THE EMERGENCE OF THE WORLD-SYSTEM

Wallerstein argued that the origin of today’s world-system can be traced back to the European world-economy based upon a capitalist system in the sixteenth century (Wallerstein 1974a: 67). At that time, Europe experienced significant expansion both geographically and economically, which led to an increase in land/labor ratio, a large-scale accumulation of basic capital, and most importantly, secular inflation (Wallerstein 1974a: 69). This was because the imports of American gold and silver led to an increase of bullion which was used as a form of circulative coin rather than treasure or ornaments (Wallerstein 1974a: 72). The increase in bullion increased the ability to utilize human and material resources, which indirectly led to a price increase. Nevertheless, there was not only a price rise, but a wage lag (Wallerstein 1974a: 77). Not every worker in Europe was affected in the same way. There were disparities throughout Europe as a result of some workers—specifically, those in the more “advanced” countries—being better equipped to withstand this decline in pay than others (Wallerstein 1974a: 81). As a result, inflation was significant not only because it acted as a mechanism for forced savings and, consequently, capital accumulation, but also because it disproportionately distributed these gains throughout the system, concentrating them in areas later known as the “core” of the world-economy.

Furthermore, the expansion resulted in the unequal development of a multilayered structure with layers within layers, which is roughly connected with a complex system of allocating productive activities (Wallerstein 1974a: 86). Different regions of Europe have shown different developing trends leading to a division between core, periphery, and semi-periphery. Northwest Europe became the core of the world economy, Eastern Europe became a periphery, and Mediterranean Europe became a semi-periphery. During that period, Europe saw the simultaneous existence of wage labor, slavery, cash-crop labor, and self-employment. However, these different modes of labor control were not distributed randomly. In fact, each mode of labor control is best suited for particular types of production in different zones of the European world-economy depending on their development progress. For example, slavery and cash-crop labor were mainly in the periphery, wage labor and self-employment were in the core, and share-cropping was in the semiperiphery (Wallerstein 1974a: 87).

Many factors contributed to the lack of development in Eastern Europe including the weakness of the towns and the Turkish and Mongol-Tartar invitations (Wallerstein 1974a: 97). Nevertheless, the intention of gaining the most advantages from the European expansion was the most significant element. At that time, Eastern Europe had a relative shortage of labor and a large amount of unused land. Their crucial consideration was which form of labor control they should adopt to make great production and gain large profits. As a result, Eastern Europe decided to specialize in agriculture, principally for certain foods, which was both labor-intensive and labor-exploitative (Wallerstein 1974a: 100). In Western Europe, however, the situation was different. Here, skilled labor was more prevalent, allowing these workers to confront situations of coercion. Moreover, the population density in Western Europe was higher and there was more demand for food, which became a matter of increased division of labor. As more capital was disproportionately inflowed to Western Europe, it liberated some workers for specialization in other tasks. Therefore, the core was toward variety while the trend in the periphery was toward monoculture (Wallerstein 1974a: 102).

The semi-periphery represents a midway point on a continuum running from the core to the periphery (Wallerstein 1974a: 103). In 16th-century Europe, the semi-peripheral areas developed an in-between form of labor control: share-cropping. As a partial response to the development of a capitalist world-economy, the landed classes of southern France and northern Italy chose the halfway house of sharecropping, in the form of semicapitalist enterprises, which are indeed appropriate for semiperipheral areas, because they were unable to relocate all the way to large estates based either on enclosure and tenancy as in England or forced cash-crop labor as in Eastern Europe (Wallerstein 1974a: 107).

Wallerstein argued that by about 1640, the core, periphery, and semi-periphery structural positions in a world-economy had stabilized (Wallerstein 1974c: 401). Different areas became complementary parts of a more complex single system. For example, western Europe depended on Eastern Europe for its production of raw materials including cereals, timber, and wool. On the other hand, Eastern Europe also depended on Western Europe for produced products like textiles, and wines. As a result, the relationship between Eastern and Western Europe became closer, as they both needed to rely on goods produced by others (Wallerstein 1974a: 95). The semi-periphery was at the middle, producing raw materials to the core while exporting produced products to the periphery. However, these exchanges were unequal as the core nations have stronger state mechanisms compared to peripheral areas that enable them to enforce the exchanges. As a result, there was an appropriation of the surplus of the whole world-economy by core areas (Wallerstein 1974c: 401). Although the military strength in the core nations and an ideological commitment to the system helped to maintain the world-system, the most important factor that made the system stable was the role of the semi-periphery countries. This role of semi-periphery acted as a buffer in the middle so that the upper stratum (core) was not faced with the unified opposition of all the others. Semi-periphery then was both exploited and exploiter (Wallerstein 1974c: 405).

Another position in the world-system is the hegemony, which is defined as “a situation wherein the products of a given core state are produced so efficiently that they are by and large competitive even in other core states, and therefore the given core state will be the primary beneficiary of a maximally free world market” (Wallerstein 1974b: 38). It is a unique position within the core nations that sometimes occurred when one core nation gained dominant economic power. However, once a state achieves true hegemony, it becomes less powerful. A state loses its hegemony not because it becomes weaker but because others become stronger (Wallerstein 1974b: 38). Throughout world history, only three powers achieved hegemony: the Netherlands in the mid-seventeenth century, the United Kingdom in the mid-nineteenth century, and the United States in the mid-twentieth century (Wallerstein 2004: 57).

WALLERSTEIN AND MARX AND ENGELS ON CAPITALISM

In general, Wallerstein expanded Marx and Engels’ notion of capitalism to a global level. For Wallerstein, the modern world-system has the capitalist system rooted and became consolidated as its defining feature (Wallerstein 2004: 57). One similarity between Wallerstein and Marx and Engels is that they all agreed that the capitalist system was rooted in colonialism. Marx and Engels argued that the discovery of gold and silver in America, the beginning of the conquest and looting of the East Indies, and the turning of Africa into a warren for the commercial hunting of black-skins were all chief momenta of primitive accumulation (Marx and Engels 1972: 435). These events all happened during the colonial period when Europeans began to expand their power to other parts of the world. Similarly, Wallerstein stated that the European expansion was the cause of the emergence of the modern capitalist world-system (Wallerstein 1974c: 407). The reason for this is that the expansion of Europe brought in a lot of bullion from America, which in turn caused inflation and a wage lag. Some workers, particularly those in more developed regions, were better able to withstand the decline in their pay. This subsequently resulted in uneven development in various regions, which then led to a distinction in the modes of labor control that were more appropriate for the circumstances in each area. This was the initial emergence of the world-system.

However, Marx and Engels viewed capitalism mainly through the class struggle between the proletariat and the bourgeoisie (Marx and Engels 1972: 473). Although they insisted that wage labor presupposes capital and that capital presupposes wage labor (Marx and Engels 1972: 209), the proletariat and bourgeoisie essentially have different interests. In order to gain more profits and beat other competitors, the bourgeoisie must reduce their costs of production by decreasing the wages of the proletariat through an increase in the division of labor and applications of machinery (Marx and Engels 1972: 214). Marx and Engels argued that this growing conflict will increase class polarization which will ultimately lead to a communist revolution and the abolition of private property (Marx and Engels 1972: 163). Thus, from the viewpoint of Marx and Engels, the capitalist system is not stable, but will eventually be substituted by communism.

Nevertheless, Wallerstein believed that although the world-system is based on the capitalist system, it would not be disrupted as Marx and Engels might have envisioned. Just as there is an increasing conflict between the proletariat and the bourgeoisie in Marx and Engels’ theories, a conflicting interest also exists between the core and the periphery in the world-system. Since the core nations were more powerful, they were able to enforce the exchange with peripheral nations allowing them to appropriate surplus value in the whole world-economy at the expense of the periphery (Wallerstein 1974c: 401). However, different from Marx and Engels who focused on two opposing entities, Wallerstein’s world-systems theory also includes the role of semi-periphery between the core and the peripheral states, which serves as a buffer to lessen the direct antagonistic conflict between the core and the periphery (Wallerstein 1974c: 405). Therefore, although the world-system will experience stagnation and recession, it is relatively stable.

WALLERSTEIN AND MARX AND ENGELS ON HISTORICAL MATERIALISM

Wallerstein’s analysis of the world-system is rooted in the historical materialism proposed by Marx and Engels. According to Marx and Engels (1972: 5), it is only when there is a change in the economic base that there is a corresponding transformation in the superstructure. Wallerstein also believed that it was the economic base that determined the superstructure. For example, when discussing the emergence of the hegemony, Wallerstein focused his analysis on the decisive role of the economic base. He argued that the hegemony takes advantage of its productive superiority due to its advanced production forces. Consequently, the hegemony gains sufficient strength to hinder or lessen the establishment of both internal and external political obstacles. The hegemony can then support specific intellectual and cultural movements, ideologies, and thrusts—the forms of superstructure—by possessing the dominant economic forces (Wallerstein 1974b: 38).

Another key component of historical materialism is the modes of production, which refers to the different styles to realize the means of subsistence. Marx and Engels proposed a temporal framework for the transition between different modes of production in human history. They argued that variations in property relations and the division of labor have driven society’s transition through distinct stages: tribalism, slavery, feudalism, capitalism, and ultimately, communism (Marx and Engels 1972: 151). These transformations occurred only when the relations of production became “fetters” to the forces of production (Marx and Engels 1972: 4). In other words, the new mode of production would never appear unless the old mode of production had exhausted its development (Marx and Engels 1972: 5). The capitalist mode of production, for example, would only emerge after the extinction of feudalism. Moreover, Marx and Engels believed that capitalism was inevitable progress over feudalism. They argued that with the expansion into new markets, such as those in East India and China, along with the colonization of the Americas, the feudal system of industry became insufficient. Therefore, capitalist modes of production would take its place as a necessary progress (Marx and Engels 1972: 474).

However, when viewing the transition of modes of production at the global level, things become different. Although Wallerstein had a similar notion of modes of production, he would say that the transitions will not happen uniformly across all places at the same time. Rather, he would spatialize it, stating that different areas would apply different modes of production based on their unique situations. In the 16th century, for example, free labor was the form of labor control used for skilled work in core countries whereas coerced labor was used for less skilled work in peripheral areas. Therefore, in the modern world-economy, wage labor was only one of the many forms of labor control within a capitalist system. Non-wage labor like slavery and feudalism was not anachronistic but could coexist with wage labor (Wallerstein 1974a: 87). Wallerstein’s world-systems theory then complicates Marx and Engels’ theory of historical materialism, showing that at a global scale, social processes and the change of modes of production do not necessarily follow a linear progression but different modes of production often coexist in a complex mixture.

CONCLUSION

Wallerstein’s world-systems theory provides a macro-level framework for understanding global inequalities and the power imbalance among various countries. By viewing the world as a single interconnected system, Wallerstein divided nations into three different categories: core, periphery, and semi-periphery, offering a new approach to analyzing each country within a broader world-system. Different from previous theories that used a single nation as a unit of analysis, Wallerstein used a world-system as a unit of analysis, showing the interconnectedness of different nations in today’s world with the intensified trend of globalization. Wallerstein argued that the world-system is essentially unequal as unequal exchanges occur all the time between the core and the periphery so that the surplus values of the whole system are disproportionately transformed to the core nations. Therefore, the world-systems theory helps to explain why there is an increasing gap between the rich nations and the poor nations.

Moreover, Wallerstein traced the development of the modern world-system all the way back to the 16th century, highlighting the importance of colonialism and imperialism. This historical perspective is significant because it shows that global inequality today is rooted in the legacy of historical exploitation caused by European colonialism, rather than the internal conflicts and failures in the peripheral nations themselves. It changed the linear model of development, which assumes that each nation can achieve prosperity independently. Indeed, from the very emergence of the modern world-system, a hierarchical structure has been established in favor of the core countries, deliberately forcing the peripheral countries into more marginalized global positions through the unequal exchange of resources and products. Only by considering all nations as a single world-system can the current state of peripheral nations be understood.

However, the world systems theory suffers from some criticism. One limitation is that it views the periphery as a passive victim of the world-system, overlooking its ability and agency to confront this unequal global structure. Some semi-peripheral and peripheral nations have formed intergovernmental organizations like BRICS to confront the power imbalances, demonstrating the periphery and semi-periphery’s efforts in challenging the existing unfair system. This leads to another criticism of the world-systems theory, that it is state-centric and does not take into account the role of transnational organizations and institutions. Some international institutions, such as the World Bank and the International Monetary Fund, have strengthened the imbalance of power between core and peripheral countries by pursuing policies that favor the core countries at the expense of the periphery. Moreover, multinational corporations (MNCs) have become the dominator of the world economy. These companies utilize cheap labor and weak regulatory power in the periphery by outsourcing their factories to countries like Vietnam and Mexico to reduce their costs of production. This action will perpetuate the division between the core and the periphery as these peripheral nations are being exploited by multinational corporations whose headquarters are often in the core.

Although Wallerstein’s world-systems theory has limitations, it is still worth reading because it brings insights into many important issues today like global inequality and economic dependency. His works provide a foundation for future researchers who want to explore how historical and structural forces shape the relationships between nations by viewing them as parts of a broader world system.

REFERENCES

Marx, Karl and Friedrich Engels. 1978. The Marx-Engels Reader (2nd Edition), Edited by R. C. Tucker. New York: W. W. Norton & Company.

Wallerstein, Immanuel. 1974. The Modern World-System I: Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century. San Diego, CA: Academic Press.

Wallerstein, Immanuel. 1974. The Modern World-System II: Mercantilism and the Consolidation of the European World-Economy, 1600-1750. San Diego, CA: Academic Press.

Wallerstein, Immanuel. 1974. “The Rise and Future Demise of the World Capitalist System: Concepts for Comparative.” Comparative Studies in Society and History 16(4):387–415.

Wallerstein, Immanuel. 2004. World-Systems Analysis: An Introduction. Durham, NC: Duke University Press.