The Modern World-System as a Capitalist World-Economy

-Immanuel Wallerstein-

We begin with a few definitions. First, the world-economy is a geographic zone in which secures a division of labor. Essential goods, capital, and labor move through the geographic zone and between the people. It is important to note that the fractures of a governing body within a world economy are more loosely related than those within the governed populace.

Upon reading this observation, I recalled a subject I read about a year ago in my study of the Iraq War. If you are familiar with the American invasion of Iraq, you are familiar with the "Green Zone" that American armed forces created upon our arrival in Baghdad. It was a secure base which distinguished the Americans from the non-Americans, the Arab from the non-Arab, the United States military from the war zone. In addition to cement walls, chain-link fences, and security guards on sight, the base held an eclectic variety of Western comforts. The base secured both a theoretical and actual division of reality and wartime reality.

Next, Wallerstein offers a "geoculture" to his reader. The "geoculture" is a general body of people who are neither culturally nor politically homogeneous in sect, but who share "common cultural patterns". The shared umbrella over top Wallerstein's idea of a "geoculture" is the organization, or division of labor.

The world-economy both requires and secures the viability and longevity of capitalism (a system of people and firms who accumulate capital in order to accumulate ever the more capital). This idea led me to think of the rationale behind naming our era, "post-modern"--a pigeon-holed term that refers to having a foot in an era after today. Like the term "post-modern", Wallerstein claims that the world-economy and capitalist system are long-withstanding, and the two act as a duo that will always share a foot in the future, today.

What remains unclear to me is how a modern man used historically failed world economies and military empires to aid in his construction of a self-sustaining, intricate web of interelational existence.

A familiar face in this multi-faceted reality is the institution labeled "market" and defined as "a magnet for all producers and buyers, whose pull is a constant political factor in the decision-making of everyone--the states, the firms, the households, the classes, and the status-groups".

Wallerstein then goes on to illustrate how to beat the system when a firm hosts a monopoly. Namely, competing companies can fight through the local political system of a restricted capitalist society by asking political officials to level the playing ground and remove the advantages of their leading competitor. Or, the smaller company can look to the international market for support. Other states can draw on their political power to deny the monopolistic company in favor of competition, generally and the small competition, in particular. In the event that the smaller producer cannot beat the system, "one must remember that bankruptcy, or absorption by a more powerful firm, is the daily bread of capitalist enterprises."

Denying capitalists and outside (or indirect) critics their romantic view of a free-trade capitalist system, Wallerstein articulated a very important point:

"Suppose there really existed a world market in which all the factors of production were totally free, as our textbooks in economics usually define this--that is, one in which the factors flowed without restriction, in which there were a very large number of buyers and a very large number of sellers, and in which there was perfect information (meaning that all sellers and all buyers knew the exact state of all costs of production). In such a perfect market, it would always be possible for the buyers to bargain down the seller to an absolutely minuscule level of profit (let us think of as a penny), and this low level of profit would make the capitalist game entirely uninteresting to producers, removing the basic social underpinnings of such a system."

Following markets, the next institution that Wallerstein goes on to explain is the firm. He lists that strong firms are responsible for eating the smaller fish in the pond of capitalism. However, the time may come when a large firm eats too much and struggles with a new found margin for error and failure.

...Error and failure, high unemployment, and wage decrease are several characteristics used to describe the world's condition today. In such case, Wallerstein prescribes the condition as a "reversal of the cyclical curve of the world-economy". Competing producers bend and shape to stay in line with the world market by displacing unemployment from state to state and by drawing on smaller companies who are looking to sell off a harvest of over-produced goods. So far, however, capitalism has exceeded the occasional stress-marks put forth by a stagnation or recession.