Wallerstein and his world

After the wave of decolonialization of the 1950s and 1960s gave rise to independent states in Africa and Asia, some expected the new nations to develop capitalist systems like those in Europe and North America, with national industries, capitalist and working classes, and a rising standard of living. "Dependency" theorists Samir Amin and Andre Gunder Frank sought to explain why this was not the case, locating the problem in unequal trade relations between the "core" and the "periphery" of the capitalist economic system.

Building on dependency theory in the 1970s, U.S. sociologist Immanuel Wallerstein synthesized a theoretical analysis of capitalism, "world-systems theory", which can be seen as a kind of compromise between Marx and Adam Smith. Rather than seeing capitalism as based on the extraction of surplus value in the wage labor relation, he sees the essence of capitalism as a worldwide trading system in which no state is powerful enough to dominate the capitalist economy.

Over the last ten or so years Wallerstein, now at Yale, has updated his analysis with a prediction that we are entering the terminal crisis of the capitalist system. Wallerstein thinks the capitalists are running out of labor to exploit, resources to consume, and that the cost of taxation is killing them.

"There simply isn’t enough surplus-value to go around, and give the top people significant income. The world simply can’t sustain a situation in which 30-40% of the world population is living at the income level of, say, Denmark," he said in a recent interview.

Wallerstein thinks that capitalists can only make real money when they are exploiting newly proletarianized, low wage labor recruited from rural areas. But when the rural sector of the world has largely disappeared, there will be nothing to stop the workers from driving the price of labor so high that it eliminates all profit. Similarly, when there is no more nature to exploit, the cost of resources and cleaning up pollution will increase greatly, and when workers demand increasing social services such as retirement, health care, and education, taxation will further erode profits. (The Decline of American Power, pp. 58-63)

What will replace capitalism? "It's intrinsically impossible to predict what the outcome will be.... Basically there will be people trying to create a new world-system which will replicate certain basic features of the existing system but not be a capitalist system. It would still be hierarchical and exploitative. The other direction would be to create an alternative system that is relatively democratic and relatively egalitarian."

Wallerstein writes regular analyses of world political developments which are worth reading and generally in line with left opinion. But I find some problems in his theoretical positions which I fear may make them an unreliable guide to the struggles ahead.

First, it is extremely mechanistic to posit that an economic crisis alone can cause one social system to give rise to another one. Economic crisis may weaken the ruling class, but only a political challenge by a rising class representing a new system can overthrow it and end its system. How can it be otherwise? While I share the feeling that the capitalist class is losing its unity, its grip, and that we are entering an increasingly chaotic period, there must be a political force powerful enough to replace it and erect an alternative system, or there will be no fundamental change. At this time no such force has yet coalesced.

I find it equally hard to understand Wallerstein's view that while capitalism is doomed, the nature of the two potential replacement systems can only be dimly grasped and that the outcome is unpredictable and will be determined purely by political struggle. While the future is indeed hard to see, it can only take shape from the contradictions of the present, and as a solution to those contradictions.

If a global financial meltdown shakes the foundations of capitalism, only a socialist movement will be able to replace them, or they will be reconstructed. If rival states contend for influence in a geopolitical game, only their people can redirect their policies towards a peaceful alternative. If climate change accelerates hurricanes and tsunamis, it may drive peoples to insist on some form of world government to provide an effective response. Surely only a socialist world can provide a stable replacement for the current madness, but that world can only emerge through a wide-ranging realization that the current system will continue to flounder without direction until the world's people take the necessary steps to replace it.

While Wallerstein politically aligns with progressive movements, in the last analysis he does so only as a preference- not as a result of his theory. I approve of his forecast of the end of capitalism, but not of his view on the way capitalism works, the process that will bring it down, or the forces that will give rise to the new world.