Our Capitalist World-Economy is Crumbling, What’s Next and What to Do? – A World-Systems Analysis of Our Global Predicament

“The mark of the modern world is the imagination of its profiteers and the counter-assertiveness of the oppressed. Exploitation and the refusal to accept exploitation as either inevitable or just constitute the continuing antinomy of the modern era, joined together in a dialectic which was far from reaching its climax in the twentieth century.” (Immanuel Wallerstein)

“Man’s ability to participate intelligently in the evolution of his own system is dependent on his ability to perceive the whole.” (Immanuel Wallerstein)

What is World-System Analysis?

The unthinking of knowledge division

World-systems analysis is a call for the construction of a historical social science that feels comfortable with the uncertainties of transition, that contributes to the transformation of the world by illuminating our choices for action without appealing to the crutch belief in the inevitable triumph of good. It is not a theory about the social world, or about part of it. It is a call to open the shutters that prevent us from exploring many areas of the real world. It’s approach is one of praxis, in which theory and practice are closely interrelated, and it contends that the objective of intellectual activity is to create knowledge that uncovers hidden structures and allows oneself to act upon the world and change it.

World-systems analysis is not a paradigm of historical social science. It is a call for a debate about the paradigm. It laid down the gauntlet in the 1970s and challenged the humanities and social sciences to create a unified theory to understand and explain economic, political, and social phenomena and to understand the dynamics of markets, states and civil society. Instead of using terms such as ‘trans-disciplinary,’ ‘multi-disciplinary,’ and ‘inter-disciplinary,’ which imply a social reality that is ontologically fragmented, world-systems analysis calls for a ‘unidisciplinary’ historical social science, and contends that the modern disciplines, products of the 19th century, are deeply flawed. It even contends that such scholarly balkanization can hinder holistic and fruitful analyses of reality, and the very administrative organization of the university then becomes a hindrance to insightful research. To understand how we have reached this state of partition requires an acknowledgment that the boundaries of the traditional disciplines are artificial, arbitrary, and historically contingent. They are not separate logics, as is manifest for example in the de facto overlap of analysis among scholars of the ‘disciplines.’

Thus, world-system analysis challenged the basic premises of the modern divisioning of knowledge into three superdomains: the natural sciences, the humanities, and (in-between the so-called “two cultures”) the social sciences. It asks whether the superdomains are in fact different kinds of knowledge, since it contends that only by simultaneously employing them in our analysis of the world can we succeed in the quest for the true and the quest for the good, which is but a single quest.

Analysis across regions and through time

To do this, world-systems analysis employs the middle ground between trans-historical generalizations and particularistic narrations. It argues that the optimal method is to pursue analysis within systemic frameworks, long enough in time and large enough in space to contain governing ‘logics’ which ‘determine’ the largest part of sequential reality.

Thus, it considers that all social systems are at once systemic (in that they have continuing traits that can be described) and historical (they are always evolving and are never the same from one moment to the next). To say that every system is historical is to say that, the system came into existence at some moment in time as a result of processes we can analyze; it evolved over time by processes we can analyze; and it came (or will come) to an end because (like all systems) there comes a moment when it has or will have exhausted the ways in which it can contain its contradictions, and it thereby goes out of existence as a system.

Seeing our world whole

World-system analysis was among the first method to suggest that we depart from the relatively newly developed unit of the nation-state and to study global interaction instead. It argues that modern states have never been societies, but are the political units of modern society’s interstate system and economy. It insists on seeing all states as parts of a “world-system”, and that each part is impossible to understand or analyze separately and separated from the whole. It thus insists that changes are not endogenous to individual states, but rather, a consequence of complex interactions among local, regional, and global processes. And because the processes within the world-system are systemic, then the entire history of the system (as opposed to the history of subunits, taken separately and comparatively) is the crucial element in understanding the present state of the system and it’s possible trajectories in the future.

In this light, Immanuel Wallerstein–the conceptor of this analysis–then defined a world-system as a social system, one that has boundaries, structures, institutions, member groups, a set of organizing principles and coherence. Its life is made up of the conflicting forces which hold it together by tension and tear it apart as each group seeks eternally to remold it to its advantage. It has the characteristics of an organism, in that is has a lifespan over which its characteristics change in some respects and remain stable in others. Life within it is largely self-contained, and the dynamics of its development are largely internal.

Wallerstein contends that there have been three kinds of societies across human history: mini-systems, single-state world-empires, and multi-polity world-economies (the latter two are collectively known as world-systems), which reflects Karl Polanyi’s distinction between reciprocal, redistributive, and market economies. A world-empire is a structure in which there is a single political authority for the whole world-system, where a world-economy has multiple political centers and cultures, integrated through the market rather than a political center, in which two or more regions are interdependent with respect to necessities like food, fuel, and protection, and two or more polities compete for domination without the emergence of one single center. Throughout history, states have attempted to turn a world-economy into a world-empire, however, none have succeeded. World-systems analysis thus is not about systems, economies, empires of the world, but about systems, economies, empires that are a world.

At present, mini-systems (simple agricultural and hunting-and-gathering societies) are for the most part extinct and single-state world-empires, such as the Roman Empire, Han China and the Maya structures in Central America, no longer exist too. Thus, world-system analysis direct it’s attention toward multi-polity world-economies. Our modern society, also called the “modern world-system” happens to be precisely that.

Analyzing the dynamics of our capitalist world-economy

Our modern society is unique in being the first and only fully capitalist world- economy, which emerged around 1450-1550 and geographically expanded across the entire planet by about 1900. Thus, world-systems analysis asserts that our current global circumstances must be analyzed within the context of centuries-long politico-economic processes that have their origins in the sixteenth century. It is thus, a macrosociological perspective that seeks to explain the dynamics of our capitalist world-economy as a total social system.

But then, how could anyone comprehend the workings of the entire capitalist world-system since 1500 when most scholars spent a career mastering the minutiae of one historical event or contemporary institution? Yet, world-systems theorists would caution us that sometimes the best tool for understanding an object is the telescope, not a microscope, and that, to use a familiar metaphor, sometimes we fail to see the forest in our focus on the trees.

To do this, first, world-system analists gain command of several disciplinary analytical approaches (in the traditional sense of multi-disciplinary division of knowledge). They must then be able to engage the topic of global development both horizontally (grasping the relationship between different places and actors in the world at the same time) and vertically (being able to compare and analyze them over time). Fortunately like any other scientific activity, this is a task that can be divided up and shared, so that no single person must do all the work that is necessary.

The strategic importance of world-system analysis thus is that it provides a clear framework of analysis to bring seemingly dispersed and separate facts and analysis of different disciplines into an insightful view of our world. It allows us to see our modern society as a whole, see the relationship between its parts, see its evolution in time, and foresee it’s possible trajectories. It provides a large-and-lengthy enough spacio-temporal map of our world which we can use to navigate our way into the unpredictable and increasingly turbulent future.

Foreseeing the end of capitalism and the emergence of a new world-system

World-systems analysis contends that countries do not develop in stages, but rather the system does, and thus, the analysis of events and countries since 1450 onward should be viewed within the framework of capitalism’s development as a historical system. One of the most important conclusion of this analysis is the argument that the structures of the global capitalist order have become considerably unsettled and has reached its endpoint because the three costs of production (labor, inputs, and taxation) for the producers have been steadily rising, cramping irremediably it’s ability to achieve the capitalist world-economy’s priority: the endless accumulation of capital. In brief, each of these costs of production represents structural long-term trends reaching their respective asymptotes in the capitalist world system in the form of:

1. The deruralization of the world, which ends its ability to obtain cheap labor for it’s profit-seeking production activities.
2. The ecological limits of toxification/pollution and resource depletion, which limits the ability of capital to reduce costs of inputs by continued externalization of these costs;
3. The spreading democratization of the world, evidenced by ever-expanding popular pressures for increased expenditures on health, education, and lifetime income guarantees, which have created a steady upward pressure of taxes eating away profit.

Capital ofcourse seeks to reduce these structural pressures all the time. This is what the neoliberal offensive of the last twenty years (among other by preaching “there is no alternative”) has been about. But the long-term curve looks like an upward ratchet effect–two steps forward and one step backward. In other words, they succeed regularly in reducing these pressures but always to a lesser degree than the next upward bump augments them.

Wallerstein thus believes that the next fifty years will be a period of chaotic instability which will result in a new configuration of world-system, one which may be more or less equal than the present one. If we are willing, after our current stage, he envisions the emergence of a more democratic, egalitarian and sustainable world-system.

The Capitalist World-Economy: Genesis, Expansion and Demise

World-Systems Analysis and Social Change

Before we discuss about the emergence of a new world-system, we need to discuss about social change within any given historical system. Let us do this by looking at the historical system of which we are a part, a capitalist world-economy.

In doing so, there are three quite separate intellectual questions that ought not to be confounded one with the other:

• The first is the question of genesis. How is it that this historical system came into existence, at the time and place that it did and in the way that it did?
• The second is the question of systemic structure. What are the rules by which this particular historical system, or perhaps more generally, this type of historical system, functions? What are the institutions through which these rules are implemented? Who are the social actors in conflict with each other? What are the long-term trends of the system?
• The third is the question of demise. What are the contradictions of the historical system, and at what point do they become intractable, leading to a bifurcation in the system, entailing the demise of the system, and the emergence of one (or more) replacement system(s)?

Not only are the three questions separate, but the methodology (the modes of possible enquiry) that may be used to respond to these queries are not at all the same.

It is important that we do not confound the three questions because most analyses of social change center around only the second set of issues, the functioning of the historical system. The analysts quite often assume a functionalist teleology; that is to say, they presume that its genesis is adequately explained once they can demonstrate that the kind of system they are describing works well, and they can argue that the system is superior in its mode of functioning to prior systems. In this sense, the genesis assumes a quasi-inevitable character, situated in the logic of history, and tied to setting in motion the particular kind of system. As for demise, this is explained in the case of defunct systems not by the inherent contradictions in the system (for every system has contradictions) but by the asserted inferiority of its mode of functioning which inevitably gave way to presumably superior modes of functioning. And, it should be noted, this question is seldom posed at all for the current historical system, so obvious to us seems its superiority. You can observe this kind of reasoning in the endless number of books which seek to explain the emergence of the modern Western world as the end point of a logical evolutionary process, books whose argumentation normally involves a searching in the depths of history for the seeds which have led to the present–the glorious present.

But in a moment, we will know that such analyses is misleading and far from the truth. And on the contrary, it is precisely because the historical system in which we live is in terminal crisis that there exists the chance of addressing these questions in ways that can make possible substantively rational social constructions. This was not a possibility available to nineteenth-century scholars, however insightful or masterly they were. It is the times that permit us, without disgracing ourselves, to follow Danton’s exhortation: “De l’audace, encore de l’audace, et toujours de l’audace.” These are our times, and it is the moment when social scientists will demonstrate whether or not they will be capable of constructing a social science that will speak to the worldwide social transformation through which we shall be living in the decades to come.

So now, we proceed.

The Genesis of a Capitalist World-Economy

We may take the period of its genesis as being somewhere circa 1450 A.D., and its locus western Europe. At that moment of time in that region, there occurred the more or less simultaneous great movements we call the Renaissance, the Gutenberg revolution, the Descobrimentos, and the Protestant Reformation. Along with it came in the wake of a somber period in this same region, in which there was the Black Death, the abandonment of villages, and the so-called crisis of feudalism (or the crisis of seigniorial revenues). How might we go about explaining the end of the feudal system and its replacement by capitalist system, more or less in the same geographic zone?

First we need to explain why the previously existing system could no longer make the adjustments necessary to continue operating according to its rules. I believe that, in this case, it is explained by a simultaneous collapse in the three key institutions that sustained the feudal system: the seigniors, the states, and the Church.

Between 1150-1300, both population as well as commerce expanded within the confines of the feudal system. However, from 1300-1450, this expansion ceased, creating a severe economic crisis. A shift of climatological conditions also decreased agricultural productivity and contributed to an increase in epidemics within the population. The drastic demographic collapse meant that there were fewer persons to till the land, that revenues fell, that rents fell, that commerce contracted, and that consequently serfdom as an institution declined or disappeared. In general, peasants were able to exact far better economic terms from large landowners. As a result, the power and the revenues of the seigniors declined significantly. The states in turn collapsed both because of the drop in their own revenues and because the seigniors turned on each other in order to salvage their personal situations in difficult times (which, by decimating the nobility, further weakened them vis-a-vis the peasantry). And the Church was attacked from within, both because of its weakened economic situation and because the collapse of the seigniors led to a generalized decline in it’s authority.

When an historical system falls apart in this way, what normally happens is that it becomes subject to a renewal of the ruling strata, most frequently by conquest from without. Had this been the fate of western Europe in the fifteenth century, we would have taken no greater notice of this transformation than we have taken of the historical replacement of the Ming dynasty in China by the Manchus (which essentially was a renewal of the ruling strata by conquest from without). This did not however happen in western Europe. Instead, as we know, the feudal system was in fact replaced by something radically different, the capitalist system.

The first thing we must note is, far from being inevitable, this was a surprising and unanticipatable development. And the second thing to note is that it was not necessarily a happy solution. In any case, how did this occur, or why?

It occurred primarily because the normal external renewal of ruling strata was accidentally and unusually not possible. The most plausible conquering stratum, the Mongols, had themselves just collapsed for reasons quite external to what was happening in western Europe, and there happened to be no other conquering force immediately available. The Ottomans came along a little too late, and by the time they tried to conquer Europe, the new European system was already strong enough (but just) to keep them from advancing beyond the Balkans.

But why then was feudalism replaced by capitalism? Here we have to remember that capitalist entrepreneurial strata had long existed in western Europe as in many others parts of the globe; indeed, such groups had existed for centuries, if not millennia. There had however been in all previous historical systems very strong forces that limited their ability to have free rein and to make their motivations the defining characteristics of the system. This was very clearly true of Christian Europe, where the powerful institutions of the Catholic Church maintained a constant battle against ‘usury’, a central capitalist practice. In Christian Europe, as elsewhere in the world, capitalism was an illegitimate concept, and its practitioners were tolerated in only relatively small corners of the social universe. Capitalist forces did not suddenly become stronger, or more legitimate in the eyes of most people. In any case, it had never been primarily the degree of strength of capitalist forces that had been the decisive factor but the strength of the social opposition to capitalism. Suddenly, the institutions that sustained this social opposition had become quite weak. And the inability to reestablish them or create similar structures by renewing the ruling strata via external conquest gave a momentary (and probably unprecedented) opening to such capitalist forces, which swiftly entered the breach and consolidated themselves. We must think of this occurrence as extraordinary, unexpected, and surely undetermined.

Nonetheless it happened. In terms of social change, this was a once only event. The change in this instance was fundamental. Instead of calling this fundamental change “the rise of the West,” as is usually and self-servingly done, we should designate it as “the moral collapse of the West” for reasons we are about to find out in this discourse. And capitalism, once given its head, is indeed a very dynamic system which rapidly took hold and eventually swept the entire planet into its orbit.

This is how world-systems analyst perceive the genesis of the capitalist world-economy in which we are living. It is wondrously aleatory.

The Functioning and Expansion of the Capitalist World-Economy

We thereupon come to the second question about our capitalist world-economy: what are the rules by which it works? what is the nature of its institutions? what are its central conflicts?

The story begins with two elementary features of historical capitalism.

The first is the fact that capitalism is a system that has an imperative need to expand in terms of total production and expand geographically in order to sustain its prime objective: the endless accumulation of capital. This began with only a slight advance in capital accumulation in Britain and France due to specific political circumstances at the end of the period of feudalism desribed previously. This then set in motion a process of gradual expansion, as a result of which virtually every area on earth today is incorporated into the capitalist world-economy.

The second feature is less often discussed. An essential element in the accumulation of capital is for capitalists, especially large capitalists, not to pay their bills in the production process. This we can call the “dirty secret” of capitalism. The language used today to describe this feature is “externalization” of costs. We shall discuss this in detail later on.

What historical capitalism did was then to push these two themes, the actual expansion and its ideological justification, to the forefront. In doing so, capitalists were able to override social objections to this terrible duo. Thus, what we mean by historical capitalism is a system in which the institutions that were constructed made it possible for capitalist values to take priority, such that the world-economy was set upon the path of the commodification of everything in order that there be ceaseless accumulation of capital for its own sake. It is a system whose institutions are geared to rewarding all those who give primacy to the endless accumulation of capital and punish all those who attempt to implement other priorities.

The set of institutions that were established to make this possible include:

• the elaboration of commodity chains linking together geographically disparate production activities operating to optimize profit ratios in the system as a whole,
• the network of modern state structures linked together in an interstate system to guarantee the operation of capitalist firms,
• the creation of income-pooling households as the basic units of social reproduction, and eventually
• an integrated geoculture legitimating the structures and seeking to contain the discontents of the exploited classes.

Structural and hierarchical division within the capitalist world-economy

The capitalist world-system is far from homogeneous in cultural, political, and economic terms–instead characterized by fundamental differences in civilizational development, accumulation of political power and capital. Within it, there is a territorial division of labor, in which the production and exchange of basic goods and raw materials that is necessary for the everyday life of its inhabitants takes place. This division of labor refers to the forces and relations of production of the world-economy as a whole and it leads to the existence of two interdependent regions: core and periphery.

These are geographically and culturally different, one focusing on capital-intensive, and the other on labor-intensive production. The most sophisticated economic activities, with a high level of technological development and the manufacturing of complex products, are concentrated in core states, which are also the strongest and best integrated. Peripheral regions are economically subordinate, generally supplying raw materials or low-quality goods, agricultural products and cheap labor for the expanding agents of the core. In between core and periphery, there exist semi-peripheral states which acts as a buffer zone, being a periphery to the core, and a core to the periphery. It has a mix of the kinds of activities and institutions that exist on both core and periphery. Areas which have so far remained outside the reach of the world-economy, which is termed external , enter it at the stage of periphery.

At the end of the twentieth century, this structural division in the world-economy would comprise of North-western Europe, the US and East Asian countries at the core, Eastern Europe, China, Brazil and India at the semi-periphery, poor African and Asian countries at the periphery, and pristine indigenous society at the external.

While there are many ways to attribute a specific country to the core, semi-periphery, or periphery, the relationship between them is structural and hierarchical. Using an empirically-based sharp formal definition of ‘domination’ in a two-country relationship, the core is made up of “free countries” dominating others without being dominated, the semi-periphery is the countries which are being dominated (usually–but not necessarily–by core countries) while at the same time dominate others (usually in the periphery) and periphery as the countries which are being dominated. Another way to differentiate countries is by their development state of their scientific and technological endeavours. The more advanced or developed they are, the more likely they are positioned at the core, and the less developed they are the more likely they will reside in the periphery or even external to the world-economy.

Domination and exploitation in the capitalist world-economy occurs through a mode of economic exchange between core and periphery which takes place on unequal terms, in which the periphery is forced to sell its products at low prices, but has to buy the core’s products at comparatively high prices, an unequal state which, once established, tends to stabilize itself due to inherent traits of the system. This is because the strong states reinforce and increase the differential flow of surplus to the core zone, while peripheral countries are then structurally constrained to experience a kind of development that reproduces their subordinate status. This is what Wallerstein called unequal exchange, the systematic transfer of surplus from semiproletarian sectors in the periphery to the high-technology, industrialized core. This leads to a process of capital accumulation at a global scale in core states, and necessarily involves the appropriation and transformation of peripheral surplus.

This inherent structural and hierarchical division in the form of differential strength of the multiple states within the system is crucial to maintain the capitalist world-economy as a whole, in other words, to ensure that it achieves it’s prime objective of endless accumulation of capital. The result of this feature is the domination and exploitation of weak and poor peripheral countries and societies by the powerful and wealthy core countries and societies through out the last 500 years–be it achieved through the military conquest of imperial colonialism, or through the trade deregulation of economic neoliberalism. Hence, the ongoing process of a capitalist world-economy tends to expand the economic and social gaps among, and also within, its varying areas in the very process of its development.

Dynamics change but structure remains

Political, economic, and military interactions between states are central to the maintenance of elites within core states. It’s elites accumulate many of their resources from the periphery and semi-periphery, use some of those resources to buy support and/or pay armed forces, and often maintain subordinate elites in non-core areas. Changes in the overall balance of political, economic and military power among states can enable individual states to move within the hierarchy. Thus, upward mobility of peripheral states is determined by their trade relations within the world economy and their geopolitical role and power. In this way, the status of core and periphery are not mutually exclusive and fixed to certain geographic areas; instead, they are relative to each other and shifting.

Thus, while the advantages of the core-states have not ceased to expand throughout the history of the modern world-system, the ability of a particular state to remain in the core sector is not beyond challenge. Indeed, it may well be that in this kind of system it is not structurally possible to avoid, over a long period of historical time, a circulation of the elites in the sense that the particular country that is dominant at a given time tends to be replaced in this role sooner or later by another country.

Thus, particular regions of the world may change their structural role in the world-economy, to their advantage, even though the disparity of reward, i.e. economic and social gaps, between different sectors of the world-economy as a whole may be simultaneously widening through the mechanism of unequal exchange. It is in order to observe this crucial phenomenon clearly that we have insisted on the distinction between a peripheral area of a given world-economy and the external arena of the world-economy. The external arena of one century often becomes the periphery of the next–or its semiperiphery. But then too core-states can become semiperipheral and semiperipheral ones peripheral.

Consequently, contrary to affirmative theories of modernization and capitalism, world-system analysis does not conceive of these differences as mere residues or irregularities that can and will be overcome as the system as a whole evolves. It is more appropriate to consider the lasting division of labor into core, semi-periphery, periphery and external, as an inherent feature of the capitalist world-economy.

The affair between the state and corporation

States and corporations are both essential to the operation of the modern world-system. With the emergence of the Westphalian order, the legitimacy of state sovereignty came to rest upon “reciprocal recognition” among states (the least costly strategy followed within the international arena). Sovereignty also operates internally, since central authorities and local powers mutually recognize each other. Such legitimacy is crucial to the workings of the capitalist order because states establish rules about work regulations, corporate governance, property rights, taxation, and the flow of commodities, labor, and capital.

The relationship between states and corporations however, is somewhat bleaker than this conventional view. It has to do with the degree to which money buys access. This kind of negative synergy is pervasive in the operations of the regimes of the wealthier states. Politics in a multi-party system to gain power within the state is an expensive game to conduct, and it is getting more expensive all the time. Most politicians, most political parties have financial needs that go far beyond what can be supplied by the relatively small contributions of the mass of their supporters. We all know what happens as a result. Wealthier contributors (individuals and corporate groups) offer large sums of money, sometimes to multiple competing parties at the same time. And in return, they expect a certain amount of tacit sympathy for their needs and explicit access for their lobbying. This way, in core zones, many businesses with the support of states they operate within, monopolize the most profitable activities of the division of labor.

Thus, although in theory capitalists operate via the market and wish governments to stay out of market operations, in practice, as every capitalist knows that the governments are crucial to their market success in multiple ways–by making possible or impossible relative monopolies, in being large-scale near-monopsonistic purchasers of expensive items, and as manipulators of macro-economic decisions (including of course taxation). No serious capitalist can afford to ignore governments, his own and those of any other country in which he operates. And given that politicians must give priority to getting into power or remaining in power, and have great financial needs, no serious capitalist can afford to ignore this obvious source of pressure on governments, or he will lose out to competitors or to hostile interests. Therefore no serious capitalist does ignore governments, and all serious capitalists have in the forefront of their consciousness the fact that politicians have great financial needs. Consequently, money-politics and corruption is absolutely normal and unexpungeable from the ongoing political life of the capitalist world-economy.

In the interstate scheme of things, states are even used by class forces to pursue the interest of core countries. Core corporations are the major economic actors in the world-economy, but rely on states to protect their assets and market access. The existence of multiple states stabilizes the system by allowing corporations mobility, thus limiting how far any state can tax or regulate them. It is through these regulatory regimes that the state is intimately involved in the endless accumulation of capital.

Growing disparity across the world-economy

Capitalism as an economic mode is based on the fact that the economic factors operate within an arena larger than that which any political entity can totally control. This gives capitalists a freedom of maneuver that is structurally based. It has made possible for the imperative of the endless accumulation of capital to constantly expand it’s frontiers–geographical, psychological, intellectual, scientific–across the world-system. And because capitalism is based on the constant absorption of economic loss (externalities) by political entities, while economic gain is distributed to ‘private’ hands, the geographic expansion of the capitalist world economy altered political systems, labor conditions and ecological balance wherever it was able to penetrate.

The division of labor within our modern world-system involves a hierarchy of occupational tasks, in which tasks requiring higher levels of skill and greater capitalization are reserved for higher-ranking areas. That is to say, the range of economic tasks is not evenly distributed throughout the world-system. This division is not merely functional–that is, occupational–but also geographical and in part a consequence of ecological considerations. But for the most part, it is a function of the social organization of work, one which magnifies and legitimizes the ability of some groups within the system to exploit the labor of others, that is, to receive a larger share of the surplus. Thus, since a capitalist world-economy essentially rewards accumulated capital at a higher rate than raw labor power, the geographical maldistribution of these occupational skills involves a strong trend toward self-maintenance. The forces of the marketplace reinforce them rather than undermine them. And the absence of a central political mechanism for the world-economy makes it very difficult to intrude counteracting forces to the skewed distribution of rewards.

This unequal exchange, of course, did not mean either that everybody in the periphery became poorer or that all citizens of the core regions became wealthier as a result. In the periphery, landlords for example often gained great wealth at the expense of their underpaid coerced laborers, since landowners were able to expropriate most of the surplus of their workers for themselves. In turn in the core regions, many of the rural inhabitants, increasingly landless and forced to work as wage laborers, at least initially, saw a relative decline in their standard of living and in the security of their income. Overall, however, the development of the capitalist world economy is detrimental to a large proportion of the world’s population. The reason for the belief is precisely because the core zones which contain about 20% of the modern world-system’s population controls about 80% of its wealth, and tends to expand as inequality and power polarization is increasing as a long-term trend of the system. It has brought about a skewed development in which economic and social disparities between sections of the world economy have increased.

The Demise of the Capitalist World-Economy

What are the contradictions of the historical system, and at what point do they become intractable, leading to a bifurcation in the system, entailing the demise of the system, and the emergence of one (or more) replacement system(s)?

I believe that we are involved right now in a transformational period in our modern world-system. One can argue that there are a series of developments which have undermined the basic structures of the capitalist world-economy and therefore have created a crisis situation. As mentioned briefly at the beginning, they create a steadily rising costs of production (labor, inputs, and taxation) for the producers, cramping irremediably their ability to achieve the endless accumulation of capital. This in turn would mark the demise of our capitalist world-economy.

Rising labor cost

This is mainly caused by the deruralization of the world. To be sure, derurarization has been regularly hailed as a triumph of modernity. But seen from the vantage point of the endless accumulation of capital, this development means the end of a previously seemingly inexhaustible reservoir of persons, those persons resident in rural areas who come to urban areas for the first time to engage in wage employment, a portion of whom could periodically be brought into market-oriented production at extremely low levels of remuneration.

This shifting pool of workers at the bottom who are paid marginal sums has been a major element in worldwide profit levels for five centuries. But no particular group of workers remained in such a category for too long. Persons long resident in urban areas, even if they are unemployed in the formal economy and living in terrible slum conditions, generally demand higher wage levels before accepting wage employment. This is because they have learned how to obtain from alternative sources in the urban center a minimum level of income higher than that which is being offered to newly-arrived rural migrants. Thus, even though there is still an enormous army of reserve labor in the rural areas throughout the world-system, the fact that the system is being rapidly deruralized means that supply is running short causing the average price of labor worldwide to go up steadily. This means in turn that the average rate of profits must necessarily go down over time.

This squeeze on the profits ratio makes all the more important the reduction of costs other than labor costs. But, of course, all inputs into production are suffering the same problem of rising labor costs.

Rising ecological cost

The second disturbing trend to our capitalist world-system has to do not with the cost of wage-labor but with the cost of material inputs. This is why capitalism may be said to have created “a new, historically unprecedented relationship between the economic process and nature”. Under capitalism, the search for profits necessarily presses producers to reduce their costs at two key bioeconomic moments, that of the extraction of raw materials and that of the elimination of the waste of the productive process. The behavior that maximizes the profits of any given producer is to pay absolutely nothing for the renewal of natural resources and next to nothing for waste treatment. This so-called “externalization” of costs puts the financial burden on everyone else, which has historically meant that, for the most part, no one has paid. This therefore has meant that the most serious overexploitation of nature has been at precisely these two points: “renewable, biological resources” and “sinks for wastes”.

The problem here is akin to that with relocation as a solution to wage costs. It works as long as there are previously unutilized areas in which to dump waste. But eventually there are no more streams to pollute, or trees to cut down–or at least, there are no more without serious immediate consequences for the health of the biosphere.

While all prior historical systems transformed the ecology, and some prior historical systems even destroyed the possibility of maintaining a viable balance in given areas that would have assured the survival of the locally-existing historical system, only historical capitalism, by the fact that it has been the first such system to englobe the earth and by the fact that it has expanded production (and population) at a previously unimaginable rate, has threatened the possibility of a viable future existence for humankind and non-humankind alike. This is the situation in which we find ourselves today after 500 years of such practices, which is why today we have an ecology movement that has been growing rapidly throughout the world.

What can be done? There are two different kinds of operations in preserving the environment. The first is the cleaning up of the negative effects of a production exercise (for example, neutralizing chemical toxins that are a by-product of production, or removing non-biodegradable waste). The second is investment in the renewal of the natural resources that have been used (for example, replanting trees) or in the case of non-renewable resources such as fossil fuel, to invest in the invention of renewable replacements for it.

The problem is the cost of carrying out these operations, which is enormous, and thus must be paid by someone via some form of taxes. And there are only two someone’s: either the firms that are considered to have been the perpetrators of environmental damage, or the rest of us. If it is the former, the pressure on the profit margins will be impressively high. And indeed, these proposals meet with considerable resistance on the part of the firms that would be affected by such proposals, on the grounds that these measures are far too costly, and would therefore lead to the curtailment of production and profit contributing to the stagnation of the economy. If it is the latter, the tax burdens will mount significantly, a problem to which we are coming. And higher taxes for citizens will eventually urge them to demand for higher wages, thereby curtailing profit rates of firms.

Furthermore, there is not much point in cleanup and organic renewal if the practices which created the problem at the first place remain as at present, since it would amount to cleaning an Augean stable. Hence, the logical inference is to require the total internalization of all costs. This however would add still further to the pressure on the profits of individual firms, thus forcing and end to the endless accumulation of capital.

Rising welfare cost

The third pressure lies in the realm of taxation. Taxation is of course a payment for social services, and therefore is accepted as a reasonable cost of production, provided it is not too high. Now what has determined the level of taxation? To be sure, there has been the constant demand of security (the military, the police). This has, as we know, steadily risen over the centuries because of the increasing relative costs of the means of security (weapons, provision for soldiers, etc.), the scope of military actions, and the perceived need of police actions. The second steady rise has been in the size of the civil bureaucracies of the world, a function first of all of the need to collect taxes and second of all to perform the expanding functions of the modern welfare states which requires a considerable amount of money.

The growth of these welfare provisions have been a principal means of ensuring relative political stability in response to growing discontents of the lower strata concerning the increasing polarization of real income, which has been a steady feature of the capitalist world-economy. Social welfare efforts by governments have been the pay-off utilized to tame the “dangerous classes,” that is, to keep the class struggle within limited bounds.

We call the response to these popular welfare measures “democratization,” which has also been a very real long-term trend. There are three principal varieties of such welfare measures: educational institutions, health facilities, and guarantees of income across the lifetime of individuals (especially, unemployment insurance and social security for the aged). Virtually all people wish to prolong life and good health to the extent possible, for themselves and their families. Virtually all people wish to arrange education for themselves and their children, primarily in order to improve their life chances. And almost all people worry about the irregularities of real income over their lifetime and wish not merely to increase their current income but to minimize sharp fluctuations. These are of course all perfectly reasonable aspirations. And they have been regularly reflected in ongoing political programs.

And actually, quite a bit has been done along these lines over the past 200 years. In the field of health, we have had governments active in improving sanitation, in providing preventive medicine (such as, for example, mass vaccinations), subsidizing hospitals and clinics, expanding medical education, providing various kinds of health insurance (as well as certain kinds of free services). In the field of education, whereas 200 years ago virtually no one received a formal education, today primary education is available almost everywhere, secondary education is widespread (albeit unevenly), and even tertiary education is available for a significant number of people (at least in the wealthier states). As for guaranteed lifetime income, we have programs of unemployment insurance, old-age pensions, and various other methods of evening out fluctuations over the life span. To be sure however, compared to health and education, programs to guarantee lifetime income are far more unevenly distributed across the world-system.

Thus, there are two things to be noted about such demands. They have been made in more and more zones of the world-system, and are today nearly universal. And the levels of the demands have risen steadily within each country, with no clear limit in sight. This has meant, has had to mean, steadily rising tax rates in virtually every country, with at most occasional slight reductions.

It is thus difficult to see how any government could survive a truly significant cutback in these expenditures. But of course, someone must pay for this. And producers in the end pay, either directly or via their employees who demand higher remuneration precisely to pay these costs through increased taxation. At a certain point, such redistributive taxation reaches levels where it interferes seriously with the possibility of accumulating capital. Hence the reaction today to what is perceived as the “fiscal crises of the states” is for capitalist firms to demand a rollback, and to seek popular support on the grounds that individual taxation is also rising sharply. The irony is that while there is often popular support for limiting taxes, there is zero popular support for cutting back welfare provisions (either of education or of health or of income guarantees).

Indeed, at the very time that there are clamors about high taxation, the levels of popular demand on government services are growing. We are witnessing today a major political battle about the size of the bill. To be sure, there are advantages to capitalists if tax is reduced, since it increases effective demand for their produce. But it is not at all sure that the increased effective demand brings greater benefit than the increased wage demand it most probably will entail. Either the bill is cut (which is incompatible with socio-political stability) or once again the profit margins will be cut, and in no small amounts. So here too we have a structural pressure on the accumulation of capital.

Effects of the structural stresses

We do not have good data on the steady increase of all these costs, but they surely are considerable. On the other hand, we cannot have a rise in the sales price of world goods to match the increase of production costs precisely because of the enormous expansion of world production which has reduced the multiple monopolizations and increased world competition. So, the bottom line is that the costs of production have risen faster than the sales prices of production, and this means a profit squeeze, which translates into difficulties in accumulating capital through production.

These trends points towards a stagnation in the world-economy in the form of considerable profit drop from production with a series of clear consequences. Persons with capital then, as a respond to this trend, shift their primary locus of seeking profit from the productive sphere to the financial sphere. Another consequence is the significantly increased unemployment worldwide. There occur also significant shifts of loci of production from higher-wage areas to lower-wage areas (what used to be called the phenomenon of “runaway factories” and more recently “down-sizing”, or “race to the bottom”).

This trio of consequences can be seen to have occurred worldwide since circa 1970. We have had endless escalation of speculative financial activity, which is of course very profitable for a relatively small group of people, at least until the point when the bubble bursts. We have had very large shifts of production from North America, western Europe, and even Japan to other parts of the world-system, which have consequently claimed that they were ‘industrializing’ and therefore developing. However, another way of characterizing what happened is to say that these semiperipheral countries were the recipient of what were now less profitable industries. And we have had a rise in unemployment everywhere–in most countries of the South to be sure, but in the North as well.

The decline of traditional antisystemic movements

Another important trend points to the demise of the capitalist world-economy. It has to do with the traditional antisystemic movements, which historically and analytically, consists of two distinct and in many ways rival kinds of popular movement–those that went under the banner ’social’, and those that were ‘national’. Social movements were conceived primarily as socialist parties and trade unions; they sought to further the class struggle within each state against the bourgeoisie or the employers. National movements were those which fought for the creation of a national state, either by combining separate political units that were considered to be part of one nation–as, for example, in Italy–or by seceding from states considered imperial and oppressive by the nationality in question–colonies in Asia or Africa, for instance.

Analysis of the world situation in the 1960s reveals these two kinds of movements was looking more alike than ever. In most countries they had completed ’stage one’ of the two-step strategy, having come to power practically everywhere. Communist parties ruled over a third of the world, from the Elbe to the Yalu; national liberation movements were in office in Asia and Africa, populist movements in Latin America and social-democratic movements, or their cousins, in most of the pan-European world, at least on an alternating basis. Once ’stage one’ was completed, and they had come to power, their followers expected them to fulfill the promise of stage two: transforming the world. What they discovered, if they did not know it before, was that state power was more limited than they had thought. Each state was constrained by being part of an interstate system, in which no one nation’s sovereignty was absolute. The longer they stayed in office, the more they seemed to postpone the realization of their promises; the cadres of a militant mobilizing movement became the functionaries of a party in power. The militant, syndicalist tactics that had been the daily bread of the social movement became ‘counter-revolutionary’, highly discouraged and usually repressed, once it was in office. Thus, they had not transformed the world.

The conclusion that the world’s populations drew from the performance of the classical antisystemic movements in power thus was negative. They ceased to believe that these parties would bring about a glorious future or a more egalitarian world and no longer gave them their legitimation; and having lost confidence in the movements, they also withdrew their faith in the state as a mechanism of transformation. This did not mean that large sections of the population would no longer vote for such parties in elections; but it had become a defensive vote, for lesser evils, not an affirmation of ideology or expectations.

Thus the traditional antisystemic movements declined for aiming not to radically change the system, but merely mending it’s negative outcomes through reforms, or worse yet, being absorbed by the system they origionally wish to change, and end up not doing anything substantial to change it.

This seemingly ‘unpleasant’ trend is, however, in fact not a plus for the capitalist system, but its greatest danger. This is because, while these movements were antisystemic in their goals, they were disciplined structures which controlled the spontaneous radical impulses of their followers. They mobilized for specific actions, but they also demobilized followers, especially when they were in government, insisting on the benefits in a distant future, as opposed to untrammeled disturbances in the present. They served as a guarantee for the existing system, in that they assured the world’s dangerous classes that the future was theirs, that a more egalitarian world was on the horizon (if not for them, then for their children), and thereby these movements legitimated both optimism and patience for radicals. In the last twenty years, however, popular faith in these movements (in all their varieties) has disintegrated, which means that their ability to canalize angers has disappeared with them. Since all these movements had in fact preached the virtues of strengthening the state structures (in order to transform the system), faith in such reformist states has also declined radically. The collapse of these movements represents the collapse on constraints on the dangerous classes, who thereby become dangerous again.

This is the last thing that defenders of the present system really want, despite their anti-state rhetoric. Accumulators of capital in fact count on the state both to guarantee economic monopolies and to repress ‘anarchistic’ tendencies of the dangerous classes. We are seeing today a decline in the strength of state structures everywhere in the world, which means rising insecurity and the rise of ad hoc defensive structures. Analytically, this is the road back to feudalism, which on the flip side, points to the demise of our capitalist world-economy.

The creative destruction of capitalism

Thus, our present condition is a bit like driving a car downhill with an engine still intact but with a damaged body and wheels. The car would no doubt roll forward but surely not in the straight line one would have previously expected nor with the same guarantees that the brakes would work efficiently. How it would behave would become rather difficult to assess in advance. Supplying more gas to the engine would ofcourse be a suicidal move. The car will certainly speed up and end up in a deadly crash.

Schumpeter accustomed us a long time ago to the idea that capitalism would not collapse because of its failures but because of its successes. We have tried to indicate here how the successes (modes of counteracting downturns in the world-economy, modes of maximizing the accumulation of capital) have, over time, created structural limits to the very accumulation of capital they were intended to ensure. This is concrete empirical evidence of the Schumpeterian assumption.

No doubt, to continue the analogy of the damaged automobile, a wise chauffeur might drive quite slowly under these difficult conditions. But there is no wise chauffeur in the capitalist world-economy. No individual or group has the power to make the necessary decisions alone. And the very fact that these decisions are being made by a large number of actors, operating separately and each in his/her own individual and immediate interests, virtually ensures that the car will not slow down. Probably, it will start to go faster and faster.

Consequently, what we may expect is collapse. As the world-economy enters into a new period of expansion, it will thereby exacerbate the very conditions which have led it into a terminal crisis. In technical terms, the fluctuations will get wilder and wilder, or more chaotic, and the direction in which the trajectory is moving ever more uncertain, as the route takes more and more zigzags with every greater rapidity. At the same time, we may expect the degree of collective and individual security to decrease, perhaps vertiginously, as the state structures lose more and more legitimacy. And this will no doubt increase the amount of day-by-day violence in the world-system. This will be frightening to most people, as well it should be.

In such a scenario, what can we say about social change? We can say that we are once again seeing the demise of an historical system, parallel to the demise of Europe’s feudal system 500-600 years ago. What will therefore happen? The answer is we cannot know for sure. We are in a systemic bifurcation, which means that very small actions by groups here and there may shift the vectors and the institutional forms in radically different directions. Structurally, can we say that we are in the midst of fundamental change? We cannot even say that. We can assert that it is unlikely that the present historical system will last too much longer (perhaps 50 years at most). But what will replace it? It could be another structure that is basically similar, or it could be a structure that is radically different. It could be a single structure over all of the same geographic area, or it could be multiple structures in different zones of the globe.

As analysts, we will not be sure until it is over. As participants in the real world, we can of course do whatever we think wise to achieve the good society out of this demise of our capitalist world-system.

Towards a More Democratic, Egalitarian and Sustainable World-System

A period of transition

In our analysis, we now know that after 500 years of existence, the world capitalist system is, for the first time, in true systemic and structural crisis, and we find ourselves in an age of transition–a period of bifurcation and chaos. Although the outcome of this transition is intrinsically uncertain and impossible to predict, for the first time in these 500 years, there is a real perspective of fundamental change, which might be progressive and put in place a more inclusive, egalitarian and sustainable world-system, but will not necessarily be so. It however is certainly open to human intervention and creativity. Each of us can affect the future.

To know what to do, we must know what the dinamics exist in our world-economy that are trying to steer this transition, and there are three of them. The first is the conflict among the major loci of capital accumulation (the triad of the U.S., western Europe, and Japan/East Asia) for primacy in the next 50 years. This struggle for hegemony is a constant of our present system, and it is now open once again with the clear decline of the U.S. Secondly. The second is the struggle between the North and the South for distribution of the world surplus, which is inherent in the ever more polarizing reality of the capitalist world-economy. And finally there is the struggle between what we shall call metaphorically the camp of Davos (symbolizing the participants of the World Economic Forum, where it is annually held) and the camp of Porto Alegre (symbolizing the participants of the World Social Forum, where it was first held).

While the first two struggles are no doubt terribly important and dominate the concerns of most people who are politically active and continue a long-existing pattern of political division, they are only an inherent part in the normal functioning and development of the capitalist world-economy. It is the third struggle that is new and perhaps most important in this period of transition. It is a product of the fact that the world-system is in structural crisis. We can also say that the first two geopolitical cleavages, conflicts among the Triad and North-South conflicts, are geographic, while the conflict between the spirit of Davos and the spirit of Porto Alegre has no geography. It cuts across the entire world, as do the movements. It is a class struggle, a moral struggle, not a geographic struggle.

The two camps are fighting not over the realities of the present system but over what will replace it. But make no mistake. The camp of Davos, even though they don’t say it and perhaps many or even most of its members don’t realize it, is not fighting to preserve capitalism but to replace it with something different in which they will maintain their privileges and authority. Thus, we can think of this long transition as one enormous political struggle between two large camps: the camp of those in power who wish to retain the hierarchies, privileges and inequalities of the existing inegalitarian system, albeit in different forms, perhaps vastly different forms; and the camp of all those who would like to see the creation of a new historical system that will be significantly more democratic, egalitarian and sustainable.

However, we cannot expect that the members of the first camp will present themselves in the guise that I used to describe them. They will assert that they are modernizers, new democrats, advocates of freedom, and progressive. They may even claim to be revolutionary. They may not be using language that reflects the demise of existing structures, but they are implementing a strategy based on such assumptions. The key is not in the rhetoric but in the substantive reality of what is being proposed. Of course, their camp is not united, as is demonstrated by the conflict between the so-called centre-right ‘traditionalists’ and the ultra-right, militarist hawks. One thing is certain, that they are working hard to build backing for changes that will not be changes, but merely a new system as bad as–or worse than–the present one.

The outcome of this tension will be decided by the political activity of everyone now and in the next 25-50 years, and by who is able to mobilize whom. It will also be in large part depend on the degree to which who is able to analyze better what is going on and what are the real historical alternatives with which we are collectively faced. It also depends as well on a sharp moral commitment to an alternative vision for a good society. That is to say, it is a moment at which we need to unify knowledge, imagination, and praxis. Or else we risk saying, a century from now, plus ca change, plus c’est la meme chose. The more things change, the more they stay the same.

Thus, we are faced today with historic choices, in which our individual and collective thinking and action will make a real difference in terms of the outcome. Today’s moment of choice is, however, in one way different than previous such moments. It is the first one in which the entire globe is implicated, since the historical system in which we live is the first one that encompasses the entire globe. Historic choices are moral choices, but they can be illuminated by rational analyses, which thus becomes the definition of our intellectual and moral responsibility. We must rise to the challenge.

Towards a new kind of antisystemic movement

It is clear that the issues confronting antisystemic movements nowadays pose themselves in a very different fashion than those of the nineteenth and most of the twentieth centuries. And despite all it’s important achievements and the momentum it established to continue networking and mobilization, there is a growing self-criticism and concern among the movements that a new stage is needed if the movements are to be successful in the long term. The two-step, state-oriented strategy of first gain power within the state structure then transform the world, has become irrelevant, which explains the discomfort of most existing descendants of erstwhile antisystemic organizations in putting forward either long-term or immediate sets of political objectives. Those few who try, meet with skepticism from their hoped-for followers; or, worse, with indifference.

Critics of the new movements of camp Porto Alegre also argue that there is a serious lack of specific goals and coherent platform, and that tactics and strategy remain unclear. Weaknesses of the new form of resistance point to a lack of coherent ideology, a lack of formal organizational structure, and the lack of a common political platform and strategy to achieve its goals. The great diversity of the new movements however, which range from abolishing nuclear weapons to saving certain kind of owl from extinction, may explain the lack of ‘coherence’ and the prudent choice to avoid a premature effort to unify all the movements in this way. But it does not relieve the anxiety that such a diffuse set of movements will suffer from inherent weaknesses or limitations on action.

Thus, the most important theoretical and practical political question facing the new social movements of global resistance is whether they are capable of acting as a ‘counter-hegemonic’ bloc in global politics and achieving significant transformation of the global system. Can they overcome the political weakness inherent in such a broad and inclusive movement and work towards achieving more coherence in organization, program and action? Can they move beyond the initial phase of protest, education and networking and develop a more structured organizational form that allows them to enter into a position of political ‘negotiation’ with the neoliberal power structure, forcing it to make concessions to popular demands? The real challenge in this new wave of resistance to capitalist globalization is to maintain the impetus to action and to global solidarity and achieve more concrete political results.

In conclusion, although it is the diversity of the movements and their insistence on participation, inclusiveness, and autonomy that gives the new movements their real strength, a common understanding and strategy is needed if it wish to be more effective in changing the world for the better.

Strategies towards an alternative world-system

In the twentieth century, there has been an enormous amount of testing of alternative strategies by different movements, old and new, and there has been in addition a rather healthy shift in the relations of antisystemic movements to each other in the sense that the murderous mutual denunciations and vicious struggles of yesteryear have considerably abated, a positive development we have been underestimating.

In light of this positive development, a strategy for the period of transition ought therefore to include the following seven components–all of them easier said than done.

Intellectual clarity

The first is a process of constant, open debate about the transition and the outcome we hope for. This has never been easy, and the historic antisystemic movements were never very good at it. But the atmosphere is more favourable today than it has ever been, and this task of achieving intellectual clarity remains urgent and indispensable–underlining the role of intellectuals in this conjuncture.

Global solidarity

The second is to expand the spirit of Porto Alegre. What is this spirit? It is the coming together in a non-hierarchical fashion of the world family of antisystemic movements from the South and North to push for making their slogan “another world is possible” a reality. We shall have to see whether this loosely-structured world movement can hold together in any meaningful sense, but its very looseness have indeed makes it difficult to suppress. It also has a good deal of grassroots support, and they are
clear about what they oppose. But most importantly, it wakes us up to the fact that, poor or rich, black or white, we are all in this together, and only we, the people of the world alone, can bring about the changes the world desperately need.

Reforms, democratization and anti-discrimination

The third component should be self-evident: an antisystemic movement cannot neglect short-term defensive action including electoral action and pressure for necessary reforms, even if it is a loosely-structured and extra-parliamentary. Although electoral victories will not transform the world, they cannot be neglected because the world’s populations live in the present, and their immediate needs have to be addressed. Any movement that neglects them is bound to lose the widespread passive support that is essential for its long-term success. But the motive and justification for defensive action should not be that of remedying a failing system but rather of preventing its negative effects from getting worse in the short run. This is quite different psychologically and politically.

This makes, however, electoral tactics a purely pragmatic matter. Once we don’t think of obtaining state power as a mode of transforming the world, they are always a matter of the lesser evil, and the decision of what is the lesser evil has to be made case by case and moment by moment. They depend in part on what is the electoral system. A system with winner-takes-all must be manipulated differently than a system with two rounds or a system with proportional representation. And since there are many different party and sub-party traditions amongst the world’ progressives, it is crucial to create alliances that respect these traditions, aiming for the 51% vote that counts pragmatically. But no dancing in the streets, when we win! Victory is merely a defensive tactic.

The most important thing among such defensive actions is to push unceasingly for democratization in the form of more education, more health and more guaranteed lifetime income. This is not only popular; it is immediately useful in people’s lives. And it tightens the squeeze on the possibilities of the endless accumulation of capital as have been described beforehand. To be sure, expanding all these “welfare state” functions always raises questions of efficiency of expenditures, of corruption, of creating overpowerful and unresponsive bureaucracies. These are all questions we should be ready to address, but they should never lessen the basic demand of more, much more. These demands should be pushed loudly, continuously, and everywhere. There cannot be too much.

We should also bear in mind that a good deal of the benefits of democratization are not available to the poorest strata, or not available to the same degree, because of the difficulties they have in navigating the bureaucratic hurdles. We need to mobilize the poorest communities so that they take full advantage of their legal rights. But the poor are only one segment of society that is being discriminated. There are others who receive similar treatments, namely, women, indigenous people, the minority, etc. Thus, anti-discrimination should be made the defining measure of democracy because democracy is about treating all people equally–in terms of power, in terms of distribution, and in terms of opportunity for personal fulfillment. Discrimination is the primary mode of distinguishing between those who have rights (or more rights) and the others who have no rights or less rights. It is pervasive throughout the existing world-system. No corner of the globe is without it, and this, must end.

The fulfillment of neoliberals rhetorics

The fourth component is to make the neoliberal to fulfil its theoretical preferences because it notably seldom means what it says, or practices what it preaches.

Take some obvious themes, say, liberty. The neoliberal used to denounce the U.S.S.R. regularly because it didn’t permit free emigration. But of course the other side of free emigration is free immigration. There’s no value in being allowed to leave a country unless you can get in somewhere else. We should push for open frontiers.

Another example is the neoliberal rethoric to press for freer trade, freer enterprise, and keeping the government out of decision-making by entrepreneurs. The other side of that is that entrepreneurs who fail in the market should not be salvaged. They take the profits when they succeed; they should take the losses when they fail. It is often argued that saving the companies is saving jobs. But there are far cheaper ways of saving jobs–pay for unemployment insurance, retraining, and even starting job opportunities. But none of this needs involve salvaging the debts of the failing entrepreneur.

Neoliberals also regularly insist that monopoly is a bad thing. But the other side of that is abolishing or grossly limiting patents. The other side of that is not involving the government in protecting industries against foreign competition. This is most popularly shown in the deadlock of the WTO trade talks regarding the opening of North countries market to agricultural and low-value industrial goods produced in countries of the South. In the WTO round in Cancun, the offensive of protectionism by countries of the North was stalled by a coalition of medium powers of the South–Brazil, India, South Africa, etc.–who put forward a simple demand: free trade that works both ways. If the North wants us to open our borders to them, they said in effect, it must open its borders to us. If in the end the North is willing, will this hurt the working classes in the core zones? Well, not if money and energy is spent on trying to achieve greater convergence of world wage rates.

The details of the proposition are complex and need to be discussed. The point however is not to let the neoliberal get away with its rhetoric and reaping the rewards of that, while not paying the costs of its proposals.

Decommodification, and management of the commons

The fifth component has to be the establishment of interim, middle-range goals that seem to move in the right direction. One of the most useful–substantively, politically, psychologically–would be the attempt to move towards selective, but ever-widening, decommodification wherever it is possible, and to the extent that it can be done. This is because the crucial thing that is wrong with the capitalist system is not private ownership, which is simply a means, but commodification which is the essential element in the endless accumulation of capital. Natural resources, land, labor and human relationships are gradually being stripped of their intrinsic value and turned into tradable commodities in a market which dictates their exchange value. To put a price tag on everything is far from wise, as the Indian saying, “Only when the last tree has died, the last river has been poisoned and the last fish has been caught will we realize that we cannot eat money.”

No one can be quite sure, however, how decommodification would work. It will take a lot of experimentation to find viable formulas. And such experimentation is going on. It is going on, we must remember, within a basically hostile environment, in which there are systemic pressures to undermine any such attempts, and which can corrupt the participants with not too much difficulty. But decommodification not only stems the drive for neoliberal extensions but builds the basis for an alternate political culture.

Of course, the theorists of capitalism have long derided decommodification, arguing that it is illusory, that it goes against some presumed innate social psychology of humankind, that it is inefficient, and that it guarantees lack of economic growth and therefore of poverty. All of this is false. We have only to look at two major institutions of the modern world–universities and hospitals–to realize that, at least up to twenty years ago, no one questioned that they should be run as nonprofit institutions, without shareholders or profittakers. And it would be hard to argue seriously that, for that reason, they have been inefficient, unreceptive to technological advances, incapable of attracting competent personnel to run them, or unable to perform the basic services for which they were created.

We also don’t know how decommodification would work if applied to large-scale production like steel production or small-scale, more artisanal production. But as an illustration, industries, especially failing industries, should be decommodified. This does not mean they should be ‘nationalized’–for the most part, simply another version of commodification. It means we should create structures, operating in the market, whose objective is performance, survival and fulfillment rather than profit. We should be thinking of how we can transform, for example, steel factories into non-profit institutions, that is, self-sustaining structures that pay dividends to no one. The recent trend of not-for-profit social business, most notably by the peace nobel laurate Muhammad Yunus and his unconventional banking model for the poor, has opened up the way for the further advancement of this trend. This is one of the important aspect of a more hopeful future, and it is doable and replicable across different sectors of our modern society.

The same trend should also be applied to the commons (water, land, fishery, airwave, knowledge, genetic code, etc.). For example, in the case of land, the concept of conservation area should be augmented and expanded with the concept of commons trust. This is already in practice in some part of the world in the form of land trust which is held by a community committed to live in a sustainable manner on that piece of land, thereby preserving the health of the soil, and the biodiversity on top of that soil.

We need to do further experimentations in decommodification. In an era when productive enterprises are becoming far less profitable than previously, precisely because of the economic growth which the capitalist world-economy has bred, to dismiss this experimentation out of hand is simply blind and foolish. Pushing alternate forms of development along these lines has a potential for answering problems not only of the South but of the declining industrial regions of the North.

Another world is indeed possible

The sixth component is to remember always that we are living in the era of transition from our existing world-system to something different. This means several things. We should not be taken in by the rhetoric of globalization or the inferences about TINA (There Is No Alternative). Not only do alternatives exist, but the only alternative that doesn’t exist is continuing with our present capitalist world-economy.

Continuous envisioning of, and experimentation with, alternative structures

Finally, we need to develop the substantive meaning of our long-term emphases, which would be a world that is relatively democratic, relatively egalitarian and relatively sustainable. To say ‘relatively’ is because that is realistic. There will always be gaps–but there is no reason why they should be wide, encrusted or hereditary.

Is this what used to be called socialism, or even communism? Perhaps, but perhaps not. That brings us back to the issue of debate. We need to stop assuming what the better (not the perfect) society will be like. We need to discuss it, outline it, experiment with alternative structures to realize it and see what works and what doesn’t. And we need to do this at the same time as we carry out the first six parts of our programme for a chaotic world in systemic transition. And if this programme is insufficient, and it probably is, then this very insufficiency ought to be part of the debate which is Point One of the programme.

Building a Better Future

There will be immense struggle over the successor world-system–which shall continue for 20, 30, 50 years or maybe more, and whose outcome is intrinsically uncertain. In this inherent uncertainty of the world and at its moments of historic transformation, the only plausible strategy for concerned citizen of the world is one of intelligent, militant pursuit of its basic objective: the achievement of a relatively democratic, egalitarian and sustainable world.

Such a world is possible. This is especially so, because remembering that unlike period of normal life for an historical system when even great efforts at transformation–so-called ‘revolutions’–have limited success due to the fact that the system creates great pressures to return to its equilibrium, in the chaotic ambiance of a structural transition, such as the one that we are in now, fluctuations become wild, and even small pushes can have great consequences in favoring one branch or the other of the bifurcation. Therefore our actions, individual and collective, however small, may have a direct and large impact on the historical path with which the world is about to take.

History is on no one’s side. It depends on what we do. If ever anyone wishes to change the world for the better, today is the moment for thoughtful action.

“Sometimes it falls upon a generation to be great . . . You can be that great generation.” (Nelson Mandela, 2005)

“Sources” and Further Reading:

1. “World Systems Theory” , by Carlos A. Martinez-Vela
2. “World Systems Theory” and “Immanuel Wallerstein”, entries at Wikipedia
3. “The Development of an Intellectual Position” by Immanuel Wallerstein, a short intellectual biography.
4. “Modern History Sourcebook: Summary of Wallerstein on World System Theory”, a part of the Internet Modern History Sourcebook
5. A review of “Wallerstein, Immanuel. World-Systems Analysis: An Introduction” by Jeff Sommers, Ph.D.
6. pp. 229-233 of “The Modern World-System: Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century”, by Immanuel Wallerstein, New York: Academic Press, 1976
7. “Review of Immanuel Wallerstein, World-Systems Analysis: An Introduction” , by Brian J. McVeigh, February, 2005.
8. “Major Works by Immanuel Wallerstein”, a list of books
9. “Democracy, Capitalism, and Transformation” by Immanuel Wallerstein, 2001
10. “Ecology and Capitalist Costs of Production: No Exit” by Immanuel Wallerstein, 1997
11. “The Ecology and the Economy: What is Rational?” by Immanuel Wallerstein
12. “Social Change? Change is eternal. Nothing ever changes.” by Immanuel Wallerstein, 1997
13. “Globalization or The Age of Transition? A Long-Term View of the Trajectory of the World-System” by Immanuel Wallerstein, 1999.
14. “The Rise and Future Demise of World-Systems Analysis” by Immanuel Wallerstein, 1997
15. “The World Revolution of 20xx” by Christopher Chase-Dunn of the Institute for Research on World-Systems
16. “Understanding Waves of Globalization and Resistance in the Capitalist World-System” by Christopher Chase-Dunn and Barry Gills
17. “New Revolt Against the System” by Immanuel Wallerstein at the New Left Review
18. “A Left Politics for an Age of Transition” by Immanuel Wallerstein, 2001
19. “The State of The Commons”, a report by the Thomales Bay Institute at onthecommons.org
20. “Land Trust” , an entry at Wikipedia
21. “Social Business Entrepreneurs Are the Solution” by Muhammad Yunus
22. “After Developmentalism and Globalization, What?” by Immanuel Wallerstein, delivered as a keynote address at “Development Challenges for the 21st Century,” at Cornell University, Oct. 1, 2004.
23. “Resilience, Panarchy, and World-Systems Analysis” by Nicholas M. Gotts at the Journal of Ecology and Society
24. “The Girl in the Cafe”, a movie about the power of a single individual’s love in changing the world for the better, Tightrope Pictures, 2005.

Keywords: world-system analysis, immanuel wallerstein, capitalist world-economy, endless capital accumulation, complexity theory, complex systems, social change, change in change, antisystemic movements, world social forum, unity in diversity, altermondialism, another world is possible, participatory democray, democratic democracy, community entrepreneurship, self-organization, global governance, spirituality, life-sustaining civilization design