Theorising Development

UNIT 6 WORLD SYSTEMS THEORY*

Structure
6.0 Objectives
6.1 Introduction
6.2 Major Intellectual Influences
6.2.1 A Critique to the Modernization Paradigm of Development: Dependency Theory
and Beyond
6.2.2 Other Inspirations
6.3 Key Concepts and Definitions
6.3.1 What is World System?
6.3.2 Core, Periphery and Semi-Periphery
6.4 A Historical Perspective on the Capitalist World Economy: Origin and
Development
6.5 Criticism and Evaluation
6.6 Let Us Sum Up
6.7 Key Words
6.8 Further Readings
6.9 Specimen Answers to check your progress

6.0 OBJECTIVES
After reading this unit, you should be able to:
Explain the major intellectual influences on the world-system theory.
Critically reflect on the modernization paradigm.
Elaborate on the notion of capitalist world economy as central to world-
systems analysis.

Explain the concepts of core, periphery and semi-periphery as fundamental

to understanding the world-systems theory.

Give an account of the history of development of world capitalist order as

an outcome of imperialist and colonial project of European nations.

Discuss economic expansion and its interrelationship with the other forms
of dominations namely: military, political and cultural.

critically review the world-systems theory and throws light on its efficacy

6.1 INTRODUCTION
In this unit we will discuss the World Systems Theory. The world systems theory
was developed by an American sociologist and economic historian, Immanuel
Wallerstein (1930-2019) in the start of 1970s as a macro sociological perspective
that sought to explain the dynamics of the “capitalist world economy” as a “total

*Written by Kanika Kakkar, Assistant Professor, Janki Devi College, Delhi University
76
social system” (Martinez-Vela 2001). Wallerstein’s works The Rise and Future World System Theory
Demise of the World Capitalist System: Concepts for Comparative Analysis
published and The Modern World System I: Capitalist Agriculture and the Origins
of the European World-Economy in the Sixteenth Century published both in 1974
provide the most comprehensive articulation of the world-systems theory.

The section 6.2 focuses on the origins of the world systems theory as an approach
critical to modernization paradigm of development. It reflects how the world
systems theory is an alternative to modernization paradigm and draws from
various other theoretical traditions like Marxism, dependency perspective and
Annales School. The section 6.3 elaborates on the fundamental characteristics/
key concepts of the world systems theory. It conceptualises the notion of world
economy as the central unit of analysis. The three tiered structure of the world
system, reflected in the concepts, core, semi-periphery and periphery is elaborated
in this section. The world-systems theory proposes historically world as single
economic system in which some countries are dominant while others are exploited
by them.

The section 6.4 provides a description of the origin of the world capitalist
economy. It traces that through history there were certain countries of the world
that emerged dominant because of their superior economic position and these
dominated and exploited other countries. It provides a historical reading of the
origins and development of capitalist world order and economy in imperialist
and colonial project of the European countries. In doing so, we get a critical
perspective on processes of industrialization and technological advancements
whereby certain countries have failed to develop and were to remain economically
subservient and exploited. In section 6.5 some of the criticisms to the world-
system theory are examined. It is seen, that despite, the criticisms on various
grounds, the theory is extremely enriching and illuminating analysis of the rise
and expansion of capitalism.

6.2 MAJOR INTELLECTUAL INFLUENCES

There are series of intellectual sources that have influenced Wallerstein’s thought
and shaped the world-systems theory. The world-systems theory has been
predominantly influenced by Marxist and neo-Marxist theories that focus on
capitalism and its economic and materialist implications, the Dependency theory
and the Annales school.

The world system theory provides an alternate to the conventional analysis of

economic development. It developed as a critical perspective to the modernization
and industrialization processes that circumscribed the traditional understanding
of development. In doing so it comes very close to the dependency theory, as
both theories adopt a critical approach to development, drawing from the Marxist
tradition. Influenced by the Marxist tradition both the world-system theory and
dependency theory provide a basis to reflect on development as a process of
capital accumulation and competitive and conflictual interests between the
dominant and dominated. The section outlines the critique that the world system
theory offers to the modernization paradigm of development. Alongside, it reflects
on the similarities and differences between the world system and dependency
theory. The various other traditions and theoretical influences that have contributed
in development of world-system theory are also pointed out.
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Theorising Development 6.2.1 A Critique to the Modernization Paradigm of
Development: Dependency Theory and Beyond
The world-systems theory provides a clear conceptual break from the
modernization paradigm on the world expansion and development of capitalism.
It shows close association with its predecessor dependency theory, which
originated as a critique to the modernization theory. In fact, world-systems theory
in many respects is regarded as adaptation of dependency theory (Chirot and
Hall 1982) .Andre Gunder Frank, a Neo-Marxist, German-American sociologist
and economic historian who had played a fundamental role in propagating this
theory post 1970, advocated the world-systems theory after 1984.

Box 6.1

Dependency Theory
Dependency theory originated in 1950s as Sir Hans Wolfgang Singer, a
German-born British development economist and Raul Prebisch, Director of
the United Nations Economic Commission for Latin America proposed that
there is a negative correlation in the economic growth between the
industrialized countries and the poorer countries. In the famous Singer-
Prebisch thesis it was pointed that the terms of trade move against producers
of primary products. The economic growth of the industrialized world meant
harmful implications for the poorer countries. This was contrary, to the
neoclassical analysis and modernization theory, which assumed that economic
growth is to have positive outcome for all although its fruits may not be
shared equally be all.

Wallerstein similar to the dependency theorists questioned the modernization

paradigm on the account that it offers a single/ universal path of evolutionary
development of capitalism across the world. The modernization theory was based
on the assumption that development takes place in a series of capitalist stages
and underdeveloped countries are still in the original stage of history through
which the developed countries had passed long ago. In other words, it provided
a very optimistic perception of development, bringing to fore that that the
underdeveloped countries are lagging since they are at an earlier stage of
development where the West, particularly Europe was long ago. Such mapping
of development in terms of stages is erroneous as it fails to make one perceive of
the global economy as an integrated whole or totality, a world-system. It fails to
take account of economic and other relationship between developed and
underdeveloped countries through history of origin and expansion of world
capitalism, which started since the 16th century as seen in the earlier section.

In this respect the world-systems theory like the dependency theory also offers a
much sophisticated understanding than the ahistorical versions of Marxism, which
tends to reify parts of the totality as if they were independent units and then
make a comparison between them. It henceforth, akin to dependency theory,
questions the understanding of development process in terms of concepts like
dual economy that has been used by many liberal economists and traditional
Marxists. According to this concept underdeveloped countries of the world are
constituted by two separate economies/parts each with a different structure, history
of its own and varied disposition of production. The two separate parts in the
underdeveloped countries reflect presence of pre-capitalist/ traditional and
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capitalist /modern mode of production geared towards the local subsistence needs World System Theory
and global export/cash economy respectively. These separate parts are reflection
of different stages of development and integration with the capitalist mode of
production. The pre-capitalist part is lagging behind because of being isolated,
lacking contact with the “outside” capitalist world and prevalence of traditional
and feudal values and ideologies. Contrarily, the world-systems theory as
dependency perspective highlights that the underdevelopment and backwardness
of a country or its part is to be understood as a product of its participation in a
singular world capitalist system. Both challenge the idea of nation-state as an
independent entity with its own economy, society and polity. They demonstrate
this by reflecting on the constitution and reconstitution of nation-states as a result
of evolution and development of world capitalist economy.

The world-systems theory like the dependency theory views capitalist system on
the world-scale as a whole demonstrating that the contemporary
underdevelopment is in large part a historical product of past and continuing
economic and other relations between the underdeveloped and developed
countries (Frank: 1989). Rather than reading the issue of development as a
domestic story, as modernization perspective proposes, a local question depending
on national institutional arrangements, the world-system theory saw the
transnational structures and institutions as constraining and restraining local and
national development. In other words, it questions the modernization theory for
suggesting that underdeveloped countries can develop by diffusing capitalist
institutions and values from the developed capitalist countries (ibid.). Alternately,
the world-systems theory is suggestive that the development in underdevelopment
countries can occur only independently of the capitalist developed world.

The world-systems theory’s critique of modernization perspective clearly

establishes the dependency theory as one of the most influential precursors to it.
However, the world-systems theory provides a more advanced basis to understand
the development and underdevelopment as a globally integrated process.
Wallerstein’s three-tiered division of world regions into core, periphery and semi-
periphery to map the development of capitalism provides a more nuanced basis
to understand development of world capitalist relations, than Frank’s bimodal
framework, which separates developed and underdeveloped regions of the world
as metropolis and satellite respectively. Thus, moving beyond the dependency
theories fundamental proposition that core countries and states exploit
underdeveloped poor countries, Wallerstein posited that the core exploits workers
in all economic zones not simply periphery. The world-systems theory allows to
explore on more contemporary question of redistribution of surplus value and
not simply surplus resources that was a part of older international division of
labour. In other word, it offers a more pertinent understanding of capitalist
expansion adopting a historical perspective that takes into cognisance a shift in
the organisation of capitalism in terms of interregional and transnational division
of labour rather than the outmoded and simplistic international division of labour
as suggested by dependency theorists.

6.2.2 Other Inspirations

The Annales School tradition shaped world systems theory’s historiographical
methodology and approach to understand capitalism. In this respect the role of
Fernand Braudel in influencing Wallerstein’s thought is central. Braudel’s concept
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Theorising Development of longue durée, inspired Wallerstein to study history of world capitalism as
continuous including constitution and reconstitution of geo-ecological regions.
It influenced him to make a more broad and macro analysis of history of origin
of world capitalism giving priority to long-term structures, patterns and trends
that evolved slowly but never remained static, rather than focus on what is called
as histoire événementielle, the “eventual” and short time span as seen in traditional
history.

Box 6.2

Fernand Braudel, Longue durée ans World-Systems Analysis

Ferdinand Braudel (1902-1985) a pre-eminently influential French historian
and historiographer, is one of the leading representatives of the Annales
tradition. Lee (2012:1) elaborates that Braudel “is known and celebrated for
his instance on the plurality of social times anchored in the longue durée as a
structure, has been a, if not fundamental conceptual underpinning of world-
systems analysis —— underlined by the fact that as Alain Brunhes writes, in
1977 ‘his career was consecrated internationally, particularly in the US, with
the founding of Ferdinand Braudel Center by Immanuel Wallerstein at the
state University of New York at Binghamton.”

Lee (2012: 3) points out that Immanuel Wallerstein (2004: 18) pointed out
that “Braudel’s insistence on the multiplicity of social times and his emphasis
on structural time —— what he called the longue durée ——- became central
to world-systems analysis. For world-systems analyst, the longue durée was
the duration of a particular historical system.”

Other important influences in Wallerstein’s work come from the research of

scholars such as Nikolai Kondratevi and Joseph Schumpeter and Karl Polyani.
The theories on business cycles and capitalist development formulated by the
economists, Nikolai Kondratevi, and Joseph Schumpeter have, had a significant
bearing on the world-systems theory. Drawing from the two the world-systems
theory claims that the regular cyclical rhythms characterize the world economy
and provide a basis for the periodization of modern history.

Further, the research of economic anthropologist and sociologist, Karl Polyani

on the three-fold typology of economic system and exchange namely, the
reciprocal, redistributive, and market systems corresponds with Wallerstein’s
discussion of mini-systems, world-empires, and world-economies respectively.
The section 1.4 of the unit further discusses these concepts.
Check Your Progress 1
i) Complete the following sentences by filling in the blank spaces

a) The modernization theory was based on the assumption .....................

b) The world-systems theory’s critique of modernization perspective clearly

establishes ................................ as one of the most influential precursors
to it.

c) ............................................ inspired Wallerstein to study history of world

capitalism as continuous including constitution and reconstitution of
geo-ecological regions.
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 d) The research of economic anthropologist and sociologist, Karl Polyani World System Theory
.................................................... corresponds with Wallerstein’s
discussion of mini-systems, world-empires, and world-economies
respectively.

6.3 KEY CONCEPTS AND DEFINITIONS

The section points out the key concepts used by Wallerstein in world-systems
theory. It begins by conceptualising the notion of world-system, which is central
to the world-systems theory. In doing so, it reflects on the concept of capitalist
world economy. Further, it elaborates on three economic zones- core, periphery
and semi-periphery that constitute the capitalist world economy. The international
division of labour and relationships between various parts of the world economy
provide a departure from the idea of nation-states.

6.3.1 What is World System?

The notion of system is central to the world-systems theory, which it takes as the
basic unit of analysis. Wallerstein has given multiple definitions and explanations
to the concept. He broadly defines it as a socio-economic unit with a single
division of labour that binds its members in a relationship of mutual
interdependence.

Wallerstein elaborates on world system in contradiction from mini-systems. Mini-

systems he states, are based on a single division of labour and have a unified
culture. Simple agricultural or hunter-gatherer societies are examples of mini-
system. These have no economic interaction with the outsiders. In contrast, as
pointed out earlier world-systems are characterised by single division of labour
that binds divergent cultures together. They involve economic networks and
relationships that cut across political boundary and society. The world system
analysis reflects on mini-systems as characteristics of past, a bygone era and
focus on world-systems as operative units of social reality whose rules have
constraining effect on individuals and society.

Further, Wallerstein focuses on two types of world systems—— world-empire

and world economy. A world empire is a large bureaucratic structure with one
political centre based on domination by conquest for e.g. the Roman Empire in
ancient times and British Empire in the modern history. In contrast, the world
economy is characterised by multiple political structures and cultures. It does
not have a common political structure. Wallerstein’s centre of attention is world
economy. According to him the modern period is characterised by a unified
capitalist economy rather than political interests. The economic interests and
networks are pivotal in the organisation of the world capitalist economy and not
political structures. The section 6.4 elaborates further that the world economy
began to take shape from the 16th century along with the development of market
capitalism. The North Western Europe became the centre for the origin for the
world economy with the growing agricultural specialisation and diversification
and was supplemented by the development of manufacturing industries like
textiles and metals. The growth of manufacturing sector led to emergence of
demand for specialised kind of labour, raw material and new markets among the
merchants and newly emerging capitalists. Expansion of trading networks and
later colonisation provided a basis to fulfil these demands. The rationale for
expansion was economic rather than political (Tonkiss 2006). 81
Theorising Development 6.3.2 Core, Periphery and Semi-Periphery
According to the world-systems analysis the origin and expansion of capitalism
and simultaneously, the international division of labour divided the world
economy into four economic zones namely, core, periphery, semi-periphery and
external areas. This stratification of the world economy reflects on the Marxian
and Weberian analysis of class. For Marx class is based on ownership and non-
ownership of means of production and forces of production. Weber understood
class in relation to both ownership and occupational skill in the production process.
The three economic zones of the world economy, the core, semi-periphery and
periphery hold distinct economic and class positions in the world economy, by
virtue of which they accrue advantages and benefits or suffer from disadvantages
and exploitation. Below are discussed the characteristic features of the three
economic zones of the world economy:

Core Countries
The core is constituted by economically and militarily the most powerful and
dominant countries of the world. The core countries are highly industrialised,
owners of the means of production and perform extremely skilled production
tasks. In fact, their high level of industrialisation and technical advancement
attracts the skilled labour from the other economic zones. The core countries are
the producers of manufactured goods rather than raw-material. They are the
vanguard of all technological innovations and industrial development. These are
the countries that focus on the capital intensive production and have benefitted
maximum from the capitalist economy. They have a locally strong dominant
bourgeoisie class that enable them to obtain control over international commerce
and extract capital surpluses from this trade for their own benefit.

The core countries exercise significant influence over non-core countries. They
draw significant advantages by dominating and exploiting the periphery countries.
They are markets for raw material and cheap labour from the periphery countries.
They extract profits from the periphery countries by selling their manufactured
goods and commodities at a high cost. Further, they draw enormous profits by
making capital investments in the periphery countries, which makes the latter
dependent and vulnerable.

The history of world capitalist system makes evident that there has been a
competition among groups of core countries to establish their domination over
periphery countries for the want of access to resources and quest for economic
dominance. There have been occasions where one core country has been able to
establish its supremacy over others. The dominance of Holland and then Great
Britain in the history of the origins of the world capitalist economy as a part of
mercantile capitalism well establishes the point. The following section on the
history of the origins of the world capitalist system will further enable us to
reflect on the point. Wallerstein added that a core nation can establish its
dominance over others by being dominant in the sphere of production, trade and
financial/banking activity. The dominance in these three spheres contribute to a
core country attaining military dominance. However, superior military and armed
strength in the history of world capitalist system have not been the basis of
economic dominance of a core country, rather military expansion has led to loss
of economic dominance.
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Periphery Countries World System Theory

The periphery countries are the economically and militarily marginalised and
exploited countries of the world. They are least industrialized, tend to have very
little of the world’s means of production and have a pool of unskilled labour.
Periphery countries are predominantly agricultural economies/ producers of cash
crops with a huge base of peasant population. They lack strong central
governments and are primary exporters of raw material to the core nations. They
engage in labour-intensive production and have to rely on coercive labour
practices often set externally by the governments of the core countries. They are
vulnerable to investments from multi-national and transnational corporations
from core countries which expropriate much of the surplus generated through
unequal trade. The periphery countries manifest high degree of social inequality.
They have a small bourgeoisie class, which fulfils its vested interests by forging
connections with the multinational and transnational corporations.

The history of world of capitalist system is replete with examples whereby, core
countries have established/sought to establish their monopoly over a periphery
country to maximize their profits and benefits from it. In this context, Wallerstein’s
concepts of trade concentration and investment concentration, whereby periphery
country trade with and receive investments from a few core countries (or only
one) becomes relevant. A high trade and investment concentration adds to the
vulnerable status of the peripheral country. The periphery country would be hard
hit, economically, in case the core country decides to end trade and investment
transactions with it. The case of Latin America a peripheral country with
concentration of trade with and investment from the U.S.A well explains this
point.

Semi-periphery Countries
Semi-peripheral are countries that are intermediate and in between the core and
periphery. These are countries that have to prevent themselves from falling into
periphery status and simultaneously attempt to graduate to the category of core
status. In other words, semi-peripheries can come into existence from declining
core and developing periphery countries. These are industrializing and developing
countries, which are becoming more diversified economies. When compared to
periphery countries, semi-peripheral countries have relatively developed and
diversified economies. However, they are not dominant in international trade as
the core countries. They have export and import tie-ups with the peripheral and
core countries respectively. The existence of semi-peripheries is extremely crucial
according to Wallerstein for the stability of world system. The semi-peripheries
act as buffers between cores and peripheries, the two opposing economic zones.
They deflect and ease the political pressures, tensions and opposition of groups
in peripheral areas that may threaten the dominance of core-states and dismantle
them.

Activity 1

Think and make note of ways in which peripheral and semi-peripheral

countries can safeguard themselves from getting exploited by core countries
and improve their position in the international division of labour. (Elaborate
in 2 pages)

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Theorising Development External areas
In addition, Wallerstein focuses on the external areas. These are areas that are
outside the world capitalist economy. They are those that maintain a division of
labour independent of it and have little foreign commercial influence. They engage
in internal commerce rather than engaging in trade with the outside world. Russia
fitted in this case for a considerable time till the 20th century when it entered in
the European world economy.
Check Your Progress 2
i) How does Wallerstein define world system? ( state in two sentences)
.......................................................................................................................
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.......................................................................................................................
.......................................................................................................................
.......................................................................................................................

ii) List out the three zones that constitute world economy?
.......................................................................................................................
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.......................................................................................................................
.......................................................................................................................
.......................................................................................................................

iii) What do you understand by external areas?

.......................................................................................................................
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.......................................................................................................................
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.......................................................................................................................

6.4 A HISTORICAL PERSPECTIVE ON THE

CAPITALIST WORLD ECONOMY: ORIGIN
AND DEVELOPMENT
Wallerstein has provided a historical perspective to the origin of the capitalist
world economic order. According to him capitalist mode of production has shaped
world economy since the 16th century, bringing to fore market trade (Tonkiss
2006). He sees the world economy as an economically integrated whole with a
single division of labour, while including distinct cultural and political systems.

Wallerstein (1974) traces the origin of capitalism in Northern Europe as an

84
unintended consequence of long-drawn-out crisis of feudalism. Europe readily World System Theory
embraced capitalism to emerge strong industrially and technologically, and used
it to establish its dominance and hegemony in the world economic order. Europe’s
colonial and imperialist projects are testimony to the world-wide spread of
capitalist economic order by it, causing development of underdevelopment in
many of the developing countries of the world.

Europe set on the path of industrialisation and technological development in

order to trade around the world. Its superior military position facilitated her to
get control of trade routes and establish her dominance in world economic order.
According to Wallerstein, imperialist quest of Europe led for the first time to the
establishment of economic system of such an enormous scale that included much
of the world transcending national borders and political boundaries. In history
such large economic systems existed in ancient times in empires as the Roman
Empire, however these differed from the new world economy as the latter is not
a single political unit as mentioned in the section 1.3. These were world-empires,
which had defined system of governments and exercised control and drew
economic advantages within specific political boundaries as was also pointed
out. In other words as elaborated in the earlier section, a world-empire operated
under a common political structure, usually imposed by a dominant power through
conquest (Tonkiss 2006). Further, while the world-empires had large clusters of
merchants engaging in long distance trade, they were of little significance to the
total economy and engaged in ‘administred trade’ and not market trade, utilizing
ports of trade, which started only with the rise of modern world economy
(Wallerstein 1974a : 391). The world-empires were predominantly, redistributive
economic forms (ibid.)

Contrarily, the rise of modern capitalism led to the emergence of a world economy
and growing predominance of market trade, which had its limits beyond political
and administrative boundaries of any one empire. The world economy in
distinction from politically unified world empire emerged as a single global
economic system. It came to be based on an international division of labour that
provided a basis for determining the relationship between the various regions of
the world, the nature of their labour organisation/conditions and political systems.

As has been noted in the earlier section, according to Wallerstein (1974a andb)
the international division of labour divided the world system into three broad
economic zones namely, core, periphery, semiperiphery. The core is dominant
region in the capitalist economy, the semi-periphery is the intermediate economies
and periphery is the underdeveloped or dependent economies. Wallerstein has
focused on the historical evolution of the capitalist world economy reflecting on
stages in its evolution as a system (1974a: 406). From its beginning in sixteenth
century Europe, the international economy has had three or arguably four,
international divisions of labour (Hutchinson 2004: 3).

The first international division of labour, spanning the early period of European
colonisation in the 16th century, was predicated on rudimentary exchange between
core countries and extraction from the economic periphery (ibid.). The core was
constituted as the dominant economic region originally located in Northwest
Europe as pointed out earlier (Tonkiss 2006). Core countries, in the Northwest
of Europe, were the loci of military and trade control. These nations were engaged
in specialised agricultural, mineral, and basic commodity production, which was
traded with nearby countries (Hutchinson 2004:3). The economic periphery in 85
Theorising Development the initial phase of capitalist expansion, comprised of countries of Eastern Europe
and Western Hemisphere including America and Carribean. Their relationship
with the core countries was marked by slavery, indentured labour and cash-crop
production by their large peasant population. These countries were source of
raw material, unprocessed agricultural commodities and mineral wealth and cheap
labour. The Mediterranean Europe formed the semi-periphery in the early period
of capitalist expansion. The core states were marked by strong state machinery
and a powerful bourgeoisie class, which played a pivotal role in strengthening
their positions in world-market by enforcing unequal exchange with the peripheral
countries, which were characterised by weak state.

A further consolidation of Europe world-economy is witnessed in the second

stage of the modern world economy in the 18th century. This stage was marked
by the emergence of Britain as the core nation ousting Netherlands from its
commercial primacy. The Britain was also able resist French attempts to establish
it economically strong.

The third stage of capitalist world economy began in the early 19th century as
the stage of industrial rather than agricultural capitalism. It was marked by the
rapid development of manufacturing industry in Europe. The core exchanged
manufactured product against periphery’s agricultural products, hence Britain
from 1815-1873 emerged as ‘the workshop of the world’ (Wallerstein 1974a:
410). Improved military and shipping facilities had made trade more viable and
less expensive for Britain. Britain during this period supplied half their needs to
the semi-peripheral countries of France, Germany, Belgium, and the US that had
some manufacture.

This period witnessed further geographic expansion of the European world-

economy to include whole globe. The geographical expansion of the European
world economy and imperial conquest led to the inclusion of Africa and Southern
Asia as peripheral zones in the latter part of the 19th century. The ‘Scramble for
Africa’ expanded among the European countries during the last two decades of
the 19th century leading to its occupation and division among the European
powers leading to the integration of the most remote regions of the world into
the global economy.

Russia the most powerful country, outside the realm of European world economy
entered in it in the status of semi-peripheral country. Latin American countries
independence from Spain failed to change its status of peripheral zone. Japan
because of the combination of the strength of its state machinery, poverty of
resource base and geographical remoteness from the core was able to climb into
semi-periphery status. The creation of vast areas as periphery brought significant
change in the status of some others. The US and Germany gained ascendancy in
the manufacturing sector, the US was able to industrialize to considerable extent
prior to the First World War.

The end of First World War and the Russian Revolution in 1917 was the beginning
of the new era, the stage four of world economy. This is the stage of consolidation
of industrial capitalist world economy. The Russian Revolution as it was brewing
had lead to decline in the status of Russia from semi-periphery to periphery.
However, the situation was to change by the end of Second World War, Russia
emerged as a powerful member of the semi-periphery that could begin to seek
full core status.
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The last two decades of the 19th century witnessed a decline in Britain’s and its World System Theory
hegemonic and economically dominant role was assumed by the United States
post First World War. The significant reasons for Britain’s economic decline
were the colonial system and participation in the War that had begun to put a
strain on its military. Again, there was a great deal of core conflict after the
Britain lost her clear dominance. This time it was Germany, and later Italy and
Japan that provided the new threat.

However, the defeat in the First World War led to a decline in Germany’s
popularity and dominance in the world markets. Various German attempts in the
1920s to find new industrial outlets in the Middle East and South America were
unsuccessful in the face of the US thrust combined with Britain’s continuing
relative strength. With Japan and Europe in ruins after the Second World War,
the U.S.A gained ascendancy and came to dominate the modern world system
more than any other country. During this period U.S.A achieved tremendous
growth in its industrial output and hence, needed markets for sale. The economic
predominance of U.S.A became evident from that she began to manufacture half
of the world’s industrial output and supplied one third of the world’s exports
(Kennedy, Paul 1987).

The Cold War however, denied U.S.A to have markets in U.S.S.R. and East
Europe. As alternative U.S.A had was to seek markets in Western Europe, Latin
America, South Asia, and Middle East. However, this required a reconstruction
of Western Europe and decolonisation of South Asia, Middle East and Africa.
Consequently, post Second World War Latin America became the reserve of
investment from U.S.A. and got completely cut off from Britain and Germany
for trade.

The end of Cold War and the end of 20th century marked a shift in the hegemonic
position of the U.S.A. For it was not merely U.S.A but along with it other
industrialized countries of Western Europe and Japan that constituted the core of
the world system. The semi-periphery was typically composed of independent
states like Singapore, Hongkong, South Korea, India and China that had not
achieved industrialisation and western levels of influence while the most
marginalised and economically dependent countries in Bangladesh, Afghanistan,
Sri Lanka and Central African Republic came to constitute the periphery.

Activity 2
Take your notebook and write a short essay on India focusing on its semi-
periphery position in the international division of labour.
Check Your Progress 3
i) Complete the following sentences by filling in the blank spaces:
a) Wallerstein traces the origin of capitalism .............................................

b) The first international division of labour.............................was predicated

on rudimentary exchange between core countries and extraction from
the economic periphery.

c) The second stage of the modern world economy in the 18th century
was marked by ...........................................................
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Theorising Development d) The third stage of capitalist world economy was marked by
................................

e) The end of First World War and the Russian Revolution in 1917 was
the beginning of ....................................

6.5 CRITICISM AND EVALUATION

Although Wallerstein’s world-systems theory is influential, it has invited several
criticisms. These are listed below:

The world systems theory is accused of being a Eurocentric approach to

understand origin and expansion of capitalist world economy. It begins
with Europe, and it traces the spread of capitalism as a world system
dominated by this core region (Tonkiss 2006). There are theories that
question the view that Europe was at the centre stage of capitalism and its
development. Many such theories make claims that it was China, and not
Europe that was the core of extended Afro-Eurasian world system for a far
longer period (ibid.) China they hold was more advanced than most of the
Europe in 18th century, and remained an important economic power into
the 19th century (ibid.) The rise of China in the 21st century does not indicate
the emergence of new economic core, but the revival of an older power
after a relatively brief period of decline (ibid.).

Second, there is a criticism of the world-systems theory on the account that

it attaches great significance to the economic processes and neglects cultural
change. R. Robertson and F. Lechner there is a world system of global
culture which is entirely autonomous from economic processes of capitalism
(Abercrombie, Hill and Tuner 2000: 398).

Third, the world-systems theory overlooks the significance of internal/

endogenous factors like class struggle in bringing about change. It
overemphasises the external forces and positioning in world economy in
determining the fate of a country.

Fourth, it is not entirely evident from the world-systems theory that peripheral
societies are underdeveloped by core regions, because most trade and
investment takes place between societies which are already developed and
industrialized (ibid.).

Fifth, according to the world-systems theory all activities and movements

take place within the structural system, constituted by core, periphery and
semi-periphery. However, the concept of globalization since 1990s has
challenged this view. There are globalisation theorists like Harvey and
Appadurai who advocate the notion of global flows, which take us beyond
the conventional geographical understanding of space as structured and
fixed as the world-systems theory suggests. These flows can be of people,
capital, technology, information and ideas evident in notions of ethnoscapes,
financescapes, technoscapes, mediascapes and ideoscapes. These flows are
suggestive of multiple cores and peripheries. No one core can be centre of
all flows. A core may be central to one kind of flow and peripheral and
semi-peripheral in status in relation to other flows in the global system.
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 Finally, the theory does not provide an adequate framework to explain World System Theory
regarding the position of socialist societies in the world system. Its primary
focus has been on the rise of modern capitalist economy.

Despite, criticisms we cannot override the relevance and significance of

the world- systems theory and Wallerstein’s work.

Wallerstein’s work in 1970s and 1980s emerged as a critical attempt to

analyse conventional models of the first, second and third world countries
in terms of their integral role in the rise and dominance of capitalism and
industrialization (Tonkiss 2006).

Second, the world-systems theory went beyond traditional sociological

understanding by explaining unequal relations as an outcome of expansion
of capitalism across globe. It is essentially a precursor to subsequent
theorisations on globalisation as it challenges the concept of nation-states
by proposing a single world economy integrated by an international division
of labour.
Check Your Progress 4
i) How does the notion of global flows question the world-systems theory?
(elaborate in 3 sentences)
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................

ii) Critics have pointed out world-systems theory as Euro-centric. (elaborate

in 2 sentences)
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................

6.6 LET US SUM UP

The section has highlighted that the world-system theory drawing from various
intellectual traditions provides an advanced a sophisticated understanding of
inequality as a result of the rise and development of capitalist world economy. It
has focused on world-systems theory as a critical perspective to capitalist
development and modernization. The various concepts and characteristic feature
underlying the theory are elaborated.
89
Theorising Development The world-systems theory envisions the capitalist world-economy as dynamic
with change and shift in the countries occupying position of core, periphery and
semi-periphery. The conceptualisation of world economy as constituted by three
economic zones/regions: core, periphery and semi-periphery provide a basis to
reflect on varying implications of modernization on different regions of the world.
The theory’s focus on a single world-economy creates significant grounds to
question the efficacy of the notion of nation-states as independent units and their
role in bringing about development.

6.7 KEY WORDS

Capitalism: is an economic organization where markets are paramount, there is
private ownership of resources and economic activity is geared towards
maximization of profits

Feudalism: relates to pre-capitalist mode of production where the dominant

classes are landlords and serfs.

International division of labour: relates to spread of markets and production

activity across the world. It is characterised by growing differentiation of
economic activity, which heightens structured hierarchies and inequalities
between the rich and poor countries of the world.

Market system: is based on the idea of buying and selling of goods in exchange
of money.

Reciprocity: means direct exchange of goods and services, fundamental to non-

market.

Redistribution: is a form of exchange where goods or services move from central

authority to the members of society in a non-market society.

6.8 FURTHER READINGS

Abercrombie, Nicholas, Stephen Hill and Bryan S. Turner. 2000. “world-system
theory” In The Penguin Dictionary of Sociology.England: Penguin

Chirot, Daniel and Thomas D. Hall. 1982. “World-System Theory.” Annual

Review of Sociology. Vol. 8 pp. 81-106.

Martínez-Vela, Carlos A. 2001 “World Systems Theory” In ESD.83-Fall 2001

http://web.mit.edu/esd.83/www/notebook/WorldSystem.pdf

6.9 SPECIMEN ANSWERS TO CHECK YOUR

PROGRESS
Check Your Progress 1
i) Complete the following sentences by filling in the blank spaces:
a) The modernization theory was based on the assumption that development
takes place in a series of capitalist stages and underdeveloped countries
are still in the original stage of history through which the developed
90 countries had passed long ago.
 b) The world-systems theory’s critique of modernization perspective clearly World System Theory
establishes the dependency theory as one of the most influential
precursors to it.

c) Braudel’s concept of longue durée, inspired Wallerstein to study history

of world capitalism as continuous including constitution and
reconstitution of geo-ecological regions.

d) The research of economic anthropologist and sociologist, Karl Polyani

on the three-fold typology of economic system and exchange namely,
the reciprocal, redistributive, and market systems corresponds with
Wallerstein’s discussion of mini-systems, world-empires, and world-
economies respectively.
Check Your Progress 2
i) How does Wallerstein define world system? ( state in two sentence)
Wallerstein defines world system as a socio-economic unit with a single
division of labor that binds its members in a relationship of mutual
interdependence. There are two types of world system-world empire and
world economy.
ii) List out the three zones that constitute world economy?
Core, periphery and semi-periphery are the three economic zones that
constitute the world economy.
iii) What do you understand by external areas?
The external areas those that are outside the world capitalist economy and
maintain a division of labour independent of it and have little foreign
commercial influence on their economy.
Check Your Progress 3
Complete the following sentences by filling in the blank spaces:
a) Wallerstein traces the origin of capitalism in Northern Europe as an
unintended consequence of long-drawn-out crisis of feudalism.

b) The first international division of labour, spanning the early period of

European colonisation in the 16th century, was predicated on rudimentary
exchange between core countries and extraction from the economic
periphery.

c) The second stage of the modern world economy in the 18th century was
marked by the emergence of Britain as the core nation ousting Netherlands
from its commercial primacy.

d) The third stage of capitalist world economy was marked by the rapid
development of manufacturing industry in Europe.

e) The end of First World War and the Russian Revolution in 1917 was the
beginning of the new era, the stage four of world economy.

91
Theorising Development Check Your Progress 4
i) How does the notion of global flows question the world-systems theory?
(elaborate in 3 sentences)

The globalisation theorists like Harvey and Appadurai notion of global flows,
takes us beyond the conventional geographical understanding of space as
structured and fixed as offered by the world-systems theory. These flows
are suggestive of multiple cores and peripheries implying that no one core
can be centre of all flows. A core may be central to one kind of flow and
peripheral and semi-peripheral in status in relation to other flows in the
global system.

ii) Critics have pointed out world-systems theory as Euro-centric. (elaborate

in 2 sentences)

There are theories that question the view that Europe was at the centre
stage of capitalism and its development and instead, claim that it was China
that was the core of extended Afro-Eurasian world system for a far longer
period. China they hold was more advanced than most of the Europe in
18th century, and remained an important economic power into the 19th
century.

REFERENCES
1) Abercrombie, Nicholas, Stephen Hill and Bryan S. Turner. 2000. “world-
system theory” In The Penguin Dictionary of Sociology.England: Prenguin
2) Chirot, Daniel and Thomas D. Hall. 1982. “World-System Theory.” Annual
Review of Sociology. Vol. 8 pp. 81-106.
3) Frank, Andre Gunder. 1989. The Development of Underdevelopment.
Monthly Review Vol.41, Issue 2.
4) Halsall, Paul. 1997. Modern History Sourcebook: Summary of Wallerstein
on World System Theory. https://sourcebooks.fordham.edu/mod/
wallerstein.asp.downloaded on June 24, 2020.
5) Hutchinson, Francis. 2004. “Globalisation and the ‘Newer International
Division of Labour” In Labour and Management in Development Journal
, Volume 4, Number 6.
6) Kennedy, Paul. 1987. The Rise and Fall of the Great Powers: Economic
Change and Military Conflict From 1500 to 2000. New York: Random
House.
7) Lee, Richard E. 2012. “Introduction: Fernand Braudel, the Longue Durée
and World System Analysis” In The Longue Durée and World-Systems
Analysis. Albany, SUNY Press.
8) Martínez-Vela, Carlos A. 2001 “World Systems Theory” In ESD.83-Fall
2001 http://web.mit.edu/esd.83/www/notebook/WorldSystem.pdf
9) Tonkiss, Fran. 2006. “Capitalism and Globalization” In Contemporary
Economic Sociology: Production, Globalization and Inequality, London:
Routledge.
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10) Wallerstein, Immanuel. 2004. World-Systems Analysis: An Introduction. World System Theory
Durham: Duke University Press.

11) Wallerstein, Immanuel. 1974a. The Rise and Future Demise of the World
capitalist system: Concepts for Comparative Analysis. Comparative Studies
in Society and history, Volume 16, Issue 4, pp. 3874-415.

12) Wallerstein, Immanuel. 1974b. The Modern World System: Capitalist

Agriculture and the Origins of European World Economy in the Sixteenth
Century. New York: Academic Press.

13) “Debating the Longue Durée”. In Annales Volume 70, Issue 2, June 2015.
(Published online by Cambridge University Press: 03 August 2017, pp. 215-
217).

https://www.cambridge.org/core/journals/annales-histoire-sciences-
sociales-english-edition/issue/DC9017ACF3432E5B1F97 D1AF33DD254
D#fn01

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