What is capitalism?

What is the difference between core and periphery, and how do they

function together?

Melisa Yilmaz-137611

According to the author, capitalism does not refer to individuals/firms who produce only for

sale and are in the market to make a profit, or those who work for wages. According to him,

capitalism should always be considered together with the world economy. Because one of the

most important factors holding the world economy together is the division of labor and

capitalism includes this very effectively. The modern world system, dating back to the 16th

century and in which we now live, is the only surviving world economic system, according to

the author, and this is because capitalism has taken root as a defining feature of this system.

Thus, a capitalist world economy can be explained by the combination of many different

institutions, such as markets.

A capitalist world-economy divides production into core-like products and peripheral

products. The core-like production processes are controlled by quasi-monopolies. Peripheral

processes are truly competitive. When exchange occurs, competitive products are in a weak

position and quasi-monopolized products are in a strong position. So a relational concept,

core-periphery duality is about the degree of profitability of the production processes. It

means that there is a constant flow of surplus-value from the producers of peripheral products

to the producers of core-like products. According to him, this kind of relationship is named as

unequal exchange. However, the locations of these processes are not immutable and

permanent. On the contrary, a core-like process can become a peripheral process easily and in

a short while. For him, the basic reason of this reality is that, quasi-monopolies exhaust

themselves.
Focused reading:

Wallerstein, I. (2004). The modern world-system as a capitalist world economy. In The world

systems theory on global inequality. Duke University Press.