state interference in the
workplace. Consequently a certain am ount o f interference m ay be very
welcom e to em ployers—at least to those which are larger and are operating
according to longer-run perspectives.
One o f the less noticed corners in which the state’s role is crucial to firm s
is in deciding what proportion o f the costs o f production is actually paid by
the firm . Econom ists speak quite often o f costs being externalized. W hat this
m eans is that a certain part o f the costs o f production are shifted from the
balance sheet o f the firm to that am orphous external entity, society. The
possibility o f externalizing costs m ay seem to run counter to a basic prem ise
o f capitalist activity. Presum ably a firm produces for profit, the profit con
sisting o f the difference between sales receipts and costs o f production. The

profit is then a reward for efficient production. The tacit assum ption—and
the m oral justification o f the profits—is that the producer is paying all
the costs.
In practice, however, it does not w ork that way. The profit is a reward not
m erely for efficiency but for greater access to the assistance o f the state. Few
producers pay all the costs o f their production. There are three different
costs that are norm ally externalized in significant m easure: costs o f toxicity;
costs o f exhaustion o f m aterials; costs o f transport. Alm ost all production
processes involve som e kind o f toxicity, that is, som e kind o f residual dam
age to the environm ent, whether it is disposal o f m aterial or chem ical waste,
or sim ply long-term transform ation o f the ecology. The least expensive way
for a producer to deal w ith waste is to cast it aside, outside its property. The
least expensive way to deal with transform ation o f the ecology is to pretend
it isn’t happening. Both ways reduce the im m ediate costs o f production. But
these costs are then externalized, in the sense that either im m ediately or,
m ore usually, m uch later, som eone must pay for the negative consequences,
by means o f either a proper cleanup or restitution o f the ecology. This
som eone is everyone else—the taxpayers in general, through their in stru
m entality the state.
The second m ode o f externalizing costs is to ignore the exhaustion o f
m aterials. In the end, all production processes use som e p rim ary m aterials,
organic o r inorganic, w hich are part o f the transform ation processes that
result in a “ final” good sold on the m arket. Prim ary m aterials are exhaust
ible, som e quite speedily, som e extrem ely slowly, m ost at som e interm ediate
pace. O nce again, replacement costs are alm ost never part o f the internalized
costs o f production. Thus eventually, the world has either to renounce the
use o f such m aterials or seek to replace them in some way. In part, it does so
by innovation, and one can make an argum ent that in this case the econom ic
cost o f non-replacem ent is sm all or nil. But in m any other cases this is not
possible, and then the state m ust step in once again to engage in the process
o f restoring or re-creating the m aterials, and this is o f course paid for by
som eone other than those who pocketed the profits. A good exam ple o f
m aterials that have not been adequately replaced is the world w ood sup
ply. The forests o f Ireland were cut dow n in the seventeenth century. And
throughout the history o f the m odern world-system , we have been cutting
dow n forests o f all kinds w ithout replacing them. Today we discuss the
consequences o f not protecting what is considered the last m ajor rain forest
in the entire world, the Am azon area in Brazil.
Finally, there is the cost o f transport. W hile it is true that firm s generally
pay fees for transporting goods com ing to them or from them, they seldom
pay the full costs. Creating the necessary infrastructure o f transportation—
bridges, canals, railw ay networks, airports—represents a very large cost, and
this cost is norm ally b orne, in large part, not by the firm s which make use o f
the infrastructure but by the collectivity. The justification is that the costs are
so massive, and the reward for an individual firm so small, that the in
frastructure w ould never com e into existence w ithou t a large input o f costs
from the state. This m ay well be true, if perhaps exaggerated, but it is further
evidence o f the critical role o f state involvem ent in the process o f the endless
accum ulation o f capital.
We have already discussed how central the creation o f m onopolies or
rather quasi-m onopolies are to the accum ulation of capital. We need only
rem em ber that every decision to make possible a quasi-m onopoly o f any
kind, w hatever the m echanism , represents an advantage to some but a dis
advantage to others. Here as elsewhere, there exist no neutral positions for
the state in enabling capital accum ulation. For capital accum ulation is al
ways capital accum ulation b y particular persons, firm s, or entities. And
com petition between capitalists is unavoidable in a capitalist system.
In discussions o f state “ interference” with firm s, it is m ost often noted
that states tax. O f course they do. They could not exist w ithout taxation. And
we have noticed how the m ost crucial element in the establishm ent o f the
state structures was acquiring not the authority but the effective ability to
tax. N o one, it is said, likes taxes. In fact the opposite is true, although few
avow it. Everyone—firms and workers alike—wants the things that states can
offer them w ith the m oney that the states have obtained through taxation.
There are basically two problem s that people have with taxes. One is the
feeling or suspicion that the states are using the taxes not to help the honest
taxpayers we all assum e ourselves to be, but to help others (the politicians,
the bureaucrats, rival firm s, the poor and undeserving, even foreigners). To
this extent we w ish taxes to be lower, and these undesirable uses o f the taxes
to cease. The second com plaint about taxes is o f course true: the m oney that
is taxed is m oney that otherwise w ould have been available to each person to
spend at his or her ow n discretion. So basically, one is yielding control over
this m oney to some collective body, which is deciding how to spend it.
In point o f fact, most people and most firm s are w illing to be taxed in
order to provide the m inim um services that each person and each firm
thinks w ill serve its interests. But no one is w illing, or ready, to be taxed more
than that. The question is always the location o f the line which separates
legitim ate from illegitimate levels o f taxation. Since persons and firm s have
different interests, they draw the line differently. And since, in addition to
the am ount o f taxes, the state can and does choose am ong a vast array o f
m odes o f taxation, persons and firm s prefer those m odes which affect them
least and others most. It is no w onder then that taxes are certain and that tax

struggles are endem ic to politics in the m odern world. The state cannot be
neutral, but it can certainly affect seriously the benefits that firm s and per
sons will derive from its tax policies.
Finally, we have been discussing the role o f the state in relation to firm s as
though this were a matter internal to the state’s boundaries. But o f course
firms are affected by the decisions not only o f their own state but o f m any
other states, insofar as their goods, capital, or personnel cross or have
crossed state boundaries, a process that is constant and massive. Few firm s
can afford to be indifferent to the policies o f states which are not their own,
in terms o f dom iciliation. The question is how the firm s can deal w ith these
other states. And the answer is in two w ays—directly and indirectly. The
direct w ay is to behave as though they were dom iciled in the other state, and
to use all the m echanism s and argum ents they w ould use with their ow n—
bribery, political pressure, exchange o f advantages. This m ay suffice, but
often the “ foreign” firm is at a considerable disadvantage in the local politi
cal arena. I f the “ foreign” firm is dom iciled in a “ strong” state, it can appeal
to its own state to use state pow er to put pressure on the other state to get it
to accede to the needs and dem ands o f the strong state’s entrepreneurs. And
o f course, this process is central to the life o f the interstate system. In the
last third o f the twentieth century, U.S. m anufacturers o f autom obiles and
steel,and airlines, were not shy about asking the U.S. governm ent to pressure
Japan and western Europe to change their policies in ways that w ould im
prove the position o f U.S. m anufacturers and the access that U.S. air carriers
had to transoceanic traffic rights.
The large m ajority o f the population in any state is accounted for by the
households o f those w ho w ork for the firm s and other organizations. The
capitalist system provides for a certain m ode o f dividing up the surplus-
value that is produced, and obviously at any given m om ent this is a zero-
sum game. The larger the portion allocated to the accum ulation o f capital,
the smaller the one that can be allocated as com pensation for those who
w ork for the production units creating this surplus-value. One o f the basic
realities is that this division o f the surplus-value has some lim its (it cannot
be too percent one w ay and o percent the other), but the gam ut o f possibili
ties in between is very large, certainly in the short run, and even in the longer
run up to a point.
It follows logically that there will be a constant struggle over this alloca
tion o f the surplus-value. This is what has been called the class struggle.
W hatever one feels about the politics o f the class struggle, it is an unavoid
able analytic category, w hich can be verbally disguised but never ignored.
And it is quite clear that in this ongoing class struggle (which is no doubt a
very com plex phenom enon, with no sim ple b inary distribution o f loyalties),
the state is a central actor in shifting the allocation in one direction or the
other. Hence, both sides organize politically to put pressure on the state as
an executive and legislative structure. I f one takes a long view o f the internal
politics o f the m ultiple states throughout the history o f the capitalist w orld-
economy, one can see that it took quite a w hile, several centuries, before the
w orking strata were able to organize themselves sufficiently to play the
political gam e with any m inim al degree o f efficacy.
The historic turning-point was undoubtedly the French Revolution. For
the French Revolution brought about the two fundam ental changes in the
geoculture o f the m odern w orld-system that we have already noted: it m ade
change, political change, into a “ norm al” phenom enon, som ething inherent
in the nature o f things and in fact desirable. This was the political expression
o f the theory o f progress that was so central to Enlightenm ent ideas. And
secondly, the French Revolution reoriented the concept o f sovereignty, from
the m onarch or the legislature to the people. W hen the genie o f the people as
sovereign escaped from the bottle, it w ould never be put back inside. It
becam e the com m on w isdom o f the entire w orld-system .
One o f the central consequences o f the idea that the people were sovereign
is that the people were now defined as “ citizens.” Today, the concept is so
elem entary that we find it hard to understand how radical was the shift from
“ subjects” to “ citizens.” To be a citizen meant to have the right to participate,
on an equal level w ith all other citizens, in the basic decisions o f the state. To
be a citizen m eant that there were no persons with statuses higher than that
o f citizen (such as aristocrats). To be a citizen m eant that everyone was being
accepted as a rational person, capable o f political decision. The logical con
sequence o f the concept o f citizen was universal suffrage. And as we know,
the political history o f the follow ing 150 years was one o f steady expansion o f
the suffrage in country after country.
Today, virtually every country claim s that its citizens are all equal, and
exercise their sovereignty through a system o f universal suffrage. Except we
know that in reality this is not really so. O nly part o f the population exercises
the full rights o f citizenship in m ost countries. For if the people are sov
ereign, we must then decide who falls within the category o f the people, and
many, it turns out, are excluded. There are som e exclusions which seemed
“ obvious” to most people: those w ho are m erely visitors to the country
(aliens); those w ho are too young to have judgm ent; those who are insane.
But what about women? And persons from m inority ethnic groups? A nd
those w ithout property? A nd those who are im prisoned as felons? Once one
starts on the path o f enum erating the exceptions to the term “ people,” the
list can get very long. The “ people,” which began as a concept o f inclusion,
turned rather quickly into a concept o f exclusion.

As a consequence, the politics o f inclusion and exclusion becam e a center
piece o f national politics throughout the follow ing two centuries. Those
who were excluded sought to be included, and those w ho were already
included were most often inclined to keep eligibility for citizens’ rights
defined narrowly, m aintaining the exclusions. This m eant that those who
were seeking inclusion had to organize outside the parliam entary channels
in order for their cause to be heard. That is, quite simply, they had to engage
in dem onstrative, rebellious, som etim es revolutionary activity.
This led to a great strategic debate am ong the pow erful in the early
nineteenth century. On the one hand, there were those whose fears led them
to feel that these m ovem ents had to be suppressed (and indeed the very idea
o f popular sovereignty rejected). T hey called themselves conservatives and
extolled “ trad itional” institutions—the m onarchy, the church, the notables,
the fam ily—as bulwarks against change. But opposed to them was another
group w hich thought that this strategy was doom ed to failure, and that only
by accepting the inevitability o f some change could they lim it the degree and
the speed o f the change. This group called themselves liberals, and they
extolled the educated individual as the m odel citizen and the specialist as the
only person w ho could wisely determ ine the details o f social and political
decisions. T hey argued that all others should slow ly be adm itted to full
citizens’ rights when their education had becom e sufficient to enable them
to make balanced choices. By em bracing progress, the liberals sought to
fram e its definition in such a way that the “ dangerous classes” w ould becom e
less dangerous and those w ith “ m erit” w ould play the key roles in political,
econom ic, and social institutions. There was o f course a third group, the
radicals, w ho w ould associate themselves with the antisystem ic m ovem ents,
indeed lead them for the m ost part.
In this trinity o f ideologies that em erged in the wake o f the French R evo
lution—conservatism , liberalism , and radicalism —it was the centrist liberals
who succeeded in dom inating the scene in the w orld-system , at least for a
very long tim e. Their program o f m odulated change would be enacted
everywhere, and they w ould persuade both the conservatives and the radi
cals to m odulate their positions such that both conservatives and radicals
came in practice to be virtual avatars o f centrist liberalism.
The politics o f all these m ovem ents were affected by the strength o f the
states in w hich they were located. As we know, som e states are stronger than
other states. But what does it m ean to be a strong state internally? Strength
certainly is not indicated by the degree o f arbitrariness or ruthlessness o f the
central authority, although this is a frequent criterion that m any observers
use. D ictatorial behavior by state authorities is m ore often a sign o f weakness
than o f strength. Strength o f states is m ost usefully defined as the ability to
get legal decisions actually carried out. (Rem em ber our earlier example o f
Louis X IV versus a contem porary prim e m inister o f Sweden.) One sim ple
measure that one might use is the percentage o f taxes levied that are actually
collected and reach the taxing authority. Tax evasion is o f course pandem ic.
But the difference between what strong states can collect (somewhere near
80 percent) and what weak states can collect (m ore like 20 percent) is
enorm ous. The lower figure is explained by a weaker bureaucracy, and the
inability to collect taxes in turn deprives the state o f the funds with which to
strengthen the bureaucracy.
The weaker the state, the less wealth can be accum ulated through eco
nom ically productive activities. This consequently makes the state m achin
ery itself a prim e locus, perhaps the prim e locus, o f wealth accum ulation—
through larceny and bribery, at high and low levels. It is not that this does
not occur in strong states—it does—but that in weak states it becomes the
preferred m eans o f capital accum ulation, which in turn weakens the ability
o f the state to perform its other tasks. W hen the state m achinery becomes
the main m ode o f capital accum ulation, all sense o f regular transfer o f office
to successors becom es rem ote, which leads to w ildly falsified elections (if any
are held at all) and ram bunctious transfers o f power, which in turn neces
sarily expands the political role o f the military. States are, in theory, the only
legitimate users o f violence and should possess the m onopoly o f its use. The
police and m ilitary are the prim e vehicle o f this m onopoly, and in theory are
merely instrum ents o f state authorities. In practice, this m onopoly is d i
luted, and the weaker the state, the m ore it is diluted. As a result it is very
difficult for political leaders to m aintain effective control o f the country, and
this in turn increases the tem ptation for the m ilitary to take control o f the
executive directly whenever a regime seems unable to guarantee internal
security. W hat is crucial to note is that these phenom ena are not the result o f
w rong policies but o f the endem ic weakness o f state structures in zones
where the large m ajority o f production processes are peripheral and are
therefore weak sources o f capital accum ulation. In states that have raw
materials which are very lucrative on the w orld market (such as oil), the
incom e available to the states is essentially rent, and here too the actual
control o f the m achinery guarantees that m uch o f the rent can be siphoned
off into private hands. It is no accident then that such states fall frequently
into situations in w hich the m ilitary assumes direct rule.
Finally, we should underline the degree to w hich weakness means the
relative strength o f local notables (barons, w arlords) w ho are able to enforce
their control over non-state regions by control o f som e local m ilitary forces,
com bined often with som e local legitim ation (o f ethnicity or traditional
fam ily or aristocratic dom inance). In the twentieth century, some o f this

local authority came to be acquired by m ovem ents that began as national
antisystemic movem ents and, in the course o f struggle, transm uted them
selves into local fiefdom s. Such local baronies tend to bring out the m afioso
side o f capitalist entrepreneurial activity. M afias are basically predators that
feed on the production process. W hen there are non-m onopolized p ro d
ucts, which are not highly profitable for the individual firm , one o f the few
ways in w hich one can accum ulate large sum s o f capital is to establish a
m onopolistic funnel through which production passes, and to do so by the
use o f non-state force. M afias are notorious for their involvem ent in illegal
products (such as drugs) but are often involved in quite legal form s o f
production activity as well. And m afia-style capitalist activity is o f course
dangerous and inherently life-threatening to the mafias themselves. Hence
historically m afiosi, once successful in accum ulating capital, seek (often in
the very next generation) to launder their m oney and transform themselves
into legal entrepreneurs. But o f course w herever tight state control breaks
down or is lim ited, there are always new m afias that emerge.
One o f the ways in w hich states try to reinforce their authority and to
become stronger and dim inish the role o f m afias is to transform their p o p u
lation into a “ nation.” N ations are to be sure m yths in the sense that they are
all social creations, and the states have a central role in their construction.
The process o f creating a nation involves establishing (to a large degree
inventing) a history, a long chronology, and a presum ed set o f defining
characteristics (even if large segments o f the group included do not in fact
share those characteristics).
We should think o f the concept “ nation-state” as an asym ptote toward
which all states aspire. Som e states claim that they do not, that they are
“ multinational,” but in fact even such states seek to create a pan-state iden
tity. A good exam ple is the Soviet U nion w hich, when it existed, claim ed that
it was m ultinational, but also prom oted the idea o f a “ Soviet” people. The
same is true o f Switzerland or Canada. N ationalism is a status-group iden
tity, perhaps the one most crucial to m aintaining the m odern w orld-system ,
based as it is on a structure o f sovereign states located within an interstate
system. N ationalism serves as the m inim al cement o f state structures. I f one
looks closely, nationalism is not a phenom enon m erely o f weak states. It is in
fact extrem ely strong in the wealthiest states, even if it is publicly invoked less
frequently than in states o f m iddling strength. Once again, the public pur
suit o f nationalist themes on the part o f state leaders should be analyzed as
an attempt to strengthen the state, not evidence that the state is already
strong. Historically, the states have had three m ain m odes o f creating na
tionalism: the state school system, service in the arm ed forces, and public
ceremonies. A ll three are in constant use.
States, as we have em phasized, exist w ithin the fram ew ork o f an interstate
system, and their relative strength is not m erely the degree to w hich they can
effectively exercise authority internally but the degree to w hich they can hold
their heads high in the com petitive environm ent o f the w orld-system . All
states are theoretically sovereign, but strong states find it far easier to “ inter
vene” in the internal affairs o f weaker states than vice versa, and everyone is
aware o f that.
Strong states relate to w eak states by pressuring them to keep their fro n
tiers open to those flows o f factors o f production that are useful and p ro fit
able to firm s located in the strong states, w hile resisting any dem ands for
reciprocity in this regard. In the debates on w orld trade, the United States
and the European U nion are constantly dem anding that states in the rest o f
the w orld open their frontiers to flows o f m anufactures and services from
them. T hey however quite strongly resist opening fully their own frontiers to
flows o f agricultural products or textiles that com pete with their ow n p ro d
ucts from states in peripheral zones. Strong states relate to w eak states by
pressuring them to install and keep in power persons w hom the strong states
find acceptable, and to join the strong states in placing pressures on other
w eak states to get them to conform to the policy needs o f the strong states.
Strong states relate to w eak states by pressuring them to accept cultural
practices—linguistic policy; educational policy, including where university
students m ay study; m edia distribution—that w ill reinforce the long-term
linkage between them. Strong states relate to weak states by pressuring them
to follow their lead in international arenas (treaties, international organiza
tions). And w hile strong states m ay buy o ff the individual leaders o f w eak
states, weak states as states buy the protection o f strong states b y arranging
appropriate flows o f capital.
O f course, the weakest states are those we call colonies, by w hich we m ean
adm inistrative units that are defined as non-sovereign and fall under the
jurisdiction o f another state, norm ally distant from it. The origin o f m odern
colonies is in the econom ic expansion o f the w orld-system . In this expan
sion, strong states at the core tried to incorporate new zones into the p ro
cesses o f the m odern world-system . Som etim es they encountered bureau
cratic units w hich were strong enough to becom e defined as sovereign states
even if not strong enough to stay out o f the expanding w orld-system . But
often the m ilitarily strong states (m ostly located in western Europe, but the
United States, Russia, and Japan m ust be added to the list) encountered areas
where the political structures were quite weak. To ensure the incorporation
o f such areas into the w orld-system in a satisfactory m anner, these areas
were conquered and colonial regim es installed.
The colonies perform ed internally the same kinds o f functions that sov

ereign states perform ed: they guaranteed property rights; they m ade deci
sions about traversal o f boundaries; they arranged m odes o f political par
ticipation (alm ost always extrem ely lim ited); they enforced decisions about
the w orkplaces and often decided on w hat kinds o f production were to be
pursued or favored in the colony. But o f course the personnel w ho m ade
these decisions were overw helm ingly persons sent out by the colonizing
power and not persons o f the local population. The colonial powers justified
their assum ption o f authority and the distribution o f roles to persons from
the “ m etropolitan” country by a com bination o f argum ents: racist argu
m ents about the cultural in feriority and inadequacy o f the local popula
tions; and self-justifying argum ents about the “ civilizing” role the colonial
adm inistration was perform ing.
The basic reality was that the colonial state was sim ply the weakest kind o f
state in the interstate system, with the lowest degree o f real autonom y, and
therefore m axim ally subject to exploitation b y firm s and persons from a
different country, the so-called m etropolitan country. O f course, one o f the
objectives o f the colonizing power was not m erely to ensure its control o f the
production processes in the colony but also to m ake sure that no other
relatively strong state in the w orld-system could have access to the resources
or the markets o f the colony, or at m ost m inim al access. It was therefore
inevitable that at som e point, there should come to be political m obilization
o f the populations o f the colonies in the form o f m ovem ents o f national
liberation, w hose object w ould be defined as obtaining independence (that
is, the status o f a sovereign state) as the first step on the path to im prov
ing the relative position o f the country and its populations in the world-
economy.
However, paying attention only to the relationship o f strong states to weak
states can lead us to neglect the very crucial relation o f strong states to strong
states. Such states are by definition rivals, bearing responsibility to different
sets o f rival firm s. But as in the com petition between large firm s, the com pe
tition between strong states is tempered b y a contradiction. W hile each is
against the other in a sort o f putative zero-sum gam e, they have a com m on
interest in holding together the interstate system, and the m odern world-
system as a whole. So the actors are pushed sim ultaneously in opposite
directions: toward an anarchic interstate system and toward a coherent and
orderly interstate system. The result, as might be expected, is structures that
are norm ally in between the two types.
In this contradictory struggle, we should not neglect the special role o f the
sem iperipheral states. These states, o f intermediate strength, spend their
energy running very fast in order at the very least to stay in their interm edi
ate place, but hoping as well that they may rise on the ladder. They use state
pow er in the internal and interstate arena quite consciously to raise the
status o f their state as a producer, as an accum ulator o f capital, and as a
m ilitary force. Their choice is ultim ately quite sim ple: either they w ill suc
ceed in m oving up the hierarchical ladder (or at least staying put) or they
w ill be pushed down.
T h ey m ust choose their alliances and their econom ic opportunities care
fully and swiftly. For sem iperipheral states are prim arily in com petition with
each other. If, for exam ple, durin g a K ondratieff B-phase there is significant
relocation o f an erstwhile leading industry, it w ill usually go to sem iperiph
eral countries. But not, however, to all o f them; perhaps only to one or two
o f them . There is not enough space in the production structure o f the whole
system to perm it this kind o f relocation (called “ developm ent” ) sim ulta
neously in too m any countries. Which one o f perhaps fifteen countries will
be the locus o f such relocation is not easy to determ ine in advance or even to
explain in retrospect. What is easy to grasp is that not every country can be
so favored, or profits w ould plum m et downward too rapidly and too steeply.
The com petition between strong states and the efforts o f sem iperipheral
states to increase their status and their power result in an ongoing interstate
rivalry which norm ally takes the form o f a so-called balance o f power, by
which one m eans a situation in which no single state can autom atically get
its way in the interstate arena. This does not m ean that the stronger states do
not attem pt to achieve precisely this degree o f power. There are however two
quite different ways in which states m ight realize dom inance. One is to
transform the w orld-econom y into a w orld-em pire. The second is to obtain
what m ay be called hegem ony in the world-system . It is im portant to dis
tinguish the two m odalities, and to understand w hy no state has been able to
transform the m odern w orld-system into a w orld-em pire but several states
have, at different times, achieved hegemony.
By a w orld-em pire we mean a structure in which there is a single political
authority for the whole world-system . There have been several serious at
tempts to create such a w orld-em pire in the last five hundred years. The first
was that o f Charles V in the sixteenth century (continued in weakened form
by his heirs). The -second w as that o f N apoleon at the beginning o f the
nineteenth century. The third was that o f Hitler in the mid-twentieth cen
tury. All were form idable; all were ultim ately defeated and unable to con
sum m ate their goals.
On the other hand, three powers achieved hegemony, albeit for only
relatively b rief periods. The first was the United Provinces (today called the
Netherlands) in the m id-seventeenth century. The second was the United
Kingdom in the m id-nineteenth century. A nd the third was the United
States in the m id-twentieth century. W hat allows us to call them hegem onic

is that for a certain period they were able to establish the rules o f the gam e in
the interstate system, to dom inate the w orld -econom y (in production, co m
merce, and finance), to get their way politically with a m in im al use o f
m ilitary force (w hich however they had in goodly strength), and to fo rm u
late the cultural language w ith w hich one discussed the world.
There are two questions to ask. The first is w hy transform ing the w orld-
econom y into a w orld-em pire was never possible, w hereas achieving hege
m ony within it was. The second is w hy hegem ony never lasted. In a sense,
given all our previous analysis, it is not too difficult to answer these puzzles.
We have seen that the peculiar structure o f a w orld-econom y (a single
division o f labor, m ultiple state structures albeit w ithin an interstate system,
and o f course m ultiple cultures albeit w ith a geoculture) is peculiarly con so
nant with the needs o f a capitalist system. A w orld-em pire, on the other
hand, w ould in fact stifle capitalism , because it would m ean that there was a
political structure with the ability to override a priority for the endless
accum ulation o f capital. This is o f course what had happened repeatedly in
all the w orld-em pires that had existed before the m odern world-system .
Thus, w henever some state seem ed intent on transform ing the system into a
world-em pire, it found that it faced eventually the hostility o f m ost im por
tant capitalist firm s o f the world-econom y.
H ow then could states even achieve hegemony? Hegemony, it turns out,
can be very useful to capitalist firm s, particularly if these firm s are linked p o
litically with the hegem onic power. H egem ony typically occurs in the wake o f
a long period o f relative breakdow n o f w orld order in the form o f “ thirty
years’ w ars” —wars, that is, that im plicate all the m ajor econom ic loci o f the
world-system and have historically pitted an alliance grouped around the
putative constructor o f a w orld-em pire against an alliance grouped around
a putative hegem onic power. H egem ony creates the kind o f stability within
w hich capitalist enterprises, especially m onopolistic leading industries,
thrive. H egem ony is popular with o rd in ary people in that it seems to guaran
tee not m erely order but a m ore prosperous future for all.
W hy not then hegem ony forever? As with quasi-m onopolies in produc
tion, quasi-absolute pow er in hegem onies self-destructs. To becom e a hege
m onic power, it is crucially im portant to concentrate on efficiencies o f
production w hich lay the base fo r the hegem onic role. To m aintain hege
mony, the hegem onic power m ust divert itself into a political and m ilitary
role, which is both expensive and abrasive. Sooner o r later, usually sooner,
other states begin to im prove their econom ic efficiencies to the point where
the hegem onic pow er’s superiority is considerably dim inished, and even
tually disappears. W ith that goes its political clout. A nd it is now forced to
actually use its m ilitary power, not m erely threaten to do so, and its use o f
m ilitary pow er is not only the first sign o f weakness but the source o f further
decline. The use o f “ im perial” force underm ines the hegem onic pow er eco
n om ically and politically, and is w idely perceived as a sign not o f strength
but o f weakness, first externally then internally. Far from defining the w orld
cultural language, a declining hegem onic power begins to find its preferred
language out o f date and no longer readily acceptable.
As a hegem onic power declines, there are always others w ho attem pt to
replace it. But such replacem ent takes a long tim e, and ultim ately another
“ thirty years' war.” Hence hegem ony is crucial, repeated, and always rela
tively brief. The capitalist w orld -econ om y needs the states, needs the inter
state system, and needs the periodic appearance o f hegem onic powers. But
the priority o f capitalists is never the m aintenance, m uch less the g lo ri
fication, o f any o f these structures. The p rio rity rem ains always the en d
less accum ulation o f capital, and this is best achieved b y an ever-shifting
set o f political and cultural dom inances w ithin w hich capitalist firm s m a
neuver, obtaining their support from the states but seeking to escape their
dom inance.

5 T h e M o d e rn W o rld -S y s te m in C risis
Bifurcation, Chaos, and Chokes
We h a v e s a id that historical systems have lives. T hey com e into existence

at some point in time and space, for reasons and in ways that we can analyze.
I f they survive their birth pangs, they pursue their historical life w ithin the
fram ew ork and constraints o f the structures that constitute them, follow ing
their cyclical rhythm s and trapped in their secular trends. These secular
trends inevitably approach asym ptotes that aggravate considerably the inter
nal contradictions o f the system: that is, the system encounters problem s it
can no longer resolve, and this causes what we m ay call systemic crisis. M ost
often, people use the word crisis loosely, sim ply to mean a difficult period in
the life o f any system. But whenever the difficulty can be resolved in some
way, then there is not a true crisis but sim ply a difficulty built into the
system. True crises are those difficulties that cannot be resolved w ithin the
fram ew ork o f the system, but instead can be overcom e only by going outside
o f and beyond the historical system o f which the difficulties are a part. To
use the technical language o f natural science, what happens is that the
system bifurcates, that is, finds that its basic equations can be solved in two
quite different ways. We can translate this into everyday language b y saying
that the system is faced with two alternative solutions for its crisis, both
o f which are intrinsically possible. In effect, the m em bers o f the system col
lectively are called upon to make a historical choice about which o f the
alternative paths will be follow ed, that is, what kind o f new system w ill be
constructed.
Since the existing system can no longer function adequately w ithin its
defined param eters, m aking a choice about the w ay out, about the future
system (or systems) w hich are to be constructed, is inevitable. But which
choice the participants collectively will m ake is inherently unpredictable.
The process o f bifurcating is chaotic, w hich m eans that every small action
during this period is likely to have significant consequences. We observe that
under these conditions, the system tends to oscillate wildly. But eventually it
leans in one direction. It n orm ally takes quite som e tim e before the defini
tive choice is m ade. We can call this a period o f transition, one whose
outcom e is quite uncertain. At som e point, however, there is a clear outcome
and then we find ourselves ensconced in a different historical system.
The m odern w orld-system in w hich we are living, which is that o f a
capitalist w orld-econonry, is currently in precisely such a crisis, and has been
for a w hile now. This crisis m ay go on another twenty-five to fifty years.
Since one central feature o f such a transitional period is that we face wild
oscillations o f all those structures and processes we have com e to know as an
inherent part o f the existing w orld-system , we find that our short-term
expectations are necessarily quite unstable. This instability can lead to con
siderable anxiety and therefore violence as people try to preserve acquired
privileges and hierarchical rank in a very unstable situation. In general, this
process can lead to social conflicts that take a quite unpleasant form.
When did this crisis start? Geneses o f phenom ena are always the most
debatable topic in scientific discourse. For one can always find forerunners
and forebodings o f alm ost anything in the near past, but also o f course in the
very far past. One plausible m om ent at which to start the story o f this
contem porary system ic crisis is the world revolution o f 1968, which unset
tled the structures o f the w orld-system considerably. This world revolution
m arked the end o f a long period o f liberal supremacy, thereby dislocating
the geoculture that had kept the political institutions o f the world-system
intact. A nd dislocating this geoculture unhinged the underpinnings o f the
capitalist w orld-econom y and exposed it to the full force o f political and
cultural shocks to which it had always been subject, but from which it had
previou sly been som ewhat sheltered.
The shock o f 1968 to w hich we shall return is not, however, enough to
explain a crisis in the system. There have to have been long-existing struc
tural trends w hich were beginning to reach their asym ptotes, and therefore
made it no longer possible to overcom e the repeated difficulties into which
any system gets itself because o f its cyclical rhythms. O nly when we have
perceived what these trends are and w hy the recurrent difficulties can no
longer be easily resolved can vve then understand w hy and how the shock of
1968 precipitated an unraveling o f the geoculture w hich had been binding
the system together.
The M odern W orld-System in Crisis 77

In the ceaseless quest for accum ulation, capitalists are constantly seeking
ways o f increasing the sales prices o f their products and reducing the costs o f
production. Producers cannot how ever arbitrarily raise sales prices to just
any level. They are constrained by two considerations. The first is the exis
tence o f com petitive sellers. This is w hy the creation o f oligopolies is so
im portant, because they reduce the num ber o f alternative sellers. The sec
ond is the level o f effective dem and—how m uch m oney buyers have in
total—and the choices that consum ers m ake because their buying-pow er is
limited.
The level o f effective dem and is affected prim arily by the w orld distribu
tion o f incom e. O bviously, the m ore m oney each buyer has, the m ore he or
she can buy. This sim ple fact creates an inherent and continuing dilem m a
for capitalists. On the one hand, they want as m uch profit as possible, and
therefore wish to m inim ize the am ount o f surplus that goes to anyone else,
for exam ple their em ployees. On the other hand, at least some capitalists
must allow for som e redistribution o f the surplus-value created, or there
w ould norm ally be too few buyers overall for the products. So, interm it
tently at least som e producers in fact favor increased rem uneration for
em ployees to create a higher effective dem and.
Given the level o f effective dem and at any given tim e, the choices that
consum ers make are decided by what econom ists call the elasticity o f de
mand. T his refers to the value that each buyer places on alternate uses o f his
or her money. Purchases vary in the eyes o f the buyer from the indispensable
to the totally optional. These valuations are the result o f an interplay be
tween individual psychologies, cultural pressures, and physiological require
ments. T he sellers can only have a lim ited im pact on the elasticity o f de
m and, although m arketing (in the broadest sense) is designed precisely to
affect consum er choice.
The net consequence for the seller is that the seller can never raise the
price to a level where (a) com petitors can sell m ore cheaply, (b) buyers do
not have the m oney to purchase the product, or (c) buyers are not ready to
allocate that m uch o f their m oney to the purchase. Given the inbuilt ceiling
to sales price levels, producers usually spend m ost o f their energy in the
effort to accum ulate capital in finding ways to reduce the costs o f produc
tion, som ething w hich is often term ed efficiency o f production. To under
stand what is happening in the contem porary w orld-system , we have to look
at the reasons why the costs o f production have been rising w orldw ide over
time despite all the efforts o f producers, thereby reducing the m argin b e
tween the costs o f production and the possible sales prices. In other words,
we need to understand why there has been a grow ing squeeze on the average
w orldwide rate o f profits.
There are three m ain costs o f production for any producer. The producer
m ust rem unerate the personnel w ho w ork in the enterprise. The producer
m ust purchase the inputs o f the production process. A nd the producer must
pay the taxes that are levied by any and all governm ental structures which
have the authority to levy them on the particular production process. We
need to exam ine each o f these three costs in turn, and in particular to see
w h y each has been steadily rising over the longue durée o f the capitalist
w orld-econom y.
H ow does an em ployer decide how much to rem unerate an employee?
There m ay be laws, which set m inim um levels. There are certainly custom
ary wages at any given time and place, although these are subject to constant
revision. Basically, the em ployer w ould almost always like to offer a figure
lower than the em ployee w ould like to receive. Producer and worker negoti
ate about this; they struggle over this question, constantly and repeatedly.
The outcom e o f any such negotiation or struggle depends on the strengths
o f each side—econom ic, political, and cultural.
Em ployees may grow stronger in the bargaining because their skills are
rare. There is always a supply-and-dem and element in determ ining levels o f
rem uneration. O r the em ployees m ay grow stronger because they organize
w ith each other and engage in syndical action. This applies not only to the
production w orkers (both skilled technicians and unskilled workers) but
also to m anagerial personnel (both senior m anagers and m iddle-level cad
res). This is the part o f the question o f econom ic strength internal to each
productive enterprise. There is also an external part. The overall state o f the
economy, locally and w orldw ide, determines the level o f unem ploym ent and
therefore how desperate each side o f each production unit is to come to a
rem uneration arrangem ent.
The political strengths derive from a com bination o f the political m achin
ery and arrangem ents in the state-structure, the strength o f syndical orga
nization by the w orkers, and the degree to which employers need to secure
the support o f m anagers and m iddle-level cadres to hold off the demands
o f ordinary workers. And what we m ean by cultural strength—the m ores o f
the local and national com m u nity—is usually the result o f prior political
strengths.
In general, in any production area the syndical pow er o f workers w ill tend
to increase over time, by dint o f organization and education. Repressive
m easures may be used to lim it the effects o f such organization, but then
there are costs attached to this too—perhaps higher taxes, perhaps higher
rem uneration to cadres, perhaps the need to em ploy and pay for repres
sive personnel. If one looks at the m ost profitable loci o f p ro d u c tio n -
oligopolistic firms in leading sectors—there is a further factor at play, in that

highly profitable firm s do not w ish to lose production time because of
w orkers’ discontent. A s a result, rem uneration costs in such firm s tend to
rise as tim e goes on, but sooner or later these same production units com e to
face increased com petition and therefore m ay need to restrain price in
creases, resulting in lower rates o f profit.
There is only one significant counter to the consequent creeping rise in
rem uneration costs—runaw ay factories. B y m oving production to places
where the current costs o f production are much lower, the em ployer not
only gets lower costs o f rem uneration but gains political strength in the zone
out o f which the enterprise is partially m oving, in that existing employees
m ay be w illing to accept lower rates o f rem uneration to prevent further
“ flight” o f jobs. O f course, there is a negative in this for the employer. If there
weren’t, the production site w ould have m oved much earlier. There are the
costs o f m oving. And in these other zones, the transaction costs are norm ally
higher—because o f the increased distance from eventual custom ers, poorer
infrastructure, and higher costs o f “ corruption” —that is, unavowed re
m uneration to non-em ployees.
The trad e-off between rem uneration costs and transactions costs plays
itself out in a cyclical manner. Transactions costs tend to be the prim ary
consideration in tim es o f econom ic expansion (K on dratieff A-phases) while
rem uneration costs are the p rim ary consideration in tim es o f econom ic
stagnation (B-phases). Still, one has to ask w hy there exist zones o f lower
rem uneration at all. The reason has to do with the size o f the non-urban
population in a given country or region. W herever the non-urban popu la
tion is large, there are large pockets o f persons w ho are partially, even largely,
outside the wage-econom y. Or changes in land use in the rural areas are
forcing some persons to leave. For such persons, the opportunity o f wage-
em ploym ent in urban areas usually represents a significant increase in the
overall incom e o f the household o f which they are a part, even if the wages
are significantly below the worldwide norm o f rem uneration. So, at least
at first, the entry o f such persons into a local w age-force is a w in-w in
arrangem ent—lower costs o f rem uneration for the employer, higher income
for the employees. Wages are lower there not only for unskilled workers but
for cadres as well. Peripheral zones usually are lower-price, lower-am enity
zones and the wages o f cadres are accordingly below the norm o f core zones.
The problem is that the political strengths o f em ployer and employee are
not fixed in stone. They evolve. I f at first the newly urbanized employees
have difficulty adjusting to urban life and are unaware o f their potential
political strengths, this state o f ignorance does not last forever. Certainly,
within twenty-five years the em ployees or their descendants becom e ad
justed to the realities of the new situation and becom e aware o f the low level
o f their rem uneration in term s of w orld norm s. The reaction is to begin to
engage in syndical action. The em ployer then rediscovers the conditions
from which the enterprise had sought to escape by m oving its production
operation in the first place. Eventually, in a future period o f econom ic
dow nturn, the producer m ay again try the “ runaw ay factory” tactic.
Over time, however, the num ber o f zones in which this p articular solution
to rising rem uneration costs can be effectuated in the capitalist w orld-
econom y has becom e ever fewer. The w orld has been deruralizing, in large
part precisely because o f this m ode o f restraining rem uneration costs by
relocating production processes. In the last h alf o f the twentieth century,
there was a radical reduction in the share o f the w orld population that lives
in rural areas. A n d the first h alf o f the twenty-first century threatens to
elim inate the rem aining pockets o f serious rural concentration. When there
are no zones into which the factories can run away, there w ill be no w ay to
reduce seriously the levels o f rem uneration for em ployees worldwide.
The steadily rising level o f rem uneration is not the only problem which
producers are facing. The second is the cost o f inputs. By inputs, I include
both m achinery and m aterials o f production (whether these are so-called
raw m aterials or sem i-finished and finished products). The producer o f
course buys these on the market and pays what must be paid for them. But
there are three hidden costs for which producers do not necessarily pay.
They are the costs o f disposal o f waste (especially toxic m aterials), the costs
o f renewing raw m aterials, and what are genericallv called infrastructural
costs. The ways o f evading these costs are m anifold, and not paying for these
costs has been a m ajor element in keeping down the cost o f inputs.
The p rim ary m ode o f m inim izing the costs o f disposal is dum ping, that is,
placing waste in som e public area with m inim al or no treatm ent. W hen
these are toxic m aterials, the result, in addition to clutter, is noxious con
sequences for the ecosphere. At som e point, the consequences o f clutter and
noxious effects becom e perceived as a social problem , and the collectivity
is forced to address it. But clutter and noxious effects behave a bit like
the absence o f rural zones nearby. A producer can always m ove on to a new
area, thereby elim inating the problem, until these “ unspoiled” areas are
exhausted. W orldwide, this is what has been happening in the capitalist
w orld-econom y. It is only really in the second h alf o f the twentieth century
that the potential exhaustion o f dum ping grounds has com e to be perceived
as a social problem .
The problem o f renewal o f raw m aterials is a parallel problem . The p u r
chaser o f raw materials is norm ally uninterested in their long-run avail
ability. A nd sellers are notoriously ready to subordinate long-run viability to
short-run gains. O ver five hundred years, this has led to successive exhaus

tions and increases in the costs o f obtaining such resources. These trends
have only partially been counteracted b y technological advances in creating
alternative resources.
The two exhaustions—o f dum ping space and natural resources—have
becom e the subject o f a m ajor social m ovem ent o f environm entalists and
Greens in recent decades, w ho have sought governm ental intervention to
meet collective needs. To meet these needs however requires m oney, a great
deal o f money. W ho w ill pay? There are only two real possibilities—the
collectivity, through taxation, and the producers w ho use the raw m ate
rials. To the extent that the producers are being required to pay for them —
econom ists call this internalization o f costs—the costs o f production are
rising for individual producers.
Finally, there is the issue o f infrastructure, a term w hich refers to all those
physical institutions outside the production unit w hich form a necessary
part o f the production and distribution process—roads, transport services,
com m unications networks, security systems, water supply. These are costly,
and ever more costly. Once again, w ho is footing the bill? Either the collec
tivity, w hich m eans taxation, or the in dividual firm s, w hich means increased
costs. It should be noted that to the degree the infrastructure is privatized,
the bill is paid by the individual firm s (even if other firm s are m aking profits
out o f operating the infrastructure, and even if individual persons are pay
ing increased costs for their own consum ption).
The pressure to internalize costs represents for productive firm s a signifi
cant increase in the costs o f production w hich, over tim e, has m ore than
overcom e the cost advantages that im provem ents in technology have made
possible. And this internalization o f costs om its the grow ing problem that
these firm s are having as a result o f penalties im posed by the courts and
legislatures for damages caused by past negligence.
The third cost that has been rising over tim e is that o f taxation. Taxes are a
basic elem ent in social organization. There have always been and always will
be taxes o f one sort or another. But who pays, and how m uch, is the subject
o f endless political struggle. In the m odern w orld-system , there have been
two basic reasons for taxation. One is to provide the state structures with the
m eans to offer security services (arm ies and police forces), build infrastruc
ture, and em ploy a bureaucracy w ith which to provide public services as well
as collect taxes. These costs are inescapable, although obviously there can be
strong and w ide differences in view s as to w hat should be spent and how.
There is however a second reason to tax, which is m ore recent (it has
arisen only in the last century to any significant degree). This second reason
is the consequence o f political dem ocratization, which has led to dem ands
b y the citizenry on the states to provide them with three m ajor benefits,
w hich have com e to be seen as entitlements: education, health, and guaran
tees o f lifetim e incom e. W hen these benefits were first provided in the
nineteenth century, state expenditures were quite sm all and only existed in a
few countries. Throughout the twentieth century, the definition o f what the
states were expected to provide and the num ber o f states w hich provided
som ething steadily grew in each o f these dom ains. It seems virtually im pos
sible today to push the level o f expenditures back in the other direction.
As a result o f the increasing cost (not m erely in absolute terms but as a
proportion o f w orld surplus) o f provid ing security, building infrastructure,
and offering the citizenry benefits in education, health, and lifetim e guaran
tees o f incom e, taxation as a share o f total costs has been steadily rising for
productive enterprises everywhere, and w ill continue to rise.
Thus it is that the three costs o f p roduction— rem uneration, inputs, and
taxation—have all been rising steadily over the past five hundred years and
particularly over the past fifty years. O n the other hand, the sales prices have
not been able to keep pace, despite increased effective dem and, because o f a
steady expansion in the num ber o f producers and hence o f their recurring
inability to m aintain oligopolistic conditions. This is what one means by a
squeeze on profits. To be sure, producers seek to reverse these conditions
constantly, and are doing so at present. To appreciate the lim its o f their
ability to do so, we must return to the cultural shock o f 1968.
The w orld-econom y in the years after 1945 saw the largest expansion o f
productive structures in the history o f the m odern world-system . All the
structural trends o f which we have been speaking—costs o f rem uneration,
costs o f inputs, taxation—took a sharp upward turn as a result. At the same
tim e, the antisystem ic m ovem ents, w hich we previou sly discussed, made
extraordinary progress in realizing their im m ediate objective—com ing to
power in the state structures. I11 all parts o f the world, these movements
seemed to be achieving step one o f the two-step program . In a vast northern
area from central Europe to East Asia (from the Elbe to the Yalu Rivers),
C om m unist parties governed. In the pan-European world (western Europe,
N orth Am erica, and Australasia), social dem ocratic parties (or their equiva
lents) were in power, or at least in alternating power. In the rest o f Asia and
m ost o f A frica, national liberation m ovem ents had come to power. And in
Latin Am erica, nationalist/populist m ovem ents gained control.
The years after 1945 thus became a period o f great optim ism . The eco
nom ic future seem ed bright, and p opular m ovem ents o f all kinds seemed to
be achieving their objectives. A nd in Vietnam , a little country struggling for
its independence seemed to be holding the hegem onic power, the United

States, in check. The m odern world-system had never looked so good to so
m any people, a sentim ent that had an exhilarating effect, but in m any ways
also a very stabilizing effect.
Nonetheless, there was an underlying and grow ing disillusion with pre
cisely the popular movem ents in power. The second step o f the two-step
form ula—change the w orld—seemed in practice m uch further from realiza
tion than m ost people had anticipated. Despite the overall econom ic growth
o f the world-system , the gap between core and p eriphery had becom e greater
than ever. And despite the com ing to power o f the antisystem ic m ovem ents,
the great participatory élan o f the period o f m obilization seemed to die out
once the antisystem ic m ovem ents cam e to pow er in any given state. New
privileged strata emerged. O rdinary people were now being asked not to
make m ilitant dem ands on what was asserted to be a governm ent that
represented them. W hen the future becam e the present, m any previously
ardent m ilitants o f the m ovem ents began to have second thoughts, and
eventually began to dissent.
It was the com bination o f long-existing anger about the w orkings o f the
world-system and disappointm ent with the capacity o f the antisystemic
m ovem ents to transform the world that led to the world revolution o f 1968.
The explosions o f 1968 contained two themes repeated virtually everywhere,
whatever the local context. One was the rejection o f U.S. hegem onic power,
sim ultaneously with a com plaint that the Soviet U nion, the presum ed antag
onist o f the United States, was actually colluding in the world order that the
United States had established. A nd the second was that the traditional anti
systemic m ovem ents had not fulfilled their promises once in power. The
com bination o f these com plaints, so w idely repeated, constituted a cultural
earthquake. The m any uprisings were like a phoenix and did not put the
multiple revolutionaries o f 1968 in power, or not for very long. But they
legitimated and strengthened the sense o f disillusionm ent not only with
the old antisystem ic m ovem ents but also with the state structures these
m ovem ents had been fortifying. The long-term certainties o f evolutionary
hope had becom e transform ed into fears that the w orld-system m ight be
unchanging.
This shift in w orldw ide sentim ent, far from reinforcing the status quo,
actually pulled the political and cultural supports from under the capitalist
world-econom y. No longer would oppressed people be sure that history was
on their side. No longer could they therefore be satisfied with creeping
im provem ents, in the belief that these w ould see fruiiion in the lives o f their
children and grandchildren. No longer could they be persuaded to postpone
present com plaints in the name o f a beneficent future. In short, the multiple
producers o f the capitalist w orld-econom y had lost the m ain hidden sta
bilizer o f the system , the optim ism o f the oppressed. And this o f course came
at the very worst m om ent, when the squeeze on profits was beginning to be
felt in a serious way.
The cultural shock o f 1968 unhinged the automatic dominance of the
liberal center, w hich had prevailed in the world-system since the prior world
revolution o f 1848. The right and the left were liberated from their role as
avatars o f centrist liberalism and were able to assert, or rather reassert, their
more radical values. The world-system had entered into the period o f transi
tion, and both right and left were determ ined to take advantage o f the
increasing chaos to ensure that their values w ould prevail in the new system
(or systems) that w ould eventually emerge from the crisis.
The im m ediate effect o f the w orld revolution o f 1968 seemed to be a
legitim ation o f left values, m ost notably in the dom ains o f race and sex.
Racism has been a pervasive feature o f the m odern world-system for all o f
its existence. To be sure, its legitim acy has been called into question for
two centuries. But it was only after the world revolution o f 1968 that a w ide
spread cam paign against racism —one led by the oppressed groups them
selves, as distinguished from those previously led prim arily by liberals
am ong the dom inant strata—becam e a central phenom enon on the world
political scene, taking the form both o f actively militant “ m inority” identity
m ovem ents everywhere and o f attempts to reconstruct the world o f know l
edge, to make the issues deriving from chronic racism central to intellectual
discourse.
Along w ith the debates about racism, it would have been hard to miss the
centrality o f sexuality to the world revolution o f 1968. Whether we are
speaking o f policies related to gender or to sexual preferences, and even
tually to transgender identity, the impact o f 1968 was to bring to the fore
front what had been a slow transform ation o f sexual mores in the preceding
half-century and allow it to explode onto the world social scene, with enor
m ous consequences tor the law, for custom ary practice, for religions, and for
intellectual discourse.
The traditional antisystenric m ovem ents had emphasized prim arily the
issues o f state power and o f econom ic structures. Both issues receded som e
what in the m ilitant rhetoric o f 1968 because o f the space given the issues of
race and sexuality. This posed a real problem for the world right. Geopoliti
cal and econom ic issues were easier for the world right to deal with than the
sociocultural issues. This was because o f the position o f the centrist liberals,
who were hostile to any underm ining o f the basic political and econom ic
institutions o f the capitalist w orld-econom y, but were latent, if less militant,
supporters o f the sociocultural shifts advocated by the militants in the revo
lutions o f 1968 (and afterward). As a result, the post-1968 reaction was

actually split, between on the one hand an Establishm ent attem pt to restore
order and solve som e o f the im m ediate difficulties o f the em erging profit
squeeze and on the other a m ore narrow ly based but m uch more ferocious
cultural counterrevolution. It is im portant to distinguish the two sets o f
issues and therefore the two sets o f strategic alignm ents.
As the w orld-econom y entered at this time into a long K ondratieff
B-phase, the coalition o f centrist and rightist forces attem pted to roll back
rising costs o f production in all three com ponents o f costs. They sought to
reduce rem uneration levels. T h ey sought to re-externalize the costs o f in
puts. They sought to reduce taxation for the benefit o f the welfare state
(education, health, and lifetim e guarantees o f incom e). This offensive took
m any form s. The center abandoned the theme o f developm entalism (as a
m ode o f overcom ing global polarization) and replaced it w ith the theme o f
globalization, w hich called essentially for the opening o f all frontiers to
the free flow o f goods and capital (but not o f labor). The Thatcher regim e in
the United K ingdom and the Reagan regime in the United States took the
lead in prom oting these policies, which were called “ neoliberalism ” as the
ory and “ the W ashington consensus” as policy. The World Econom ic Forum
at Davos was the locus for prom oting the theory, and the International
M onetary Fund ( i m f ) and the newly established World Trade O rganization
(w t o ) became the chief enforcers o f the W ashington consensus.
The econom ic difficulties faced by governm ents everywhere from the
1970s onw ard (particularly in the South and in the form er com m unist zone)
m ade it extrem ely difficult for these states, governed by old antisystem ic
m ovem ents, to resist the pressures for “ structural adjustm ent” and opening
frontiers. As a result, a lim ited am ount o f success in rolling back costs o f
production w orldw ide was achieved, but a success far below what the pro
m oters o f such policies had hoped for, and far below what was necessary to
end the squeeze on profits. M ore and m ore, capitalists sought profits in the
arena o f financial speculation rather than in the arena o f production. Such
financial m anipulations can result in great profits for som e players, but it
renders the w orld-econom y very volatile and subject to swings o f currencies
and o f em ploym ent. It is in fact one o f the signs o f increasing chaos.
In the world political arena, the world political left would increasingly
make electoral objectives secondary, and began the organization rather o f a
“ m ovem ent o f m ovem ents” —what has com e to be identified w ith the World
Social Forum ( w s f ), which met initially in Porto Alegre and is often re
ferred to by that sym bol. The w s f is not an organization, but a meeting-
ground o f m ilitants o f m any stripes and persuasions, engaging in a variety o f
actions from collective dem onstrations that are w orldw ide or regional to
local organizing across the globe. Their slogan, “ another w orld is possible,”
is expressive o f their sense that the w orld-system is in a structural crisis, and
that political options are real. The w orld is facing increasingly a struggle 011
m any fronts between the spirit o f Davos and the spirit o f Porto Alegre.
T he dram atic attack b y O sam a bin Laden on the Twin Towers 011 Septem
ber 11, 2001, m arked a further indication o f w orld political chaos and a
turning-point in political alignm ents. It allowed those on the right who
w ished to cut their links with the center to pursue a program centered
around unilateral assertions b y the U nited States o f m ilitary strength com
bined with an attem pt to undo the cultural evolution o f the w orld-system
that occurred after the w orld revolution o f 1968 (particularly in the fields o f
race and sexuality). In the process, they have sought to liquidate m any o f the
geopolitical structures set in place after 1945, which they have seen as con
straining their politics. But these efforts threatened to worsen the already-
increasing instability in the w orld-system .
This is the em pirical description o f a chaotic situation in the world-
system. W hat can we expect in such a situation? The first thing to emphasize
is that we can expect, we are already seeing, w ild fluctuations in all the
institutional arenas o f the w orld-system . The w orld-econom y is subject to
acute speculative pressures, w hich are escaping the control o f m ajor finan
cial institutions and control bodies, such as central banks. A high degree o f
violence is erupting everywhere in smaller and larger doses, and over rela
tively long periods. N o one has any longer the pow er to shut down such
eruptions effectively. The m oral constraints traditionally enforced both by
states and b y religious institutions are finding their efficacity considerably
dim inished.
On the other hand, just because a system is in crisis does not mean that it
does not continue to try to function in its accustom ed ways. It does. Insofar
as the accustom ed ways have resulted in secular trends that are approaching
asym ptotes, continuing in custom ary ways sim ply aggravates the crisis. Yet
continuing to act in custom ary ways w ill probably be the mode o f behavior
o f m ost people. It makes sense in the very short run. The custom ary ways are
the fam iliar ways, and they prom ise short-run benefits, or they w ould not be
the custom ary ways. Precisely because the fluctuations are wilder, most
people will seek their security by persisting in their behavior.
To be sure, all sorts o f people w ill seek m iddle-run adjustm ents to the
system, which they w ill argue will m itigate the existing problems. This too is
a custom ary pattern, and in the m em ory o f m ost people one that lias worked
in the past and should therefore be tried again. The problem is that in a
systemic crisis, such m iddle-run adjustm ents have little effect. This is after
all what we said defined a systemic crisis.
A nd others w ill seek to pursue m ore transform ative paths, often in the

guise o f m iddle-run adjustm ents. They are hoping to take advantage o f the
wild swings o f the period o f transition to encrust m ajor changes in operat
ing m odes, which w ill push the process toward one side o f the bifurcation. It
is this last form o f behavior which w ill be the m ost consequential. In the
present situation, it is the one to w hich we referred as the struggle between
the spirit o f Davos and the spirit o f Porto Alegre. This struggle is perhaps not
yet at the center o f most people’s attention. And o f course, m any m ost active
in the struggle m ay find it useful to divert attention from the intensity o f the
struggle and its real stakes, in the hope o f achieving som e o f their objectives
w ithout arousing the opposition which the open proclam ation o f these
objectives m ight arouse.
There is only so m uch that can be said about a struggle that is just
beginning to unfold, one o f whose central characteristics is the total uncer
tainty o f its outcom e, and another o f w hose characteristics is the opacity o f
the struggle. O ne m ight think o f it as a clash o f fundam ental values, even o f
“ civilizations,” just as long as we don’t identify the two sides with exist
ing peoples, races, religious groups, o r other historic groupings. The key
element o f the debate is the degree to which any social system, but in this
case the future one we are constructing, will lean in one direction or the
other on two long-standing central issues o f social organization—liberty and
equality—issues that are m ore closely intertw ined than social thought in the
m odern world-system has been w illing to assert.
The issue o f liberty (or “dem ocracy” ) is surrounded by so m uch hyper
bole in our m odern w orld that it is som etim es hard to appreciate what the
underlying issues are. We m ight find it useful to distinguish between the
liberty o f the m ajority and the liberty o f the m inority. The liberty o f the
m ajority is located in the degree to which collective political decisions reflect
in fact the preferences o f the m ajority, as opposed to those o f sm aller groups
who may in practice control the decision-m aking processes. This is not
merely a question o f so-called free elections, although 110 doubt regular,
honest, open elections are a necessary i f far from sufficient part o f a dem o
cratic structure. Liberty o f the m ajority requires the active participation o f
the majority. It requires access to inform ation on the part o f the m ajority. It
requires a m ode o f translating m ajority view s o f the populace into m ajority
view s in legislative bodies. It is doubtful that any existing state w ithin the
m odern w orld-system is fully dem ocratic in these senses.
The liberty o f the m inority is a quite different matter. It represents the
rights o f all individuals and groups to pursue their preferences in all those
realms in w hich there is no justification for the m ajority to im pose its
preferences on others. In principle, m ost states in the m odern world-system
have given lip service to these rights to exem ption from m ajority prefer
ences. Som e have even lauded the concept not m erely as a negative protec
tion but as a positive contribution to the construction o f a historical system
of m any different strands. The traditional antisystem ic movements placed
priority on what we are calling the liberty o f the m ajority. The world revolu
tionaries o f 1968 placed great em phasis rather on expanding the liberty o f
the m inorities.
Even if we assume that everyone is in fact in favor o f liberty, which is a
rash assum ption, there is the enorm ous and never-ending difficulty o f de
ciding w hat is the line between the liberty o f the m ajority and the liberty
o f the m inorities—that is, in what spheres and issues one or the other
takes precedence. In the struggle over the system (or systems) that will
succeed our existing w orld-system , the fundam ental cleavage will be be
tween those w ho wish to expand both liberties—that o f the m ajority and
that o f the m inorities—and those w ho w ill seek to create a non-libertarian
system under the guise o f preferring either the liberty o f the m ajority or the
liberty o f the m inorities. In such a struggle, it becom es clear what the role o f
opacity is in the struggle. O pacity leads to confusion, and this favors the
cause o f those w ho w ish to lim it liberty.
Equality is often posed as a concept in conflict with that o f liberty, espe
cially if we m ean relative equality o f access to material goods. In fact, it is the
reverse side o f the same coin. To the degree that m eaningful inequalities
exist, it is inconceivable that equal w eight be given to all persons in assessing
the preferences o f the m ajority. A n d it is inconceivable that the liberty o f the
m inorities w ill be fully respected if these m inorities are not equal in the eyes
o f everyone—equal socially and econom ically in order to be equal politically.
W hat the emphasis on equality as a concept does is point to the necessary
positions o f the m ajority to realize its own liberty and to encourage the
liberty o f the m inorities.
In constructing the successor system (or systems) to our existing one, we
shall be opting either fo r a hierarchical system bestowing or perm itting
privileges according to rank in the system, however this rank is determined
(including m eritocratic criteria), or for a relatively dem ocratic, relatively
egalitarian system. O ne o f the great virtues o f the existing w orld-system is
that although it has not resolved any o f these debates—far from it!—it has
increasingly brought the debate to the fore. There is little question that
across the world, people are m ore fully aware o f these issues today than a
century ago, not to speak o f five centuries ago. T hey are m ore aware, m ore
w illing to struggle for their rights, m ore skeptical about the rhetoric o f
the pow erful. H owever polarized the existing system, this at least is a p osi
tive legacy.
The period o f transition from one system to another is a period o f great

struggle, o f great uncertainty, and o f great questioning about the structures
o f knowledge. We need first o f all to try to understand clearly w hat is going
on. We need then to m ake o u r choices about the directions in w hich we want
the w orld to go. A n d we m ust finally figure out how we can act in the present
so that it is likely to go in the direction we prefer. We can think o f these three
tasks as the intellectual, the m oral, and the political tasks. They are different,
but they are closely interlinked. N one o f us can opt out o f any o f these tasks.
If we claim we do, we are m erely m aking a hidden choice. The tasks before us
are exceptionally difficult. B ut they offer us, individually and collectively, the
possibility o f creation, or at least o f contributing to the creation o f som e
thing that m ight fulfill better our collective possibilities.
GLOSSARY
T h is is a g lo s s a r y o f term s u se d in this b o o k . A g lo s s a r y o f c o n c e p ts is n o t a d ic tio n a ry . T h e re

e xists n o d e fin itiv e m e a n in g fo r m o st o f these te rm s. T h e y are q u ite re g u la rly d efin ed a n d used
d iffe re n tly b y d ifferen t sch o la rs. T h e p a r tic u la r u sage is o fte n b ased o n d ifferen t u n d e rly in g
a ss u m p tio n s o r th e o riz in g s. W h a t w e h a ve h ere are te rm s I-tfce a n d the w ays in w h ich I use
th em . S o m e o f m y u sag es are s ta n d a rd . B u t in s o m e cases, m y u sage m a y be s ig n ific a n tly
d ifferen t fro m th a t o f o th e r a u th o r s. In s e v e ra l cases, I h ave in d ica te d m y u sag e o f a te rm in
re la tio n to that o f a n o th e r te rm b e ca u se I c o n s id e r the tw o te rm s to b e a re la tio n a l pair. A ll these
te rm s are fo r th e m o st p art a lre a d y de fin e d , e x p lic itly o r im p lic itly , In the text. B u t it m a y be
u se fu l to the re a d e r to b e a b le to re fe r to th em q u ic k ly an d p recisely. C ro ss-re feren c e s fro m o n e
e n try to a n o th e r are in d ic a te d b y s m a l l c a p i t a l s .
a n fisy stem ic m ovem ents. I in ve n te d this te rm to c o ve r to g e th e r tw o co n c e p ts th at h ad been used

sin ce the n in e te e n th c e n tu ry : so c ia l m o v e m e n ts a n d n a tio n a l m o ve m e n ts. I d id this b e
ca u se I b e lie ve d th at b o th k in d s o f m o v e m e n ts s h a re d s o m e c ru c ia l fe atu res, an d that bo th
re p resen te d p aralle l m o d e s o f a sse rtin g stro n g re sista n ce to the e x istin g h isto ric a l system
in w h ic h w e live, u p to a n d in c lu d in g w ish in g to o v e rth ro w th e system .
A sia tic m o d e o f p ro d u ctio n . T h is t e rm w as in ve n te d b y K a rl M a r x to refer to w h a t o th e rs th in k o f
as c en tra liz e d im p e ria l syste m s o rg a n iz e d a ro u n d the n eed to su p p ly a n d c o n tro l irrig a
tio n fo r a g ric u ltu re . T h e k e y p o in t fo r M a r x w as that th ese system s lay o u tsid e w h a t he
o th e rw ise th o u g h t w as a u n ive rsa l p ro g re ssiv e seq u en c e o f su ccessive “ m o d e s o f p ro d u c
tion ,” th at is, d ifferen t w ays in w h ic h syste m s o f p ro d u c tio n w ere o rga n iz e d .
asym ptote. A c o n c e p t in m a th e m a tic s, re fe rrin g to a lin e w h ic h a p a r tic u la r c u rv e c a n n o t reach
in a fin ite space. T h e m o st fre q u e n t u sag e is in re fe rrin g to c u rv e s w h o se o rd in a l is
m e a su re d in p erce n ta ge s, an d fo r w h ic h 10 0 p ercen t re p resen ts the a sy m p to te .
a x ia l diWsio;i o f labor. A te rm used in a rtic u la tin g the a rg u m e n t that w h a t h o ld s the capitalist
w o rld - e c o n o m y in ta ct is an in v isib le axis b in d in g to g e th e r c o re -lik e a n d p erip h e ra l p ro
cesses (see c o r e - p e r i p h e r y ).

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WORLD-SYSTEMS ANALYSIS An Introduction

DUKE UNIVERSITY PRESS D urham and London 2004

A cknow ledgm ents vii

To Start: U nderstanding the World in W hich We Live Lx

1 H istorical O rigins o f W orld-System s Analysis: From Social

2 T h e M odern W orld-System as a C apitalist W orld-Econom y:

3 The Rise o f the States-System : Sovereign Nation-States, Colonies,

4 The C reation o f a G eoculture: Ideologies, Social M ovem ents,

5 T h e M odern W orld-System in Crisis: Bifurcation, Chaos,

Bibliographical G uide 101

T h e m e d i a , a n d in d e e d the social scientists, constantly tell us that two

U nderstanding the W orld xi

xii W orld-System s A nalysis

From Social Science Disciplines to Historical Social Sciences

W o r l d - s y s t e m s a n a l y s is originated in the early 1970s as a new per­

Production, Surplus Value, and Polarization

T h e w o r l d in w h ic h we are now living, the m odern w orld-system , had

The M odern W orld-System 25

The M odern W orld-System 27

The M odern W orld-System 29

The M odern W orld-System 31

The M odern W orld-System 33

The M odern W orld-System 35

The M odern W orld-Systcm 37

The M odern W orld-System 41

Sovereign Nation-States, Colonies, and the Interstate System

T h e m o d e r n S T A T E i s a sovereign state. Sovereignty is a concept that was

The Rise o f the States-System 43

The Rise o f the States-System 45

The Rise o f the States-System 47

The Rise o f the States-System 49

The Rise o f the States-System 51

The Rise o f the States-System 53

The Rise o f the States-System 55

The Rise o f the States-System 57

The Rise o f the States-System 59

Bifurcation, Chaos, and Chokes

We h a v e s a id that historical systems have lives. T hey com e into existence

The M odern W orld-System in Crisis 77

The M odern W orld-System in Crisis 79

The M odern W orld-System in Crisis 81

The M odern W orld-System in Crisis 83

The M odern W orld-System in Crisis 85

The M odern W orld-System in Crisis 87

The M odern W orld-System in Crisis 89

T h is is a g lo s s a r y o f term s u se d in this b o o k . A g lo s s a r y o f c o n c e p ts is n o t a d ic tio n a ry . T h e re

a n fisy stem ic m ovem ents. I in ve n te d this te rm to c o ve r to g e th e r tw o co n c e p ts th at h ad been used

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W o r l d - s y s t e m s a n a l y s is originated in the early 1970s as a new per