Global Formation:

Structures of the World-Economy


Dedicated to my daughters

Cori, Mae and Frances



First edition published by Basil Blackwell, 1989.

Second Edition published by Rowman and Littlefield, 1998.


This book develops a structural approach to the study of the modern world-system. The stress is on systemic patterns and deep structural logic rather than on conjunctural situations or particular areas or periods.

A new introduction to the second edition discusses recent world events (such as the demise of the Soviet Union, economic globalization, and the further rise of the East Asian "emerging markets")  from the perspective of  the schema of world-system cycles and trends proposed in Global Formation. Also  considered are recent major studies of the modern world-system and comparisons with earlier regional systems.  Implications for  future of the contemporary system  are also contemplated.

My approach differs from the work of most other scholars utilizing the world-systems perspective in several ways. I believe that concept formation and theory construction are essential pieces of the effort to build a cumulative social science. This commitment to theory has led me to utilize the interpretive works of other world-system scholars to formulate theoretical models with empirical implications, and to explicitly confront the conceptual problems raised by critics of the world-system perspective. Also, I have a fondness for quantitative empirical analysis as a method for testing
theoretical propositions, although this does not prevent me from asking questions which are difficult to quantify. This predilection has urged me to review the growing corpus of comparative research which is relevant to our understanding of world-system processes, and to approach the problems of theory construction and concept formation with an eye to matters of operationalization and proposition testing.

Part I outlines the main structures of the world-economy. Major theoretical debates about world-systems and modes of production are addressed, and a new formulation is proposed. Then I describe a set of processes which are hypothesized to operate at the level of the world-system as a whole. Various approaches to the periodization of the development of the modern world-system are compared, and recent developments since World War II are examined from the perspective long run systemic cycles and trends. Finally I discuss world culture and the role of normative integration and cultural domination in the reproduction of the global system.

Part II examines the relationships between states and the capitalist world-economy. Issues raised in the current literature on the political economy of capitalist states are considered, and explanations of differences in state strength and regime form between core and peripheral states are formulated. The multicentric interstate system of unequally powerful and competing states is conceived as the main political structure behind the reproduction of capitalist relations of production. Geopolitics, warfare, and commodity production are interdependent forms of competition which reproduce one another. Chapter 9 formulates an explanation for the hegemonic cycle--the rise and decline of hegemonic core powers--and reviews related research.

Part III focuses on the nature of the core/periphery hierarchy in the modern world-system. The analytic definition of core production is specified as relatively capital intensive commodity production, and contending conceptualizations are discussed. The definitions of semiperipheral areas are considered, and the notion of discrete boundaries between core, peripheral and semiperipheral zones is critiqued. Various mechanisms which are alleged to reproduce the core/periphery hierarchy are described and the crossnational research which examines the effects of these mechanisms on national development is reviewed. The question of the necessity of the core/periphery hierarchy for capitalism is confronted. Studies of recent changes in the structural characteristics of core and peripheral countries are summarized, and the questions of absolute immiseration of the periphery and the growing gap between core and periphery are examined empirically. Chapter 13 proposes a causal model of the relationship between certain world-system cycles and reorganizations of the core/periphery hierarchy, and reviews research which is relevant to these models.

Part IV considers problems of metatheoretical stance and methodological approach in the study of world-systems. I locate my own historical/structural theorizing further toward the nomothetic end of the idiographic/nomothetic continuum relative to the position of the Braudel Center scholars.

My position on method contends that the faults of mainstream American social science are mainly problems of theoretical substance rather than research methods. While I abhor raw empiricism as much as the next fellow, I see the comparative and quantitative methods developed by modern social science as important tools for studying world-systems and for evaluating world-system theories.

The last chapter discusses the implications of the theoretical conclusions reached and the gaps in existing empirical research. Though the theorization is incomplete, and much more empirical work needs to be done, I permit myself to comment on possible implications of the world-system perspective for policy and political action. This is justified by the grave implications of some of the findings, especially the apparent tendency of the capitalist world-economy to regularly produce wars among core states, a systemic feature which, in combination with the proliferation of nuclear arsenals, portends world-wide tragedy.

Table of Contents



Introduction to the Updated Edition


Part I The Whole System

1 The Deep Structure: Real Capitalism

2 Constants, Cycles and Trends

3 Stages of Capitalism or World­System Cycles?

4 The World-System Since 1945: What Has Changed?

5 World Culture, Normative Integration and Community

Part II States and the Interstate System

6 States and Capitalism

7 Geopolitics and Capitalism: One Logic or Two?

8 Warfare and World­Systems

9 Rise and Decline of Hegemonic Core States

Part III Zones of the World­System

10 Core and Periphery

11 Reproduction of the Core/Periphery Hierarchy

12 Recent Trends

13 Cycles and the Core/Periphery Relationship

Part IV Metatheory and Research Methods

14 Theory Construction

15 Research Methods

Part V Implications






The structuralist theoretical approach to world-systems analysis developed in this book owes much to my professors at Stanford University, especially John W. Meyer and Michael T. Hannan, but also Morris Zelditch, Jr. and Joseph P. Berger.  The ideas emerged in proximate interaction with Walter Goldfrank, Volker Bornschier, Albert Bergesen, Albert Szymanski, Joan Sokolovsky, Stephen Bunker, Alejandro Portes, Craig Murphy, Katherine Verdery, Peter Evans, Michael Timberlake, Richard Rubinson, David Harvey, and Neil Smith.  They have been presented at meetings of the American Sociological Association, the Society for the Study of Social Problems and the International Studies Association.  Earlier versions of several chapters have appeared in the International Studies Quarterly, Comparative Political Studies, Politics and Society, the Humboldt Journal of Social Relations, Anthro-Tech and various of the Political Economy of the World-System Annuals.  An earlier version of chapter 8 was co-authored with Joan Sokolovsky, part of chapter 11 with Richard Rubinson and part of chapter 15 with Aaron Pallas and Jeffrey Kentor.  I have also received helpful commentary and critique on various chapters from Giovanni Arrighi, Robert Wuthnow, Kathleen Schwartzman, William R. Thompson, Christian Suter, Ulrich Pfister, Pat McGowan, David A. Smith, Patrick Nolan, Terry Boswell, Patrick Bond, Michael Johns, Phil Vilardo, Linda Pinkow, Roland Robertson, Richard G. Fox, Phil McMichael, Peter Grimes, and Ken O'Reilly.

     I would like to thank Immanuel Wallerstein, Terence Hopkins, Giovanni Arrighi and the other scholars and staff of the Fernand Braudel Center at SUNY-Binghamton for encouraging me to formulate a structural approach to the study of world-systems.  I hope I have done justice to their work.  The

collective project to develop a cumulative social science is often undermined by the pressure to individualize one's theoretical stance.  I have followed Kent Flannery's (1982) advice against relieving yourself while standing on the shoulders of giants.

     Also I am indebted to Shirley Sult for her help in typing and retyping the manuscript.  My wife, Carolyn Hock, has provided support and inspiration while prodding me to exercise the body as well as the mind.



Christopher Chase-Dunn

Baltimore, Maryland





This book proposes and begins to implement a structural approach to the study of the modern world-system.  The stress is on the systemic patterns and the deep structural logic rather than on the conjunctural situations of particular areas or periods.  My approach differs from the work of most other scholars utilizing the world-systems perspective in several ways.  In contrast to the stated position of the Fernand Braudel Center scholars, that theories are only heuristic devices,1 I believe that theory construction is a valuable activity in its own right, and is a necessary part of the effort to build social science.  Also, I have a fondness for quantitative empirical analysis as a method for testing theoretical propositions, although this does not prevent me from asking questions which are not quantifiable.  These rather old-fashioned predilections have led me to utilize the historical interpretations of other world-system scholars to formulate causal models, and to explicitly confront conceptual and operational problems.  This may seem oddly Victorian in the new age of poststructuralism but literary trends come and go and it seems folly to abandon theory to the neofunctionalists and "rational choice" merchants.

      Before outlining the intent and contents of this book I provide a short summary of the intellectual history of the world-system perspective for the  general reader.  Those unfamiliar with world-system terms are referred to the glossary.  The world-system perspective seeks to analyze longrun/largescale social change by combining the study of societal-level processes with the study of intersocietal and transsocietal relations.  It challenges the assumption that national societies (or tribes or city-states) constitute independent units whose development can be understood without taking into account the systematic

ways in which societies are linked to one another in the context of a larger network of material exchanges.  These inter-societal  and trans-societal networks of material exchanges are termed world-systems.

     World-systems themselves have boundaries.  Our modern world-system is  global in the sense that all, or almost all, of the human beings on earth are strongly linked to it by virtue of their participation in economic and  political networks which connect every continent.  But world-systems of the past were not global.  There have been intersocietal material interaction  networks in small regions, unconnected with other regions by any sustained material exchange.  The processes by which primitive and ancient world-

systems developed and merged to become the contemporary global world-system are beyond the scope of this book.2  Suffice it to say that the myriad of smaller systems  became joined into a single large network by the end of the nineteenth century.

     The shift of empirical focus from single societies to the world-system as a whole constitutes the most influential aspect of the world-system perspective as it has emerged from the scholars of the Fernand Braudel Center, especially Immanuel Wallerstein.  But, in addition to this shift of  focus, certain theoretical assumptions are important to Wallerstein's analysis.  World-systems are understood as historical in the sense that the institutions which give them their distinctive character are human inventions.  The institutional patterns which regulate competition and conflict within any world-system are themselves seen as historical creations of individual and collective actors.  Historical world-systems, and the modes of interaction which they exhibit, come into existence and eventually go out of existence.  They are born and they die.

     An important structure of the modern world-system is the core/periphery  hierarchy  a historically constructed stratification system composed of dominant core states, dependent peripheral areas and intermediate semi

peripheral states.  In Wallerstein's formulation the basic logic of the modern world-system is capitalism, a mode of production which is defined as a central feature of the system as a whole.  The modern world-system is a capitalist "world-economy" which emerged in Europe and Spanish America in the sixteenth century, and then expanded to dominate the whole globe by the end of the nineteenth century.  A "world-economy" is defined as a world-system which contains multiple societies, multiple states and a single economic division of labor, while a "world-empire" is an economic network across multiple cultures over which a single encompassing state apparatus has formed.  The modern world-system is a world-economy, while many previous world-systems, such as the Roman Empire and the Chinese Empire were world-empires.

      Wallerstein defines capitalism as commodity production in which there are different sorts of class relations  wage labor in the core and more  politically coerced forms of labor control in the periphery.  Commodity production is defined in the Marxist sense  the production of commodities  for profitable sale in a price-setting market.  Wallerstein understands all areas within the contemporary global political economy to be within the  bounds of the capitalist world-economy, including the socialist states.

     This perspective on social change derives from, and is a modification  of, Marx's effort to understand modern society.  It focuses on capitalism as a mode of production, although it denies that capitalism can be understood  by looking only at the "advanced" countries.  At the beginning of the twentieth century many Marxists turned their attention to imperialism.  V. I. Lenin [1916] saw imperialism as a stage of capitalism.  Rosa Luxemburg [1913] saw imperialism as a necessary consequence of the operation of Marx's model of capitalist development.  Nikolai Bukharin's [1915] Imperialism and World Economy is the most important early precursor of the world-system  perspective.

     Mainstream American sociologists after World War II used Talcott Parson's digestion of Durkheim, Weber, and Pareto to construct modernization theory, which was applied to the "less developed" societies.  This approach  saw traditional institutions as blocking the development of modern economic and political institutions in the "backward" countries.  Karl Polanyi's work  (1944, 1977) during the postWorld War II years carried on the project of the turn-of-the-century Marxists in analyzing capitalism on a global scale.   Polanyi, a Hungarian non-Marxist socialist, emphasized the historicity of modes of integration, especially the market system.  This perspective,  combined with the Marxist legacy, was to shape the theoretical approach of the Braudel Center scholars. 

     In Latin America economists, sociologists and political scientists reacted to modernization theory by analyzing how local societal features had been produced and were sustained by hierarchical international and trans-

national economic and political institutions.  Dependency theory evolved in many different directions, but some of the scholars who applied and synthesized this approach moved toward the formulation of a theory of global  capitalism, especially Andre Gunder Frank and Samir Amin.  They, and Immanuel Wallerstein, developed the world-system perspective which this book  seeks to theorize, although the Wallersteinian version will be the one most intensively considered here.

     The main intent of this book is to formulate a structural theory of the  capitalist world-economy, and to address the major theoretical debates which have arisen in the social science literature about world-systems.  As

Sidney Mintz (1985) has written, an explanation should not be "just one more chorus of the bone song."  We must be explicit about which are the key  relationships which compose the structures of the world-economy, the mechanisms which reproduce these structures, and the contradictions which  create pressures for structural change.  The theory I develop extends Marx's accumulation model to the world-system as a whole.  It focuses on the world  class structure and the core/periphery hierarchy as the main contradictions around which conflict and competition in the global political economy turn,  and it reconceptualizes capital as a relational institution of domination and exploitation which includes states and the interstate system as part of  capitalist relations of production.

     The main structures of the world-economy are:

     1the world class system;

     2the core/periphery hierarchy;

     3the interstate system, and

     4the world market.

These are defined and interrelated in the chapters that follow.

     A second intent of this book is to summarize the recent empirical research which is germane to our knowledge of the modern world-system.  This  burgeoning corpus is already large, and any effort to be complete becomes quickly obsolete.  Since I am more sympathetic with formal comparative and quantitative studies than many of the other world-system scholars, I have tried to pay

special attention to these.  And I have also included many  studies which do not explicitly use world-system concepts, but which nevertheless examine phenomena which I deem to be relevant to world-system theoretical questions.

     Part I argues that we can best understand the global system in which we live by defining capitalism in a way which builds on Marx but which modifies his conceptualization to some extent.  Once we have redefined capitalism, the continuities of recent centuries become more visible.  The major theoretical debates about world-systems and modes of production are addressed, and a new formulation is proposed.  Then I describe a set of processes which are hypothesized to operate at the level of the world-system as a whole.  This is presented as a schema of world-system constants, cycles, and trends, and this schema is then compared with the idea of stages of capitalism.  Finally I discuss world culture and the role of normative integration and cultural domination in the reproduction of the global system.

     Part II examines the relationships between states and the capitalist world-economy.  The nature of the capitalist state in the context of the world-system, and the relative internal and external strength of core and peripheral states are considered.  The multicentric interstate system of unequally powerful and competing states is analyzed as the main political structure behind the reproduction of capitalist relations of production.  Geopolitics and commodity production are interdependent forms of competition which reproduce one another.   Chapter 9 formulates an explanation for the hegemonic sequence  the rise and decline of hegemonic core powers  and reviews related research.


      Part III focuses on the core/periphery hierarchy.  The analytic definition of core production is specified as relatively capital intensive commodity production.  Definitions of the semiperiphery and the idea of boundaries between core, peripheral and semiperipheral zones are examined.  The

mechanisms which reproduce the core/periphery hierarchy are described and the cross-national research which examines the effects of these mechanisms on national development is reviewed.  I argue that the core/periphery hierarchy is necessary to the survival of capitalism.  The problems of absolute immiseration of the periphery and the growing gap between core and periphery are considered.  Chapter 13 proposes a hypothetical causal model of the relationships among several worldsystem fluctuations and reviews research which is relevant to this model.

     Part IV considers metatheoretical stance and methodological problems.  I locate my own historical/structural theorizing further toward the nomothetic end of the idiographic/nomothetic continuum relative to the position of the Braudel Center scholars.  I defend structural theory against the attacks made by historicists.

     On method I hold that the faults of mainstream social science are mostly problems of theoretical substance rather than research methods.  While I abhor raw empiricism as much as the next fellow, I see the comparative and quantitative methods developed by modern social science as important tools for studying world-systems and for evaluating world-system theories. 

     The last chapter examines the implications of the theoretical conclusions in this book and the gaps in existing empirical research.  Though this book is only the first step toward specifying and testing theories of the world-system,

I cannot refrain from making a few remarks about the possibilities for transforming the capitalist world-economy into a more humane and peaceful world society, though these statements are not  entirely deduceable from the earlier chapters.  This is justified by the grave implications of some of the findings, especially the apparent tendency  of the capitalist world-economy to regularly produce wars among core states, a systemic feature which, in combination with the nuclear arsenal, portends  world-wide tragedy.

     Here is a more detailed summary of the main conclusions reached in each chapter:

      Part I addresses the substantive theoretical problems raised by a structural approach to the world-system perspective.  It is an effort to go beyond the use of the world-system as a new empirical frame of reference to an explicit theory of world-system structures and processes.  Chapter l presents a reformulation of Marx's accumulation model of capitalist  development which utilizes concepts produced by the Braudel Center scholars.  Contrary to the popular misconception that world-system theory emphasizes exchange  relations over production relations, capitalism is defined as a system in which commodity production for profit occurs in the context of  differentiated forms of labor control.  Production relations are understood to differ in the extent to which labor is commodified.  The class structure  of world capitalism is embedded in an interstate system of unequally powerful political organizations (states), and employs politically protected, wage and coerced forms of labor control.  These forms of labor control roughly correspond to the core/periphery



      The world-system is objectively stratified into social classes (e.g. world bourgeoisie, world proletariat, intermediate strata) but the political  activities of these classes tend to be oriented toward particular "national" state apparatuses.  This is the reason why many Marxists argue that the  relevant perspective on class struggle is a national (or "internal") one, but it is also an important structural basis for the reproduction of divisions within the world working class.  The core/periphery hierarchy and nationalism crosscut and disorganize workingclass solidarity, and perpetuate the reproduction of capitalist accumulation.

     Chapter 1 stakes out a position on the mode of production issue which differs from both: (a) orthodox Marxists (i.e. capitalism = the wage system); and (b) Immanuel Wallerstein's assumption that a mode of production is a feature of a whole world-system (the "totality assumption"), and thus there can only be one mode of production in a world-system. 

     While I claim that it is advantageous to include both core and peripheral forms of capitalist exploitation within the capitalist mode of  production, the identification of the mode of production with the whole world-system creates grievous problems when we try to analyze the  transformation of modes of production.  Therefore I introduce the distinction between the spatial boundaries of a world-system and the logical boundaries of modes of production.  This enables us to study how a mode of production becomes dominant within a world-system and how modes of  production may be articulated with one another within a single world-system.  I employ a typology of modes of production suggested by Amin (1980a) and Wolf (1982), except that capitalism is redefined to include both core and peripheral forms of labor exploitation for profit.  

     Chapter 2 describes a schema of the dynamics of systemic constants, cycles, and trends which are characteristic of the whole world-system.  The systemic constants are those basic features of the capitalist mode of production described in chapter 1.  The system cycles include the long business cycle (i.e. the Kondratieff wave), the hegemonic sequence of the rise and decline of core states, the cycle of core war severity, and the cycle of core/periphery trade and control.  The systemic trends include the expansion to new populations and territories, the expansion and deepening of commodity relations, state formation, growth of firms, the transnationalization of capital, the increasing capitalintensity of production, and


     Chapter 3 compares the above schema of cycles and trends to the periodizations of capitalist development advanced by other Marxists.  It is  concluded that the various hypothesized stages of capitalism are more elegantly explained as periodic combinations of world-system cycles and  trends.

     In chapter 4 the schema outlined in chapter 2 is used to consider the  significance of developments which have occurred in the world-system since World War II, such as the decolonization of almost the whole periphery, the  growth of transnational corporations, industrialization in the periphery and the semiperiphery, the growth of international organizations, and the

increasing number of socialist states.  It is concluded that no really qualitative changes have occurred.  Rather the seemingly new institutional and organizational forms which are observed are functional equivalents of older forms which correspond to long-standing (but not ahistorical) patterns.


     Chapter 5 discusses the cultural aspects of integration and domination in the contemporary world-system.  It compares the contemporary capitalist world-economy with earlier world-systems in terms of the centrality of  cultural consensus and ideological hegemony in maintaining cohesion and order.  The particular mix of normative, economic, and coercive integration which characterizes the contemporary system relies most heavily on market interdependence and political-military domination, although cultural hegemony plays a supporting role.  The cultural hegemony of the core powers is systematically undermined by the reproduction of nations and states, and  by the uneven development of capitalist commodity production which sometimes raises nonWestern nations (e.g. Japan) to core status.  Resistance to cultural domination is relatively easy to organize even in peripheral areas, and is

legitimated to some extent by the multicentric interstate system and its associated support for national identities.  The world market and the interstate system themselves require a substratum of cultural consensus without which cross-cultural trade is problematic.  But this  culturally-based "trade ecumene" is a minimal level of agreement about media of exchange, contract, and diplomatic protocol.  It does not constitute a normative order in which Durkheimian processes of moral boundary maintenance operate.

     Part II focuses more directly on states and the interstate system.  Contrary to the popular notion that capitalism is an economic subsystem of  private firms producing for markets, and contrary to the characterization of the world-system perspective as "economistic," I emphasize the importance  of states in the capitalist world-system.  Chapter 6 discusses the contention

that core states are strong, while peripheral states are weak.  A distinction is made between internal and external state strength.  With  regard to external strength all parties agree that core states are generally stronger.  With regard to internal state strength there is considerable  controversy, but empirical evidence is presented which supports the idea that peripheral states are weaker internally than are core states.  I also discuss research on the relationship between regime form and the position of states in the core

periphery hierarchy.  The  structural processes which sustain relatively democratic states in the core and relatively authoritarian states in the periphery are examined.  The oscillation between authoritarian and populist regimes in many semiperipheral states is also considered.

     Chapter 7 focuses on the multicentric interstate system of unequally  powerful states.  This is conceptualized as the main political structure of the capitalist world-economy.  It is argued that political-military

competition and competition for shares of world markets are complementary and interdependent aspects of the struggle to appropriate world surplus  value.  These types of competition should be analyzed as composing a single

systemic logic rather than as two different modes of interaction.  The  reproduction of a competitive world market of capitalist commodity producers is argued to be dependent on the structure of the interstate system, and  conversely, the reproduction of the interstate system is dependent on the dynamics of competition among capitals.  Chapter 7 also examines certain  features of the interstate system which are rarely discussed in international relations theory.  In addition to the rarity of attempts to impose imperium over the core and the consistent failure of those attempts which have been made, we must wonder why hegemonic core powers never even propose such a

policy.  It is argued that a world-system in which the capitalist mode ofproduction is dominant is a fertile context for the success of core states which pursue a strategy combining military control of trade routes with accumulation through profit-taking, rather than  geopolitical territorial conquest and tribute-gathering.  Thus it is not the hegemons, but rather challenging core powers who set off on the road of world imperium.  But these challenges do not succeed because they are incapable of obtaining sufficient support in a system in which expanding and deepening commodity production and the continuation of the multicentric interstate system hold greater promise for national ruling classes than the presentiment of shares within a world imperium.

     Chapter 8 further considers these same problems, arguing that it is not a matter of "economic versus political-military" power, but rather the

particular institutional features of the capitalist mode of production which explain the processes of the interstate system.  The centrality of markets and capitalist accumulation undercuts the tendency to empire-formation.  This chapter also compares the modern interstate system with earlier world-empires and interstate systems, and discusses the functions of world wars in

restructuring the distribution of international power in response to the uneven development of national economies.  It is argued that world wars are a necessary, cyclical and structural component of the expansion and deepening of capitalism.

     Chapter 9 focuses on the causes of the rise and decline of hegemonic core powers.  Contrary to many characterizations, the modern  world-system is not a monolithic structure of domination with a single center.  Not only is there continual resistance from peripheral areas, but the core itself is multicentric and is characterized by uneven development resulting in upward and downward


mobility.  Empirical studies of the hegemonic sequence are reviewed, including Joshua Goldstein's demonstration of a strong link between Kondratieff economic cycles and fluctuations in war severity.  Goldstein's research provides the most convincing empirical demonstration of the existence of world-system processes to date, as well as chilling support for the notion that world war is a "normal" outcome of the operation of these processes.  Efforts to measure the rise and decline of hegemons are reviewed, and the implications of hegemonic sequence studies for the current era of declining US hegemony are considered.

     Part III examines the core/periphery hierarchy as a structural feature of the world-system.  This hierarchy is understood as an institution of socially structured inequality which is reproduced rather than eliminated by "development."  The whole worldsystem develops but the core/periphery hierarchy, despite a certain amount of upward and downward mobility, remains a structural feature of the larger system.  Chapter 10 reviews different terminologies and contending analytic definitions of the core/periphery hierarchy.  An argument is made in favor of the notion of core production as relatively capitalintensive production.  The spatial nature of the core/periphery dimension is described as a nested hierarchy of multilevel and overlapping regional and organizational  boundaries.  The notion that core, periphery and semiperiphery are distinct zones with measureably distinct boundaries is described as a useful simplifying metaphor for analytic purposes.  But I suggest that the empirical core/periphery hierarchy more probably corresponds to a multidimensional set of continuous distributions.


     The concept of the semiperiphery is understood as a designation for two types of intermediate positions.  The various efforts which have been made to measure the position of countries in the core/periphery hierarchy are described and critiqued.  I review research which reveals important structural

differences among peripheral areas due to differences in the nature of the indigenous societies before incorporation into the modern world-system.  And I describe important long-term reorganizations of the institutional and structural nature of the core/periphery hierarchy which have occurred over the past centuries.  I then dispute recent arguments by economic historians which deny that exploitation of the periphery was an important factor in the emergence of capitalist industrialization in the core.

     Chapter 11 examines various mechanisms which are argued to reproduce  the core/periphery hierarchy such as wage differentials, trade composition, different forms of core versus peripheral class formation, the disarticulation  of economic structures in the periphery, transnational corporate exploitation, and state-centric explanations which focus on differential processes of state formation and political class struggle.  My own argument is a political theory of differential outcomes of class struggle which  explains why the core/

periphery hierarchy is necessary for the reproduction of capitalism and how capitalism reproduces the core/periphery hierarchy.  Then I review the crossnational research which has been done on the various proposed mechanisms which reproduce international inequalities.

     Chapter 12 examines recent trends in characteristics of core and  peripheral countries and the empirical research which documents these trends.  It also discusses the idea of absolute immiseration as it is applied to the

capitalist world-system.  Research reveals that the magnitude of relative

core/periphery inequalities has not diminished in recent decades, but there is little evidence to support the claim of periphery-wide absolute immiseration.  The consequences of world-system inequalities thus stem primarily from relative differences in a world-economy in which most of the periphery is in fact "developing" relative to itself over time, but the differences between core and periphery are not diminishing.

      Chapter 13 describes a hypothetical model of cyclical changes in the core/periphery hierarchy and the temporal and causal relations between this  and the hegemonic sequence of the rise and decline of core powers and changes in the level of competition/conflict among core powers.  The chapter describes research which is germane to this model, including evidence of the existence of cyclical international debt crises. 

      Part IV confronts metatheoretical and methodological problems which surround the effort to construct and test world-system theories.  Chapter 14  describes a continuum of metatheoretical orientations in the social sciences which extends from completely historicist description at one end to completely ahistorical generalization at the other.  Various intermediate points on this continuum are discussed, and a case is made in favor of a more structural (less historicist) approach to world-system theory.  The attack on structural Marxism is reviewed and a defense of theory is proposed.  My own critique of Althusser et al. is both substantive (the failure to use a worldsystem frame of reference) and methodological (the substitution of rationalist critique and political debate for systematic empirical research).  Nevertheless I find the

distinctions between mode of production and social formation, and between structural causation and conjunctural events, to be useful for world-system theory.

     The ontological status of world-systems and other objects of social scientific study are compared and the frequently made erroneous assumption that there is a necessary relationship between spatial scale and level of

abstraction is contested.  The  potential relevance of structural world-system theory for political practice is also considered.

     Chapter 15 examines the question of appropriate research methods for studying world-systems.  Those who have argued that comparative and quantitative methods are inappropriate are confronted with arguments about the assumptions behind formal modeling and comparative data analysis.  I contend that we can make good use of the generalized logic of time series analysis to study processes which operate at the level of the whole world-system.  Several problems arising from the application of time series analysis are discussed.  It is also argued that the quantitative comparison of smaller units of analysis (e.g. nationstates) is indeed relevant for our understanding of some world-

system processes.  But findings about relationships among characteristics of e.g. nation-states cannot be used as evidence for relationships among analogous features of the world-system as a whole  the socalled aggregation problem.  On the other hand, knowledge of the causality of processes occurring within and between nation-states is indeed relevant for our understanding of some world-system processes because not all these operate at the level of the whole.

     The existence of strong worldsystem processes implies a problem for crossnational comparisons: the nonindependence of cases  Galton's problem.  I propose a solution to Galton's problem which builds worldsystem processes

and interstate relations into the causal model for crossnational analysis.  Several different research designs for world-system analysis are described and compared, and a new design for testing multilevel models of causality is proposed.  The chapter ends with a consideration of the possibility of systematic comparative research on a large number of world-systems, a research design which has conceptual and feasibility problems but which may nevertheless be quite useful for testing propositions about the relationship between world-systems and modes of production.

     Chapter 16 examines the implications of this book for future studies of  world-systems and discusses the matter of contemporary political practice.  The motivation behind this work is the feeling that we don't really understand the nature of the social system in which we are living, a world of our own creation and yet beyond our control.  It was a similar uneasiness  that motivated Marx and the other social scientists of the nineteenth century.  The efforts to synthesize the theories of the classical  sociologists have not produced a theory which adequately explains the social phenomena we see in the twentieth century, especially the contradictory  nature of our world-system.  Talcott Parsons performed such a synthesis and the outcome was modernization theory, a poor vehicle now largely  discredited.  And yet simply returning to Marx, as many critics of modernization theory have done, is not really adequate either.  The twentieth century needs its own Marx before we can have a new Gramsci or a Lenin.

     Many Marxists (e.g. E. P. Thompson, 1978), have abandoned theory for  historical studies, arguing that theory has been used badly by the Stalinists.  Theory is like technology.  Good theory may be used for bad  ends.  And yet

theory is both potentially useful for humane ends, and, I would contend, an end in itself.  I find no massive contradiction between  scholarship and political practice, although they are certainly not the same activity.  The immediate intent of this book is theoretical.  The ultimate  goal, however, is to help us understand the world in order to change it.




The Whole System

This section addresses some basic explanatory problems which have emerged from the effort to theorize about the capitalist world-economy.  Criticisms of the world-system perspective by other Marxists are addressed, an explication of the Wallersteinian version is performed, and certain of  its assumptions are critiqued and reformulated.  I will outline a perspective on modes of production in general, and an argument for modifying  Marx's definition of capitalism.  The question of world-system boundaries will be considered, as will the relationship between classes and the  core/periphery hierarchy insofar as they are related to our understanding of capitalism as a mode of production.  The Wallersteinian "totality assumption," which implies that each world-system has only one mode of production, is criticized and replaced with an analysis of logical  boundaries between modes of production within historical world-systems.

     The intent of this section is to move our analysis of world-systems  from an orienting perspective which is used to interpret history toward a new theory of the underlying tendencies of development.  I do this by explicating a  strongly theoretical interpretation of the literature produced by the scholars of the Fernand Braudel Center, and by responding to the theoretical critiques of this literature.

      There is a continuum between two polar types of explanation in the social sciences: at one extreme is ideographic historicism (the claim that each event, village, country, period, etc. is unique); while at the other extreme is completely nomothetic ahistoricism (the attempt to specify one  theory which explains all social systems, small and large, simple and complex).

Immanuel Wallerstein's work is consciously located on this continuum at a midpoint which is more historical than that of the structural Marxists, and yet which is more generalizing than that of most historians.  Wallerstein interprets the history of "historical systems," inventing  theoretical concepts that seem to be helpful along the way.  By a "strongly theoretical" reading of Wallerstein I mean to formulate a causal and  structuralist theory out of the insights and loosely defined concepts which he has produced.

      Wallerstein's usage of the term "historical systems" demonstrates his dialectical view that whole socio-economic systems are both systemic and  indeterminant to a certain extent.  The real question is: exactly how systemic is the world-system?  Fernand Braudel (1984:70) suggests that Wallerstein's approach is "a little too systematic."  My position is that it may be possible to determine just how systemic the world-system is by  clearly formulating models and testing them against empirical data. 

     There are those who argue that a science of society is impossible; that  we cannot explain and predict social change.  Human beings, the objects of analysis, are ostensibly intelligent and have free will and so, it is argued, attempts to predict their behavior are doomed.  In addition, sociological theorizing is reflexive  we are trying to understand ourselves and therefore objectivity is impossible.  Also once a prediction is known the object of the prediction may intentionally (and obstinately!) choose to disconfirm it.

     The attainments of social science do not yet completely discredit these claims, although I would contend that we are not nearly as ignorant as some critics of social science seem to think.  Marx and Weber provide us giant

shoulders on which to stand, and we ought not underestimate their value.  But no one would dispute that social science is yet young.  Our paradigms seem more reactive than cumulative, and we haven't yet attained sufficient consensus to constitute "normal science" in the Kuhnian sense.  This might be because human behavior is impossible to explain and predict, or simply  because we haven't yet penetrated its deep structure.  My effort to theorize about world-systems posits the usefulness of models of deep social  structure and begins to specify one.1

     The search for a social "genetic code" can procede in a number of directions, as Marx pointed out in his short discussion of the "method of  political economy" (Marx, 1973:100-8).  The Althusserian structuralists tend to become encompassed by their own sanitized logical world of textual  interpretation and rational argument.  They never, or rarely, allow the messy empirical world to penetrate.  Marx pointed out that political economy must alternately move from the concrete to the abstract, and then back again.  Deduction and induction are both necessary operations.

     Why would it be helpful if we had a formal theory of world-system  development?  In addition to all the usual scientific desiderata  simplicity, explanation, prediction  such a theory might help us to avoid self-

destruction, and to construct a more humane, less exploitative world society.  A theory of social change, instead of implying a philosophy of fatalistic determinism, can itself be an aid in our effort to control our own collective future.

     This last goal of theorizing should be an intended consequence which is kept in mind in the course of the theory-building project, although we must  avoid letting political criteria determine our theoretical decisions.  The right combination of progressive intent and scientific open-mindedness is difficult to specify, but it is clear that these two should interact without  either dominating the other.


Modes of Production in General

In this introductory section I will discuss some general theoretical questions which provide a framework for the effort to come to grips with what is unique to the logic of the modern world-system.  What is the general relationship between historical world-systems and modes of production?  And what is the best way to conceptualize the boundaries of world-systems?  These questions are related, and some of the simplifying assumptions made by Wallerstein have caused unnecessary confusion and disputation.

     By mode of production we mean the basic underlying logic which any  social system exhibits.  For Marx this was necessarily related to the problem of material production.  He focused on the social relations and institutions which organize production and distribution of the material goods required for the reproduction of a society and its members.  In class societies a very fundamental set of institutions which are the center of modes of production are those social relations of production which allow a  class of exploiters to appropriate surplus product from a class of direct producers.  These

institutions  forms of labor control  vary across different modes of production.

     A related but somewhat different way of conceptualizing social logics was developed by Karl Polanyi.  Polanyi (1977) designated three modes of societal integration which are said to characterize exchange in very different types of

societies: normative, political and market.  Reciprocity, the normative distribution of resources according to culturally agreed upon rules of justice, exists in all societies, but is the most important mode of integration in "communal" or kin-based classless, stateless societies.  Redistribution, or the politically determined distribution of goods becomes more important once specialized coercive organizations (states) have emerged to monopolize legitimate violence.  States and empires use political organization and formally organized coercion to extract surplus product from direct producers.  State-formation proceeds in tandem with class-formation, such that privileged positions with respect to basic resources become associated with life-long (not age-based) statuses.  The emergence of hereditary aristocratic lineages usually precedes primary state-formation.   Reciprocity does not cease to exist within class/state societies, but it becomes articulated with, and dominated by, the logic of "redistributive" or  better, tributary modes of production and distribution.  There are many types and varieties of the tributary modes of production, some very  centralized, some very decentralized (i.e. feudalism).  And the institutional forms of class relations vary greatly within the tributary modes.  But the logic of politically coercive organizations dominates both class struggle and intersocietal competition.

     The third type of integration proposed by Polanyi is the price-setting market.  A market is not identical with all exchange.  Exchange may be regulated according to custom (reciprocity), according to law (redistribution), or by competitive buying and selling.  The gathering of people in a village square to exchange goods does not necessarily constitute a market in Polanyi's sense.  The rates of exchange (prices) must be determined (or greatly affected)by the buying and selling decisions of a large number of separate actors trying to maximize their individual returns.  A price-setting market is, of course, an ideal type, the same one which is at the center of classical and neo-classical economic theory.  But Polanyi was at pains to point out that this form of interaction is not a natural and universal way in which all people exchange with one another.  Rather it is an historical creation which emerges under certain conditions and which becomes the dominant form of exchange in a certain type of society.  The process of commodification, the transformation of land, labor and wealth into commodities which are exchanged in price-setting markets, becomes the object of analysis rather than a background assumption about human nature and the propensity to truck, barter, and maximize profit.

     A major theoretical problem has been how to combine Marx's modes of production with Polanyi's modes of integration.  Samir Amin (1980a) and Eric  Wolf (1982) have found similar solutions regarding the conceptualization of precapitalist modes of production.2  They agree with Polanyi that stateless,  classless societies have a mode of production in which normative obligations, usually defined in terms of kinship ties, regulate production  and exchange.  Amin terms these "communal," while Wolf calls them "kin-based" modes of production.  Ethnographic studies (e.g. Sahlins, 1972) support the notion that reciprocity is the dominant form of exchange and that true market relations are rarely found in such societies.

     With regard to Polanyi's redistributive mode of integration, other  theorists have pointed out that the term "redistributive" is somewhat unfortunate.  It was derived from the study of chiefdoms, societies which are somewhat more stratified than most stateless societies, but not so stratified

as societies in which true states and social classes have emerged.  Neil Smelser (1959) suggests that the kind of appropriation of resources which occurs with the emergence of states and empires should  rather be termed "mobilization."

      Amin and Wolf propose that social systems in which political coercion is the dominant relation of production and distribution should generally be  termed "tributary modes of production."  Feudalism is one such mode of production, and so are the so-called "asiatic" and "slave" modes designated by other Marxists.  The tributary modes differ from one another in terms of class relations (i.e. serfdom, clientalism, slavery, tenantry, corve, helotry, etc.)3 and also in terms of the degree of centralization of state power feudalism versus absolutism.  But they all share the feature that political power and coercion are the main determinants of outcomes in competition among classes, states, and empires.

     Robert Brenner (1977) rightly located Wallerstein's theoretical perspective on the terrain of a dispute about the transition to capitalism in Europe which took place among Marxists in the 1950s.  The dispute really involved two problems.  One was how to conceptualize exchange, and the importance of commodity production as a basis of capitalism.  Brenner contended that Wallerstein and the "neo-Smithian" Marxists before him (e.g. Paul Sweezy, 1976) put too much emphasis on the emergence of markets.  Brenner argued that the most central determinant of the logic of a mode of production is the form of class relations.  Following Dobb (1963), Brenner tended to limit his notion of class relations to those institutions which regulate the immediate relations between a direct producer and his/her immediate exploiter at the "point of production."

     A second issue which threaded through the Brenner critique was the matter of "internal" versus "external" determinants.  The many Marxists who have accepted Brenner's critique of the world-system perspective associate the alleged emphasis on exchange with the discussion of international trade.  This is thought to depreciate the importance of internal class relations and class struggle.  The problem of "internal to what" is usually unexamined.  Some emphasize the firm or the plantation or the village.  Others are thinking about the nation-state or the region.

     The Wallersteinian perspective was misperceived by Brenner and the others who have adopted the "exchange versus class struggle" criticism.  Wallerstein was not arguing that exchange or trade is a more important aspect of a mode of production than class relations.  Rather he was pointing to the multilevel character of systems of exploitation and emphasizing the mystifying

consequences of characterizing all international trade as equal exchange.  Class relations and relations of coercion and exploitation exist at several levels; within firms [as the important work of Braverman (1974), Burawoy (1979) and Edwards (1979) has recently illuminated], but also at the level of localities, regions, nation-states, and the core/periphery hierarchy.  These relations can all be understood broadly as class relations, or production relations in the Marxist sense.  And the internal/external distinction is as mystifying as the idea that international trade (or wage labor) is always equal exchange.  Wallerstein contends that it is the boundaries between organizations, and nation-states, as well as the core/periphery hierarchy which divide those oppositional forces which would challenge the logic of capitalism.

     Following Polanyi, Wallerstein points out that exchange is not simply  exchange.  Each material exchange has an institutional underpinning which we must investigate in order to understand the logic of the system we are  studying.  Some exchanges are customary, some are politically determined and some are in the context of a price-setting market.  And, as Marx clearly  believed, much of the logic of capitalism is contained in the institution of commodity production for the market. 

      Commodification is the process by which formerly non-marketmediated activities come to take the commodity form.  It is important to understand that commodification  is not an either/or matter.  There may be more or less of it in different realms or activities within a social system.  We know from studying the historical development of commodity production that archaic wealth (prestige goods) was first commodified in the sense of becoming a generalized medium of exchange  money.  Land slowly became something which was alienable and saleable.  And the commodification of food, raw materials, services, and  labor occurred in spurts, in interstitial areas, and to varying degrees within the tributary modes of production.  Precapitalist empires, themselves  still dominated by the logic of the tributary mode of production, became more and more commercialized.  Wealth, land and labor increasingly became commodified, but the logic of market integration still played only a subordinate role.

     Labor is never a perfect commodity.  Neither is wealth or land.  We must speak of degrees of labor commodification.  Customary work relations are the least commodified because obligations are usually personal and dependent on normative consensus and internalized values.  Politically-structured labor

relations based on coercion may become partially commodified.  Thus slave labor is more commodified than serfdom, and is more manipulablely and congruent with

the logic of profitable commodity production.  Consideration of costs and profits, the price of slaves, and the ability to buy more slaves or sell them off, lent plantation and latifundium enterprises a rather capitalistic nature even within precapitalist world-systems.

     Wage-labor is the most perfectly commodified form of labor control  because the price tends to be regulated by the cost of the reproduction of labor-power; the capitalist can buy only the labor time he needs, and so  wage-labor is even more flexible for the cost-conscious capitalist commodity producer than is slave labor.  Labor-time, rather than the laborer, has  become a commodity.  And there is the additional benefit that exploitation is more opaque, because the exchange of wages for labor time is defined as  an equal exchange.  Slavery is less easily legitimated.

     Both Marx and Wallerstein see commodity production as necessary to capitalism, but Marx argued that "fully formed" capitalism can only be based  on wage labor, while Wallerstein argues that peripheral capitalism can be based on less commodified forms of labor control.  Two points should be made about this definitional disagreement.  The first is that it can be agreed that wage labor is important to capitalism, because it is the most commodified form of labor control.  But it may be unwise to define other types of labor control as necessarily non-capitalist for two reasons. The first is that there may be different levels of capitalism.  Marx acknowledges this when he discusses merchant capitalism and simple  commodity production.  And secondly these allegedly less capitalist forms of capitalism may be articulated or integrated in systematic ways with "full"  capitalism.


     Even more importantly, as I shall argue in chapter 1, the survival of capitalism may depend on the articulation of different forms of labor control.  In chapter 2 I build upon earlier work to hypothesize a schema of empirically observable cycles and trends which are thought to be  characteristics of the contemporary world-system as a whole.  Chapter 3 compares the stages of capitalism suggested by some Marxists with the idea  of cycles of world-system development.  In chapter 4 the schema developed in chapter 2 is employed in a consideration of structural changes in the  world-system which have occurred since World War II.  Chapter 5 examines the nature of global culture and the role it plays in the reproduction and  transformation of the contemporary world-system.  Let us now examine further the question of how capitalism is most usefully defined.


Chapter 1

The Deep Structure: Real Capitalism


The goal of this chapter is to reformulate Marx's theory of capitalist accumulation using insights provided by the analysis of the modern world-system.  We begin by exploring three approaches to theorizing about the deep structural dynamics of the world-system: (a) a purely formal approach to the specification of logical boundaries between modes of production;  (b) the process of commodification and its limits; and (c) the problem of world classes.  The epistemological assumptions behind this effort to theorize the world-system are described and defended in chapter 14.  After reformulating Marx's theory we will critically evaluate one of Wallerstein's simplifying assumptions, the idea that the mode of production is necessarily a feature of a whole world-system, and the corollary that each world-system has only one mode of production.

     My ultimate goal is to reformulate Marx's theory to take into account those systematic aspects of capitalist development which Marx neglected.  This requires:

     1  a clear specification of Marx's model;

     2a critique of its inadequacies in the light of our knowledge of         world-system processes;

     3a reformulation of the concepts and basic axioms, and

     4testing the new formulation against contemporary and historical         social reality.

This book begins these tasks, but it certainly does not finish them.

Marx's Model of Capitalist Accumulation

Marx began his explication of the laws of capitalist development with a dialectical analysis of a fundamental institution of capitalism  the

commodity.  From this institutional form, which allegedly contains the secrets of the deep structure of capitalism, he derives the law of value, the roles of capital and labor, and the accumulation of capital through the production and appropriation of surplus value.  This theoretical formulation has several advantages.  It is elegant.  It focuses on what are indubitably essential features of the capitalist mode of production  market exchange, commodified labor, the concentration of means of production in private hands, and the accumulation of capital by means of the production of commodities and the exploitation of commodified labor.

     There are two main issues which divide Marxists over the definition of the basic characteristics of the capitalist mode of production: (a) the nature of class relations in capitalism, and (b) the importance of the state and the interstate system for capitalism.  Marx's most abstract model of the capitalist accumulation process, as presented in volume 1 of Capital (1967a), assumed a closed system in which there is a single laissez-faire state standing behind property relations, but not directly engaging in the accumulation process.  The model also assumed only two classes:  capitalists owning and controlling the major means of production, and proletarians selling their labor-power for wages in a competitive labor market.

     Marx defined capitalism as a system in which ownership and control of the major means of production are in the hands of private (not state) entrepreneurs who produce commodities for a competitive market.  For Marx the commodification of labor is primarily through a competitive labor market  the wage system  in which proletarians who own no means of production are "free" to sell their labor-power to capitalists.  He developed his model on the basis of his observations of nineteenth-century British capitalism.  He assumed that Britain was the highest form of capitalist development and thus the analysis of British industry should reveal the essential characteristics of the capitalist mode of production.  He expected that all national societies would develop along the same basic path that had been followed by the British (1967a: 8-9).

     Thus, according to Marx, the basic characteristics of fully developed capitalism are:

     1 Generalized commodity production: The production of commodities for profitable sale on a price-setting (competitive) market.

     2 Private ownership of the major means of production: Private capitalists accumulate capital by making investment decisions within a logic of profit maximization.  This implies that the capitalist state does not directly interfere in investment decisions or in the market, but rather provides legitimation and order, using its power primarily to guarantee external defense and internal peace consistent with the institutions of private property.

     3 The wage system: Labor-power is a commodity sold by proletarians (who do not own means of production) to capitalist owners of the means of production in a competitive labor market.

     The problem with Marx's formulation is not so much what it includes as what it leaves out.  Marx seeks to overcome the vacuities of classical political economy by conceptualizing capitalism as an historical system which

came into existence through the use of force (see Part 8, volume 1 of Capital)and which will pass out of existence through the development of its own internal contradictions.  But, in seeking analytical elegance in his specification, Marx abstracts from a number of processes which should be included within the specification of the capitalist mode of production.  For example in volume 1 of Capital Marx assumes:

     1 the existence of an English-type caretaker state which does not directly interfere in the process of development;

     2 no international trade  a closed system;

     3 a completely competitive relationship among capitals; and

     4 the complete commodification of labor-power such that there exists only a class of workers with no institutional power to obtain more than the subsistence wage, and a class of capitalists who own and control all means of production.

     Certainly simplifying assumptions are required in any theory which attempts to specify the essential tendencies of a mode of production.  We should not include sun spots or climate change in our theory.  Some processes must be designated as exogenous, while others, hopefully, capture the kernel of the social system we are studying.  The problem I am raising is that Marx may have distorted the kernel somewhat by his choice of simplifying assumptions.

     My reading of the world-system literature leads me to question the wisdom of several of Marx's theoretical decisions.  It is not a matter of the simplifying assumptions being incorrect in one or another concrete empirical situation.  This is true of every theoretical abstraction.  It is rather that

the essential processes of capitalist development may be distorted by the

particular assumptions made by Marx.  Marx attributed a great deal to

historical specificity, as have many Marxists since.  But his theory was an abstraction from the complications of history.  The approach I will outline here will do the same thing, except that it will draw the boundaries between the essential endogenous process of capitalism and the historical excrescences in a different way.

     The hard task is to reformulate a new theory of the essential kernel of capitalism.  Bertell Ollman (1976) has convincingly argued that Marx held to a philosophy of "internal relations" in which an essential part (termed a "monad" by Leibnitz) contains relations that express the basic nature of the whole system under analysis.  This consists in identifying the crucial or kernel set of relations.  Some Marxists (Dobb, 1947; Brenner, 1977) have argued that the key social relation for capitalist society is the relationship between capital and labor as it occurs within the firm, or as Marxists say, at the point of production.  This is undoubtedly an important relationship and a spate of excellent studies have focussed on the labor process as it has developed in contemporary core capitalism (Braverman, 1974; Edwards, 1979; Burawoy, 1979).  The world-system perspective encourages us, however, to notice how control institutions (relations of production) are structured beyond the point of production, in states, and, indeed, are institutionalized in the core/periphery hierarchy.

Additions to Marx's Model

The conceptualization of the world-system as a multilayered system of competing groups has been very helpful in accounting for the historical development of

capitalism.  Here I would suggest that the processes of state formation, nation-building, class formation, and the reproduction of the core/periphery hierarchy can be theorized as fundamental to the capitalist mode of production itself.  Obviously these processes are beyond the scope of a narrowly economic view of capitalism, but it is precisely the transcendence of such an

economistic theory which is necessary if we are to theorize the development of capitalism as a whole system.

     The disadvantage of this inclusion of processes formerly thought to be historical into the basic model of capitalist development is that it

complicates the model greatly.  Instead of a kernel social relation located at the point of production we have a much more complicated set of organizational, political, market, interstate and world class relations.  What is needed is a new synthesis of these processes which has the virtues of Marx's original theory: simplicity and the identification of a relational kernel.

     One of the key insights into capitalist development stimulated by Wallerstein's (1979a) theoretical writings is that commodity production regularly takes place in an arena that is importantly structured by noneconomic relationships.  There has never been an empirically existing perfect market within the capitalist system.  Instead capitalism is structured as a set of power relations, sometimes taking the form of price-setting markets, but just as often constituted as institutionalized power or authority relations

among classes and states.  Thus capitalism is a competitive system in which no single organization exercises monopoly control over production and consumption, but within certain organizational realms monopoly power is temporarily

exercised.  This organizational power is most often institutionalized within state structures or guaranteed by property laws which are backed up by states.  Thus mercantilism is not a stage of capitalist development, but, with some variations in form and extent, is a constant feature of capitalism.  In thelong run, however, these extra-economic sources of control are themselves subjected to competition in the arena of the world-system.

     Thus the organizational structures of states and firms, and the structured relations among classes are subjected to a competing-down process which occurs in the interstate system and the world market (see chapters 7 and 8).  This accounts for certain regularities which can be observed in the world-economy.  Not only are peripheries underdeveloped, but the uneven development of core countries results in the rise and fall of hegemonic core powers.  This is because the correct combination for success in the capitalist system depends, not only on efficient production for the market, but also on the right mix of state investment in infrastructure, regulation of classes, and the exercise of military power and diplomacy in the interstate system.

     Marx's simplifying assumption that workers in a purely capitalist system receive only the wages necessary for the reproduction of the labor force does not accurately reflect the process of class struggle which occurs within the capitalist system.  Many core workers undoubtedly receive wages beyond reproductive necessity, and many peripheral workers receive wages which are below what they need to reproduce themselves and thus must rely on other

resources.  Marx assumed that trade union movements would more or less automatically develop into socialist challenges to the logic of capitalism.

By now it is obvious that trade unions by themselves do not challenge the basic logic of capitalism, although they do raise the wage bill paid by capital.  This suggests that the process by which workers resist their perfect commodification should be seen as a normal part of capitalist development itself.  Their differential success in this is known to be mediated primarily by the extent to which they are able to gain access to state power, and toutilize this access to guarantee their right to bargain collectively with capital.

     While the forms of the welfare state and the political legitimation of labor unions exist not only in the core but in the periphery, and while the real level of protection which workers are able to receive from their own unions and their states varies over time in all states, it is still the case that there is a significant differential between the core and periphery in terms of the political protection versus the use of political coercion in class relations.  These systematic variations must be taken into account in any theory of accumulation, uneven development, and crisis.  Erik Wright's (1978:147-54) explication of the different theories of crisis refers to one cause of the decline of the rate of profit as the "profit-squeeze" model, in which workers are effective in maintaining a wage level which discourages new capital investment.  This is an example of the inclusion of the consequences of class struggle into the model of accumulation itself.

     Another consequence of the systematic inclusion of extra-economic determinants of class position is that it enables us to better understand exploitation in the periphery.  A great debate has emerged among Marxists about the definition of the capitalist mode of production.  Many reassert Marx's claim that the fully developed capitalist mode of production can only exist in the context of the wage system.  Thus the slavery and serfdom which were

created in peripheral areas during the expansion of the European world-

system are classified as precapitalist modes of production which were

articulated with capitalism. 

     This debate about the articulation of modes of production has been reviewed and clarified by Aidan Foster-Carter (1978).  He suggests thattheorization of the capitalist mode of production at the world-system level may bring about a synthesis of the currently somewhat Balkanized discussions of particular theoretical questions by Marxists concerned with problems of development.  Foster-Carter recommends that the theorization of capitalism should go beyond an economistic approach to include political dimensions.  I think he is mistaken, however, as were Brenner (1977) and Frank (1979a), to suggest that world-system articulation ought to be conceptualized as

"exchange."  Certainly the form of exchange (commodity production versus gift-

giving or tribute payments) is important, but international trade and the core/periphery hierarchy should be analyzed in terms of production relations as well.  As Albert Bergesen (1983) has strongly argued, it is institu

tionalized power (in the form of private property, colonialism and neo-colonial geomilitary influence) which stands behind the fictively equal trade between core and periphery.   

     When we include noneconomic dimensions of class into our definition of capitalist production relations we must abandon the assumption of a perfect price-setting labor market.  Intraclass stratification into "segmented labor

markets" is often structured by extra-economic institutions e.g. nationalism, racism, sexism, ethnic solidarities, or trade unions, and immigration laws.

     In the periphery extra-economic coercion plays a much greater part in production relations.  Even so, the cost of slave or serf labor and their relative efficiencies or inefficiencies entered into the calculation of profitability and investment decisions.  The elimination of these extreme forms of labor coercion in the periphery has by no means equalized the levels of coercion exercised over core and peripheral workers.  The wage differential beyond the difference in productivity analyzed by Arghiri Emmanuel (1972) isbased on the exercise of coercion in the world-system.  Peripheral states generally exercise more repressive controls over worker organizations.  If legal protections for workers exist, they are usually not enforced.  And the core/periphery division of labor itself (differences in productivity as well as wages) contributes to the great income inequalities which exist between core and peripheral workers.  These differences, which may be partly conceptualized as stratification within the world proletariat, are produced both by the direct exercise of core power through state action and transnational corporate politics, and as the indirect consequence of the core/periphery division of labor.

     The Wallersteinian world-system perspective contends that the core/

periphery hierarchy and the exploitation of the periphery by the core are necessary to the reproduction of capitalism as a system.  Thus, rather than a temporary stage on the road to fully developed core capitalism, the "primary accumulation" (Frank, 1979a) by which the core exploits the periphery is one of the main mechanisms which allow the continuation of expanded reproduction in

the core.  The relative harmony of capitalists and workers in the core (which can be observed in the interclass alliances typified by social democratic regimes or the "business unionism" form of class struggle in the United States) is possible because of the key role performed by exploitation of the periphery.

     It is undeniable that the greater proportion of surplus value produced in the world-economy is, and has long been, produced in the core, but the exploitation of the periphery both creates extra amounts of surplus value which can be redistributed in many indirect forms to core workers, and also rein

forces the ideologies of nationalism and "national development" which facilitate class alliances in the core.  Albert Szymanski (1981:chapter 5) shows evidence against several propositions which support the "necessity of imperialism" argument.  He does not, however, contradict the claim that the core/periphery hierarchy allows capitalist accumulation to proceed as a result of its effects on class peace in the core.  Szymanski's critical evaluation of the "aristocracy of labor" thesis (1981:chapter 14) does not disprove that core workers benefit from the core/periphery hierarchy, and in fact Szymanski admits that the concentration of cleaner, betterpaid jobs in the core is an important contributor to the depolarization of class conflict within core countries.  This suggests that decreases in the exploitation of the periphery by the core may have potentially revolutionary consequences for core countries, and thus for the capitalist world-system as a whole.


Logical Boundaries Between Modes of Production

The discussion of structures often proceeds at a metatheoretical level in which great paradigms clash but little is accomplished for cumulative social science.  A theoretical holism which simply asserts that the essential features of a

social system (the monad or kernel) exist at the level of the whole system, is such a metatheoretical claim.  As an heuristic device it has the same

scientific status as the claim that the point of production is the spatial location of the systemic monad.  Both of these metatheoretical points of departure try to conceptualize the deep structure spatially, and they do so in order to help us sort out the central qualities from which the more complicated world of appearances and concrete realities can be explained.

     But the attempt to identify the qualities of modes of production with spatial entities may produce more confusion than clarification.  If we assume that each world-system has one and only one mode of production, as Wallersteindoes, how do world-systems change?  It is more useful to conceptualize modes of production in terms of logical boundaries rather than spatial boundaries.  This allows for the articulation between different modes, and for the competition between modes within a single socio-economic system.  It may be the case that most spatially designated socio-economic systems have one mode of production which is dominant, but if we eliminate the possibility of the coexistence of modes, we cannot discuss situations in which modes of production may be vying with each other for domination, and thus our ability to analyze transformation is accordingly limited.

     A clear specification of the underlying structural tendencies of

capitalist development is necessary to distinguish institutional forms and social movements which reproduce capitalism (or allow it to intensify or to expand to a larger scale) from those forms and movements which may act to transform the capitalist system into a qualitatively different system.  Here Althusser (Althusser and Balibar, 1970) has given us a useful distinction 

that between the mode of production (the basic essence of capitalism as a system) and the social formation (the concretely existing set of social institutions which contain historical survivals of earlier modes of production and nascent elements of modes of production of the future).  The idea of "social formation" will here apply to the whole world-system rather than to separate national societies.  Thus the book is titled Global Formation.

     The above posits the existence of a systemic essence  the basic

tendential laws of capitalist development.  My discussion focuses on the logical "boundaries" between different modes.  It is argued that these boundaries must be specified clearly in order to understand how fundamental social change  the qualitative transformation of social systems  occurs.   We must consider the possibility that two or more modes of production may coexist within a single world-system.  Foster-Carter's (1978) review of the mode of production controversy discusses several important conceptual distinctions.  He points out that both articulation (in the sense of the complementary interpenetration of two modes), and contradiction (in the sense of conflict and competition among modes) are necessary in order to understand the interactions among modes of production.  As Foster-Carter puts it, "Each concept needs the other: articulation without contradiction would indeed be static and anti-Marxist; but contradiction without articulation...fallaciously implies that the waxing and waning of modes of production are quite separate activities, each internally determined, whereas in fact they are linked as are wrestlers in a clinch" (1978:73).


An Analytic Narrative

Here follows a rather abstract and brief sketch of the history of the

capitalist world-system which will be helpful in sorting out the relationship between modes of production and world-systems.  Wallerstein contends that the transition to capitalism occurred for the first time in the European world-

economy during the "long sixteenth century" (14501640).  This system was imperialistic from the beginning in that it was composed of a hierarchical division of labor between core and peripheral areas.  It emerged from European feudalism, a somewhat unique social system which was itself a devolved combination of the Roman Empire and the Germanic tribal societies (Anderson, 1974a).  European feudalism during its classic period (the ninth through eleventh centuries AD) was not a world-system in the strict Wallersteinian sense.  The manorial economy was composed of economically self-sufficient units, and thus there was no territorial division of labor exchanging fundamental products.  This weakly integrated system was fertile ground for the emergence of markets and capitalism.1

     Fernand Braudel's (1984) narrative of the European world-economy differs from Wallerstein's in theoretically relevant ways.  Though he avoids committing himself to formal definitions, Braudel makes a distinction between capitalism and the market economy.  For him capitalism is haute finance and mercantile monopoly spreading over the top of market exchange like a parasite, able to influence the development of states and economies by subtle manipulations.  Braudel differs from Wallerstein by conceiving of the European world-economy as a set of layered modes of production with capitalism at the top and precapitalist modes such as slavery and serfdom in the periphery.  This layered approach leads him to include the city-state Mediterranean world-economy of the twelfth century in his narrative of the development of the capitalist world-system.  He also contends that a world-economy necessarily has a single city at its center, and he describes the see-sawing hegemonies of Venice, Antwerp, and Genoa during the period before Wallerstein's European world-system allegedly experienced the transition to capitalism. 

     What we have here are two different notions of the transition to

capitalism.  For Braudel just the top layer was capitalist, and it was merchant or commercial capitalism, not industrial capitalism.  For Wallerstein each world-system has only one mode of production, so the entire European world-

economy (both core and periphery) experienced the transition from feudalism to capitalism during the "long sixteenth century" (Wallerstein, 1974:chapter 8).

     Braudel's notion of a layered world-system with capitalism at the top and precapitalist modes in the periphery is similar to the formulations of many other theorists (e.g. LaClau, 1977).  But unlike LaClau, Braudel implies notonly that capitalism creates and sustains peripheral exploitation, but that capitalism is dependent on the existence of a periphery.  In this he follows the lead of Rosa Luxemburg (1968).  Here is where Wallerstein's formulation is superior.  The idea of a mode of production as a self-sustaining logic of reproduction would seem to require that sectors or layers which are necessary to the reproduction of the logic be defined as part of that logic.

     According to Wallerstein the period of the fifteenth and sixteenth centuries was a period of transition in which the logic of capitalism came to dominate European feudalism.  The key struggle was the defeat of the Habsburg attempt to convert the nascent capitalist world-economy into a tributary world-empire.

     The peripheralization of Eastern Europe was possible in part because the timing of the process of infeudation there was delayed due to the weaker influence of the Roman Empire.  The so-called "second serfdom" of Eastern Europe was really its first serfdom (Anderson, 1974a).  The development of serfdom out of the slavic village communities corresponded, in Poland, with the emergence of the European world-economy such that serfdom became a form of labor control utilized for the production of commodities for export to the core areas of Western Europe.

     From its base in Europe and Latin America the European-centered capitalist world-economy expanded in a series of waves to eventually dominate the whole globe by the end of the nineteenth century.  But the process of expansion was also accompanied by a process of the deepening of capitalist relations in the areas where they had already become dominant, that is in Europe and Latin America.  The commodification of land, labor, and wealth not only was expanded to new areas by trade and by force, but was also intensified to include moreand more areas of life within the older regions of the capitalist world-

economy.  In the core this meant the more thorough subjugation of the labor process to the logic of efficient and profitable commodity production (Marx 1976:1025-38) and in the periphery it meant the partial decline of the directly coercive aspects of labor control and the rise of more opaque market-mediated wage labor relations.

     Capitalist slavery and serfdom were eventually replaced by less directly repressive forms of labor control.  The process of proletarianization deepened in both the core and the periphery as subsistence production and home

production (worker's gardens, nonmonetized family labor, etc.) became

commodified, making workers more and more exclusively dependent on the sale of their labor power.  In the periphery at times "precapitalist" forms of labor control were either created anew or revitalized to produce commodities for export to the core.  In addition, many "part-time proletarians" received low wages made possible by their partial dependence on village communities which served as labor reserves for the sector of the economy producing peripheral commodities (Murray, 1980).

     Thus the expansion of capitalism during some phases reproduced "precapitalist" forms of production, while during other phases it broke these forms down and replaced them with production relations more similar to those of the core.  Proletarianization and the commodification of life has therefore increased in both the core and the periphery, with a certain lag in the periphery, and the retention in the periphery of more coercive types of labor control.  These are more coercive relative to the core but less coercive relative to the earlier periphery.

     At the level of the core/periphery hierarchy capitalist production relations have similarly become less directly coercive and more formally organized as market relations between equals, even though the unequal power of core and peripheral states in the interstate system, and the "market

advantages" of core capitalism (employing capital-intensive technology and skilled highly paid labor) remain great.  Nevertheless, neo-colonialism is

not colonialism.  The sovereignty of contemporary peripheral nation-states may often be in question, but it is undoubtedly greater than when colonial empires carved up Asia, Africa, and the Americas.  Similarly, "peripheral industrialization" and "dependent development" (Evans, 1979) may not constitute the end

of economic domination by the core, but they certainly involve more core-like capitalist relations of production than did the purely extractive peripheral industries of earlier centuries.

     In this brief description of the spread and deepening of capitalist relations of production we can see the importance of specifying both the spatial and logical boundaries of capitalism.  The intensification of

commodified relations within both the core and the periphery of the capitalist system is an important process which has consequences for the ability of capitalism to reproduce itself.  An exclusively spatial metaphor for conceptualizing production relations blurs the distinction between the logics of different modes of production.  I am arguing that, though articulation of wage-labor production with non-wage forms of commodified labor is an endogenous feature of capitalism, we must analyze the logical boundaries of modes of production without relying too heavily on the spatial dimension. 

     Socialism is a mode of production which subjects investment decisions and distribution to a logic of collective use value, and as such, socialistmovements reintroduce non-commodified relations into the interstices of capitalist relations.  But the complete institutionalization of a socialist mode of production awaits the day when this qualitatively different logic becomes dominant in the world-system.  Thus the question of logical boundaries is important for allowing us to see how a particular organizational form may reproduce capitalist relations or contribute to the transformation of


     A particular institution may, of course, do both at the same time.  Thus labor unions have forced capital to expand mechanization at the same time as they have placed constraints on capitalist control of a certain share of

surplus value.  Similarly, "socialist" states may reproduce the logic of commodity production on a national scale (state capitalism) while at the same time creating a more socialist logic of distribution, at least within their own political boundaries (Chase-Dunn, 1982b).  Thus logical boundaries must be specified which enable us to understand the qualitative distinction between capitalism and socialism even when these are not differentiated spatially.

     We can borrow a metaphor from biological systems in order to begin this task.  Alker (1982) and Lenski and Lenski (1982) have argued that social systems are reproduced by "genetic" codes.  These theorists share a cybernetic conception of systemic structure in which social information becomes coded in cultural and symbolic systems.  Materialists may utilize the imagery of the genetic theory of deep structure and reproduction without adopting an idealist philosophy.  For Marx the "genetic structure" of social systems was inherent in the institutions by which material life was reproduced.  He posited a tension between the technical and social forces of production (technology, labor process) and the relations of production (those political institutions whichallow exploitation to take place).  Cultural institutions were thought to be reflections of the more basic struggle over material production.  Thus the essential nature of a particular mode of production could be understood from an analysis of the typical institutions of production and class exploitation.  A deep structure theory which follows the materialist approach will start with an analysis of class relations.  These are conceptualized in various ways by different Marxists and these differences have profound effects on the understanding of modes of production and their transformation.


A Purely Formal Approach

What is a model of deep structure?  We have various formal alternatives which may be useful.  A theory may be specified axiomatically as a series of propositions and derived hypotheses.  Nowak (1971) has thus formalized parts of Marx's accumulation model of capitalist development.  Such an axiomatic theory could employ the kind of dialectical causal logic suggested by Wright (1978:

15-26).  Or a theory may posit the existence of a set of basic processes in terms of causal relations among a number of variables.  The equations which describe this kind of model may be written, and alternative specifications are easily posited.  Let us take this second form and imagine that we have decided upon a set of key variables for representing the underlying model of capitalist development.  We then have a number of equations which posit causal relations among basic variables under specified scope conditions.  If we want to use dialectical logic we may model complicated non-Aristotelian relations among variables (see Alker, 1982).2

     Let us think about what it would mean to formally specify the logical boundaries of such a formalization of the basic processes of the capitalist system.  We can ask what would have to change to constitute a qualitativelydifferent system.  If we could somehow actually know the exact specification which corresponds to the actual capitalist mode of production at a single point in time we would likely find out that the historicists are partly right.  Even ignoring those aspects of social reality which are largely conjunctural, the most appropriate structural model is likely to be always changing to a certain extent.  Let us assume that this "background" change is fairly constant over time and that it is relatively small.  If, indeed, the basic structure changes rapidly, then generalizations about modes of production are inappropriate, and the best we can do is to write history.

     The problem of "stages of capitalism" might be understood in such a formalistic approach by focusing on larger changes in the parameters

specifying relations among variables.  Qualitative transformation in such a formalistic approach could be designated as more fundamental change in the model such that wholly different processes with different variables are created and become dominant in the overall determination of development.  This would correspond to transformation of structural "constants" which are then seen not as constant relative to all socio-economic systems, but only with regard to a particular mode of production.  

     Many problems are raised by such a purely formal approach to system transformation.  How can we distinguish between changes in the model which are unimportant for the basic structure, or which reproduce the same system logic using new organizational forms (perhaps on a greater spatial scale), from changes which truly transform the system logic?  The distinctions between background, stage, and transformative change suggested above are based on formal distinctions within mathematically or logically specified models.  Certainly such an approach would need to combine these formal distinctions withsubstantive considerations about the nature of modes of production.  If we want to be able not only to say that fundamental change has occurred, but also to say in what direction change is occurring, we need to have substantive models of the various possible modes of production: kinbased, tributary, capitalist,

and socialist.  Here we will work mainly on the specification of the

capitalist mode, although it should be remembered that the problem of logical boundaries implies the necessity of specifying the other modes as well. 

     We require a substantive core of assertions on which to base our theory of world-system development.  It might be possible to work inductively from empirically observable cycles and trends (see chapter 2).  It should be recognized that quite different deep structure theories might account for any particular set of empirical patterns, though an inductive approach would probably rule out some theories.  At this point I will proceed in the other direction, from prior theorizing, although it should be emphasized that this deductive kind of theoretical development should not remain a selfcontained universe.  Different formulations must eventually contend with one another to account for empirical evidence.  We are a long way from sufficient clarity, however, and the first task is to think through some general theoretical problems.

     A question which poses nicely the problem I wish to confront is "what is capital?"  Marx understood capital to be a social relationship, an institutionalization of control through property ownership of the means of production.  For Marx capital contained within itself the relationship with labor, a relationship in which property-less workers must sell their labor time to capital-owners.  How might we modify this definition in the light of the insights provided by viewing capitalism as a world-system?  I will approachthis problem from two directions.  The first uses insights about the state and the interstate system to reformulate the definition of capital.  This involves the analysis of the process of commodification and its limits.  The second

approaches the problem of domination more directly by analyzing the relationship between classes and the core/periphery hierarchy.  Let us consider these in turn.

Commodification and its Limits

Marx began with the commodity.  The commodity is a standardized product produced for exchange in a price-setting market, in which the conditions of production are subject to reorganization as a result of changes in input

costs.  A work of art is not a commodity because it is not (by definition) standardized or reproducible.  Your mother is not a commodity because she is not replaceable in the market.  There are no perfect commodities, but many social objects approximate commodities.  It is uncontestably the case that the deepening of capitalist relations involves the commodification of ever more areas of human life.  Production for use in the home becomes replaced by the purchase of commodities.  Economists commonly project the character of commodities onto everything.  Children become consumer durables. Some socio

logists carry on in the same manner, although they sometimes differentiate purely economic from "social" exchange (Blau, 1964).  The "market mentality" tends to analyze all interaction as commodified exchange.

     All of human life is not organized in the commodity form.  Some things represent collective "goods" or transcendent values which have no calculable market price.  Many relationships, even in "advanced" countries, involve real transcendent solidarity which is not reducible to a business deal.  Friendship, love, patriotism are often described in the language of "rational choice," butpart of the nature of these relationships involves a merging of the individual interests (the constitution of a corporate entity) such that the terms of exchange among parts are undefined, and undefinable.

     Marx observed that the market, especially the market for labor, while it formally represents an exchange among equals, is actually an institutional mystification of the main type of exploitation which typifies capitalist society: the appropriation of surplus value.  One of his great contributions was to show how the formal equality of the market could produce socially structured inequality.  I have mentioned above that Marx's model of capitalist

accumulation assumes a perfectly operating system of markets for labor and other commodified objects.  This assumption has led to the narrow view, held by both Marxists and non-Marxists, that capitalism is limited to a market system in which "private" owners of the means of production employ commodified labor to accumulate capital. 

     The public/private distinction is fundamental to Marx's definition of "independent producers," and thus also to his distinction between production for use and production for exchange.  It is assumed that, in a market economy, independent producers seeking to maximize their own returns exchange

commodities with one another.  The production of use values, on the other hand, assumes some unity of interests, either because an individual or family is producing for itself, rather than for the market, or because the unit producing use values does it according to a calculus which includes other principles in addition to strict economic efficiency.  Thus use-values may be produced by a traditional division of labor in an Indian village in which "prices" are customary (Mandel, 1970), by a state within a tributary mode of production according to a logic of political domination, or by a socialist society inwhich investment decisions and exchange terms are democratically determined using a calculus of social need.

     A historicalstructural perspective on capitalism suggests that we should seek its kernel in the main specific types of competition and integration which operate in the whole terrain of interaction.  Since the market principle is historically only part of the determination of success and failure in the worldsystem, we should incorporate the dynamics of those non-market processes which are important to successful accumulation into our conceptualization of the kernel relations.  It has been argued by some critics of Wallerstein that states and the interstate system (which form the political basis of world capitalism) operate according to somewhat different principles than do firms and classes struggling to survive and succeed in the arena of the world market (Skocpol, 1977; Zolberg, 1981).  In chapter 7 I argue that the logic of competition and conflict in the interstate system (geopolitics) and the logic of competition in the world market should be understood as inter-dependent determinants of the dynamics of capitalist development.  The present task is to ground this idea in an analysis of the process of commodification and its limits.3

     The expansion of capitalism has largely consisted of a deepening and widening of commodified relations.  More and more aspects of life become commercialized.  More and more interactions are mediated by markets.  And the spatial scale of market integration grows.  But there are clearly limits to the degree of commodification which is possible for capitalism to survive as a social system.  Capitalists themselves, workers' organizations and especially states sometimes resist market forces and act to erect institutional barriers to the commodification of certain relations.  Much of politics in capitalistsociety is a seesawing struggle among different groups over the process of commodification and its limits.  This struggle is a normal part of capitalism itself, although the resistance to commodification holds the possibility of challenging the basic logic of capitalism.

     Some of the limits on commodification are erected by political groups operating explicitly in their own interests.  Thus cartels, guilds, and trade unions are organizations which resist market forces in the name of "special interests."  But the most extensive efforts to regulate market forces are carried out by states in the name of "society."  Public health regulations, minimum wage legislation, national parks and many other institutional features of capitalist societies are legitimated in terms of state provision of "public goods" which market forces either would not provide or which must be protected from commercialization in the name of those "universal interests" represented by the State.

     Karl Polanyi's (1944) sweeping portrayal of the "great transformation" outlined the growth of markets and the commodification of wealth, labor, and land in England and the Continent.  Polanyi also portrayed a societal reaction to commodification in which the negative effects of market forces were becoming subject to regulation by states.  This reaction to the commercialization of society was understood by Polanyi as the basis of the emergence of socialism.  The expansion of the welfare state, even though a long and uneven process, would eventually alter the logic of capitalism toward a more collective form of rationality.

     Polanyi's depiction of the transition to socialism is more historical and openended than the functionalist notion of an equilibrium between differen

tiation and integration or an automatic dialectic which mechanically produces social transformation.  Obviously the political tussle over the extension and limitation of commodification involves class struggles, ideological hegemony, complicated matters of consciousness formation, etc. and is anything but automatic.  But Polanyi's analysis falters because he fails to consider the importance of the fact that these struggles take place within a larger terrain formed by the world economy and the interstate system.  Despite his focus on many international aspects of capitalist development, Polanyi does not see that the structure of the interstate system itself poses a major difficulty for his theory of the transition to socialism.  The limits on commodification, and also the limits on collective rationality are set in a competitive struggle in which firms, classes, and most importantly states are the players against one another.

     The myth of the Nation as a transcendent solidarity is an important determinant of success or failure in this struggle.  States must be able to legitimate their actions and to mobilize participation (taxpaying and warfare) in order to survive or prevail in the worldeconomy.  Those that do this less efficiently or less effectively are likely to lose out in the competitive struggle.  Thus both political mobilization and comparative advantage in the world market are important to the logic of capitalism.

     The ideological mystification which holds that the State represents the "general will" or the "universal" interest is not false only because states are controlled more by capitalists than by workers.  It is also false because states represent only the interests of their own citizens.  Thus the State is only one more political organization in a larger arena of competing political organizations.  Even if a state did represent all of its citizens these would

not be universal interests from the point of view of the socioeconomic systemas a whole.  The "society" represented by each state is a national society, a subgroup in a larger whole.  And there is no world state to aggregate the interests of all participants in the worldsystem.

     The political structure of capitalism is not the Capitalist State.  It is the Capitalist Interstate System.  This fact alters Polanyi's model of commodification and its limits as a process for the transition to socialism because there is no effective organization to represent, even ideologically, the collective rationality of our species.  This is why the limits which are placed on commodification do not easily add up to the transformation to socialism.  As trends in the last decade have shown, austerity regimes, deregulation and the extension of commodification within the "socialist" states occur globally during certain periods, although not in the same way everywhere.  The ability of any single national society to construct collective rationality is limited by its interaction within the larger system.

     The expansion and deepening of commodification has always created reactions and stimulated the formation of political structures to protect people from market forces.  Capitalists themselves organize political institutions which limit market forces.  Contrary to much ideology most real living capitalists usually prefer monopolistic certainty to the vagaries and risks of market competition.  Thus capitalist states have always tried to protect the capitalists who control them.  States act to expand markets or to destroy barriers to market competition when their own capitalists will benefit because they enjoy a competitive advantage.  And workers and peasants have tried to protect themselves from market forces through guild organizations, community structures, workers' coops, labor unions and political parties.  Marx's (1967a) discussion of the struggle over the length of the working day shows how middlestratum professionals sometimes become involved in welfareoriented regulation of market forces.  The abolition of child labor and slavery are additional examples of limits to commodification created by movements with complex class identities.

     The constraints on market forces imposed in one region, state or industry are often one of the most important driving forces of the expansion of commodification to new areas.  Successful labor organizing causes capital to look elsewhere for labor.  Monopolies organized locally or nationally encourage consumers to try to gain access to outside markets where goods may be cheaper, and cheaper production in these outside markets is also encouraged.  Thus commercialization and regulation interact in a spiral which drives a number of the longrun trends visible in the worldsystem.  Commodification causes political organizations to emerge, which then result in incentives for the further extension of commodification.  This may undermine earlier, smallerscale political organizations by pricing them out of competition or by causing them to internally impose new conditions of "market efficiency."  So far the scale of market forces has always been able to escape political regulation, now even encompassing the "socialist" states and encouraging their movement toward deregulation and levels of allocation more typical in the larger worldeconomy.

     The size of firms, the spatial scale of markets and the depth of market integration increase partly in reaction to political efforts to regulate market forces.  The "internationalization of capital" is partly explained by escape from political regulation and labor unions and a good portion of the trend

toward evergreater stateformation  the arrogation of powers over more and more areas of life  can be attributed to state action vis a vis market forces.  Increasingly states not only react to market forces with regulation but theyintervene to create market forces.  As firm size and the spatial scale of markets has grown, state responsibility for economic development has increased.  The state not only serves private entrepreneurs and tries to attract capital, sometimes it itself is the entrepreneur.  This occurred first in several second tier core and semiperipheral countries trying to catch up with British industrialization, but now peripheral capitalists regularly use the only organization they have access to which is large enough to compete in the global economy  the State.  State capitalism is thus a trend, not of socialism, but of the increasing scale of production and market integration in the capitalist worldeconomy.

     What are the implications of the above for our effort to redefine capital in the light of the historical patterns of capitalist development in the worldsystem?  For one thing we need to reconsider the question of forms of property and capitalism.  The emphasis on commodification and the importance of markets in the context of multiple competing and unequally powerful political organizations leads us to question a narrow interpretation of "private" property as the only appropriate form of ownership for capitalism.  General Motors would still be a capitalist firm competing in the world automobile market even if it were to become owned and controlled by its employees.  Even stateowned firms are subject to constraints based on the ability of the state which owns them to compete in the larger global political economy.  Capital is that sort of power which is able to combine the operation of profitable commodity production with the relatively efficient provision of those "public goods" which are necessary or advantageous to profitability.  Thus capitalists, in this sense, are neither private owners of productive wealth nor state managers, but rather the combined operations which produce success or failure in the capitalist worldsystem.  Iam not suggesting that we should abandon the distinction between privately held capital and the state, nor am I suggesting that these do not often have contradictory interests.  What I mean is that "success" in the capitalist system requires both of these and their cooperation whether or not the jobs be differentiated to separate organizations or more integrated, as when states directly control commodity producing firms.  Thus states are part of the relations of production in capitalism, and capitalism cannot be understood as separate from the logic of nationbuilding, stateformation and geopolitics as they typically operate in the context of an expanding and deepening process of commodification.

     In order to understand how geopolitics and the competition among states in the interstate system is integrated with capitalist commodity production we

must analyze the form and content of interstate competition within the

capitalist world-economy.  This subject is taken up in the second part of this book.

World Classes and the Core/periphery Relationship

Let us now turn to the way in which exploitation and domination are

structured  the interaction of interclass and intraclass conflict in the

world-system.  Albert Bergesen (1983) has argued that the core/periphery relationship can be conceptualized as a kind of class relationship.  He shows

convincingly that the relationship between the core and the periphery is not simply an exchange between equal partners.  Structured power has created and sustained the hierarchical division of labor between the core and the

periphery, and continues to do so.  Bergesen's argument is an important response to Brenner's (1977) characterization of the world-system perspective as "circulationist."      Nevertheless, rather than collapsing the categories of class and core/

periphery, it may be more helpful to use them both and to study their inter-

action.  First, what is the difference between the two?  According to Marx, the capitalist/proletarian relationship is based on ownership and/or control of productive property versus a class of workers who do not own means of production and must sell their labor-power.  This institutional situation is understood to have come into existence through the use of extra-economic coercion, and to be largely sustained by the normal processes of capitalist economic competition.  The core/periphery relationship is analytically understood as a territorial division of labor in which core areas specialize in capital intensive production using skilled highly paid labor, and peripheral areas specialize in labor intensive production using low wage (or coerced) and relatively unskilled labor.4

     The world economy is composed of "commodity chains," forward and backward linkages of processes of production (Hopkins and Wallerstein, 1986).  These commodity chains link raw materials, labor, the sustenance of labor, intermediate processing, final processing, transport, and final consumption.  The great bulk of consumption in the capitalist world-economy is of products whose commodity chains cross national boundaries, and a large portion of these link

the core and the periphery.  Wallerstein contends that core activities take place at those "nodes" on commodity chains where capital-intensive technology and skilled highly paid labor are used, and where relatively greater surplus value is appropriated (see chapter 10). 

     The core/periphery relationship was brought into existence by extra-

economic plunder, conquest, and colonialism, and is sustained by the normal

operation of politicalmilitary and economic competition in the capitalist world-economy.

     The world class structure is primarily composed of capitalists (owners and controllers of means of production) and property-less workers.  This class system also includes small commodity producers who control their own means of production but do not employ the labor of others,5 and a growing middle class of skilled and/or professionally certified workers.

     The territorial core/periphery hierarchy cross-cuts this world class structure and interacts with it in important ways.  Thus the categories of core capitalist/peripheral capitalist, and core worker/peripheral worker are useful for an analysis of the dynamics of world capitalism.  Core labor is usually conceived as organized by the wage-system in which competition in a labor market determines wages.  But at least some core workers have long been in the category of protected labor in the sense that trade unions, welfare legislation and/or other politically articulated institutions (such as immigration controls) give them some protection from competition in the world labor market and some advantages in the struggle with capital.  Guilds protected workers and producers from competition within medieval cities,

encouraging the development of capitalist production outside city walls.  Core states, and other states as well, develop politically-mediated mechanisms for

protecting workers, but the uneven process of capitalist accumulation manages to find ways around many of these protections.  The point is that the world class system may be best understood as a continuum from protected labor through wage labor to coerced labor which roughly corresponds to the core/periphery hierarchy. 

     It is important to realize that labor may be commodified without receiving a formal wage.  The serfs and slaves who produced surplus value for peripheral capitalists in earlier centuries were treated as commodities in the sense that their labor process was directed by a logic of capital accumulation, even though they did not have the juridical freedom to sell their labor-time to capital.  There are many degrees and forms of the commodification of labor.

     Sidney Mintz (1977) addresses the question, "was the plantation slave a proletarian?" and his answer, after examining the interconnections between industrial capitalism in England and plantation production of raw materials, is a qualified yes.  Mintz (1985) also focuses on the organizational nature of sugar plantations as capitalist firms.  Not only were plantations producing commodities for profit, but Mintz points out that the combination of agriculture with the processing of sugar cane exhibited features of industrial production usually associated with the factory system in core areas.  Rather than trying to lump slaves and wage-workers together as proletarians in order to account for the important linkages between the two, the Wallersteinian approach sees them as two kinds of labor control which are commodified, one typical of the core, and the other, with an added dose of extra-economic coercion, most often found in peripheral capitalism.

     Marx clearly distinguishes proletarian from slave labor in his model of fully-developed capitalist accumulation.  In volume 1 of Capital Marx (1967a: 168) outlines his definition of commodified labor as the buying and selling of labor-power.  The proletarian is defined as one who is free to sell his labor time, but is not himself a commodity in the sense that a slave is.  He is also "free" of the ownership of the means of production and so is institutionally compelled to sell his labor-power because he cannot produce for subsistence. We would expect to find an argument by Marx as to why this narrow definition of commodified labor is important in his theory of capitalism, but instead we find a kind of circularity in his definition of a commodity.  He declares that "the exchange of commodities of itself implies no other relations of dependence than those which result from its own nature" (Marx, 1967a:168). 

     It is implied by Marx that slave labor is not itself a commodity because slaves are not specifically produced for sale.  Actually slave-breeding in mid-nineteenth century Virginia did approximate production for exchange, but we may wonder about many other goods which are produced both for subsistence and for sale.  Are bananas not a commodity because the peasant may eat them as well as sell them (Trouillot, 1988)?  Is labor-power, the ability of human effort to transform nature, produced exclusively for sale?  By narrowing his definition of a commodity Marx thus limits his definition of capitalism to the wage-

system.  He says, "Otherwise with capital, the historical conditions of its existence are by no means given with the mere circulation of money and commodities.  It can spring into life only when the owner of the means of production and subsistence meets in the market with the free labourer selling his labour-power.  And this one historical condition comprises a world's

history" (Marx, 1967a:170). Actually it comprises the history of the core zone, which is itself not comprehensible without consideration of the

accumulation carried out in the periphery through forms of labor which were partly commodified while also containing a large dose of politically-mediated coercion.

     Coercion beyond the operation of free labor markets remains an important condition for reproducing wage differentials in the contemporary world.  After all, if there were no extra-economic barriers to labor migration, day laborersin the United States would not earn ten times more than day laborers in Mexico.  It is not the operation of a perfect labor market which determines proletarian status, but the subjection of labor to the logic of profit-making, and this is accomplished by a wide variety of institutional means.

     The combination of capital/labor relations and core/periphery relations produces many of the consequences which are fundamental to the capitalist development process.  The dynamics of the interstate system and the process of uneven development are the result of interclass and intraclass conflict and competition as well as international competition.  Class alliances or "relative harmonies" between capital and sectors of labor within core countries cause, and are caused by, the internationally strong states and internally relatively well-integrated nations of the core.  The more coercive and exploitative interclass relations of the periphery are partly the result of alliances between peripheral and core capitalists, as are the relatively weaker states and less integrated nations of the periphery.  State socialism, the most important of the anti-capitalist movements which have emerged within the capitalist world-system, was possible because of the "combined and uneven

development" which occurred in semiperipheral areas (Trotsky, 1932), where cross-cutting contradictions (conflicts among capitalists and between

capitalists and workers) were exacerbated by an intermediate position in the core/periphery hierarchy.

     The interstate system, centered on powerful core states which contend with one another for hegemony, is an important structural basis of the continued competition within the world capitalist class.  No state represents the "general" interests of the capitalist class as a whole.  Rather subgroups of the world capitalist class control particular states. This multicentricstructure of the world capitalist class allows the process of competitive capitalist uneven development to continue.  The rise and fall of hegemonic core states and changes in the structure of international alliances allow for flexibility in the world polity and accommodate changes in the distribution of comparative advantages in commodity production.  A single world capitalist state would be much more likely to politically sustain the interests of those capitalist subgroups which controlled it, and thus to impede the shift in productive advantage from less to more "efficient" producers.  Similarly such a state would become the single object of orientation of anti-capitalist movements.  Thus, unlike the present interstate system, in which successful social constraints on capital often lead to the state's loss of centrality in the world market and capital flight, in a world capitalist state the

aggregation of workers' interests would likely be more effective in actually transforming the logic of the political economy toward a more democratic and collectively rational system.

     The world-system perspective contends that the core/periphery hierarchy, rather than being a passing phase in the transition of "backward" areas toward core-type capitalism, is a permanent, necessary and reproduced feature of the capitalist mode of production.  This contention is supported by historical studies and crossnational comparative research (see Bornschier and Chase-Dunn, 1985) which have substantiated the continuation of mechanisms that reproduce core/periphery inequalities.  The periphery of the world-economy has certainly "developed" and changed greatly since the incorporation of Latin America, Asia, and Africa into the Europe-centered capitalist world-economy, but the

hierarchical relationship between the core and the periphery remains.

     What is the function of this territorial hierarchy for capitalism as a system?  It has probably never been the case, even in the heyday of pure plunder, that more surplus value was extracted from the periphery than was produced in the core.  Most of the surplus value accumulated in the core is produced by core workers using relatively more productive technology. Never-

theless, the surplus value extracted from the periphery has played a crucial role in allowing the relatively peaceful process of expanded reproduction in the core to proceed.  This has occurred in three ways: a) by reducing the level of conflict and competition among core capitalists within core states; b) by allowing adjustments to power relations among core states to be settled without destroying the interstate system; and c) by promoting a relative harmony between capital and important sectors of labor in the core.

     This last point is politically sensitive because it is contrary to much Marxist class analysis.  It also raises the admittedly difficult question of longrun versus shortterm class interests.  There has been much discussion

about whether or not core workers exploit peripheral workers, or benefit from their exploitation (Emmanuel, 1972:271-342).  It is clear that many core workers do benefit from the exploitation of the periphery in a number of different ways.  They are able to buy peripheral products cheaply.  The territorial division of labor between the core and the periphery enables a larger proportion of core workers to have cleaner and more skilled jobs.  The profits from imperialism enable some core capitalists to respond more flexibly to worker demands for higher wages.  The greater affluence of the core allows core states to devote more resources to welfare, and to maintain a relatively greater degree of pluralism and democracy.

     Thus the Marxists who have maintained that lack of socialist militancy among core workers is entirely due to "false consciousness" based on

nationalism and anti-socialist propaganda are wrong, although the status-based mechanisms of ideological hegemony are also important in maintaining class harmony in the core.  The objective structuring of interests based on the cross-cutting nature of class and core/periphery exploitation has stabilized the capitalist world-economy.  This structural basis of capitalism implies that constraints on the ability of core capitalists to keep on exploiting the periphery may have revolutionary consequences for class relations within core countries.  If core/periphery wage differentials were to decrease, core workers would be less subject to the "job blackmail" backed up by the threat (and reality) of capital flight.

What is Real Capitalism?

Let us combine the above discussions of commodification and class-core/

periphery together to postulate a new specification of the capitalist mode of production.  Real capitalism can be defined as:

     1 Generalized commodity production in which land, labor, and wealth are substantially commodified.

     2 Private ownership and/or control of the means of production, which may be exercised by individuals or organizations, including single states, which are themselves players in the larger competitive arena of commodity production and geopolitics.  This allows for "state


     3 Accumulation of capital based on a mix of both competitive production of commodities and politicalmilitary power, in which commodity

     production has the greater weight in the determination of outcomes in the system as a whole.

     4 Exploitation of commodified labor which is, however, not always paid a wage.

     5 The combination of class exploitation with core/periphery exploitation such that the former is more important quantitatively in the accumulation of capital, but the latter is nevertheless essential because of its political effects on the mobility of capital and in reducing class conflict and weakening anti-capitalist movements in the core.

     This adds considerably to Marx's more elegant formulation, but the elements added allow us to account for many of the structural features of the contemporary world-system by referring to its mode of production.  Samir Amin

(1974) has suggested a slightly different formulation which defines core capitalism the way Marx did, except that it is articulated with and reliant on peripheral capitalism.  Core capitalism is defined by Amin as "autocentric" self-expansion of capital, while peripheral capitalism is externally determined (by the core) and uses an extra dose of coercion in its class relations.  The definition suggested above is intended to analytically combine the interstate system and the core/periphery hierarchy into our definition of capitalism in order to explain certain features of the modern world-system which are quite problematic when Marx's definition is used in its unmodified form.

     Now we have an explanation, based on the capitalist mode of production itself, for why socialism has not emerged in the "most developed" (core) areas.  The core/periphery hierarchy operates to reduce class antagonisms or to suppress class conflict in both the core and, to some extent, in the periphery.  In peripheral areas a comprador bourgeoisie often rules with coresupport, but when anti-imperialist movements emerge they are most often broad

anti-core class alliances.  But in the semiperiphery class antagonisms are not cross-cut by the core/periphery hierarchy, and it is there that the strongest attempts to create socialism have been made.

     The above definition also allows us to theoretically account for the general features which many different peripheral areas have in common.  We do not mean to contend that all peripheral areas are the same.  The original social structural characteristics and cultures of the societies which were incorporated into the expanding European world-economy undoubtedly affected the particular institutional forms which emerged in different areas (see chapter 10).  Yet the process of peripheralization and exploitation, with its

phases of alternately sustaining and destroying "precapitalist" institutions and forms of labor control (depending on changing opportunities in the world market) has a certain unity which the world-system definition of capitalism captures.

     The processes of uneven development, the rise and fall of hegemonic core powers, and the upward and downward mobility of areas in the core/periphery hierarchy, are more clearly understood when we incorporate the interstate system and the core/periphery hierarchy into our notion of capitalism.  All these advantages are strong reasons to adopt the above definition of the capitalist mode of production which is suggested by Wallerstein.  But some of Wallerstein's simplifying assumptions, like those of Marx, may have created more problems than they solved.

World-System Boundaries and Modes of Production

As has been mentioned above, Wallerstein's totality assumption holds that the mode of production is a feature of a whole world-system, and by extension theneach world-system has only one mode of production.  This simplifying assumption has allowed us to examine the systematic ways in which capitalism and imperialism are linked, and to reconceptualize the capitalist mode of

production as including both core and peripheral types of capitalist

exploitation.  Now that this is accomplished we can reexamine the totality assumption in order to resolve certain problems which it causes.

     Many critics of the world-system perspective have pointed out that the equation of a mode of production with a whole world-system makes problematic the understanding of the transformation of modes of production.  If each

world-system can have only one mode of production, how do modes change?  The simplifying assumption which equates spatial boundaries with logical boundaries runs into difficulties when we try to understand how modes of production have been transformed in the past and how they might be transformed in the future.

     The simplest Wallersteinian definition of a world-system focuses on a network of material exchange, the exchange of fundamental or necessary goods  food and raw materials.  In order to use this definition we need not consider the question of the mode of production or the institutional forms of the exchanges.  We only need to know the extent of direct and indirect material flow densities.  This is a convenient and empirically useful definition which allows us to investigate the relationships between worldsystems and modes of production rather than assuming that each worldsystem has only one mode of production.  Its application to the idea of a European world-economy raises difficulties.

     The idea of Europe is a civilizational idea.  Wallerstein inherited a long tradition of historical interpretation which accounted for the rise of Europe to world domination in terms of differences between Europe and the "orient."  Europe was never (or only briefly) a separate world-system according to the definition of material exchange networks.  Rather there has existed for at least two millenia a multicentric Eurasian world-system.6  The European core area and its dense network of bulk goods (food and raw materials) has been strongly linked to North Africa and West Asia since the Greeks and the Romans emerged to core status.  And this Western subsystem has been in important interaction with India and China for a very long time.

     Wallerstein substitutes the mode of production criteria for the network of bulk goods criteria when he analyzes the interaction between Europe and India (Wallerstein, 1986) or between Europe and the Ottoman Empire

(Wallerstein, 1979c).  These are alleged to be separate world-systems because Europe is capitalist while India and the Ottoman Empire are not.  Wallerstein's totality assumption tends to impair the analysis of the systemic consequences of interactions between Europe and India.  It also tends to interpret the emergence of capitalism and market systems within the Indian Ocean region (see Chaudhuri, 1985) and within the Ottoman Empire only in terms of interaction with Europe.

     To be fair Wallerstein's (1974:59-63) analysis of why capitalism did not emerge in China can be read as a description of modes of production contending within a single world-system, as can his analysis of the transition to capitalism in sixteenthcentury Europe.  But he avoids the language of contending modes of production and the coming to dominance of a mode of production.  His laudable intent is to stay away from the scholastic

discussions of articulation which have led to the proliferation of modes of production (Hindess and Hirst, 1975; Taylor, 1979; Wolpe, 1980). The main

thrust of Wallerstein's analysis has been to demonstrate the connectedness ofcore and peripheral kinds of exploitation.  Once this is accomplished by reconceptualizing the capitalist mode of production as above we no longer need the totality assumption.

     This assumption also creates difficulties when we attempt to understand the transition to socialism in the twentieth century.  Although I have argued that existing socialist states have not yet developed an autonomous socialist

mode of production (Chase-Dunn, 1982b), I would not want this to be true by definition.  As difficult as it may be in practice for a city or a nation-state to develop an autonomous and self-sustaining socialist mode of production in the context of the contemporary capitalist world-system, I would not argue that it is impossible in principle.

     In conclusion let me summarize.  I have redefined the capitalist mode of production to allow the explanation of systemic features which are not easily explained using Marx's definition.  Incorporating the interstate system and the core/periphery hierarchy as central features of capitalism allows us to understand the general patterns of development in the global political economy and the general features of class struggle and international uneven development.  It also allows us to understand the general features of development in peripheral areas.  By redefining capitalism as I have, it becomes possible to drop Wallerstein's totality assumption while retaining the above explanatory advantages.  It also allows us to separately analyze the logical boundaries of modes of production and the spatial boundaries of world-systems.

     Does this suggest that the articulation of modes of production is "moved out" to the boundary between peripheral capitalism and other modes of production?  This spatial analogy is improper if it implies that other modes of

production can exist only on the perimeter of the world-system.  It is possiblethat elements of socialism, or the tributary mode of production, exist in the

core or the semiperiphery as well as in the periphery and beyond.  Ernest Mandel (1977) has contended that street lights, which are free, non-commodified "public" goods produced for the use of everyone, are socialist institutions even within the heart of capitalism. 

     As has been mentioned, however, the general analytic framework which allows us to have more than one mode of production within a concrete social system does not by itself tell us how these may be in interaction, or in contradiction, with each other.  For this we must have a substantive theory of the nature of each, and knowledge of their compatibilities and contradictions.  I have surmised elsewhere that socialism, a holistic mode of production in its very nature, may have a more difficult time emerging and growing in the interstices of capitalism than capitalism did within the terrain of the tributary mode of production.  This is because capitalism thrives on competition and conflict, and only grudgingly constructs collective rationality, whereas socialism requires cooperation, and has difficulty sustaining it in the context of a still strong and fiercely competitive capitalist arena.

     Let us now turn to a consideration of certain observable cycles and secular trends which are characteristics of the whole capitalist world-system.


Chapter 2: Constants, Cycles and Trends 

This chapter describes a number of features of the capitalist world-system as a whole which are, in principle, more directly observable than its deep structural essence.  In fact, however, much of the operationalization and evidence-gathering which needs to be done in order to verify these hypothesized surface level patterns has not been done.  I will discuss those studies which have been carried out, and their implications for the schema I am proposing in later sections, especially chapter 13. 

     I will argue in chapter 4 that a proper understanding of the structural features, systemic logic and normal cycles of the capitalist world-economy reveals that the global system has not undergone any important transformative change in the period since the Second World War.  The rapid changes of scale and apparently new institutional forms are interpreted as continuations of processes long in operation.  This argument requires that we have a fairly clear idea of the deep structural logic of capitalism, and an accurate specification of the processes which maintain the systemic features of the modern world-system and drive forward its cycles and trends.

     What follows is a list of structural constants, cycles, and trends which are asserted to be features of the whole world-system.  The constants are those deep structural features of the capitalist mode of production adduced from our discussion in chapter 1.  The cycles and trends are suggested by our empirical knowledge of the modern world-system, although only some of these have been quantitatively studied over long periods of time.  The present list is a revised version of that presented in Chase-Dunn and Rubinson (1977), modified by consideration of the similar discussions contained in Hopkins and Wallerstein (1982: chapters 2 and 5) and the empirical studies cited below.

     The term "cycle" as utilized in worldsystem studies does not imply a perfect sine wave with unvarying amplitude, symmetry and period.  Joshua Goldstein (1988:chapter 8) contends that social cycles typically involve processes which are sufficiently indeterminant to preclude exact mathematical specification, and thus we analyze sequential changes with only approximately specified periods.  Robert Philip Weber (1987) maintains that sequences with "quite irregular" periodicity should rather be termed "fluctuations" and the word "cycle" should be saved for more rigorous occasions.  I will not worry about these matters for now since most of the "cycles" discussed in this chapter are hypothetical.1

Systemic Constants, Cycles, and Trends

In order to study change we must have a clear idea of the structural constants, cycles and trends operating in the capitalist world-economy.  For the moment particular historical contingencies will be ignored.


Structural Constants

As explained in chapter 1, the capitalist world-economy is a worldsystem in which the capitalist mode of production has become dominant.  Thus this historical system has a deep structural logic of capitalist capital

accumulation which drives it to expand and which contains systemic contradictions which will provoke its transformation to a different logic once expansion and deepening of capitalist social relations have approached their limits.

     The constant structural features of the capitalist world-system are:

     1    The interstate system  a system of unequally powerful nationstates which compete for resources by supporting profitable commodity production and by engaging in geopolitical and military competition.

     2    A core/periphery hierarchy in which the countries which occupy a core position specialize in core production  relatively capitalintensive production utilizing skilled, high-wage labor.  Peripheral areas contain mostly peripheral production  laborintensive, low-wage, unskilled labor which has historically been subjected to extra-economic coercion. 

     3    Production relations in the capitalist world-economy are more complex than Marx (1967a) assumed in his basic model of capitalist accumulation.  The direct producers differ in their access to political organizations, most importantly, states.  Thus there is a reproduced differentiation between core labor and peripheral labor.  Labor is commodified, but it is not a perfect commodity.  Direct producers (workers) vary in terms of the degree to which their interests are protected or coerced by political organizations.  Core workers often enjoy the protection of state-legalized labor unions and welfare laws, although many remain in the condition of "free" laborers more subject to the vicissitudes of the labor market.  At the other extreme are those peripheral workers who are directly subjected to extra-economic coercion  historically: serfs, slaves, and contract laborers as well as workers in countries where independent trade unions and labor parties are suppressed by the state.  Thus the continuum from protected to coerced labor is a constant differentiation within the world work force although, as we shall see below, the trend toward proletarianization moves a greater proportion of the work force toward full-time dependence on capitalist commodity production.


4                   Commodity production for the world market (which includes both national and international markets) is the central form of competition and source of surplus value in the capitalist mode of production.  This form of competition is fundamentally interwoven with the competitive political processes of state-formation, nation-building and geopolitics in the context of the interstate system.  The world market is not a perfect price-setting market, although it has long been, and remains, a very competitive arena.  Monopolies are politically guaranteed within subunits (single states or the colonial empires of individual core states), and super-profits deriving from these monopolies are subjected to a longrun competition as the political conditions for maintenance of monopolies are themselves subjected to the forces of economic and geopolitical competition.


Systemic Cycles

1    The long business cycle (Kwave).  This is a world-wide economic cycle (see VanDuijn, 1983) in which the relative rate of capital accumulation and overall economic activity increases and then decreases toward stagnation in a 40 to 60 year period.  This cycle was first discovered through the analysis of price series by N. D. Kondratieff (1979).  The causes of the Kwave are explained within a Marxist framework by Mandel (1980).  Goldstein (1988) shows how the long wave is composed of two cycles, a price cycle of inflation and deflation, and a production cycle of growth and stagnation.  According to Goldstein (1988:chapter 10) the price cycle lags behind the production cycle by about ten to fifteen years.  Suter (1987) has recently presented an analysis of world-system debt cycles which integrates the Kwave with the shorter (15-25 year) Kuznets cycle as they have interacted in the nineteenth and twentieth centuries.2   The hegemonic sequence.  This refers to a fluctuation of hegemony versus multi-centricity in the distribution of military power and economic competitive advantage in production among core states.  Hegemonic periods are those in which power and competitive advantage are relatively concentrated in a single hegemonic core state.  Multicentric periods are those in which there is a more equal distribution of power and competitive advantage among core states.  In only a very rough sense is this a cycle because its periodicity is very uneven.  It should rather be termed a sequence or fluctuation.  There have been three hegemonic core states since the sixteenth century: the United Provinces of the Netherlands, the United Kingdom of Great Britain, and the United States of America.  The national-level conditions and system-level processes which cause the rise and decline of hegemonic core states are explicated in chapter 9.2

3    The cycle of core war severity.  Recent research by Goldstein (1985, 1986) confirms that the severity of world wars  wars among core states contending for dominance in the world-system  is periodic in a 40 to 60 year cycle which is strongly related in time to the Kondratieff wave.  There have been several peaks of severity (battle deaths per year) of core war since 1500, but the three most severe periods of world war  the Thirty Years War, the Napoleonic Wars, and World Wars I and II  were followed by the emergence of a new hegemonic core power.  These processes are discussed in more detail in Part II of this book.  

     Samir Amin (1980a) has suggested that world wars represent normal forms of competition within capitalism as a system.  The political structure within which peaceful capitalist accumulation proceeds becomes unable to provide stable support after a period of uneven economic growth, and world wars establish a new power framework for continued capitalist accumulation.  Albert Bergesen (1985) discusses this idea in an analysis of the relations among several world-system cycles.

4                   The structure of core/periphery trade and control.  A periodic change in the pattern of control and exchange between the core and the periphery has characterized the world-system since 1450.  Periods of relatively free market multilateral exchange have been followed by periods in which trade was more politically controlled and tended to be contained within colonial empires (Krasner, 1976).  Bergesen and Schoenberg (1980) have also demonstrated that waves of expansion of colonial empires are correlated in time with the existence of warfare among core states.  Models of the relationships between these cycles are formulated in chapter 13.


Systemic Trends

A number of systemic trends increase in waves which roughly correspond in time with some of the cycles described above.

     1    Expansion to new populations and territories.  The capitalist world-

system has expanded to incorporate and (usually) peripheralize formerly external arenas in a series of waves since the sixteenth century.  These waves have been documented in terms of the expansion of formal colonial administration by Bergesen and Schoenberg (1980).  The limits of this type of expansion were reached at the end of the nineteenth century when nearly the whole globe became integrated into a single hierarchical division of labor.

     2    The expansion and deepening of commodity relations.  Land, labor, and wealth have been increasingly commodified in both the core and the periphery. More spheres of life have become mediated by markets in the core than in the

periphery, but all areas have experienced a secular increase in every epoch ofthe modern world-system.  This trend, like others, is somewhat cyclical in that during periods of economic stagnation commodification slows down, or even reverses as some people fall back on subsistence production and/or reinvent mutual aid forms of support.

     3    State formation.  The power of states over their populations has increased in every period in both the core and the periphery (Boli, 1980).  States have increasingly expropriated the authority and resources of other societal actors and organizations, although this trend has been uneven, and there have been periods when state control temporarily decreased or became more decentralized in particular areas.

     4    Increased size of economic enterprises.  The average size in terms of assets and employees controlled by economic enterprises has increased in every epoch.  Agricultural enterprises and industrial enterprises have gone through periods when this trend has slowed or even temporarily reversed.  The causes of this concentration of capital are different in upward and downward phases of the Kwave (Bergesen, 1981).

     5    The transnationalization of capital.  Much contemporary literature discusses the "internationalization" of capital (Lapple, 1985; Hymer, 1979).  This usage is incorrect, because the agents of exchange are never nations, and neither are they usually states.  Rather capital flows across the borders of states, and is thus transnational (or trans-state).  Capital has been trans

national at least since the long sixteenth century, when substantial direct investments by productive and merchant capital were made across core states (Barbour, 1963) and by core capitalists in peripheral areas (Frank, 1979b).  Since then capital has become increasingly transnational in the sense that the proportion of total world investment which crosses state boundaries has risen. The most recent expansion of transnational corporations is thus a continuation of a trend long in operation (Bornschier and Chase-Dunn, 1985:chapter 3).

     6    Increasing capital intensity of production and mechanization.  Several "industrial revolutions" in both agriculture and manufacturing since the long sixteenth century have increased the productivity of labor in both the core and the periphery, although the core retains its relatively higher level of productivity.  Capitalist relations of production have deepened across the system, subjecting the labor process to greater amounts of direct control, although decentralization in the form of small commodity production, subcontracting (putting-out), or bureaucratization of labor control (Edwards, 1979) reproduces a "competitive sector" of independent producers and forms of autonomy.  The longrun trend among transnational firms has been toward more direct control over production and the expansion of the scale of coordination of production, but some industries and sectors remain decentralized, and in certain periods centralization slows or even reverses in some regions.

     7    Proletarianization.  The process of class formation has increased the dependence of the world work force on participation in labor markets.  Subsistence redoubts, urban informal sectors, and domestic economies have

functioned to sustain a substantial semi-proletarianized sector of the world work force,3  but the longrun trend has been to move a greater and greater proportion of direct producers into full-time dependence on commodity production.  This has been true of both the core and the periphery, with a greater lag in the periphery.  Similarly, the extent of extra-economic coercion used to compel labor in the periphery has decreased somewhat over time, as the alternatives to labor market participation have been reduced.  Capitalist

slavery, serfdom, and contract labor have been largely eliminated, although therelative degree to which political coercion is applied in class relations

remains greater in the periphery than in the core.  This includes the

suppression of trade unions and peasant and/or labor parties by authoritarian peripheral states, often supported by core states.

     8    The growing gap.  There has long been a trend toward a growing gap in average incomes between core and peripheral areas.  Within core areas the middle strata of cadres necessary to capitalist core production has expanded its relative size as a proportion of the labor force, and the wages of important sectors of the working class have increased relative to incomes and levels of living in peripheral areas.  Mandel (1975) and Amin (1975) contend that both core and peripheral workers received only subsistence wages until the 1880's when, they allege, the gap between these incomes first emerged.  But if we are sensitive to smaller differences and include middle strata in our estimates of average income, we are likely to find that the trend toward a growing gap has been in operation since the sixteenth century.

     The above schema of structural cycles and trends has been combined into a "descriptive model" which depicts relations in time among the different features (see ChaseDunn, 1978:170).  A causal model of the relationship between the hegemonic sequence and the core/periphery hierarchy is specified in chapter 13 (see figure 13.2).  In chapter 4 we use the above schema to examine claims that fundamental changes have occurred in the world-system since World War II.  Now let us compare the idea of stages of capitalism with the above schema of world-system cycles.


Chapter 3: Stages of Capitalism or World-System Cycles?

The periodization of capitalist development has proven to be a controver­sial topic in both classical and contemporary theories.  The conceptualization of stages of development is important because whatever position one adopts has implications for our understanding of both the past and the possible futures of systemic transformation.  Most stage theories, including those of some Marxists and the modernization school, focus on national societies as the unit of analysis.  National societies are thought to evolve through historical stages, being relatively "advanced" or "underdeveloped."  Other Marxists and dependency theorists have focused our attention on the fact that national societies interact with one another in systematic ways and form together a larger system which itself evolves.  This reconceptualization solves many of the problems created by the assumption that national societies are indepen­dent, but it raises a number of new issues.  How are we to conceptualize this larger system and what is the best way to periodize its development?  When has it simply adjusted to its own contradictions and when has it become a fundamen­tally different type of system?

I would like to dismiss outright the notions which entertain a unilinear development of national societies and discuss different approaches to stages of world-system development.  Here I will contrast two  contemporary views.  The first focuses on a series of stages in which the relations between the core and the periphery are thought to be qualitatively  different, based on the predominance of different kinds of capital in the core.  The second

ack­nowledges these differences but focuses instead on characteristics of the system as a whole which vary over time.  It argues that some system

charac­teristics are cyclical in nature, while others are secular trends, and thereby our attention is focused on the similarities of the different periods rather than their differences.  Neither of these approaches is "historicist" in the sense of emphasizing what is entirely unique about a particular period.  Rather they both focus on the way in which systematic laws of motion of capital accumulation produce different institutional forms in different periods.


Stages of Capitalism and Dependency

A number of recent Marxist works focusing on the world-system argue a periodiz­ation of capitalist development which distinguishes between three (or four) stages in which the characteristics of core capital and its relationship to peripheral areas vary.  I will review and compare these  periodizations, and then outline a different approach.

Albert Szymanski (1981:95) summarizes his version of periodization as  follows:

Imperialism has gone through four qualitatively distinct  stages: first, noncapitalist mercantile imperialism from around 1500 to around 1800; second, competitive capitalist imperialism from around 1840 to around 1880; third, early monopoly capitalist imperialism from around 1890 to around 1960; and fourth, late monopoly capitalist imperialism since the 1960s.


In another version Andre Gunder Frank (1979a:9) approv­ingly quotes Samir Amin as follows:

I distinguish 3 periods: (1) mercantilist, (2) developed  (achevé) capitalist (post industrial revolution, pre-monopolist) and (3) imperialism.  To each of these periods there correspond specific functions of the periphery at the service of the essential needs of accumulation at the center.  In stage (1) the essential function of the

periphery (principally American, supplementarily African which supplied the former with slaves) is to permit the accumulation of money wealth by the Atlantic merchant bourgeoisie, wealth which transforms itself in real (achevé) capitalism after the industrial revolution. Hence the system of plantations (after the pillage of mines) around which all of America turns from the XVI to the XVIII centuries.  This function loses its importance with the industrial revolution when the centre of gravity of capital moves from commerce to industry.  The new function of the  periphery thus becomes to lower (a) the value of labor power (through the provision of agricultural products of mass consumption) and (b) the value of the constituent  elements of constant capital (by providing raw  materials).  In other words the periphery permits fighting against the tendential decline in the rate of profit (as Marx as well observed ─ AGF).  To achieve this during period (2) capital has only one means at its disposal: commerce.  During period (3) on the other hand, capital also has the very efficient means of the export of capital.


Amin's position on periodization is further explained in his Imperialism and Unequal Development (1977:229-35).Let us focus on the characteristics attributed to each stage and the  differences which are alleged to exist between stages.  The first transition is that between mercantile (or merchant) capitalism and industrial  (competi­tive, developed) capitalism.  The distinctions made here involve assertions about class relations, exchange relations, and the relationship  between the state and the economy.  Much of this follows from Marx's discussion of merchant capitalism in volume 3 of Capital (1967b:323-37) and his distinction between merchant capitalism and the fully developed capitalist mode of production ─ industrial capitalism.  Marx's abstract model of capitalist dynamics as presented in volume 1 of Capital assumes a system in which there is competition between capitals, sale of commodities at their labor value, non-interference by the state in the economy, and a closed system in which there is no internation­al trade.  Of course Marx did not claim that this model directly

represented any concrete society.  It is rather an abstraction employing simplifying assumptions which is intended to explicate the underlying develop­mental tendencies of the capitalist mode of production.  British national society in the nineteenth century was Marx's inspiration and is probably the case which closest approximates the abstract model.  Marx believed that he had teased out the underlying nature of capitalism by examining what he considered to be its purest and most highly developed concrete case, and that other countries would follow Britain's path of development.1  It was argued in chapter 1 that some of his simplifying assumptions were mistaken, not because they were empirically inaccurate, but because they missed much of that which is fundamental to capitalism as a system.

Marx's model of capitalist accumulation was not intended to apply to the stage of mercantile capitalism.  In this stage commercial capital (involving the buying and selling of commodities produced by independent producers) is the most prevalent and important form of enterprise.  Merchant capital does not directly coordinate production and sales.  Production is left to independent producers.  Thus merchant capital does not directly subject production to the logic of capitalism.  Merchants make profit by buying cheap and selling dear, often by exploiting price differentials between areas which are not integrated into a single market economy.  Production capital, on the other hand, directly combines raw materials and labor purchased from proletarians to produce commodities for sale.  This integrates the value relations between different types of  production such that "abstract labor" comes to exist.  This means that market integration is complete and the division of labor is subjected to a  single price system.  Qualitatively different types of work come to be related to one another in a single quantitative dimension, that of labor  value.  The commodification of labor is necessary for this to occur, and most Marxists believe that this is only accomplished under the wage system.

Thus merchant capital (before the existence of integrated markets) exchanges "unequals" in the sense that goods are produced in economies in which a single standard of value has not been formed.  Merchants make profit by moving commodities from areas in which they have low prices to areas in which they have high prices.  It is only within fully developed industrial capitalism that commercial capital (operating within a single price system) makes profit by receiving part of the surplus value produced in the production process, not by exchanging unequals.  Merchant capital operates solely in the "sphere of circulation," although Marx asserted that it acted as a solvent on pre-capitalist relations of production under some conditions.

It is similarly asserted that proletarianization is only rudimentary during the period of mercantile capitalism, that is, the wage-earning class is small and there are many extra-market constraints which prevent labor (and other "factors of production") from taking the commodity form.  Marx's  (1967a:717-33) discussion of primitive accumulation describes how English and Scottish peasants were forcibly separated from the means of production and turned into sellers of labor-power from the last part of the fifteenth century on.

The stage of mercantile capitalism is also characterized as a period in  which political relations were much more determinant of the terms of exchange and the conditions of production than in later industrial capitalism.  The guilds, municipal monopolies, noble privileges, and state policies of

mercan­tilist "armed" trade (Parry, 1966) are understood as proof that market mechanisms were as yet only weakly operating.  States operated as "violence-

co­ntrolling" organizations providing protection for economic operations enabling their benefactors to realize what Frederic Lane (1979) has called "protection rent."  As we will see in Part II, this involvement of state power and geopolitical military competition in the accumulation process can be understood as a normal part of capitalism in all periods.

Primitive accumulation in the periphery (plunder, forced labor, monopoly trade) is understood by many Marxists, including Marx himself, as one of the main processes which created the capitalist mode of production, but which is not in itself part of that mode of production.

In the emergence of industrial capitalism a number of important changes are alleged to have occurred.  For one thing the "bourgeois revolutions" in  Europe destroyed many of the local political encumbrances on trade and production.  The formation of national markets was accomplished by the  elimination of many of the prerogatives of merchant capital and landed nobilities.  Commodity production became much more competitive, at least 

within the national markets of the core countries.  And in the middle of the  nineteenth century there was a temporary reduction of political constraints on international trade with the lowering of European and American tariff barriers. According to many histories of capitalist development this is the period when industrial (or productive) capital came to dominate the economy for the first time.  The wage system and the process of expanded  accumulation became self-reproducing.  Industry became organized as a competitive interaction of small firms, and the rate of technological change increased dramatically.  The factory system in which labor was brought together with machinery was created in the English Midlands.

The core/periphery relationship is alleged to have been predominantly a matter of commodity trade during this period, and Ernest Mandel (quoted in Frank, 1979a:8) asserts that this constituted the "equal exchange of equals."  A single measure of world value was constituted by the integration of the world division of labor into a single interactive market.  It is alleged that trade between the core and the periphery contained equal amounts of labor value in the period of competitive capitalism.  And Mandel (1975:49-61) argues that competitive industrial capitalism encouraged indigenous capital formation in the periphery.

There is some disagreement about the effects of core/periphery trade  during the period of competitive capitalism on the periphery.  Some Marxist scholars argue that merchant capital tended to dissolve precapitalist  relations of production by drawing people into commodity production for the world market.  On the other hand, Geoffrey Kay (1975) argues that merchant 

capital tended to underdevelop the periphery by perpetuating precapitalist forms of production, shoring up traditional rulers, and extracting surplus product.  He contrasts this to what he sees as the developmental effects of  industrial capital, which directly subjects labor in the periphery to capital­ist production, creating the potential for autonomous capitalist growth in the periphery.  A similar argument is made by Bill Warren (1980). 

Most stage theories envision an important new period of capitalism  emerging in the late nineteenth century with the formation of the "monopolies."  Since Lenin (1965) this allegedly new development in the core has been causally linked with "imperialism," i.e. the exploitation of peripheral areas by the monopoly capitals of the core.  Amin (1977) reserves the term imperialism for this kind of exploitation, and calls earlier capitalist exploitation of the periphery "expansionism."  The emergence of "monopoly capitalism" is thought to involve a change in the operation of the process of accumulation.  Monopoly pricing within national markets and the extraction of surplus profits by large firms has been understood as a new departure in which the distribution of surplus value is distorted.  The  so-called "monopoly sector," the sector in which the largest firms dominate the most profitable types of production, is thought to obtain a larger share  of the total surplus value by draining surplus value from the "competitive sector."

In addition, the growth of state expenditures and increases in the social wage are understood as subsidizing the costs of reproducing labor  power, and thus lowering the wage bill of "monopoly capital."  State spending, especially on military forces, is thought to provide a necessary outlet for "economic surplus" (Baran and Sweezy, 1966) and to help resolve the irrational­ities of capitalist production by providing employment and invest­ment opportunities not generated in the private sector.  The domination of "finance capital" (a coalition of banking and industrial capital) (Hilferding, 1981) in combination with the much more direct  involvement of states in sponsoring economic development (Poulantzas, 1973) is alleged to have had important effects on the tendencies of the accumulation process.  Arguing the direct opposite position from that of Kay (1975) discussed above, Mandel contends that the emergence of monopoly capitalist imperialism and the export of investment capital to the periphery put a brake on the indigenous capitalist development of the periphery which had begun during the period of competitive capitalism.  The declining rate of profit in the core led to the massive export of investment capital to the periphery, but the monopoly nature of this capital and the use of state power in formal colonialism led to the exploita­tion and underdevelopment of the periphery according to Mandel.

Mandel, Amin, and Arghiri Emmanuel (1972) contend that the core/periphery relationship altered during the late nineteenth century due to the  emergence in the 1880s of a wage differential between core workers and peripheral workers.  Previous to that, workers in both the core and the  periphery had received subsistance wages, but in the late nineteenth century, due to the diminishing reserve army of labor in England and because of the partial success of labor struggles there, wages for English workers began to rise above subsistance.  This brought about the "unequal exchange" analyzed by  Emmanuel (1972) in which core/periphery trade came to be the "unequal exchange of equals."  When there is a wage differential beyond differences in produc­tivity market exchange conceals a transfer of surplus value from low wage to high wage regions.  This occurs when there is an equalization of the profit rates due to capital flows, but no equalization of wage rates due to labor migration.  While both labor and capital have flowed from the core to the periphery and vice versa throughout the history of the capitalist world-sys­tem, it is alleged by Emmanuel that the frictions preventing wage

equaliza­tion are greater than the frictions encountered by exports of  investment capital.

Many Marxists argue that the middle of the twentieth century brought the emergence of yet another stage of capitalist development.  This has been termed "late capitalism" by Mandel and is thought to be characterized by the

increased importance of "technological rents" and the further institution-

aliza­tion of science in the profit-making process (see also Habermas, 1970).  This period is also characterized by the great expansion of the transnational corporations that coordinate production and profit-making on a global scale.

The alleged consequences of this new stage for core/periphery relations are described in chapter 4.  Whereas Kay (1975) argued that production capital of any kind involving direct investment and control of peripheral production caused autonomous capitalist accumulation in the periphery, Warren (1980) argued that it is the export of industrial capital which causes capitalist growth in the periphery.  Following Warren, Szymanski (1981) made a distinc­tion between "early" and "late" monopoly capitalist imperialism, with only the latter having positive growth effects on the periphery. 

The thesis that the latest stage of capitalism is less detrimental to the economic growth of the periphery is shared to a certain extent by some dependency theorists (e.g. Dos Santos, 1963; Cardoso and Faletto, 1979).  Peter Evans (1979) discusses the emergence of "dependent development" in the  Latin American periphery based on the production of manufactured goods for the home markets of Latin American countries by transnational corporations.  While these authors agree that the "new dependency" (or "associated-dependent development") perpetuates the core/periphery structure of power in many ways, they also believe that overall economic growth is increased by this new form of core penetration.  This contention is disputed by Frank, Amin, and Mandel, who believe that real economic development in the periphery is only possible in the context of a socialist revolution.

As discussed in chapter 4, Folker Fröbel, Jürgen Heinrichs and Otto Kreye (1980) have argued that a "new international division of labor" has been created by transnational corporations using free production zones in the periphery to employ cheap labor to produce manufactured goods for the world market.  John Borrego (1982) contends that the core/periphery hierarchy itself is disappearing with the emergence of a new stage of "meta-national"

capitali­sm.  This kind of emerging stage of global capitalism is also described by Robert Ross and Kent Trachte (forthcoming).


Cycles of World-system Development

Another view of the stages of development of the capitalist world-system is that proposed in chapter 2.  This view periodizes development in terms of characteristics of the system as a whole: constant features, cyclical proces­ses, and secular trends.  It suggests a modified model of the capitalist mode of production which is true to the spirit, but not the letter, of Marx's accumulation model.  The capitalist mode of production is understood as commodity production for profit on the world market in which labor is a commodity but is not always paid a wage.  Capitalist production relations are understood as the articulation between wage labor in the core and coerced labor in the periphery.  The interaction between core and periphery is understood as fundamental to capitalism as a system.  Thus imperialism (generally understood, including  colonialism, direct investment, core/­periphery trade, and neo­colonialism) are conceived to be integral to the functioning of the capitalist mode of production.  Capitalism thus includes both expanded reproduction in the core and primary accumulation in the periphery.  Primary accumulation is not merely a process of creating capitalist production relations, but is rather a permanent and necessary feature of capitalism as a mode of production.  The state and the interstate system are not separate from capitalism, but are rather the main institutional supports of capitalist production relations.  The system of unequally powerful and competing nation-states is part of the competitive struggle of capitalism, and thus wars and geopolitics are a systematic part of capitalist dynamics, not exogenous forces.

According to Wallerstein (1974), the first epoch of capitalist develop­ment, from 1450 to 1640, was the period of the transition from feudalism and the somewhat precarious emergence of the institutions and class relations of the capitalist mode of production in Europe.  The crisis of feudalism, fundamentally a class struggle between lords and peasants, was resolved by a reorganization of accumulation on the basis of primarily agrarian capitalism and a territorial expansion.  Marx's (1967a:713-50) analysis of "primitive accumulation" as the process of creating the institutional bases of capitalism clearly applies to this epoch.  The direct plunder of Africa and the New World which brought money-capital to Europe was followed by the forcible creation of a proletariat in the core and the extension of serfdom and slavery in the periphery.  The reorganization of agriculture on an increasingly capitalist basis, albeit quite differently in the core and in the periphery, was accom­panied by the further development of capitalist production in the towns of the core.  The process of capitalist accumulation, involving both uneven develop­ment and successive periods of expansion to new areas, became the main determinant of development in the European world-economy during the long sixteenth century.

The second epoch, from 1640 to 1815, is understood as one in which the European capitalist world-economy stagnated somewhat and then was stabilized  (Wallerstein, 1980a).  This was the period of Dutch hegemony and the fierce competition between the Dutch, English, and French for the colonial profits of the older Portuguese and Spanish empires.  The competition between the English and the French for hegemony was finally resolved after the failure of

Napoleo­n's bid for world empire (or earlier, see Braudel ─ 1977:102).

The third epoch, from 1815 to 1917, is understood as the period of the  final expansion of the capitalist system to the whole globe and its consolida­tion.  This period saw another economic reorganization known as the industrial revolution, which was actually just another expansion of capital intensity in industrial and agriculture production.  The "factory system" further extended the trend toward rapid urbanization of the work force in the core.  The Pax Britannica was followed by the "new imperialism" in which the newly rising core and semiperipheral powers ─ the USA, Germany, Italy, and Belgium, Japan, and Russia ─ scrambled for peripheral territory in competition with the older core powers.  This period of disorganization and intense competition led eventually to what is conventionally called World War I.

The fourth epoch, from 1917 to the present, is understood as the final consolidation of the system and the beginning of the period of its crisis and transformation to a fundamentally different kind of system.  This is the period of the Pax Americana, the decolonization of almost all of the periphery, the increased integration of global production by capitalist firms (public and private), and the emergence of anticapitalist forces which increasingly limit the manuevering room for capitalist accumulation.  The period since 1945 is scrutinized more closely in the next chapter.

The four epochs outlined above can be understood analytically as  involving three kinds of structural elements: (1) those underlying institu-

tion­al features and developmental laws that are basic to capitalism as a system; (2) cyclical processes which repeat themselves in each of the epochs; and (3) secular trends which increase at a varying rate across all of the epochs.  These elements and some of their interrela­tions have been described in chapter 2.

The cycles and trends listed in chapter 2 must be applied to each epoch with some qualifications.  The first epoch (1450-1640), due to the as yet poorly formed and unstable institutional basis of capitalist development, did not exhibit all the features characteristic of later epochs.  Thus Portugal and Spain, though performing some of the functions of hegemonic core states in this period, were not centers of comparative advantage in commodity production.  The attempt by the Habsburgs to impose a political empire over the whole European world-economy revealed a "precapitalist" predilection for political domination reminiscent of the tributary modes of production.  It is significant that later hegemonic core powers have never attempted to create a world imperium.

During the first epoch the center of economic hegemony moved from Venice to Genoa and then to Antwerp (see Braudel, 1984).  George Modelski (1978) has argued that Portugal played the role of a "great power" providing international order through geopolitical leadership during the sixteenth century.  Spatial differentiation of economic and political─military hegemony was a common characteristic of tributary world-systems.  Only in the fully institutionalized capitalist world-economy which emerged in Europe did these roles become merged, and this occurred first with the rise of Dutch hegemony in the seventeenth century. In the second epoch (1640-1815) the hegemony of Amsterdam was fully established during and following the Thirty Years War.  Its hegemony was soon challenged by British and French rivals.  The economic slowdown of the seventeenth century was followed by the expanding Atlantic economy of the eighteenth century in which Britain and France fought for supremacy.  The cyclical expansion of the colonial empires occurred near the end of every epoch.  Bergesen and Schoenberg (1980) show that the peaks of expansion (in terms of the number of new colonies established) were in 1640, 1785 and 1890 (see figure 13.4 below).  Colonial expansion was accompanied by more political control by core states over core/periphery trade, whereas during periods in which a single core power attained economic hegemony there was a more market-d­etermined trade relation­ship between the core and the periphery.  This  cycle of core/periphery trade and control structures occurred in every epoch.


The third epoch (1815-1917) may be understood as the "classic" period in terms of the trends and cycles described above.  The British came into both politico-military and economic hegemony after the defeat of the French in a series of wars from 1756 to 1815.  Napoleon's failure to impose imperium on the world-economy allowed the British hegemony in production to expand into the markets of the continent and the newly independent Latin American states.

The fourth epoch (1917 to the present) is confusing insofar as it is a period in which the contradictions of capitalist development meet certain "ceiling effects" or obstacles which constrain readjustment of the capitalist accumulation process (Chase-Dunn and Rubinson, 1979).  For  example, a number of the secular trends described have run up against limits.  There are no more human societies for the capitalist mode of production to invade and conquer.  There is no more territory to be grabbed by colonizing core states.  As Lenin pointed out, further expansion by competing core states must involve the redivision of territory already conquered.  This constraint on expansion has been further exacerbated by the  achievement of formal sovereignty in almost the whole periphery.  Thus competing core states must often vie with one another for access to the periphery by offering better terms.  This is a far cry from the 1885 Berlin Congress on Africa in which the core states divided that continent amongst themselves without consulting Africans at all. 

These ceiling effects which limit the further expansion of the capitalist system to new populations and territories do not, of course, preclude its deepening.  They do, however, tend to limit the degrees of freedom available to capital in its attempt to adjust to the contradictions created by its own development.  As well, the "socialist" revolutions which have taken state power in the semiperiphery and the periphery create obstacles to the maneuverability of capital.  If the present period is one of transformation we should expect a combination of the old cycles characteristic of previous epochs with newly emerging institutions and forms of struggle.  One of the most important tasks is to sort out the processes  of the old system from the harbingers of a new one.


For example, the schema in chapter 2 would predict that the decline of  United States hegemony would be followed by a period of intense conflict between core states, colonial expansion in the periphery, and the emergence  of a new hegemonic core state.  A number of new features of world-system development may modify this scenario, however.  The formal recolonization of  the periphery by core states seems unlikely.  Functional substitutes in the form of gunboat diplomacy, covert intervention, and contention about "back­yards" or imperial spheres of influence may bring a similitude of the old colonial empires, but the differences are important.  The costs of empire have undoubtedly increased in this world where the peripheral states band together to demand a "new international economic order," though the success of this peripheral solidarity has been limited.  The emergence of a new hegemonic core state, or block of states, in the next 40 years also seems unlikely.  As likely is the emergence of some limited form of world political authority following a period of disorganization (or war) among the present core states.  World state formation would represent a fundamental systemic change.

With the above qualifications to the cyclical schema in mind let us now compare the world-system approach to periodizing capitalist development with the "stages of capitalism" approach outlined in the first part of this chapter. Differences Between the Two Types of Periodization

Broadly speaking, the world cycles approach emphasizes the continuity of the basic capitalist processes in each of the periods, while the "stages of capitalism" approach emphasizes differences of form and consequence.   Wallerstein's approach implies that production capital (both agricultural and industrial) has always been the driving force of development and thus

"in­dustrial revolutions" have occurred in every epoch.  In the sixteenth century it was not merchant capital but production capital in agriculture and town manufactures which, with revolutionized class relations, created the basis for increased productivity, and a strengthened set of states in the core.  In the seventeenth century it was Amsterdam's productive advantage in the herring industry, dairy farming, and shipbuilding which was the basis of its hegemony, not only mercantile "armed trade" (Wallerstein, 1980:chapter 2).  Similarly, investment in the periphery by the great chartered companies, the establish­ment of plantations worked by slaves, and the extensive export of capital from Amsterdam to  other core countries as well as to peripheral areas (Barbour, 1963) cannot be understood under the rubric of "merchant capital."

Sidney Mintz's (1985) analysis of the place of sugar production and  consumption in the development of the modern world-system describes sugar cane plantations in the Caribbean as "factories in the field."  Mintz (1985:46-52) contends that these agricultural enterprises, which combined planting with a processing operation to produce crystallized sucrose, were an important and early instance of the factory system.  Mintz's (1985:59-61) thoughtful discussion of the capitalistic nature of the plantation system qualifies to some extent his earlier contention that the sugar─producing slaves can be understood as proletarians (Mintz, 1977).  He emphasizes the processual connections between New World slavery and the wage-based industrial capitalism which was expanding in England, but he also points to important differences between the two.  These differences are reconciled with an understanding of capitalism once we employ the notions of core and peripheral forms of capital­ism necessarily linked with one another.


Some authors have contended that the slave-based plantation system was a form of merchant capitalism, a contention which would seemingly be con­tradicted by the fact that plantations involved the direct investment of core capital to produce commodities.  For Marx merchant capitalism was defined as the purchas­ing of goods which are resold for a profit.  The idea of merchant capital has been extended beyond this definition, especially by Fox-Genovese and Genovese (1983).  They link their idea of merchant capital with slave production and stress the anti-capitalist world view of the slave─holders as evidence that they were not capitalists.  Eugene Genovese's earlier work (1971, 1974) demonstrates fascinating linkages between consciousness, ideology, resistance, and economic structures, but the contention that the aristocratic ideals of the slave-holders proves that they were not capitalists equates ideological and structural positions too simply.  The critiques by slaveowners of industrial slums and the crass cash nexus of the impersonal wage system (in contrast to their own paternal concern for their slaves) may rather be interpreted as the fruit of political competition between two groups of capitalists with

conflict­ing interests.  It would not have been the first time (nor the last) that a group of capitalists with investments sunk in a certain form or scale of production employed the ideology of paternalism (or nationalism) against a  newer competing group.

The tendency for states to interfere with trade, to regulate production, the establishment of guilds and associations attempting to protect the positions of certain producers, are not seen as characteristics unique to a period of "mercantilism."  Rather, these attempts to use political organiza­tions to guarantee market advantages are understood as normally recurring moments of capitalist development itself.  Every capital is anxious to obtain political protection of its own markets and resources.  Arguments in favor of free trade are employed by those who fear the political controls of others.  In such a light the similarities of "mercantilism" with "monopoly capitalism" are most apparent.  Braudel (1977:95) makes this point, but argues that the creation of a protected home market only became crucial in the nineteenth century.  Previous to this, according to Braudel, it was city-states rather than nation-states that performed the role of hegemonic core power.  It may rather be that certain processes create a fairly constant ratio between the size of the home market of the hegemonic core power and the total size of the

system.  Thus Amsterdam's United Provinces may be understood as intermediate between  Venice's petite "national" territory and London's Great Britain.  And, of course, the giant size of the United States' internal market corresponds with the greater extent and density of the contemporary world market.


The argument has been made by some of the proponents of the "stages of capitalism" view of periodization that the form and consequences of the core/periphery relationship have changed from period to period.  Plunder was followed by trade, and that by direct production for export, and then trans-  national corporate control of production for the peripheral market itself.  While it is clear that the forms of labor exploitation in the periphery have  changed, the basic underlying process of "primary accumulation" (in the sense of politically coercive labor control) have been a reproduced feature of the core/periphery relationship clear up to the present.2 

Clearly, the form of primary accumulation has changed from epoch to  epoch, and in some sense it has become less "primitive" ─ that is, closer in form to the "free" labor of the core.  Thus the direct plunder of treasure  and slaves was replaced by the establishment of "coerced cash crop" labor (capitalist slavery and serfdom) ─ which was then later replaced by colonial  trade economies in which labor was either paid a below-subsistence wage or else small commodity producers were exploited through a politically controlled unequal market exchange.  Neo-colonial forms of labor exploitation are undoubtedly closer in form to the "free" labor of the core, but they are still more determined by direct political coercion.

Giovanni Arrighi (1978) argues that the different forms of core/periphery relations are used at all times, with varying weights depending on the period and the historical situation of the particular core power.  It is most probably the case that "economic" penetration of the periphery by merchants, settlers, and direct investment is more prevalent during periods of rapid growth in the world-economy, while more politically coercive forms  of penetration (formal colonialism, monopoly trade, and forced labor) are employed more frequently when the world-economy is in contraction and competing producers rely more on state power to protect or extend their share of world surplus value.


It may be true that the gap between the degree of coercion of core labor versus peripheral labor has narrowed, but it has most certainly not been eliminat­ed.  What is clear from a long-run perspective is that the juridical form of labor control, that is whether or not labor is formally paid a wage, is not the only determinant of the commodity nature of labor.  Nor is it the only dimension of the core/periphery hierarchy.  Even if the entire world-economy were to be composed of capitalists and wage laborers, the interstate system would tend to reproduce the core/periphery hierarchy.  The size of the relative gap between the incomes of core and peripheral workers has greatly increased over the long run, while absolute levels of living have risen, albeit unevenly, in the periphery.  Thus immiseration has tended to be relative rather than absolute (see chapter 12), while exploitation (in the formal Marxist sense) has everywhere increased.

The Wallersteinian world-system perspective implies that there has always been a core/periphery wage differential, contrary to the arguments of Emmanuel, Amin, and Mandel that this developed only in the late nineteenth century.  This differential has certainly increased over the long run operation of the system, but core workers and middle strata have always had political advantages as well as an involvement in more profitable and more skilled types of production, and these factors resulted in higher average incomes for core workers from the sixteenth century on.  This problem is considered further in chapter 10. 


Brenner (1977) has made an important critique of Wallerstein's contention that the "second serfdom" in Eastern Europe was a capitalist response to market opportunities created by the emerging division of labor between the core and the periphery in the long sixteenth century.  Brenner argues that the system in which serfs were legally bound to work on the landlord's demesne did not allow increases in productivity through the use of new techniques.  Thus he claims it was not capitalist.  It is of course true that coerced labor is somewhat incompatible with capital-intensive processes of production.  But this was hardly the issue for Polish landlords who wanted to produce something to exchange for Western European products.  Their class position gave them a political advantage which made the use of coercion rational from the point of view of their own profits. 


Contrary to what Brenner implies, Wallerstein has never said that coerced labor is the most efficient or productive form from the point of view of the whole system.  Serf labor, although not very productive, was partially commodified in the sense that it was subjected to exploitation for the purpose of profitable commodity production, and its "price" (costs of political coercion) influenced the costs of production and the profitability of the opera­tion.  Brenner claims that the juridical nature of serfdom prevented it from responding to market forces, but the enserfment of Polish peasants in the sixteenth century was driven forward in response to the Western European demand for grain.  And the further coercive exploitation of East European serfs in the seventeenth century was a response to declining world wheat prices (Wallerstein, 1980a:129-44).


Another point of contention between the two types of periodization is  whether or not the consequences of core penetration of the periphery have changed with the reorganizations of dominant capital and core/periphery relations.  As stated above, Kay (1975), and others (Warren, 1980; Szymanski, 1981) have argued that contemporary transnational investment in peripheral countries creates the possibility for autonomous capitalist economic develop­ment in these countries.  On the other hand, many dependency theorists have argued that the consequence of transnational investment is to continue to underdevelop peripheral countries relative to those other peripheral countries which are less dependent on foreign investment.  Cross-national comparative research on the post-World War II period reveals that countries with higher levels of penetration by foreign capital grow more slowly (other things equal) than countries with lower levels of transnational corporate penetration (Bornschier and Chase-Dunn, 1985).  In addition, it has been shown that, contrary to Szymanski's argument, it is transnational investment in

manufactur­ing that has the largest negative effects on aggregate national economic growth.  These studies reveal that foreign capital investment inflows have immediate positive effects on GNP growth, but long-run negative consequen­ces as the effects of structural distortions and repatriation of profits spread to the national economy as a whole.  The implication of these findings is that core capital continues to have the effect of recreating the gap between core and  periphery.  Changes in the form and structure of core/periphery relations which have occurred in the twentieth century have not operated to eliminate  the development of under­development.

It may be the case that, just as the terms of trade between core and periphery are known to alternate cyclically in favor of, or against, the  periphery (Barrat-Brown, 1974), the wage gap also exhibits a cyclical as well

as a secular increase.  If this is true the increase noted by Mandel (1975) and Amin (1975) in the 1880s may have been part of a cyclical shift rather than a completely new trend in core/periphery relations as they allege.  Research on recent trends in the core/periphery wage differential is reported in chapter 12. 

One explanation for uneven development is the effect which class struggle has on the concentration of capital in a particular area.  Successful accumula­tion is usually accompanied by rising wages due to demand for skilled labor, exhaustion of the reserve army of the unemployed, and the growth of trade unions which allow workers to influence access to jobs and the level of wages.  This process of class struggle eventually causes capital to flow to areas where labor is cheaper to obtain a competitive advantage.  This is part of the explanation for the flow of capital to the periphery.  But the continued cheapening of constant capital inputs by technological development can also cause cheap labor in the periphery to lose its competitive advantage.  Thus, as Mandel points out, capital-intensive agricultural production within core countries in the twentieth century has replaced much labor-intensive peripheral agricultural  production.  This "see-sawing" process of uneven development, the alternating concentration and spread of capitalist production techniques and investment, creates a cycle in which the gap between core wages and peripheral wages may become alternately larger or smaller.  Though the gap has definitely increased over the last hundred years (chapter 12), it remains to be empirical­ly demonstrated whether or not this trend also contains a cycle.

In discussing differences between the twentieth century and earlier epochs it is important to distinguish that which is superficially different from that which reveals a fundamental crisis of capitalism.  One reason to carefully consider the problem of periodization within the capitalist mode of production is so that we may be able to distinguish those new forms which reproduce capitalism from those forms which might transform it.  The mere scale of phenomena in the twentieth century, the rate of change, the size of organizations, the global nature of production and consumption, are often seen as qualitative differences from earlier epochs.  The world cycles approach emphasizes the continuity with the earlier epochs in terms of the underlying processes at work, but also alerts us to those key features which should be watched to detect signs of structural transformation. 

The discussion of the growth of monopoly or oligopoly power, or of the  emergence of a new stage of "monopoly capitalism," often assumes that the use of politically organized price distortions alters the underlying rules of capitalist development.  On this basis some Marxists have argued that volume 1 of Marx's Capital is no longer relevant for the analysis of development because it assumes equilibrium prices and competition among capitals.  I argue in chapter 4 that this is not the case.  The world-economy remains a very competitive arena in which there are no long-run monopolies.  The profit rate which equalizes over the long run is the "surplus" profit rate, that which includes profits due to the exercise of monopoly power.  In this light Capital, with some revisions (the addition of the interstate system and class struggle) remains relevant for understanding contemporary capitalist development.

Also, in the twentieth century we have "state capitalism" in which  states themselves act like firms which are competing in the world market.  Here the use of political mobilization, coercion, and productive advantage  are combined in a very direct way.  This is not, however, a completely new feature.  Political power has always been used to distort market processes in

favor of certain groups.  What remains the case in this epoch is that there is no single overarching political authority which can control the whole arena of economic competition, and so the process of capitalist accumula­tion continues.  Let us now look more closely at the period since  World War II.


Chapter 4: The World-System Since 1945: What Has Changed?


To answer completely the question posed in the title of this chapter we would need a clear formulation of the deep structural logic of the capital­ist world-economy, and a way of determining the extent to which new develop­ments have altered its logic.  The level of specification obtained regarding the nature of the capitalist mode of production in chapter 1 is somewhat crude.  Yet we can employ it and the schema presented in chapter 2 to make some guesses about the extent of change.  Of interest in such an exercise is the problem of when quantitative change becomes qualitative change.


A New Stage of Capitalism?

Several recent analysts claim that capitalism has entered a new stage since World War II.  This contention utilizes the notion that capitalism goes through stages which differ from one another in systemically important ways.1  In chapter 3 I have argued that a theory of cycles and trends can account for most of the changes across epochs which are claimed to be stages of capitalism.  Here I want to focus on the changes alleged to have occurred since World War II, or to be occurring now.

Albert Szymanski (1981:95) contends that a transition from "early monopoly capitalist imperialism" to "late monopoly capitalist imperialism" occurred around 1960.  John Borrego (1982) speaks of the recent transition from national to metanational capitalist accumulation.  Robert Ross and Kent Trachte (forthcoming) speak of the transition from monopoly capitalism to global capitalism.

The substantive observations on which claims of a qualitative

transition are based differ among the different authors.  Szymanski argues that the most recent stage is based on the decolonization and industrialization of the periphery.  Borrego, and Ross and Trachte focus on the increased importance of globally operating firms.  These contentions and others will be analyzed below.

This discussion of the various claims about qualitative change will be organized into the following topics:

1 the transnationalization of capital;

2 technological rents;

3 the new international division of labor;

4 world classes and world state formation; and

5 a socialist world-system.


The Transnationalization of Capital

Some social scientists, on first perceiving the reality of the world-

economy, have assumed that its importance as a systemic logic which has major effects on the development of subunits is of quite recent origin (e.g. Michalet, 1976), or that it has just recently become transnational2 (Hymer, 1979).  These claims may be broken down into their constituent arguments, which involve the logic of investment decisions, monopolization, effects on states, and effects on prices and value.  Arguments about the effects of the growth and reorganization of transnational firms on the peripheral countries will be discussed below in the section on the "new international division of labor."

It is undeniable that transnational firms have grown in size and impor­tance since 1945.  Their expansion and operations in particular countries have been the subject of many excellent studies (Biersteker, 1978; Evans, 1979; Gereffi, 1983; Bennett and Sharpe, 1985) as have various aspects of economic and political institutions within core states that have affected the growth of transnational investment (Krasner, 1978; Hawley, 1983; Lipson, 1985).  The fact of this growth is presented by some analysts as evidence that the logic of the world-system must have changed.  This connection needs to be examined.

The great chartered companies were the first transnational corporations, engaging in both merchant capitalism (buying cheap and selling dear) and productive capitalism (the direct organization of commodity production).  They were joint stock companies which were allocated monopoly rights and political─ military protection by the individual core states that chartered them.  These "monopoli­es," however, were usually incomplete and often short-lived because competition among the chartered companies of different core states was rife.

Some authors have alleged that the contemporary transnational corporations are controlled by international groups of capitalists not aligned with any particular core state (e.g. M. Dixon, 1982).  In terms of the ownership of stock, it has been shown that almost all of the modern transnational firms are, in fact, owned and controlled by capitalists from a single core state (Mandel, 1975).  Nevertheless there is some co-participation in ownership across national boundaries.  This feature, however, is not new.  Barbour (1963) reports that disgruntled seventeenth-century Amsterdam merchants not able to obtain shares in the Dutch East India Company were instrumental in the formation of the English East India Company.

The fact that some capital was transnational in the seventeenth century does not contradict the contention that it is more transnational now.  The question is, what difference does that make for the logic of investment decisions and capital accumulation?  The great chartered companies, along

with peripheral plantations and mines, were primarily operated according to the logic of productive capital rather than merely merchant capital (Barr, 1981).  But it is undoubtedly the case that the direct organization of production by capital has become much more firmly entrenched since the seventeenth century.  Merchant capital, buying products from independent producers, has been increasingly replaced by productive capital directly controlling the production of commodities.  Transport and communications costs have declined in a geometric fashion, facilitating the expansion of the spatial extent of investment strategies.  Thus the world-economy is more integrated by global investment decisions and international sourcing than ever before.  But does this constitute a change in logic or merely a change in scale?

The schema presented in chapter 2 accounts rather well for most of the recent changes, especially as it designates trends toward transnationalization, capital intensity, and the increasing size of firms.  It could be argued however that these quantitative trends have led to qualitative changes in the nature of the game.

One undeniable consequence of the increasing integration of the world-

economy by transnational corporations and the shift away from merchant

capitalism is to increase the systemness of the system.  Merchant capitalism trades commodities between regions that have not become fully integrated as systems of production.  Marx (1967b) describes how merchant capital eventually creates "abstract labor" by subjecting qualitatively different kinds of production to an equivalent standard ─ "socially necessary labor time."  Unin­tegrated systems have price structures which vary according to their social structural uniquenesses, differences in natural endowments, and techniques of production.

Merchant capital moves goods from areas where they are cheap to areas where they are dear in the "exchange of unequals" (Amin, 1980a).  But the long-run conse­quence of such exchanges is to alter the allocation of labor time in both areas such that they move toward the formation of a single equilibrated system in terms of the "efficient" allocation of labor and other scarce resources.

No market system is ever in perfect equilibrium in the above sense, and indeed a certain inequality of labor values is part of the institutional nature of the capitalist world-economy ─ the unequal exchange between the core and the periphery (Emmanuel, 1972).  The long-run consequence of the action of market exchange is to produce a single interactional set of prices which reflect the competitive rationality of a market system.  Most of the remaining structural barriers to the equalization of wages and other prices are generated by the structure of capitalism itself.  They are generally not "survivals" from the past, but are themselves produced by competition and conflict among classes and states in the context of the capitalist mode of production.

The trends toward the transnationalization of capital, the further integration of the world-economy, and the growing importance of production decisions on a global scale, reduce the importance of the remnants of pre-

capitalist systems. The capitalist mode of production became dominant in the European world-economy of the long sixteenth century, but it still interacted with precapitalist modes of production which continued to have some influence on the historical development of the system.  As it expanded it incorporated other socio-economic systems into itself and these too have left some institu­tional remnants which have influenced the particular configurations of develop-ment in different areas (Wolf, 1982; Nolan and Lenski, 1985).  Some

institu­tional aspects of these precapitalist modes of production undoubtedly remain, but their importance has certainly decreased with the growing

integra­tion of the system.

Some analysts have argued that the increasing importance of the trans-

na­tional corporations has altered the logic of capitalism toward a less competi­tive, more monopolized and monolithic system.  It is true that a large and growing component of international trade is made up of intrafirm transfers.  The affect of this, it is alleged, is to decrease the overall amount of competition in the system.

This argument is analogous to the discussion of the transition from competitive to monopoly capitalism (see chapter 3).  It is alleged that there was once a stage of capitalism in which the state did not interfere in production decisions or markets, but merely provided the institutional support for the operation of free markets in land, labor, and capital.  Firms were small, start-up costs were low, and thus the competitive market system forced firms to produce as cheaply as possible and to sell their products at the lowest possible prices.

This version is alleged to describe Britain in the late eighteenth and early nineteenth centuries.  In fact it describes certain sectors of the British economy which have become idealized in economic myth.  It is true that capitalism is a dynamic system which has always had a "competitive sector" of high-risk, small-scale entrepreneurs and that, at certain periods in certain countries, something approximating the free market model has actually operated.

Once we focus on the world-economy rather than national economies a number of things become clear.  First, most states most of the time have attempted to influence production and market forces in favor of some group of capitalists.  The laissez-faire state is merely a special case, in which one set of comparatively advantaged capitalists has succeeded in reducing the political favoritism formerly offered to another set.  Second, although monopolies are granted by states and enforced within municipalities and by other political organizations, cartels, guilds, unions, etc., there are no long run monopolies in the capitalist world-economy.  The political organizations which grant monopolies are themselves in competition with one another, and, since no one can really escape interaction in the larger arena for long, protectionist measures and monopoly rights are themselves subjected to a logic of competition.

These observations are no less true in the 1980s than they were in previous centuries, except that the size of the largest firms has increased relative to the size of states.  It is this last development which has caused some authors to argue that competitive capitalism has changed into monopoly capitalism.

Monopoly pricing allows firms to pass on costs to those consumers over whom they have some direct or indirect political influence.  If the world-

sys­tem had a single overarching state apparatus, true and complete monopolies could be maintained.  But in a world-economy with a competitive interstate system, monopolies are partial and temporary.

At the global level there are no industries that could be described as uncompetitive, despite the growth of transnational firms.  The recent glut of steel, cars, oil, ships, and other world commodities reminds us of the continuing "anarchy of production decisions" which has always been a feature of capitalism (Strange and Tooze, 1981). Ross and Trachte (forthcoming) argue the opposite: that the emergence of global capitalism increases the competitiveness of the system as market shares are no longer guaranteed within national boundaries.  The relevant market for leading edge, core industries has always been the world market (both national and international markets). The rise of oligopoly within national markets enabled core firms to compete in terms of product development instead of price competition within their "own" national markets, while the international markets have been and continue to be more price competitive.  The product cycle, in which new products are developed in the core countries and older products move on to the price competition of second tier core and semiperiphe­ral countries, is not new.  Joint ventures between Japanese and American auto and electronics firms may be somewhat novel, but they do not constitute oligopoly at the global level.

Ross and Trachte also claim that capital flight has taken on new significance as a key lever of domination in the relationship between capital and labor. It is clearly true that the spatial scale of production location has expanded beyond the organizational capacity of contemporary trade unions, but this also happened in the late nineteenth and early twentieth centuries as textile production moved out of New England to the Southern states of the US. Truly international unionism could once again enable workers to combat capital's ability to utilize job blackmail, although few signs of a new wave of trade union internationalism are visible.

Several analysts have suggested that the increased importance of trans-

national corporations has diminished the power of nation-states.  Raymond Vernon stated this thesis most strongly in his Sovereignty at Bay (1971).  A modified version has been discussed by Marlene Dixon (1982) in her essay on "dual power."  It is clearly the case that transnational corporations have increased their power vis-à-vis small peripheral states.  And, simply as a function of their size, the largest firms may have increased their influence over core states as well.  It should be remembered, however, that states have also increased their powers.  The question is, whether or not the changing relationship between the size of firms and the power of states has altered the logic of the game.

Above it was pointed out that, contrary to the contentions of some authors, most of the world's largest firms continue to be primarily controlled by capitalists from one or another of the core states.  Thus there are no truly multinational firms from the point of view of ownership.  Among the 50 largest transnational firms in the world only Unilever and Royal Dutch Shell could be considered "binational" in terms of ownership (Bergesen and Sahoo, 1985).  The extent to which these firms may constitute an integrated world bourgeoisie is discussed below in the section on world class formation.  Here I wish to address the relationship between firms and states.

It is obvious that transnational firms do not control their own armies, nor do they have powers of taxation.  The usual distinction between "private" firms and public organizations becomes very problematic when we consider the case of state capitalism.  But, even considering the growth of direct state control of production, there remains an important differentiation between economic and political sources of power in the capitalist world-economy.

Firms continue to rely on states for the provision of "order."  Frederic Lane (1979) has analyzed this interaction in terms of the notion of "protection rent," and the best state (from the capitalist point of view) is the one that provides the social conditions for profit-making at cost. 

Transnational corporations have contradictory interests vis-à-vis states.  On the one hand they need world order, not merely order within national boundaries, and this requires a fairly stable set of alliances among the strongest core states.  On the other hand, they make great profits from their ability to play off states against one another.  States compete to offer the best deals to attract the capital investments of the transnationals.  And transnationals desire to maintain the maneuverability which the multistate system guarantees.

The power of the transnational firms should not be overestimated, however.  Their dependence on individual states is still very great.  They cannot suppress strikes, political challenges, or nationalizations without being able to mobilize the police forces and armies controlled by states, and so they must maintain influence and control over states.  This cannot be done solely by threat of capital flight.  It must also be done by supporting friendly politicians, paying taxes, and demonstrating "good citizenship" shown by public affairs campaigns and "social" activities.  This is most true of their relations with core states, of course.  But even in peripheral states they must coopt some support, even if this only means bribing a few generals.

The "sovereignty at bay" thesis was most believable when it was first put forth in the 1960s.  At that time the world economy was still growing.  Stagnation had not yet raised the banner of protectionism and the use of political power to maintain access to markets and profit-making opportunities.  When the pie is shrinking the world-system turns toward a much more state­centric system, which provides the basis for neo-mercantilist "realist" interpretations (e.g. Krasner, 1978).  M. Dixon's (1982) dual power thesis is correct.  The complicated game of competition in the capitalist world-economy is a combination of profitable commodity production with efficient use of geopolitical power.  But this is not a new development.  Rather we have experienced in recent years a shift which has occurred many times before, from capitalist profit-making in an expanding market to equally capitalist geo-

polit­ical competition involving mercantilism, austerity, and the threat of world war.

"Creative financing" and the casino quality of international financial transactions (Strange, 1986) have certainly become more salient in the current period partly because of the geometric leap in the turnover time of finance capital which is associated with faster communications and the further trans- nationalization of capital and commodity and money markets.  But it was in the 1920's that Hilferding (1981) first proclaimed that finance capital had created a new stage of capitalism because the banks had taken control of capitalist production.  The struggle between money capital and production capital has see-sawed back and forth for centuries.  The seemingly magic quality of funny money has always eventually returned to some more stable relationship to use values, and I expect that the current wild period will lead to a period of

"devaloriza­tion" by one means or another.


Technological Rents

Mandel (1975) and Habermas (1970) argue that post World War II capitalism is different in important ways because the largest firms compete with one another for technological rents derived from the application of science and engineering to production.  Rather than competing for markets for the same product by cutting costs and prices, the largest firms compete by developing new products.  A version of this argument has been used by Arrighi (1982) in his description of the important differences between the last decades and earlier periods of world-system development.  Arrighi argues that the emphasis on competition through the engineering of new products is the major explanation for

"stagfla­tion," the allegely peculiar combination of slower economic growth and higher unemployment with price inflation.  The uniqueness of stagflation is in some doubt however.  Goldstein (1986) argues that there has always been a lag between the long cycle of production and the long cycle of prices.  This would imply a "normal" interval of stagflation within the K-wave (see Goldstein, 1988: chapter 10).  Nevertheless Arrighi may be right that the operation of trends toward the larger size of firms, transnationalization, and competition through product differentiation have made stagflation a more salient feature of the most recent downturn.

The New International Division of Labor

Several versions of the "new international division of labor thesis" have been offered.  The most extreme version of the thesis claims that the core/­periphery territorial division of labor has been eliminated, with metanational capitalist accumulation taking place globally irrespective of territorial location.  Another version contends that peripheral capitalism (based on "primary" accumulation using coerced labor to produce cheap, labor-intensive raw material inputs) has been eliminated as a consequence of the industrializa­tion of peripheral countries.  Yet another version emphasizes the political autonomy of former peripheral areas following decolonization and the demise of the colonial empires.  We shall examine these arguments in turn.

First let us describe the core/periphery hierarchy as it has been conceptualized in the world-system perspective.  The underlying analytic basis of this territorial hierarchy is the distinction between core production and peripheral production.  Core production is relatively capital intensive and employs skilled, high wage labor; peripheral production is labor intensive and employs cheap, often politically coerced labor.  In core areas there is a predominance of core production, and the obverse condition exists in peripheral areas.  This means that there may be backwaters of peripheral production within core states.  Wallerstein defines semiperipheral states as areas containing a relatively equal mix of core and peripheral types of production.

One of the main structural features which reproduce this territorial hierarchy is the exercise of political─military power by core states.  It is not simply a matter of original differences among areas in terms of wage levels and "historical" standards of living, as Emmanuel (1972) implies.  The wage differential between core and peripheral workers is a dynamic and reproduced feature of the system.  Core states (the most powerful political organizations in the system) are induced to provide some protection for the wages of their citizens, as well as supplemental benefits composing the social wage.  The core/periphery wage differential is greater than that which would be due to differences in productivity alone, and this differential is maintained by restrictions on international labor migration from the periphery to the core.  The great differences in capital-intensity between the core and the periphery also account for a good portion of the wage differential.

This territorial division of labor is not static.  It has expanded along with the expansion of the whole system, and there has been some upward and downward mobility within the structure.  The whole system moves toward greater capital intensity, so production processes which were core activities in the past have become peripheral activities at a later time.

The international division of labor has been reorganized several times before in the history of the capitalist world-economy (Walton, 1985).  The original plunder by core states of external arenas (extremely primitive accumulation) was replaced by the production of raw materials using coerced labor.  Core investments in plantations and mines were followed by investments in utilities, communications and transportation infrastructure.  As domestic markets in the periphery developed, local and core capital took up profitable opportunities in manufacturing, and, in the most recent phase, industrial production for export has emerged in the periphery.  Throughout these reor­ganizations the whole world-economy has developed more capital-intensive production, but the gap between the core and the periphery has been reproduced.

Ulrich Pfister and Christian Suter (1987) have demonstrated that, despite the particular forms of reorganization which the core/periphery hierarchy experiences, there are recurring cycles in the core/periphery relationship as well.  Their study, and another study by Suter (1987), demonstrate the existence of waves of capital exports from the core to the periphery followed by periods of debt crisis and default by peripheral borrowers.  The experience of the 1970s and 1980s is similar in many ways to three earlier periods of massive debt crisis which have occurred in the world economy since 1800.

The core/periphery hierarchy has been reinforced by an unequal distribu­tion of political─military power among core states and peripheral areas.  Historically this was organized as a system of colonial empires in which core states exercised direct political domination over peripheral areas.  Chirot (1977:map 2) and Szymanski (1981) have argued that the nearly complete decolonization of the periphery has reduced the power differential between core and peripheral states.  Contrary to most discussions of neo-colonialism, Chirot claims that formal sovereignty has eliminated the periphery, and that Asia, Africa and Latin America can now be categorized as semiperipheral.3 

Chirot's claim that decolonization has created a world-system with no periphery is undoubtedly a mistake.  Was Latin America then semiperipheral immediately upon attaining independence from Spain in the early nineteenth century?  Are Haiti, Bangla Desh, or Chad possibly semiperipheral now?  But the underlying contention that the core/periphery power differential may have diminished should not be so easily dismissed.  The phenomenon of OPEC, the Conference of Non-aligned Nations, and the heavy support in the United Nations for a New International Economic Order may indicate some truth to the hypothe­sis of a reduction in the magnitude of the core/periphery power differential.

Clearly some formerly peripheral countries have become semi­peripheral, and the United States has lost some of its former hegemony.  But core states as a whole may have gained additional power at the same time that peripheral states have attained formal sovereignty.  Only carefully operationalized empirical research on changes over time in the global distribution of military power capabilities, state access to resources, and level of economic develop­ment can resolve this problem.  Until this research is done we can only use partial evidence to inform us about possible changes in the magnitude of core/periphery inequality (see chapter 12).

Another contention about the new international division of labor focuses on the growth of industrial production in the Newly Industrializing Countries (NICS) (Caporaso, 1981).  Sometimes this phenomenon is interpreted as the end of a core/periphery system.  Deindustrialization in the core, industrialization in the periphery, and a shift toward control by global transnational corpora­tions are portrayed as the beginning of a new era of metanational capitalism (Borrego, 1982).

The notion of upwardly mobile semiperipheral countries has been convinc­ingly utilized to understand the recent developmental paths of Brazil, Mexico (Gereffi and Evans, 1981), and India (Vanneman, 1979), as well as the ninetee­nth─century United States (Chase-Dunn, 1980).  The notion of "dependent develop­ment" conceptualized by Cardoso (1973) and applied by Evans (1979) has proven extremely fruitful for understanding the bargaining and competitive struggles among transnational firms, semiperipheral state managers and national capitalists in Brazil and other countries.

Cardoso's (1973) analysis of the shift from classical dependence (produc­tion of raw materials for export to the core) to dependent development (Brazilian production of manufactured goods for the domestic market by transna­tional corporations) claimed that a change had occurred in the effects of dependence on overall economic development.  Cardoso argued that the trans-

na­tional firms would now have an interest in the expansion of the domestic market and so they would act economically and politically to foster the growth of the national economy, albeit in a way which might exacerbate inequalities among classes, and this was allegedly demonstrated by the Brazilian "miracle." Cross-national research on the effects of dependence on foreign investments in manufacturing does not support Cardoso's claim.  Bornschier and Chase-Dunn (1985:chapter 7) find that dependence on manufactur­ing transnationals has a large long-run retardant effect on GNP growth in a cross-national comparison, although short-run effects of inflows of foreign capital are positive, accounting, at least in part, for the short-lived miracle in Brazil.  This shows that one of the mechanisms which reproduced the classical core/periphery hierarchy (exploitation through foreign investment) continues to operate in the "new" international division of labor. 

Fröbel, Heinrichs, and Kreye (1980) have emphasized the importance of manufacturing in the periphery for export to the core.  They document the growth of so-called free production zones, areas juridically outside the tariff and labor regulations of peripheral countries which allow transnational firms to have "export platforms" for the utilization of cheap peripheral, often female, labor.  The industrial exports of the Asian "Gang of Four" (South Korea, Taiwan, Singapore, and Hong Kong) are important cases of the shift toward peripheral industrial production for the world market.4  Fröbel, Heinrichs, and Kreye (1980) emphasize that this kind of peripheral industrialization steals jobs from core nations by shifting industrial

produc­tion overseas.  Ross and Trachte (1983) have argued that the recent growth of sweatshops employing undocumented immigrant workers in New York City is an instance of the "peripheralization of the core."5

The problem is whether or not these developments are the first stages of a shift toward metanational capitalism, or are simply the continuation of uneven capitalist development in a period of economic stagnation, with upward and downward mobility occurring in a structural hierarchy which is still intact.  The decline of the economic hegemony of the United States has occurred mainly vis-à-vis other core powers, Western Europe and Japan.  This is a continuation

of the sequence of core competition, with uneven development occurring within countries (the decline of the older industrial Northeast "rust bowl" and the rise of the Sunbelt) a well as internationally.

No one could seriously claim that the core/periphery hierarchy has already been eliminated. Immense differences still exist in the level of living and the capital intensity of production.  The transnational corporations have their headquarters in the great world cities of the core countries.  Industrial production in the periphery has certainly grown, but it remains a very small proportion of world industry (Petras et al., 1981:chapter 6).  The heavy intermediate industries (e.g. steel, chemicals) which have grown in the semiperiphery are no longer the leading sectors of the world economy.  In chapter 12 I review studies which estimate recent trends in the magnitude of core/periphery inequalities.  There is no evidence in favor of the notion that the core/periphery hierarchy is moving toward greater equality.

Neither the industrialization of the periphery nor the deindustrialization of the core have reduced the magnitude of core/periphery inequalities.  To claim that core countries have become peripheralized because some areas within the core have experienced economic decline is certainly an exaggeration.  Similarly, discussions of the arrival of "post-industrial" society in the core are certainly premature.  The proportion of the work force in services and non-manual labor has undoubtedly grown in core countries.  But, at least for the US (a declining hegemonic core power), this is a repetition of a pattern which can be seen in the trajectories of hegemonic predecessors ─ the United Provinces of the Netherlands and the United Kingdom of Great Britain.  Both of these hegemons began their ascent by developing a competitive advantage in

consumer goods, followed by the export of capital goods, and finally lived out the twilight or their golden ages as centers of world finance and services.  The United States is, general­ly, following this same sequence (see chapter 9).

While it is true that industrialization has occurred in some areas of the periphery and in most of the semiperiphery, it should be remembered that industrialization is the application of greater amounts of fixed capital, machinery, and non-human energy to production.  It is an increase in capital intensity.  This increase has continued in the core at the same time that it has occurred in the periphery, and thus the relative distribution of capital intensity may not have changed.  Indeed, much of the peripheral industrializa­tion has been quite labor-intensive.  The free production zones exist primarily to exploit cheap labor.  And even capital-intensive production in semiperiphe­ral areas generally uses technology which has become obsolete in the core.

Very little quantitative empirical work has been done on changes in the magnitude of inequalities in the world-system as a whole.  In chapter 12 this matter is discussed in detail and new evidence is presented.  Here I would like to refer to a table which calculated the distribution of world resources in 1950, 1960, and 1970 which was presented in a review of theories and trends of convergence and divergence among national societies by Meyer, et al., (1975).  An updated version of the table is presented in chapter 12 but it does not contain data on educational enrollments, and it is these which I wish to compare to other attributes and resources here.

Table 2 in Meyer, et al. (1975:232) showed that the poorest countries did not increase their share of world GNP between 1950 and 1970, while they did increase very slightly their proportion of world electrical energy consumed. 

Between 1950 and 1960 they increased their share of the world's nonagricultural work force from 7.3% to 9.5%  These figures confirm the impression that the economic structure of the peripheral countries has indeed changed, but that they have not, as a result, increased their share of world output.

The largest increases for the least developed countries are in the areas of educational enrollments and urbanization. These institutional features (which are often associated with "modernization" of national societies) have grown rapidly. These changes, however, are only superficially similar to the educational expansion and urbanization processes which occurred during earlier times in core countries.

Education does not expand only as a function of the growth of domestic demand for skilled labor in industry and services.  Between 1950 and 1970 educational enrollments expanded everywhere in the periphery and semi-periphery of the world-system (Meyer and Hannan, 1979) regardless of the level or rate of economic development.  It is much easier for peripheral states to create the trappings of modernization than to change their relative position in the core/periphery division of labor.

Similarly, the urbanization explosion in the periphery and semiperiphery has been dubbed "overurbanization" by some observers because it has occurred in the absence of a similar growth rate of industrial employment.  The gigantic cities of the periphery most often import capital-intensive technology from the core, which does not create a large demand for workers in industry.  Squatter settlements and the teeming "informal sector" of peddlers, domestic servants, and small commodity producers swell the urban population.  This informal sector provides cheap inputs to large-scale enterprises and government by subsidizing the costs of reproducing labor power, and by producing products for sale which are cheap because of the exploitation of unpaid family labor, or subminimum wage labor (Portes, 1981). The urban informal sector, then, is the functional equivalent of rural labor reserves, village economies, and the "domestic mode of production" which cheapened the wage bill in classical dependent economies by reproducing part-life-time proletarians (semiproleta­rians).

In addition, the city systems which have grown up in Latin America are much more centralized around a single large city than those in core countries.  This "urban primacy" emerged, not during the colonial era, but during the 1930s and 1940s (Chase-Dunn, 1985b). Thus, the type of urbanization experienced by peripheral countries has been very different than in the core.  Kentor (1981) has shown that one cause of urbanization in the periphery is dependence on foreign investments by transnational corporations.  And this dependence has also been shown to cause rises in the levels of tertiary employment (services) which are much greater than the growth in secondary (industrial) employment (Evans and Timber­lake, 1980; Kentor, 1981).

World Classes and World State Formation

Although it has been difficult to maintain in the recent period of internation­al squabbles, warmongering, and neo-mercantilism, some have made the argument that the world bourgeoisie is becoming more integrated as a class (Sklar, 1980; Borrego, 1982).  International organizations such as the Trilateral Commission are alleged to form the core of an emergent monolithic world bourgeoisie based on the global transnational corporations.  This is a new formulation of the old debate which started at the end of the last century among members of the Second International about superimperialism versus continued imperimperialist rivalry.  Many of the issues discussed above in the section on the internationalization of capital are relevant, but here we shall focus on changes in the interstate system.

There has been a world bourgeoisie since the beginning of the modern world-system, but it has been a very differentiated, competitive, and conflic­tive class.  Peripheral capitalists employing coerced labor have produced for export to the core.  Core capitalists, divided by nation-state, sector, and access to state power, have made alliances and fought wars among themselves.  Often these alliances have crossed the boundaries of core states.  It is undeniable that the frequency and importance of intracore capitalist alliances has increased as the scale of transnational firms has grown.

The question is, does this lower the competitiveness of the system (addressed above) and does it alter the operation of the interstate system?  Recent attempts to forge a core-wide common policy against OPEC (spearheaded by the internationally-oriented portion of the United States bour­geoisie) were not notably successful. The Trilateral Commission has attempted to coordinate the economic policies of European, North American, and Japanese states in an era of economic contraction, again without much success. That these kinds of international organizations exist is not unique to the contemporary period, and neither is their ineffectiveness novel.

Some may discern a trend toward international political integration in the emergence of the United Nations.  Indeed, international organizations have proliferated as the world-economy has become more integrated. The Concert of Europe fell apart to be reorganized as the League of Nations, which was rent by world war, to be followed by the United Nations.  Although there undoubtedly has been some progress toward institutionalization of international conflict resolution and collective security in this sequence, the United Nations remains quite limited in its ability to prevent wars among states. The question we must ask is whether or not the importance of military competition among core states has been reduced.

The effect of the spread of nuclear weapons must be discussed here. Do these weapons make continued competition among subgroups of world capital by means of war obsolete?  Clearly a world war involving nuclear weapons would disrupt the operations of the capitalist system, hardly the most tragic of its consequences.  Such a war would lead to social devolution, if not the end of our species.  This outcome is a real possibility because the separate con­tenders who are risking nuclear holocaust are not in control of the outcomes of their combined interaction.  Is the world-system a headless horseman, or rather a horse with many heads, galloping toward the edge of an abyss?

State managers, world bankers, and transnational firms create war machines as a mechanism to provide investment opportunities, to be sure, but the weapons also have a potential "use value" as threats to maintain or extend political hegemony. These threats involve the risk of a holocaust even though none of the major actors desire this outcome.

The presence of nuclear weapons does not, in itself, change the basic logic of system interaction. Commodity production and geopolitical competition remain the main forms of competition.  But the existence of these weapons does imply that the normal operation of the system, with the usual sequence of hegemonic decline followed by world war, followed by the emergence of a new hegemonic core power, cannot continue.  A real world war among core powers would undoubtedly bring the final holocaust.  Thus the mechanism which has formerly resolved the contradictions of uneven development can no longer operate.  Or rather, if it does operate, the game is over.

The combined effects of increases in the ability of international organizations to mediate conflicts and the increasing destructiveness of weaponry have decreased the probability of the outbreak of war among core states to some extent.  But it should be remembered that both international organization and increasing destructiveness are not unique to the post-World War Two era.  Many turn-of-the century observers believed that the "Great War" was unthinkable because of the brutal destructiveness of industrial warfare technology.  My point is that, while the probability of war among core states may have decreased somewhat, the basic logic of competition and conflict in the world-system has not changed and there are no existing institutions which are strong enough to guarantee the peace.

In a purely mechanistic system doom would be the most certain prediction.  But we are dealing with a human system, a somewhat intelligent set of actors who can surely see the way out of such a dilemma.  Perhaps a sufficiently large, but not entirely devastating, nuclear conflagration will jar the peoples and leaders of the world into consciousness and create the political will necessary to outlaw warfare.  The existence of such a threat to the survival of the human species could provide the motivation for the mobilization of a movement to create a real basis for collective security, a world federa­tion capable of preventing warfare among nation-states.  The current manifesta­tions of this potential are, however, a long way from that goal.


A socialist world-system.

Another version of the claim that the current world-system has undergone or is now experiencing transformation focuses on the emergence of the socialist states.  I have elsewhere presented an interpretation of these states as territories in which intentionally socialist movements have come to state power, but have not yet successfully introduced a self-reproducing socialist mode of production (Chase-Dunn, ed., 1982b).

Polanyi (1944) discussed the dialectical interaction between the market principle and the needs of society for protections against certain of the consequences of market rationality, but his analysis focused primarily on national societies.  At the level of the world-system and its anti-systemic movements we see that the attempts to create non-commodified relations of cooperation become encapsulated politically within organizations: co-ops, unions, socialist parties, and socialist states.  The market principle has, so far, been able to expand its scale to reincorporate these collectivities into the logic of competition within the larger world-system.

Thus the contemporary socialist states are important experiments in the construction of socialist institutions which have been perverted to some extent by the necessities of survival and development in the context of the capitalist world market and the interstate system.

The large proportion of the world population now living in avowedly socialist states, and victories within recent decades of socialist national liberation movements in Africa, Asia, Latin America, and the Caribbean have been interpreted by Szymanski (1981) as a kind of domino theory of the transition to world socialism.  Szymanski contends that the Soviet Union and

Eastern Europe constitute a separate socialist world-system and that the logic of world capitalism has been seriously weakened by the growing number of socialist states.

My own interpretation disputes this contention.  I see the socialist states (including China) as having been significantly reincorporated into the capitalist world-economy.  Whether or not this is true, one of the most disconcerting features of current socialist states is their most unsocialist behavior toward one another.  I interpret this as a continuation of the nationalism and interstate competition which is normal behavior in the capitalist world-system.

Frank (1980:chapter 4) draws the same conclusion from recent trends in which the socialist states have increased their exports for sale on the world market, imports from the avowedly capitalist countries, and made deals with transnational firms for investments within their borders.

National economic planning, which is most highly developed in the socialist states, may be simply the most complete expression of the trend toward state capitalism which is occurring in most core and peripheral countries.  And while distribution is more equal within socialist states, this does not change the competitive logic with which they interact with other states.  Thus one possible world is composed of states which are internally socialist but which compete with one another in international markets and geopolitics.

The increasing number of socialist states does not seem to have weakened the logic of world capitalism. Rather the political constraints on the free mobility of capital which these states have created push the logic of

capital­ist organization to expand its scale.  States become firms, and transnational corporations deal with all players in a competitive world which remains subject to the anarchy of investment decisions.


Discussion and Conclusions

To argue that the world-system's logic has not fundamentally altered does not imply that this is impossible or even unlikely.  Nor is it to argue that the massive expansions, emergent institutions, and shifts of capital from place to place have not had drastic effects on the lives of people.  I would like to revisit some of the questions raised in the earlier sections to speculate about the possible consequences of changes which have not yet occurred, but which might occur in the future.

What if it were true that recent trends were the beginning of the end of the core/periphery hierarchy.  World-system theory has claimed that peripheral capitalism is a normal and necessary part of the capitalist mode of production, and that the reproduction of expanded accumulation in the core requires the existence of primary accumulation in the periphery.

This idea is not based on the claim that peripheral production creates the bulk of surplus value in the system, but rather on the insight that the relative harmony of classes in the core, the somewhat peaceful accommodation between capital and labor which exists as social democracy, corporatism, or "business unionism," is based on the ability of core capital to emphasize nationalist bases of solidarity.  Nationalism in the core is sustained by competition among core states and by the ability of core capital to pay off an important segment of core workers with higher wages, better working conditions, more welfare provisions, and greater access to political power through democratic processes.  This is possible, at least in part, because core exploitation of the periphery provides a measure of additional surplus value through unequal exchange (e.g. cheap bananas for core workers), profits derived from investments in the periphery, and the status-based affects of comparison with "less developed" countries.

In a pregnant sentence Wallerstein predicts that "When labor is everywhere free we shall have socialism" (Wallerstein, 1974:127).  This implies that, if the core/periphery division of labor disappears, capitalism will no longer be able to overcome its own contradictions, and the political structures main­tained by the core/periphery hierarchy will crumble.  Socialist transformation, which Marx predicted would occur first in the core nations, will finally visit them.

If the above analysis is correct the imminent approach of metanational capitalism would be good news for the world socialist movement as Borrego (1982) contends.  But the formal proletarianization of the world work force (the end of coerced labor and the decreasing availability of alternatives to dependence on the world market) does not necessarily mean the end of "segmented labor markets."  Political and ethnic stratification have proven effective in maintaining wage differentials among formally "free" proletarians.  The core/ periphery hierarchy could become increasingly based on inequality between politically protected labor and "free" labor.

If a contraction in the magnitude of the core/periphery hierarchy were to occur, this would exacerbate the contradictions of capitalism, which have been softened in the past by what David Harvey (1982) has called the "spatial fix," the ability of capital to find fresh room for accumulation by moving to where opposition and constraints are fewer.  The expansion of the capitalist world-system has been driven by the search for new markets, cheap inputs, and profitable investment opportunities.  Lenin (1965) pointed out that by the end of the nineteenth century the core states could no longer find new worlds to conquer and were forced to divide and redivide the already-conquered world.  This extensive expansion has been supplemented by intensive expansion, the conversion of more and more aspects of life to the commodity form, and thus expansion of profit-making opportunities in the provision of fast food breakfasts, etc.  The potential for further commodification is great, especial­ly in the periphe­ry, where a substantial terrain of production and consumption for use remains.

Increases in the extent and depth of commodification must eventually reach limits.  Only so much of human activity can be commodified and the ability of markets and capital to expand beyond political regulation must decline as the density and scale of political regulation begins to catch up.  Antisystemic movements create obstacles to the manueverability of capital and place claims on profits.  The see-sawing back and forth motion of capital must eventually generate consciousness and coordination among groups who have an interest in collective rationality at the world-system level.  Capital flight has pitted workers against one another for 500 years, but the growing scale and density of political claims must eventually decrease the incentive to move and the level of profit.  The systemic crisis of capitalism will involve the creation of democratic and collectively rational control over investment decisions in a context in which "private" wealth no longer has the power or the motivation to continue directing the production process.

The growth of welfare states, decolonization of the periphery, and the emergence of states in which socialist parties control state power should be understood in this light.  Despite the failure of these to change the logic of the world-system so far, developments of this kind which manage to coordinate their efforts on a global scale can indeed transform that logic.  These questions are addressed in more detail in chapter 16.


Chapter 5 : World Culture, Normative Integration and Community


A structural approach to the modern world-system necessarily raises questions about the role of culture and of normative integration.  This chapter discusses the extent to which world culture exists, and the role that ideologies,consciousness, and collective solidarities play in the reproduction and transformation of the contemporary world-system.  Critics of the world-system perspective have complained that cultural factors are treated as epiphenomenal, and a number of recent efforts have been made to remedy that situation (e.g. Wallerstein, 1984b:chapters 15 and 16; Robertson and Lechner, 1985).  My own theorizing rests on historical
material¬ism, but I do not accept a general model in which the "base" mechanically determines the "super-structure."  This chapter argues that world culture and normative integration play secondary rather than primary roles in the reproduction of contemporary world order because of the nature of the

capitalist mode of production as it operates on a global scale.  But I am not arguing that culture and normative integration are secondary in all systems, nor that they will always be so in the future.
  In this discussion of the structure, functions, and content of contem­porary world culture I will argue that consciousness, ideology, and consensual definitions of reality and the good are not the primary institutions which integrate the modern world-system.  Rather, in comparison with earlier whole socio-economic systems and with contemporary subunits such as families and national societies, the capitalist world-economy is integrated more by

political/military power and market interdependence than by normative consen¬sus.  This is not to contend that there is no such thing as world culture, but rather to argue that its nature and structure depend on more potent economic and political institutions. After consideration of the role played by normative integration in the contemporary world-system I will discuss

the structure of the emerging consensual world culture and the resistance to core cultural domination by peripheral groups.    A culture is defined broadly by many anthropologists as a constellation of socially constructed practices (e.g. Fox, 1985).  I will use the term more

narrowly to refer to consciousness and symbolic systems of belief and knowledge.  In this sense culture is composed of collectively held definitions of reality and understandings of what constitutes good and evil.  Thus we are talking about ideology, although this is understood broadly to include all belief systems and religion, but also science and secular economic and political ideas. The construction and sharing of complex symbolic systems is the most

important feature which distinguishes human beings from other forms of life.

Symbolic systems allow us to collectively accumulate knowledge.  The relatively great capacity for learned behavior (as opposed to instinctual behavior), which is based on the unpreprogrammed cortex of the human brain, allows individuals to internalize some of the accumulated cultural heritage of past social development.  As Marx says in ”The Eighteenth Brumaire• (Marx, 1978:9), this happy possibility has a dark side as well: "the tradition of all the genera­tions of the dead weighs like a nightmare on the brain of the living."  The institutions and ideologies we inherit not only empower us, they also constrain us and reinforce structures of domination.  Structures of power mold the cultural heritages which individuals receive.
     This is not the whole story of course.  If individuals only received

heritages nothing would ever change.  The very process by which individuals

are confronted with competing and contradictory cultural elements, and the

decisions between alternative possibilities, builds an element of freedom into

the daily reconstitution of consciousness.  Large-scale processes may carry on

according to a systemic logic which seems to steam roll across individuals, but

individuals and groups of people nevertheless choose their actions.  Structural

change, especially the transformation of systemic logic, occurs at least in

part because people become aware of alternatives and struggle in their behalf.Solidarity, the conscious identification of individuals with one another and with larger collectivities, is an important aspect of all social systems. Solidarity is based on identification and the sharing of cultural agreements,of definitions, of values and norms.  It is this aspect of culture, its

integrational function, which is the main focus of the following discussion.

How does normative solidarity, which unites people into families, communities,and nations, function in the modern world-system? A recurring issue which differentiates theories of social systems is the causal weight they attach to ideological versus infrastructural institutions.

The shift in focus from national societies to the whole world-system has been accompanied by a new set of debates about this issue.  Wallerstein (1979a) and Braudel (1984) have emphasized the importance of political and economic institutions at the world-system level which produce and reproduce material life, while others have stressed the cultural and normative bases of world-
sys¬tem integration (e.g. Parsons, 1971; Heintz, 1973; Inkeles, 1975; Meyer,
1987).  This chapter will place the characterization of the importance of cultural institutions in a comparative context which employs a broad typology of whole socio-economic systems developed by Polanyi (1977).
Talcott Parsons was perhaps the most well-known exponent of the idea that

there exists a global social system which is normatively integrated.  In his

1961 article, "Order and community in the international system," he argued that international law, shared assumptions about the desirability of economic development, rational bureaucratic organization, and political democracy form the basis of a world normative order.  Parsons did not directly address the question of the role of the normative order in the larger system,

because for Parsons all social systems are, by definition, normatively based.

Social structures are defined in terms of shared assumptions about proper rules

of behavior, and the value system is the most fundamental feature of a social

system.  In his short book, ”The System of Modern Societies• (1971), Parsons

applies his AGIL schema to the "international system," arguing that core states

are differentiated in terms of their functions within the larger international

system.  The French specialize in fine arts and diplomacy, the British in democracy, and the United States in economic development and education.


 Types of Integration

But other students of comparative society differ with Parsons's emphasis on the

role of normative integration in all social systems. As discussed in the introduction to Part I above, Karl Polanyi (1977) and Eric Wolf (1982) distinguish between social systems in terms of the main type of glue which integrates them:  
”Normative social systems”: Polanyi discussed reciprocal systems in which

production and exchange are based on consensually held norms of reciprocal obligation [Wolf's (1982) kin-based mode of production; Wallerstein's (1979a:155) mini-systems].  While most contemporary families are reciprocal subunits within a larger socio-economic entity,

that larger entity, the modern world-system is, I will argue below,held together by a different kind of glue.
”Politically coercive social systems: Polanyi also discussed “redistributive" systems which are integrated by political institutions which gather goods by means of taxation or tribute-payment.¼2  States which organize threats and coercion are the main institutions in such systems.
”Market-based social systems: A socio-economic system is integrated by markets when a considerable share of its interactions, and the direction and nature of its development, are conditioned by the buying and selling of commodities on price-setting markets.  A price-setting market is one in which the exchange rates áÄá prices áÄá are determined by competitive buying and selling by a large number of independent agents seeking to maximize their individual resources.ÞZÞ
  In reciprocal systems a consensual moral order defines reciprocal role obligations and mobilizes social labor.  Distribution is controlled by a set of rights and obligations and social integration is guaranteed by socializing individuals into the belief systems which define their roles and regulate interaction.  Internalized definitions of self and the peer pressures of a

face-to-face community are the main glue which guarantees social order.
Redistributional activity in such systems may confer prestige on benefactors, but authority structures are not very hierarchical.  These societies are classless in the sense that kinship groups are not ranked and superior position is usually not inherited.  And they are stateless in the sense that they do not
contain a differentiated organization which exercises a monopoly of legitimate violence.  Cultural integration based on consensus about what is real and what is good is the main basis of social order.   In politically coercive systems there are classes and states.  Surplus product is gathered and redistributed by a political/military ruling class which utilizes institutionalized authority backed up by force to accomplish appropriation.  There are many institutional means used to reinforce the appropriation of surplus product in these "tributary modes of production"

(Amin, 1980a:46-70) and they vary in the degree to which they are centralized (Wolf, 1982).  European or Japanese feudalism represent a rather decentralized, so-called "stateless," type in which each manor is, in fact, a mini-state.

More typically we think of the great agrarian empires in which a centralized state extracts resources from a wide territorial division of labor.  In such socio-economic systems the political organization of force is the main deter­minant of societal dynamics, but normative integration continues to play a role.  Religion is used to legitimate the rule of the temple and the palace.

Codified law is created to centrally define correct behavior and deviance across local communities which have formerly relied on unwritten moral tradition.  Such "world-empires" (Wallerstein, 1979a:156) are primarily integrated by the political competition which is articulated in a single state apparatus.   The three types of integration -- normative, political and market -- exist

in most world-systems, but world-systems differ in the extent to which these are dominant and in the particular ways in which they are combined.  Normative integration has changed its locus and function over the long history of human social development.  In the classless, pre-state societies, clans and tribal groupings based on notions of kinship used normative integration (Durkheim's mechanical solidarity) to produce social order.  Conformity was ensured by

informal social censure; the deviant was often shamed into self-punishment (Malinowski, 1961).
    When states emerged, societies became integrated predominantly by the coercive power of political institutions of various kinds.  Military ruling classes monopolized the means of violence and "protected" peasants from other competing military centers in exchange for obedience and peasant produced surplus product.  The first urbanized civilizations may have been theocracies, integrated largely on the basis of normative legitimacy, but soon states,

competing with one another in warfare, became integrated by political/military

institutions.  Normative integration through religious and ideological institutions continued as an important, but not central, adjunct to military organization.  Subunits such as families, lineages, and peripheral communities remained integrated by normative means, but these were articulated within a dominant tributary mode of production.   It was the imposition of rule across normatively-defined communities which created the need for the law codified rules.  Normative integration in a consensual culture does not require codification because everyone knows what is right and what is wrong, just as the incest taboo in modern society does not

primarily rely on legal enforcement.  But when an imperial state seeks to impose a uniform set of rules across a set of normative communities which it has conquered, the written law becomes necessary.
     In market systems integration stems primarily from the specialization of

independent producers and their resulting objective reliance on one another

(interdepen¬dence).  Polanyi (1944) argued that pure market systems are unstable
and tend to generate new political institutions to protect societal desiderata

from the negative consequences of unbridled competition and narrow market rationality.  In the Wallersteinian version "world-economies" are systems in which there are multiple cultures, multiple polities, and a single integrated division of labor.  The ”capitalist• world-economy combines commodity production

for markets with political-military competition among unequally powerful nation-states.  Integration is due to interdependence and the dynamic interaction between uneven capitalist accumulation and the balance of power mechanism of the interstate system.  The institutions of international capital investments and the interstate system are reciprocally interdependent on one

another and provide the structural center of what is an extremely expansionist and intensifying socio-economic system (see chapter 7).     Thus the glue which holds together the modern world-system is a combina­tion of market-generated interdependence in the world division of labor and the

political-military power of core states.  Our global political economy is called a capitalist one because the market-based logic of accumulation constitutes a greater part of the dynamics of the whole system than in earlier (precapitalist) world-empires and world-economies.  We know that markets and wage labor existed in the Roman Empire, but these institutions did not
determine, or even much influence, the dynamic of imperial expansion and contraction.  Rather it was political competition within the arena of a single state apparatus and the extraction of resources (tribute, slaves) by conquest which was the structural kernel of the Roman system (T. Hopkins, 1978).
  The above characterization of the modern world-system does not imply that

normative solidarities play no role in integrating our global system.

Normatively integrated subunits such as families are important components of
capitalist production because they operate as income-pooling units which allow

people to combine different sorts of resources, and thus they play a crucial

role in the reproduction of the labor force (Smith et al., 1984).  Families,

neighborhoods, village communities, and other face-to-face primary groups

continue to play an important part in the generation and maintenance of

individual personalities.  Social psychological research shows that the

cognitive relationships of individuals to larger solidarities such as ethnic

groups or nations are crucially mediated by such primary groups (Shils and

Janowitz, 1948).
  Thus it is incorrect to see contemporary solidarities like the family as

merely vestigial remnants of earlier modes of integration.  Their functional

importance in the modern world-system does not, however, mean that we ought to

understand the larger system to be normatively integrated in the same sense

that earlier socio-economic systems were.  The system as a whole is not held

together by consensual understandings.  Most exchange in the capitalist

world-economy is not specified by agreed-upon reciprocal obligations.  Rather

exchange is primarily organized as market trade of commodities and as inter-organizational and interstate political bargaining.  Normative Solidarities in the World-system
Normative integration plays an important but subservient role in the modern world-system.  Normatively integrated subunits such as the family, the local community, ethnicities, and nations (national communities) serve important functions for the operation of the capitalist mode of production.¼4  I already

mentioned the importance of the household as an income©pooling group which

bears the cost of child-bearing, child-rearing, care of the elderly, and psychological sustenance of the self.      Probably the most important resource-pooling solidarity in the modern

world-system is the nation, not because of the direct effects of such pooling,

but because of its linkage with the state.  Most modern states are nation-states in which the functions of formal political organization, authority,interest-aggregation, etc. are blended with the ideology of national interests.

Successful competition within the world market requires a strong and integrated

state standing behind a strategy of competitive commodity production.  Such a

state must be able and willing to use force to guarantee the market share interests of its national investors (which may be state bureaucrats or "private" capitalists).  The use of international force requires a certain degree of legitimacy, as does the maintenance of peace and order at home.

Class conflicts and domestic resistance to the use of military power are often softened by the ideology of nationalism.  The viability of nationalism as a solidarity is, of course, reinforced by its frequent correspondence with the nation-state.  But nationalism is also

reinforced by the core/periphery hierarchy, the structured inequality between

"developed" and "underdeveloped" nations.  Unlike class solidarity, which is
usually crosscut by the core/periphery hierarchy, nationalism in both the core and the periphery is reinforced by the inequalities among "advanced" and "developing" countries.¼5  Class solidarity within core countries is reinforced by the perception by core workers that they share national interests with their "own" capitalists in exploiting peripheral countries and competing with other core countries. An example of this is presented in Sidney Mintz's (1985) recent study of the place of sugar consumption in the emergence of industrial capitalism in Britain, in which Mintz examines the linkages between slave-grown Caribbean sugar and the growth of sugar consumption by the British proletariat.
Mintz's anthropology of food consumption emphasizes the social symbolism of

what and how we eat, and its connections with power.  He notes that cheap sugar

provided fast calories for core workers at the same time that it enabled them

to consume an item which, along with tea, had in the past been an imperial

luxury available only to the rich.


Cultural Presuppositions of the World Market

As the above indicates, there are various forms of community (solidarity)which are institutionally embedded in the operation of the modern world-system. Normative integration is important for families, neighborhoods, villages,cities, subnational regions, ethnicities, tribal groupings, clans, class and occupational groupings, political parties, and most importantly, nations.

These various forms of community are not, however, the main type of glue which holds the contemporary world-system together.  Neither is political organiza­tion, although this plays an important role in mediating competition.  The main glue of our global system is the interdependence produced by a market-mediated network of economic differentiation, a division of labor which Durkheim called "organic solidarity."  This form of integration is not a solidarity in the normative sense, because it does not require identification with a larger collective interest or the sharing of consensual definitions of proper behavior or the good.  Markets are constituted by the buying and selling activities of large numbers of individuals (or firms) operating on their own account to maximize returns.  Normative evaluations of different persons are ideal-typically irrelevant.  But, as Durkheim (1964) pointed out, contractual market exchange

does require a certain level of normative consensus, as well as a certain kind

of law.  Actors must come to agreement on prices and on a generalized medium of
exchange (money) and they should agree that one exchange partner is as good as

another, or rather is as good as his/her ability to pay.  The institutionalization of a price-setting market is problematic within a normatively integrated group, and it is even more problematic between different culturally-¬bounded groups. Phillip Curtin (1984) has studied the world historical development of market exchange across cultural boundaries.  Curtin observes that trade between culturally distinct groups is most often carried out by a separate

normatively integrated group which specializes in cross-cultural trade.

Curtin terms these specialized trading ethnicities  "trade diasporas" because they usually set up enclaves within the boundaries of the cultural groups that they link through trade.  Curtin's work on sub-Saharan Africa led him to the idea of a trade diaspora, which he then used in a broader investigation of cross-cultural trade ranging from ancient Mesopotamia to the trading outposts

of the European colonial powers.  Without trust and credit long-term, long-distance trade is difficult to sustain, and trade between different cultural groups requires consensus about

notions of fairness and equivalent values.  A specialized trading group which is integrated on a kinship or ethnic basis provides the social organization which can sustain cross-cultural market exchange.  Curtin observes that trade diasporas decline as the separate cultures whose exchanges they mediate develop sufficient common understandings to allow direct trade, a situation he

terms the emergence of a "trade ecumene."  A certain level of cultural understanding facilitates the linkage of different cultural regions by market interdependence.
     Of course, the emergence of a trade ecumene does not imply that a "perfect" market mechanism operates in international exchange.  For one thing, much international exchange (even within a capitalist world-economy) is conditioned by political agreements similar in form to the "state-administered trade" which was typical in world-systems dominated by the tributary mode of

production.  And the "market universalism" assumption of the equivalence of all buyers and sellers is also violated by the fact that the capitalist world-system remains divided into separate normatively integrated groups -- primarily nations.  Also the universal equivalent, money, is imperfectly formed in international trade, as the history of international monetary institutions

attests (Vilar, 1976).  Nevertheless, the depth of the trade ecumene and the relatively strong operation of price-setting international markets is undoub­tedly greater in the modern world-system than in earlier world-systems in which capitalism and commodified relations were less prevalent.     The normative relations which emerge among nation-states and transnational

actors in a market-integrated world-economy are primarily composed of expecta­tions about fair trade and the protocols of diplomatic interaction.  The analysis of these normative structures has been carried out under the rubric of "international regimes" (Keohane and Nye, 1977).  Charles Lipson's study of the protection of private property in the periphery by core states describes well the limits of such international normative structures:
“...stable property rights and contractual relations are exceedingly difficult to establish across national boundaries.  Although collective evaluations and expectations are an important feature of international relations, these normative properties are weaker because political, social, and cultural communities are constituted primarily at the domestic level, where they typically overlap and reinforce one another (as the term ”nation-state” suggests). Thus, while it is difficult to establish the meaning and value of property rights domestically, it is far harder

internationally.” (Lipson, 1985:4, emphasis in the original)
     Despite the limitations of international normative structures, the study

of international regimes has revealed important things about the contemporary

world order and the ideological premises and disputes which accompany world

politics.  The studies by Stephen Krasner (1985) and Craig Murphy (1984)

demonstrate how arguments over world distributive justice in many respects

parallel ideologies of inequality and inequity at the level of national societies.Ideological support for socially structured inequalities also plays a role in justifying and rationalizing core/periphery differences. Some of the non-market barriers to wage equalization between core and peripheral workers are ideological, as is also the case with wage differences among men and

women, or blacks and whites. Michael Hechter (1975) has shown that
cultural¬ly-based definitions of in-group and out-group (e.g. English versus Irish) played an important role in maintaining the structure of "internal colonial¬ism" within the British Isles.  But we must note that while attitudinal racism and nationalism certainly have a life of their own and undoubtedly play

a supportive role in structures of domination, these are largely reinforced by

economic and political institutions.  And this is even more the case when the

object of analysis is international inequalities.  The political structure of

migration control is a complex function of popular attitudes, the economic

demand for labor, and the political power of competing organizations and states

(Portes and Bach, 1985).  And migration control is certainly one of the most

potent institutions which reproduce core/periphery wage differentials.The Structure of Contemporary World Culture
Both the content and the level of consensus among participants vary across cultures.  Consensus is never complete and it tends to decrease with com­plexity.  As discussed above, Durkheim (1964) argued that there is a normative basis to contractual exchange in market society, although it differs greatly from the customary obligations prevalent in societies with a less complex division of labor.  In societies with a complex division of labor in which

individual producers exchange their products for the products of impersonal

others through the medium of money, consensus still exists on some matters.

But an elaborate division of labor tends to create an objective dependence of

individuals and groups of producers on market exchange such that ”broad

consensual agreement is no longer required for” social order”.  People may

believe anything they want to about religion or aesthetics.  Market exchange only requires certain social agreements about the formally equal status of buyers and sellers, the legal obligations of contract, and the terms and content of exchange value.  This necessary consensus is somewhat minimal in comparison with the degree of consensus about ontology and sacredness which exists in simple societies, and this minimal consensus is backed up by law and formal sanctions.

Complex societies are characterized by relatively individuated and voluntary

forms of consciousness in the sense that individuals exercise many options in

choosing among culturally available identities and ideologies. Marx's (1967a:71-83) discussion of the "fetishism of commodities" implies that the institutionalized opaqueness by which market relations obscure the concrete relationships among producers is functional for the operation of

capitalism because producers and consumers are alienated from the knowledge of their real interdependencies.  More recent critics (Zaretsky 1976; Bellah et al, 1986) argue that the consumerism and privatism which are associated with individuated identity in capitalist society alienate the individual from meaningful social action.   It is clear however that modern national societies continue to be integrated, at least in part, through collective consciousness.  Durkheimian processes of moral boundary maintenance, as well as strong sentiments of

solidarity are evident with regard to the "national community."  The nation is

probably the most important collective solidarity in the modern world-system.  Ideological hegemony, as analyzed by Antonio Gramsci (1971), certainly plays an important part in legitimating political and economic hierarchies within national societies.  To make this point, however, is also to recognize that consensus and cultural agreement are primarily organized along national
lines in the contemporary world-system, and ”not• at the level of the whole

system.   The organization of consciousness and identity along national lines is,

in fact, an important characteristic of the capitalist world-economy.  It is

not only the multicentric character of the interstate system which allows

capital to maintain its mobility and the capability of outmaneuvering oppositional movements.  In addition, the tendency of world culture to be fragmented into national cultures, and for collective solidarities to be organized nationally, reinforces the structural mobility of capitalist accumulation.  The poor record of proletarian internationalism and the bloody conflict among contemporary socialist states have resulted primarily from the institutional

structuring of political power in the interstate system, but they have also

resulted from virulent nationalism.
  The point here is that nation-building, the formation of national solidarities out of formerly separate collective identities, is itself
product of the long-run operation of the interstate system and the commodity

economy.  That nations are better integrated in terms of collective identity

in the core than in the periphery is largely a consequence of colonialism and

economic exploitation which developed the core and underdeveloped the periphery.  Colonialism often employed a divide and conquer policy which pitted peripheral ethnic groups against one another, while effective nation-building in core countries was facilitated by exploitation of the periphery.    The most salient feature of world culture is its multinational character.

Natural language is the most important bearer of cultural meaning, and ”there

is no global language•.  Language remains differentiated at the level of the
world-system.  And thus collective identity as expressed through intimately understood symbolic systems remains multinational.  This is not to claim that consensual symbolic systems are not emerging at the global level.  Cultural imperialism and the ideological hegemony of European religion, politics,

economics, and science have produced obvious isomorphisms among the national cultures of the world-system.  Robert Wuthnow (1980) has convincingly argued that the institutionalization of science and the emergence of different types of religious movements have been strongly conditioned by world-system
proces¬ses.  Economic development, political equality, and nationally delimited

collective rationality compose an underlying set of consensual themes for world

culture (Heintz, 1973).  Each nation expresses its own identity in terms of

some "uniqueness" which is nevertheless consistent with one or another version

of these basic themes.
On the other hand the civilizational values which constitute European

culture, and thus the culture of domination in the Euro-centered world-
system, are by no means universally accepted despite the trend toward morphological similarities among national cultures.  Important aspects of non-Western civilizational traditions with very different presuppositions

about the universe are still strongly held by large numbers of the world's peoples (Galtung, 1981; Wallerstein, 1984b:chapter 16).
  The study of international regimes [i.e. the evolution of agreements about specific issues such as aid, debt, foreign investment, the law of the

sea, etc. (Krasner, 1985; Lipson, 1985; Wood, 1986)], as well as discussions of international distributive justice confronted in the debate over a "new international economic order" (Murphy, 1984), have certainly illuminated the process of consensus formation and disputation in the emergence of a world normative order.  Stephen Krasner's (1985) study of debates between core and

peripheral states reveals the feature, well-known from studies of other cases

of distributive justice, that peripheral states are much more likely to favor

an international regime which controls resources on the basis of globally­defined interests, whereas core states are more likely to favor the
distribu¬tion of resources according to ability of individual states to pay.   Systems of linguistic equivalence have become institutionalized in the practices of international translators, and artificial world languages such as

mathematics are accepted everywhere.  A single method of time-reckoning is

nearly universal, and pressure is exerted to standardize other measure¬ments.

Communications protocols, traffic signs, medical terminology, national economic

accounting, social indicators, and even aesthetic and literary judgements are

increasingly consensualized. World literature, world history, and even theory

and research on something called the world-system, are perhaps expressions of

the emergence of a unitary world culture (see also King, 1984).
     Identification with the human species as a whole is not a very important

solidarity in the integration of the contemporary world-system.  The boundaries

of human solidarities have been expanding their scope for a long time.  The

development of "world" religions such as Christianity and Islam separated

kinship and blood ties from the definition of membership in the moral order.

The actual content of the idea of universalism has expanded to include the

whole human species in the "brotherhood of man," the "species-being" of nineteenth century socialists.  Contemporary discussions of the global village, or spaceship earth, stress the extent to which we share a common fate as a species.  And most of contemporary social science assumes the oneness of the human species.     Of course ideas may be expressed or held by a minority without being institutionalized into social structures.  When we discuss the nature of

contemporary solidarity, the global community is revealed to be only weakly

institutionalized.  There are many competing world religions, including the

variants of socialism.  And international law, although stressed by Parsons

(1961) in his discussion of normative order at the international level, is yet

poorly institutionalized.  Even the most central actors simply disregard the

World Court when it suits them.
  Durkheim used changes in legal systems as a measure of the type of solidarity found in a society.  In a similar fashion, many people have examined

the world legal system to see if global normative regulation is emerging.  The

function¬ing of the World Court has been the focus of much discussion and

criticism (e.g. Falk, 1982).  The importance of normative regulation at the

global level undoubtedly oscillates with the level of conflict in the worldªsystem.  In addition it seems likely that international law has indeed increased its importance compared with earlier centuries.  But this trend has not significantly shifted the overall logic of the world©system toward that of a normatively regulated system.  That is to say, though normative regulation

may have increased to some extent at the global level, it remains a very weak

force.    Complex cultures are never very homogeneous.  Parsons (1971) speaks of

differentiated cultures in which subunits specialize in separate but inter­dependent forms of consciousness and meaning.  Thus lawyers think differently from doctors (have a subculture) which is nevertheless part of a larger integrated culture.  Perhaps the emerging world culture is such a differen­tiated civilizational whole.  Many have argued that certain underlying cultural

themes have penetrated everywhere in the modern world-system, or at least are

shared by national elites everywhe¬re.  Variously called "modernism" or

"Westernism," this world culture has been spread by colonialism and market

relations to every corner of our earth.  Its content has been described as

focusing on economic develop¬ment, rational bureaucracy, secular humanism and

science, and political democracy, although the global status of the latter is

questionable because of oscillation between democratic and authoritarian

regimes in the periphery and semiperiphery.  Nevertheless, it must be significant that there are few true monarchies left in the world.  Legitimation of the state from "below," that is, as an organization operating in the interest of the "people," has become nearly universal.  This is very different from the ideologies of tributary states and empires, which are agents of the

gods (see chapter 6).   If there is something like a world culture then English is obviously one

of its major languages.  This has resulted from the far©flung expanse of the
British Empire, but also from the fortunate (or unfortunate for Anglophobes) circumstance that the British hegemony was followed by that of a hegemon carrying a similar linguistic gene, the United States.  A hegemonic core power promotes its own language and many speakers find it a necessary ”lingua franca•.
  Certainly the number of spoken languages has decreased over the last 500

years as a result of the European conquest of earth.  And bilingualism has

expanded to increase the size proportions of the world's population speaking one or another of the largest languages.  But synthetic languages (such as mathematics) and methods of time-reckoning, methods of measuring space, etc. have spread somewhat independently of natural languages.       Linguists such as Sapir (1949) and Whorf (1956) have argued that meanings

are non-trans¬lateable across language groups employing incompatible assumptions

about the nature of reality.  We have all heard of the difficul¬ties of

translating certain German or French words into English.  How much more

difficult to express the Eskimo notions of snow or the Navaho attribu¬tion of

modified action to what we think of as inanimate objects (e.g. the log bumps,

instead of a bump on the log).  Problems of this kind are resolved (or

obliterated) when translation equivalences become institutionalized, as when

professional translators at the United Nations develop standard solutions to

the problem of equivalences.  The original nuances are lost, but this is

nevertheless a form of global consensus creation.


Cultural Imperialism

Culture usually reflects socially structured inequalities.  That is, culture is

itself hierarchical and comes to reflect, and to reinforce, hierarchy.  Marx

said that the dominant ideas of an age are the ideas of its rulers, and Gramsci

analyzed ideological hegemony in terms of the ability of a ruling class to
legitimate itself by propagating a dominant (but not totally exclusive)

world-view.  Much of what has been called world culture by Parsons (1961, 1971)

and the modernization school, has been called Western cultural imperialism by

others (e.g. Galtung, 1971). William Meyer (1987) has performed an operationalization of "the
struc¬tural thesis of cultural imperialism" which examines certain key propositions with data on 24 developing countries.  He uses cross-sectional multiple regression analysis to examine the relationships between two indicators of the penetration of a country by Western news and information flows and three indicators of Westernization of the economy, education system,

and consumption.  Meyer does not find support for the hypotheses of cultural

imperialism, but his study can hardly be cited as firm evidence.  The small

number of cases (small for regression analysis) and problematic operationalizations make the results untrustworthy.  The same can be said of other comparative studies which have sought to examine the effects of media imperialism (see Stevenson and Shaw, 1984).  These questions are important and relatively unplowed ground for careful comparative research.       While no one can deny the existence of hierarchical aspects of world culture, I will argue that this form of imperialism is not very central to the functioning and reproduction of inequality in the modern world-sys¬tem.

Cultural imperialism certainly propagates core popular culture and the "preference structures" which create demand for the consumption of core commodities in every part of the globe.  This is accomplished in part through the centralization of communications and information-providing systems in core countries (Schiller, 1969).  Coke, Pepsi, rock-and-roll, and American television programs are everywhere.But just as oppressed groups within nations have often found it possible

to redefine themselves, to throw off the styles and identities provided by dominant groups and to assert their own "traditional" or "unique" definitions of self or group, this kind of resistance also operates in the core/periphery hierarchy.  The psychology of national liberation is essentially the creation of new national identities in reaction to the colonial ideologies of the past.

This form of resistance has been fairly successful, although not unproblematically so.  The secular trend toward unifying cultural understandings remains subject to important resistance.  Groups and nations which feel short-changed by the accretion of allegedly "universal" culture may often redefine themselves (Wuthnow, 1980).  The traditionalism of the Khomeini regime in Iran, and the claims to non-Western civilizational values put forth by many peoples, show that oppression which is symbolically organized is much easier to combat than oppression which becomes institutionalized in a material division of labor or a costly military apparatus.  Blacks may redefine themselves as beautiful; Jehovah's Witnesses may proclaim themselves the closest to God, and these "ethnic" forms of resistance may help people feel better about their situa­tions, but the material bases of oppression and exploitation are more difficult to overcome.  The nationalism of peripheral countries is thus an attempt by elites and peoples to redefine themselves on a more equal footing in a system which consistently operates to marginalize them, and as such these forces may often be understood as opposition to exploitation (Fox, 1987).  The nationalism

of core countries, on the other hand, appears as an atavistic denial of the best universalist tendencies of modern society.  Yet both kinds are the productof a world political economy which divides peoples from one another and promotes conflict over resources.   Albert Szymanski's (1981:257-88) chapter on "ideological hegemony as a mechanism of imperial domination" shows the important extent to which core culture has been promoted in an effort to legitimate core/periphery exploita­tion.  Szymanski also reveals the ease with which nationalist regimes in the

periphery may produce their own television programs, etc.  The falling cost of

communications technology has provided the means to counter the centralization

of the provision of information and entertain¬ment.  In the modern world-system

it is much easier for oppressed people to redefine themselves, to adopt a more

positive self-definition even in the face of "hegemonic" cultures, than it is

to change the position of a nation in the economic and political/military

hierarchy.    Thus we have the phenomenon of "overmodernization."  Many developing

countries adopt the trappings of development:  state planning, mass education,

national monuments, etc. without being able to create the material bases of

economic development.  Meyer and Hannan (1979) show that all countries,

regardless of the rate of economic growth, expanded their education systems in

the period between 1950 and 1970.  The worldwide education explosion, however,

is unmatched by worldwide economic development because it is much easier to

create students, schools and teachers than it is to institute productive and/or

profitable economic enterprises in the context of a competitive world market.Of course some countries have rejected modernization as Western imperialism and sought to recreate "indigenous" institutions and ideologies. The Iranian revolution is an obvious example, but many other peripheral and semiperipheral countries have similar elements in their national ideologies.

It is fairly easy to accomplish such a redefinition and rejection of the
dominant world culture because ”the world culture itself is pluralistic.

Participation in the world market, or even in the international system of

diplomacy, does not demand much in the way of cultural uniformity.  The above points support the contention that world culture is not the main way in which order is sustained in the contemporary world-system.  But a counter-argument could contend that the world-system is not well© integrated,

and that this is due to a lack of normative consensus.  Many have perceived

international relations not as a system, but rather as an "anarchy of nations"

each out to get as much as it can.  It is clearly the case that warfare is an

institutionalized part of the competition among states.  Warfare is nearly

continuous on the earth, and war among core states is periodically produced by

the process of uneven capitalist economic development (see chapters 7 and 8).  While warfare indicates that competition regularly breaks into conflict, it is misleading to characterize the world-system as an "anarchy of nations."

The system reveals many regular patterns of interaction despite the fact that it is not strongly integrated by consensual culture.  The market interdepen¬dence and the related political-military balance of power mechanisms operate to produce certain features which contradict the hypothesis of a disordered Hobbesian war of all against all.  First, the core/periphery

hierarchy is fairly stable.  Despite a certain amount of upward and downward

mobility, any area is most likely to remain in the position in which it has

long been.  And the number of sovereign states has increased rather than

decreased.  In a system based purely on conquest we would expect the number of

sovereign states to decrease as empire-formation takes place.
One of the most persuasive arguments in favor of a strong world culture

is that by John W. Meyer.  Meyer claims that certain values, primarily those of
economic progress and rationality, are institutionalized as normative rules in

the world polity.  As Meyer (1987:50) puts it,  “Explanations of the world-wide state system that stress cultural factors are on the right track.  Yet their commitment to a narrow conceptualization of culture caused them to miss the awareness that modern world culture is more

than a simple set of ideals or values diffusing and operating separately in individual sentiments in each society.  The power of modern culture -- like that of medieval Christendom -- lies in the fact that it is a shared and binding set of rules exogenous to any given society, and located not only in individual or elite sentiments, but also in many world institutions (interstate

relations, lending agencies, world cultural elite defini­tions and organization, transnational bodies, and so on).

The United Nations, although a weak body organizationally, symbolically represents many of the rules of the modern world polity....It symbolizes the rules of a political system in which national© states are constitutive citizens. Meyer contends that a strong set of institutionalized norms accounts for the stability of the interstate system, supports the sovereignty of existing

states, and legitimates the expansion of state regulation within national

societies in both the core and the periphery.  Meyer notes that peripheral

states expand their internal jurisdiction and adopt the trappings of "modernity" (welfare systems, educational systems, etc.) even in the absence of much domestic economic development, and there is considerable empirical support for this contention (see Meyer and Hannan, 1979).
    I agree with Meyer that the normative rules institutionalized in the United Nations and the protocols of diplomacy support the interstate system and the sovereignty of states.  But I disagree that these norms are the main source of support for these important central structures of the modern
world-system.  Meyer's assumption that the norms are "shared and binding" is simply incorrect.  When norms are binding the cost of deviance is opprobrium from a valued other (shame) or self-punishment motivated by guilt.  Deviance from the norms of diplomacy or the UN Charter is not sanctioned in these ways in the contemporary world-system.  My own explanation of the expansion,

stability, and reproduction of the interstate system also refers to institutions, but not to rules and values embodied in the world culture.  In chapters 6, 7 and 8 I argue that the features of states and the interstate system to which Meyer refers (and others) are produced by an institutional¬ized capitalist mode of production and by the efforts of groups to protect themselves from market forces and exploitation by core powers.   I agree that normative and value-based consensus has increased at the global level, and that world culture is evolving as a differentiated complex system of institutionalized values.  But I also contend that these emergent

features do not yet play a strong integrative role in the dynamics of the contemporary world-system.  System integration is primarily mediated by markets, and this is backed up by the functioning of the interstate system, a political/military balance of coercive power which regularly (but not randomly) employs warfare as a means of competition.  World culture operates to legitim¬ate commodity production and the interstate system, but is not an important determinant of the dynamics of our world-system.  Consciousness may, however, play an important role in the transformation of the current system to one based more on consensus and normative integration.


The Future of World Culture and Community

The trend toward world cultural integration which can be discerned in an

increasing convergence around basic themes and the isomorphism of national

cultures has not yet reached the point at which normative processes have a

central role in world-system processes.  The capitalist world-economy is an

historical system with contradictory tendencies which will eventually lead to
its transformation into a qualitatively different kind of system.  My argument

above should not be interpreted to mean that ideas will have no importance in

the transformation of this system.  On the contrary, it is my hope that a

scientific analysis of the deep structural tendencies of the system will be

useful in transforming it.  As Polanyi (1944) suggested for national societies,

the enormously productive forces of capitalist develop¬ment are also enormously

destructive of certain human values which do not easily enter into the calculus

of "private" (or partial) profit-making.  The normative assertion of these

collective values is an important part of constructing a world polity which can

democratically and rationally plan world production, distribution, and development.  Thus the "universalism" generated by capitalist culture needs to be carried forth to a new level of socialist meaning, albeit with a sensitivity to the virtues of ethnic and national pluralism (see Chase-Dunn, ed., 1982b:chap¬ter 14).  The claims made by Parsons (1971) and the other culturalist

theorists that normative universalism is a central feature of the existing

capitalist world-system must be debunked, but the possibility of such a world

society in the future should be recognized. Now we turn to a consideration of the role of states and the interstate system in the capitalist world-economy.  A summary of the conclusions reached

in Part I is contained on pages 8 to 11 in the Introduction.


PART II : States and the Interstate System

Economics and politics are not really separate phenomena despite the needs of academic disciplines to maintain their boundaries.  Political economy is the study of the interaction and interdependence between economic and political activities.  We cannot understand any social system without knowing how both power and production are organized.  A debate has emerged about the nature of the modern world-system and the relationship between its economic and political aspects.  Some authors stress the autonomous nature of geopolitics (Skocpol, 1977; Zolberg, 1981) and others, like Modelski and Thompson (1988) analyze long cycles of power concentration in which the long-range military capabilities of the "great powers" are the main focus.  The world-system theory developed here looks at the specific ways in which economic and political action are intertwined within the capitalist world-economy.  It is argued that the interstate system of unequally powerful and competing states is the political body of capitalism, and that capitalist institutions are central to the maintenance and reproduction of the interstate system, as well as vice versa.

     According to Levy's (1983:table 3.1) compilation there have been 64 wars involving two or more states classified as "great powers" since 1495.  Several different definitions and lists of wars are reviewed and critiqued by Levy (1985).  Here I am defining world wars as major conflicts among core powers for control of core areas of the world-system. Rather than simply counting wars, students of international conflict have devised measures of the intensity of warfare.  Goldstein (1985, 1988) uses a measure based on the number of battle deaths per year to study cycles of core war severity.

     Though individual conflicts may have many causes, the cycles of world war among core states are understood here as a normal part of the restructuring of political relations which follows the uneven development of capitalist accumulation. The rise and fall of hegemonic core powers is also seen as a consequence of uneven development and associated processes of class conflict and core/periphery interaction.

     Contrary to the arguments of some analysts (e.g. Schumpeter, 1955), capitalism is not a pacific mode of production.  Rather warfare appears as a normal and periodic form of competition within the capitalist world-economy.  In the modern world-system warfare is in large part an adjunct to strategies of trade and investment, whereas in the precapitalist world-empires it was itself the primary form of competition.  For capitalism the interstate system of sovereign nation-states, which presumes the legitimacy of warfare, is a crucial institution.  It is contended here that the emergence of a system-wide world state, even a confederation limited solely to the prevention of warfare among nation-states, would be the beginning of the end of capitalism as a dominant mode of production.

     Chapter 6 reviews recent neo-Marxist and neo-Weberian studies of states as organizations.  The process of state-formation, the size of states, and differences between core and peripheral states are considered.  Chapter 7

examines the arguments that claim that geopolitics is a separate game from economic competition.  I contend that these two forms of competition

constitute a single integrated logic in the modern world-system.  The ways in which the interstate system and the world economy are intertwined with one another in the modern world-system are examined.  Chapter 8 continues this

discussion by focusing more explicitly on the institutions of capitalism andtheir role in reproducing the interstate system; it compares the modern interstate system with earlier world-empires, and considers the patterns and linkages between different kinds of wars.  Chapter 9 outlines an explanation of the rise and decline of hegemonic core states, the most successful states within the capitalist world-system.


Chapter 6: States and Capitalism


It has been implied that the world-system perspective is a vulgar "economistic" approach which contends that political action is determined by economic structures.  It is undeniable that the relationship between political action and socio-economic structures is somewhat loose.  This is quite evident when we consider the extremely complicated connections between class interests and political action.  They are by no means as simple and direct as Marx and many Marxists have assumed (and wished).  Analogously, if we examine the link between the world-system position of states and the policies, organizational forms, and regime structures of those states there is not a simple and complete fit.  To be sure, we can not explain everything about political action and state structures by knowing how and where a country is inserted into the world hierarchical division of labor.  As John Willoughby's (1986:43) excellent discussion of core and peripheral state formation in the context of the internationalization of capital concludes:

          Neither imperial nor subordinate state behavior can be explained without reference to more specific national and international historical processes.  No narrow focus on the tendencies of capital can by itself explain state behavior.  The method does account for certain general structural trends in the evolution of the global polity, but these findings only provide a basis for understanding the subject of imperialism proper.  It is still  necessary to develop a framework that can model the interactions among core and peripheral nation-states and international organizations.  Otherwise, it will not be possible to anticipate the shifting contours of political-economic subordination and conflict so basic to the capitalist world.


This said we can, however, observe certain general regularities which may be helpful in understanding the world-system as a whole, and also the constraints and possibilities of particular states.1      Those who wish to take a less deterministic, more voluntarist, approach to the state and politics often take the Weberian methodological route which emphasizes variability, and seeks to explain why it is different in such and such a place.  Charles Ragin and David Zaret (1983) have recently clarified the distinction between Durkheimian variable-based and Weberian case-based explanation.  The latter emphasizes explaining the genesis of diversity, while the former focuses on explicating the general model rather than the deviant case.  Both strategies are useful and ought to be combined, as Ragin and Zaret contend.  What they do not point out, and what is often missing in those analyses of particular states which emphasize historical contingency, is that explanation of variability or diversity assumes the adequacy of the general model with which the particular case is being contrasted.  What I wish to do here is to focus on the formulation of a general model.

     This chapter considers recent studies which compare core, peripheral, and semiperipheral states, and which discuss generalizations about the connection between the core/periphery hierarchy and features of states.  It also discusses the question of the nature of the state within a capitalist mode of production, this in the context of the world-system perspective.  The interconnection between the interstate system, geopolitics, and capitalist institutions are examined in two following chapters.  Here we will focus on individual states.

     Is it true that the typical capitalist state is one which only provides social order and does not intervene in markets or production decisions?  Or, to ask the question another way, is capitalism a system which is best conceptualized as operating within the context of such a minimalist state?  What is the real relationship between states and markets within the capitalist mode of production?  Are core states typically stronger than peripheral states, anddoes this hold for both internal power and power vis--vis other states?  Are core states typically more democratic, less centralized, and less authoritarian than peripheral and semiperipheral states?  If there is such a correspondence between regime form and world-system position, what explains this correspondence?  These and related questions are discussed in this chapter.

State Strength: Internal and External

Immanuel Wallerstein (1974) contends that core states tend to be strong, both internally and vis--vis other states, while peripheral states tend to be weak.  And he argues that these tendencies are reinforced by certain structural features of the world-system, by ongoing processes of exploitation and oppression which reproduce the core/periphery hierarchy (see also Rubinson, 1976; Kick, 1980).  The strong state/weak state formulation has been criticized by neo-Weberians, as has the alleged "economism" of Wallerstein's approach (e.g. Skocpol, 1977).  It is contended by critics that some non-core states are very strong vis--vis internal oppositional forces, and that some core states look rather weak internally.  It is generally agreed that in external stateto-state relations Wallerstein's generalization holds.  Core states are always more powerful than peripheral states vis--vis other states in terms of military power and economic power deriving from position in the hierarchical international division of labor.  These different types of power may not be perfectly correlated, as some states emphasize one or the other, and attention must be paid to the fact that some states change their relative position, moving up or down in the core/periphery hierarchy.  The thing which

distinguishes a capitalist world-economy from earlier world-systems is the extent to which states in the core rely on comparative advantage in production for the world market instead of politicalmilitary power.  This does not imply,however, that the normal or typical capitalist state is one which does not interfere with market exchange.  The laissezfaire state is, in fact, rather atypical, corresponding to those hegemonic core states who are big winners in the world market without needing to resort to strong mercantile interference, or small states greatly dependent on international exchange who do not have the option of exercising effective politicalmilitary influence.

     The rough correspondence between external state strength and relative status in the core/periphery hierarchy is a matter of definition for those who understand geopolitics to be the main arena of competition in the modern world-system.  It must be admitted that politicalmilitary competition is important, but if we seek to understand how the modern world-system differs from earlier world-systems we must examine the interaction between states and capitalist commodity production.

     The question of internal power is admittedly more complex than the question of external power.  I will argue that the form of the government, (whether it is constitutionally democratic, monarchical, or one or another form of centralized authoritarianism) is not simply related to the question of internal state power.  A democratically constituted state may be weak or strong vis--vis internal opposition groups, as may an authoritarian state.  And state strength vis--vis potential and/or actual internal opposition varies over time (relative to itself) in both core and the peripheral states, as do the formal constitutional forms taken by states and the composition of class alliances backing particular regimes.

     The question of the internal power of states is, like all discussions of power, both theoretically and empirically problematic.  Much of the recent literature focusing on states analyzes the "capacities" of the state toimplement policy decisions in specific realms of social, political, and economic activity (Skocpol, 1985).  This is a useful conceptualization of internal state power, but it needs to be clarified in several ways.  The quantity of various kinds of resources directly controlled by governmental agencies (assuming these can be quantitatively measured) needs to be compared with the resources available to internal groups that are prone to resist state policy.  And both the state itself and its contending oppositional groups need to be analyzed, not as monolithic, but in terms of the degree of united action versus competing or even conflicting subsections.  One important determinant of the power of a state visvis internal opposition is the degree to which state managers and state agencies support each others' actions.  Indeed, Arthur Stinchcombe has made this his definition of legitimacy (Stinchcombe, 1968:

chapter 4).

     It should be noted that it is a characteristic of the most successful hegemonic core states to be relatively decentralized in form.  Thus the Dutch Republic has been a confederation of provinces in which the central government has formally limited powers.  The United Kingdom of Great Britain is also a confederation which, in addition to its stable institutions of representative democracy and constitutional limitations on central state authority, confers a relatively large share of governmental authority to local jurisdictions.  The United States, similarly a relatively decentralized federation (though the power of the federal state has increased greatly over time), still does not

have a nationally directed education system or a serious public central institution for national economic planning.  The US shares with the other previous hegemons stable institutions of representative democracy at local, single state, and federal levels of government.    Peter Evans's discussion of transnational linkages and the economic roles of core and semiperipheral states suggests that core states often display internal weakness at the same time that they have external strength.  He argues this as follows:

          Presiding over an economy in which transnational capital is the dominant fraction of the "local" bourgeoisie inhibits the expansion of the state's domestic economic role in capital-exporting countries.  The interests of trans

          national capital coalesce with the geopolitical concerns of state elites around an "externally strong, internally weak" state apparatus.  The United States is the prime example, Britain and Switzerland provide supporting evidence. (Evans, 1985:217)


     Evans' usage applies best when we are considering processes such as those that occur in declining hegemonic core powers (see chapter 9).  It is then that capital exports become relatively great as domestic opportunities for profit contract.  In these states formerly convergent interests among different types of capital, and between capital and significantly large groups of core workers, show signs of increasing divergence.  No doubt the state becomes weaker (relative to itself at an earlier time) in such a situation as the coalition of interests behind the state becomes increasingly problematic.  But it would be inaccurate to characterize core states as typically internally weak relative to semiperipheral or peripheral states.  The power of a state as an organization really comes down to the amount of resources it can mobilize relative to the amount of resources which can be mobilized against it.  In core countries there are more total resources to be mobilized, and thus a state may need to mobilize great resources against an actual or potential internal challenge.  But decentralization and democratic political forms are not direct indications of state weakness.  In fact, these forms may help create legitimacy and consensus among significant supporters of a state, and thus undermine challenges and resistance to state authority.

     As implied by the above discussion, legitimacy is an important component of internal state strength.  Robert Philip Weber (1981) has demonstrated that there is an association over time in changes in the content of political rhetoric and the Kondratieff cycle.  Weber performed a content analysis of British Speeches from the Throne from 1795 to 1972 which reveals a 52year thematic cycle, and this closely corresponds to the Kwave.  Weber argues that this shows that problems of political legitimacy are linked to the contradictions produced by capitalist development.  Regardless of how this empirical relationship is explained, the finding confirms the existence of a connection between "internal" legitimacy processes and the long economic cycle of the worldsystem. 

     We normally think of autonomy and "sovereignty" as definitionally involved with state strength.  Sovereignty is a very problematic thing when we turn to a consideration of peripheral states.  The most extreme and obvious example of lack of sovereignty in the periphery is the formal colony, an extension of the state apparatus of a core power. Although such an apparatus may be very powerful vis--vis oppositional groups in the periphery, we would not consider it to be, in itself, an internally strong state.  It is likely to lack legitimacy, and it always lacks autonomy.  External and internal state strength are thus not completely independent from one another even at the level of definition.  Sovereignty vis--vis other states is a requirement for internal

strength as well as external strength because it would be nonsensical to characterize a comprador state or formal colony (whose very existence is guaranteed primarily by the forces of a core state) as being an internallystrong state.  Internal state strength must be defined in terms of those resources which are autonomously controlled by the particular state under consideration.  In practice this is a difficult distinction to make, but we must make it in order to distinguish colonies and comprador regimes from strong states.

     A related point, first outlined by Richard Tardanico (1978), is suggested by the conventional use in comparative research of government revenues or expenditures as measures of state strength.  While these are obviously direct measures of some of the resources commanded by a state, a better measure would be the amount of resources commanded by the state during a period in which state power is challenged.  Though the seventeenthcentury Dutch Republic had a fairly small regular budget, the stadtholder of Amsterdam could sell enough state bonds in a single visit to the Amsterdam securities market to fund the mobilization of the nation for effective war against its core state rivals (Barbour, 1963).  Similarly, British government revenues per capita (or per national income) were lower than the French revenues throughout the nineteenth century, except during years of war mobilization, when the British state resources suddenly jumped to a level much higher than that of the French state.  The relatively low level of per capita revenues, I would contend, does not signify that the British state was weaker than the French state during most years of the nineteenth century.  On the contrary, the ability of the British

state to mobilize greater resources when they were needed means that the state as an organization was probably internally stronger in Britain than was the French state in France.

     A strong state, then, is strongly supported by an alliance of capitalists which is itself unified and has relatively convergent interests, and is thesource of important resources.  There are analytically two elements here: the magnitude of resources, and the relative unity within and among classes.   Richard Rubinson (1978) has analyzed the political processes by which powerful coalitions among capitalists and landed property owners were forged to form a strong bloc behind upwardly mobile semiperipheral states in Germany and in the United States in the nineteenth century.  Although core states themselves vary in terms of the unity and magnitude of resources to which they have access, in both these regards they are usually in better shape than are peripheral states, which generally suffer from higher levels of political disarticulation as well as a scarcity of resources.

     An important difference between a capitalist state (which mainly provides order and other conditions for profitable commodity production and commerce) and precapitalist states (which directly engaged in the tributary mode of production in which political-military power was itself the main source of surplus appropriation) suggests reasons why a lowbudget state may be, at the same time, very powerful vis--vis both internal and external opposition.  Capitalists want effective and efficient states  that is, states which supply sufficient protection for successful capitalist accumulation at cost.  A state which does this will be strongly supported by groups with large resources, and yet these states may have relatively small bureaucracies and sparse budgets.

     The above arguments notwithstanding, most crossnational studies of internal state strength use some measure of the resources available to the government and compare this magnitude to some measure of the overall resources available in the country.  The most common measure is the ratio of government revenues to the GNP.  Most of this research has examined the causes of the relative growth of states and the effect of state strength on other variables(e.g. Rubinson, 1977b). A recent Ph.D. dissertation by SuHoon Lee (1986) demonstrates that growth in the extractive capacity of peripheral and semiperipheral states (revenues), their coercive capacity (the military), and their integrative capacity (mass education) are primarily the consequence of international interactions (such as involvement in interstate wars and the international market) rather than internal factors.  Cameron (1978) finds that the extractive capacity of core states is highly related to their degree of involvement with the international market.

     Here is some additional evidence which bears on the question of the internal strength of core and peripheral states.  Table 6.1 is taken from information contained in the World Bank's World Tables (1983).  This table shows the average levels of government consumption as a percentage of GDP for groups of countries from 1960 to 1981.  The country groups are composed by the World Bank.  In our terms, the 21 so-called "industrial market economies" correspond almost exactly with the core.  "Lowincome developing economies"  (those 43 countries with less than $405 GDP per capita in 1981) are all peripheral, while "middle income developing economies" includes 106 countries, both peripheral and semiperipheral.  So-called "East European non-market economies" and "high income oil exporters" are excluded from the above groups.2

--Table 6.1 About Here--

     The item, general government consumption, is defined as follows:

          General government consumption comprises all current expenditure for purchases of goods and services by government bodies:  that is, central, regional, and local governments; separately operated social security funds; and international authorities that exercise tax or governmental expenditure functions within the national territory.  It excludes outlays of public non-financial enterprises and public financial institutions.  The current expenditure of general government covers outlays for compensation of employees, purchases of goods (excluding the acquisition ofland and depreciable assets) and services from other sectors of the economy, military equipment, and other purchases from abroad.  Capital expenditure on national defense (except for civil defense) is treated as

          consumption, whereas all expenditure on capital formation (including civil defense) is included in gross domestic investment.  (World Bank, 1983 I:xi)


     Government consumption as a percentage of GDP is by no means the ideal measure of internal state strength.  It does not take account of the resources which would become available to a state in the face of an emergency, an important component of state strength suggested in the argument above.  Neither does it at all capture the dimension of unity (or disunity) among state agencies nor potential opposition groups, nor does it include certain capital expenditures (e.g. land purchases) or the expenditures of state-owned firms, which probably are indications of internal state strength.  Undoubtedly this measure is affected by differences in accounting procedures and other things which are unrelated to state strength.  It does, however, take roughly into account the magnitude of the economic resources normally available to states and weights this by the total value of final economic transactions in the society (GDP)  As such this ought to be a rough proxy (in cross-national comparison) for the normal extractive power of a state vis--vis its national society.

     Table 6.1 shows that the percentage of GDP attributable to government consumption has risen since 1960 in all groups.  This supports other research (Boli, 1980; Lee, 1986) which has demonstrated increases in state-formation in both the core and the periphery.  Of more relevance to the question of differential state strength, however, is the indication in table 6.1 of  considerable differences between zones of the world-system with regard to the extractive capacity of states.  The level of average extractive capacity amongcore states is significantly higher than that found in either middle or low income developing countries, and this difference continues over time despite the rise of each group.

     The differences between the low and middleincome groups indicate, with one exception, that semiperipheral states may be internally stronger than peripheral states.  This conclusion is uncertain however, because the group of middleincome countries includes both semiperipheral and peripheral countries.

A State-centric View of Exploitation

The recent literature which emphasizes the relative autonomy of state managers, and their inclination to expand the state bureaucracy and to organize stable and protected access to resources  to expand state power and control as far as they can  needs to be considered within a context of different modes of production. Charles Tilly (1985) has characterized modern nation-states as predatory accumulators on their own account, as legalized protection rackets operating to obtain the largest possible share of resources.  It is important to remember that, although there has been a trend toward the growth of states in both core and periphery, there still remain important differences between

the operation of states within a capitalist world-system and the operation of states within systems in which tribute-gathering is the main form of accumulation.  States within the contemporary world-system certainly have a tendency to expand their resources.  State managers often and regularly attempt to extend their power by finding or creating constituencies which allegedly need their services, and by expanding state access to resources.  But the objects of state policy and the continuing limitations on the use of state power need to be considered in the context of a world capitalist system.

     The expansion of core states has been analyzed by certain Marxists in terms of necessary correctives to contradictions produced by "monopoly capitalism."  Baran and Sweezy (1966) noted that the post-Korean war expansion of the US military budget to wartime levels, which created a permanent state-sponsored demand for important sectors of US private industry, was proportionally the same share of the US economy which was idle due to overcapacity before the outbreak of World War II.  James O'Conner's (1973) analysis of the fiscal crisis of the state extends this kind of thinking to the expansion of welfare services by the US state, arguing that the social contradictions of monopoly capitalism require ever larger state expenditures to subsidize the continuation of private accumulation.

     But O'Conner's work also contends that there are important limitations on the further expansion of state expenditures, and this idea of constraints is often neglected by state-centric analysts.  Contrary to the tone one often finds in the literature on the predatory expansiveness of state managers, there remain powerful forces which limit the tendency to state expansion.  Taxation has been resisted in all historical systems, but in a capitalist

system the ruling class itself lives primarily on profits from commodity production rather than tax revenues.  Tax payments constrain profit-making in many ways.  Taxes on capitalist firms raise the cost of products and reduce competitiveness, and thus profits.  Taxes paid by consumers lower the effective demand for commodities.  Thus, as Fred Block (1978) and many other analysts have pointed out, the very structure of capitalist accumulation limits states to activities which promote an atmosphere of "business confidence."

     States themselves are often major purchasers of products from the private sector, of course.  And, increasingly, modern states are themselves directlyentering into the production of commodities.  Bennett and Sharpe (1985:71) usefully summarize the differences between private and publicly owned firms.  Public firms may operate at a loss if there is sufficient political support to subsidize them.  But even state capitalism is eventually subjected to cost considerations emanating from competitive markets.  If states produce for export they must compete with foreign producers, and so cost considerations are important.  And, even when they produce only for their own monopolized domestic market, there are important constraints.  If they produce for a protected internal market the political costs of maintaining an internal monopoly vary with the disparity between the internal price and the world price.  Above a certain differential the costs of preventing smuggling, and/or illegal internal production, become exorbitant.  As long as the interstate system remains a competitive arena there is a tendency toward the "equalization of surplus profits" in which the political conditions for the maintenance of monopolies are subjected to a logic of cost efficiency.

     The historian of Venice, Frederic Lane (1979) has analyzed the inter

action between state power and the economic growth of firms in terms of the notion of "protection rent."  States, which he calls "violencecontrolling enterprises," are differentially successful in providing effective and efficient protection to merchants and commodity producers.  In the context of a competitive interstate system and an international pricesetting market, protection rent is an important component of the profits which are gained by firms.  Lane explains,

          An essential charge on any economic enterprise is the cost of its protection from disruption by violence.  Different enterprises competing in the same market often pay different costs of protection, perhaps as tariffs, or bribes, perhaps in some other form.  The difference between the protection costs forms one element in the income of theenterprise enjoying the lower protection cost.  This element in income I will call protection rent.  (Lane, 1979:1213, emphasis in the original).


Though Lane's notion has been applied primarily to "mercantilist" states, protection rent, and competition among states to provide relatively efficient protection for their international merchants and producers, continues to be an important constraint on state expenditures in the contemporary world-system because capital can migrate to where effective protection costs are lower.

     Of course, as William H. McNeill (1982) has argued, there is a contextual effect by which the level of expenditure of any single state will be justified in rising along with the general level.  McNeill contends that market-based industrialism and rapid innovations in military technology have, in the context of the continuation of an extremely competitive interstate system, created a virtual explosion (excuse the grim pun) of military expenditures.

     The expansion of states everywhere, and their increasing tendency to become directly involved in the process of economic development, may have somewhat weakened the constraints on state expenditures which emanate from the world market and the competition for investment capital, but these forces still remain important limitations on the expansion of state appropriation of resources.

     Raymond Duvall and John R. Freeman (1981) present an excellent theoretical analysis of state entrepreneurship in dependent capitalist states, mainly semiperipheral ones.  They make the important point that there is no such thing as "the capitalist state" in general.  The particular articulation of each state within the larger world-system must be taken into account in any theory of state economic policy.  Peter Evans's (1979) analysis of the Brazilian trip, the alliances, bargaining, and competition among statemanagers, local capitalists and transnational firms operating in Brazil, strongly supports the Duvall and Freeman contention that the role of the state in accumulation cannot be understood without attention to the particular insertion of each country in the larger system.

     It is extremely difficult for states to cut themselves off from the larger world-system and to create a closed internal economy, although many have tried.  The most successful in some respects are the large semi-peripheral

states, especially China and the Soviet Union, which have adopted state socialism.  Because of the actual or potential great size of internal demand and access to internal natural resources, these states have been able to directly use political power to mobilize internal industrialization.  They have been able to buffer themselves from world market forces and political-

military threats that tend to undercut autarchic industrialization. 

Mercantilist state power (la Friedrich List) was also used to protect infant industries from foreign competition in earlier successful industrializers 

England, the United States, Germany and Japan (Senghaas, 1985)  and state power has been very important in the recent industrialization of Brazil, Mexico, India, and of course South Korea and Singapore. 

     Contrary to the implications of Gershenkron's (1962) analysis, it is not only late industrializers that employ mercantilist protection and state intervention in order to foster capitalist accumulation.  Both England and the US, allegedly the models of laissezfaire industrialization, employed state power during crucial periods.  In England state intervention was used in the seventeenth and eighteenth centuries to reinforce enclosures of agricultural properties and to protect the woolen textile industry against Dutch

competition.  In Elizabethan England the government acted to constrain thebusinesses of foreign merchants in London in order to open up additional opportunities for domestic commercial and industrial interests.  The emergence of free trade ideology and policy occurred only after the initial successes, and were largely motivated by the desire of the new industrial capitalists to reduce the state-guaranteed prerogatives of the land-owning capitalists.

     Similarly the United States employed state power to protect capitalist development, contrary to the image of the laissezfaire state.  The anti-

imperial revolution against Britain set the stage for a series of political struggles over the use of state power.  State intervention occurred, for a long time, primarily at the level of the separate states rather than at the federal level (Lunday, 1980).  This involved state-sponsored infra-structural

development, the granting of commercial monopolies, and the regulation of land and water use.  Intervention at the federal level turned toward an increasingly mercantilist "American System" policy in a series of struggles and not a few setbacks, which were finally settled by the Civil War.  My own study of tariff politics in the US between 1812 and the Civil War shows, in this single policy terrain, how shifting coalitions of core capitalists, peripheral capitalists, farmers, and urban workers eventually led to the firm establishment of core capitalism in the United States (Chase-Dunn, 1980).

     It is obvious that some states are able to move upward in the core/periphery hierarchy.  These include Gershenkron's so-called late industrializers.  The world-system analysis of "national development" views these cases of upward mobility as exceptions against the background of the more frequent "development of underdevelopment."  This is not just a matter of vocabulary.  Discussions of the state and national development which focus only on the industrialization of national economies have difficulty accounting forthe phenomenon of a reproduced core/periphery hierarchy based on uneven development, with dependent industrialization occurring, but little or no reduction in the overall magnitude of world-system inequality.

     As Peter Evans and John Stephens (1987) have persuasively argued, state control and market freedom are not mutually incompatible alternatives. States increasingly act to both control markets and create them.  Indeed, the policies of states that successfully promote capitalist development are oriented, not

only to the efficient supply of social order, but also to the creation of structures which promote profitable enterprises.  State capitalism does not simply wait for entrepreneurs to succeed so that it can tax them.  It acts to create opportunities for entrepreneurs, and sometimes it takes on the entrepreneurial role itself.  Evans (1986) has analyzed the Brazilian creation of a domestic micro-computer industry by some state "technicos" who managed to create a constituency for themselves by spawning domestic computer-producing firms.  "Japan, Incorporated," the state-level organization of an entire nation's education system toward research and development of new products for the world market, is another example of the aggressive capitalist state.

     It is not simply a question of intervention versus the free operation of markets, but rather the goals and content of state policies.  It is undoubtedly true that economic intervention has increased and become much more sophisticated than when states imposed import and export tariffs primarily as a mechanism for raising revenues. But the larger point is that this kind of intervention is not precapitalist nor anti-capitalist, but is rather the normal operation of states within a capitalist mode of production.  The definition of capitalism as private business conducted in the context of a minimalist state was a mistaken representation produced by focusing on a core state (Britain) at the height of its hegemony, a rather atypical situation.

Peripheral and Semiperipheral States

Rather than focusing on the exceptional success stories, the upwardly mobile states, attention should be given to the more usual patterns revealed by the relative stability of the core/periphery hierarchy and its constraints on state action.  As many have argued, even core states are limited in terms of their possible actions by the fact of their interdependence in the larger world-

system.  Political-military conflicts and economic competition restrict the range of policies which a core state can adopt.  And of course, the longrun operation of the whole system conditions the kind of class structure, political institutions, etc. which we find "internal" to core states as well as

peripheral states (e.g. Walton, 1981).  Nevertheless, the room for manuever is considerably greater for core states than it is for peripheral states because their access to resources is relatively greater and less dependent on external forces or constrained by internal opposition.  The observation that peripheral capitalism relies more heavily on political coercion to maintain class relations and to accomplish production and distribution can be linked to an analysis of the organizational forms of states and regimes in the periphery.

     Marx's examination of "primitive accumulation" (Marx, 1967a:part 8) discusses the plunder and dispossession which occurred in the expansion of European hegemony.  In a sense capitalist accumulation was always, and still is, more "primitive" in the periphery.  Its reliance on political coercion is more than a passing phase which occurs during the creation of capitalist institutions.  The precapitalist world-empires utilized political coercion directly in the maintenance of master/slave or lord/serf relations.  Thegathering of tribute, taxes and rents was a relatively visible form of surplus appropriation compared to the more opaque form of exploitation in the

capitalist/proletarian relationship.  So peripheral capitalism does bear a greater similarity to precapitalist societies based on the tributary mode of production than does core capitalism.

     And yet it is misleading to conceptualize the developmental process we observe in peripheral areas as a separate precapitalist mode of production, or a period of transition to full capitalism.  These usages are more than merely semantic differences because a mode of production ought to be largely self-reproducing, and a period of transition should not last for centuries.  But peripheral capitalism, though it changes its form and, in some ways, does take on aspects of core capitalism (more proletarianization, more commodification, more state formation, more nation-building, etc.) never arrives at the destination of "advanced capitalism."  That is, the relative gap between the core and the periphery is reproduced, not eliminated (see chapter 12).

          Thus peripheral states do develop, just as the economy of the periphery does.  But they very rarely become core states.  Peripheral areas experience state formation.  Decolonization creates formal sovereignty.  The state arrogates greater powers over other social and political organizations such as tribes, village communities, ethnic and religious organizations, etc. The expansion of mass education performs the magical rituals of nationbuilding by producing and distributing national ideology and the political status of the citizen (Ramirez and Rubinson, 1979).

     And yet other features of peripheral states seem more reticent to "develop."  The literature on modernization and democracy argues that economic development is necessary in order to institutionalize a democratic polity. Yet, though there has been a good deal of industrialization in many peripheral and semiperipheral countries, this has not resulted in stable democratic government in most cases.

     If we want to analyze the possibilities and constraints of peripheral and semiperipheral states the first thing we must notice is that many of these states depend on core states, transnational banks, or core-based transnational firms for a significant share of their resources, and these forms of support come with certain explicit or implicit limitations on state action.  Bruce Moon's (1983) comparative study of the foreign policies of peripheral states demonstrates that patterns of voting in the UN can best be interpreted in terms of rather stable structures of core power domination based on the dependency of periheral states rather than in terms of a more flexible set of bargaining relationships.  And Nora Hamilton's (1982) study of Mexican social movements and the state in the 1930s shows the effects of changing core state policy on the limits of peripheral state action.  One of the biggest factors allowing a significantly populist and nationalist state action (the expropriation of USowned oil companies) by the Cardenas regime was the advent of Roosevelt's much more liberal policy toward Latin America.  Cardenas could never have gone so far if the US had maintained a hard line.

     Maurice Zeitlin's (1984) careful study of the class backgrounds of nineteenth century Chilean statesmen and the class forces behind two civil wars in Chile is intended as an antidote to a vulgar world-system theory in which the policies of peripheral states are determined by direct manipulation by core states or core-based capitalist firms.  Zeitlin effectively disproves earlier interpretations, which claimed that manipulations by British imperial agents defeated Jose Manuel Balmaceda's attempt to use Chilean state power tosupport a more autonomous type of economic development.  But his findings, supposedly demonstrating that local class struggles (rather than "external

factors") explain the failed "bourgeois revolution" of Balmaceda, actually reveal a clash of interests between two sets of peripheral capitalists: those vested in copper mines (who were suffering from declining prices and stiff foreign competition for export markets); and those rising producers of nitrate exports (who were enjoying grand profits). 

     Balmaceda's intended policy of state mobilization was supported primarily by the copper interests who wanted to tax the nitrate exporters in order to invest in infrastructure which would improve their position in the world market.  Yes, this is a class struggle explanation, but one in which the interests and actions of the important class fractions are heavily influenced by their points of insertion and varying fortunes in the world market.  The "rounds of accumulation" notion, which is useful in understanding regional uneven development in core areas (e.g. Smith, 1984), can be seen operating in the rise and fall of extractive and agriculture export products in peripheral areas.  These boom and bust sequences account for a great part of the political changes which occur in the periphery (Bunker, 1985).

     The world-system perspective also has implications for the nature of politics in semiperipheral states.  In addition to these states being relatively intermediate in terms of their levels of internal and external power, it is thought that the relative balance of peripheral and core types

of production within some semiperipheral states tends to create combinations of class interests and regime form which, it is argued, differentiate semi-

peripheral from both core and peripheral states.  A recent volume edited by

Giovanni Arrighi (1985) presents a collection of studies which examine the applicability of the semiperiphery concept for understanding twentiethcentury political changes and patterns of economic development in most of the countries of Southern Europe.

     These studies exhibit the many problems of trying to understand the particular histories of countries with a concept which has emerged from the attempt to describe and explain features and processes which appear when we focus on the world-system as a whole.  When we use a telescope we see different patterns than when we use a magnifying glass.  Nevertheless the studies are illuminating, not only because we learn a lot about the countries which are examined, but because the exercise clarifies some of the confusing aspects of the semiperiphery idea and some of the limits of its usefulness (see chapter 10).

Regime Form: Democracy and Authoritarianism

It is a common observation that, though both core and peripheral states exhibit authoritarian regime forms, this feature is much more frequently found in peripheral or semiperipheral states.   Kenneth Bollen (1983) presents a cross-national study of the relationship between world-system position and political democracy which demonstrates that both semiperipheral and peripheral states are less likely to have democratic regime forms than core states.  Bollen's findings also show that peripheral states are even more likely to be undemocratic than semiperipheral states (Bollen, 1983:table 2).  This striking larger pattern requires theoretical attention.

     There has been much recent study of peripheral and semiperipheral states, their organizational characteristics, and the ways in which the state is linked to the local class structure.  Michael Timberlake and Kirk Williams (1984) use cross-national data to examine the relationship between the levelof penetration by transnational firms, exclusion of non-elite groups from politics, and levels of repressiveness of peripheral and semiperipheral governments.  Their results show that dependence on foreign capital does not have a direct effect on government repressiveness, but it is associated with political exclusion, and affects repression indirectly through its effects on exclusion.  Thus, among peripheral and semiperipheral countries, it is those most dependent on foreign capital that are most likely to have authoritarian states. 

     Guillermo O'Donnell's (1978, 1979) analysis of bureaucratic

authoritarianism in the Southern Cone countries of South America examines the links between industrial phases of semiperipheral economic development, the emergence of strong demands from a large and active middle strata composed of formal sector workers and urban small businessmen, and the reactive emergence of an authoritarian regime.  The democratic institutions of Brazil and Argentina were utilized by politically aggressive "middle class" interests to press their demands upon the state apparatus.  It is the relatively developed countries in Latin America which have exhausted the importsubstitution process and have relatively large and active middle strata which are most likely to develop bureaucraticauthoritarianism.  The cyclical ups and downs of the world economy, interacting with different phases of national development, produce a political crisis.  According to O'Donnell bureaucraticauthoritarianism takes over when the military steps in to impose a technocratically legitimated order, allegedly representing the nation as a whole.  This occurs in reaction to the political crisis, and may be exacerbated by a downturn in the world economy requiring fiscal austerity measures.

     Clive Thomas (1984) has examined the authoritarianism of more recently decolonized peripheral states in Africa and the Caribbean.  Thomas focuses on states in which the middle class of business entrepreneurs and the class of urban formal sector workers are miniscule or absent.  In these peripheral states, Thomas argues, authoritarianism is a consequence of the absence of opportunities in the local economy.  Political forms of exploitation

articulated through the state apparatus are virtually the only game around, and so fierce competition over control of the state undercuts the emergence and maintenance of democratic institutions.  Regimes tend to form around an authoritarian one-party state.

     When we compare the analysis by O'Donnell with that of Thomas the first things that strike the eye are the important differences between the semiperipheral Southern Cone countries with their relatively developed national economies and significant middle classes, and the more peripheral Caribbean and African states with their small urban sectors.  O'Donnell's arguments for the emergence and reproduction of authoritarian regimes are based on completely different (and opposite) causes from those of Thomas.  For O'Donnell it is the large middleclass groups and urban workers clamoring for shares of the pie which reactively stimulates bureaucratic-authoritarian regimes, while for Thomas it is the absence of these groups which results in authoritarian regimes.

     While these explanations may seem to be at odds, they are easily reconciled if we employ two explanations suggested by the literature which compares regime types.  A recent review of this literature by Peter Evans and John Stephens (1988) suggests a useful synthesis of the approach suggested by

Barrington Moore's (1966) study of democracy and dictatorship and recentMarxist analyses which focus on the organizational power of the urban working class.3  Moore's analysis focuses on the agrarian class structure to explain differences in regimes.  He argues that those countries in which large agricultural landowners formed a significant political block tended to prevent the emergence of democratic state structures or to break down democratic regimes which had emerged.  On the other hand, in countries where the landowners were either too few to be politically important or the agrarian class structure was composed mostly of peasant freeholders, the emergence of an industrial urban working class was able to create and sustain a democratic regime.  It is necessary to examine the stability of democracy as well as its existence at any point in time.  The historical studies of European states which examine their political histories over long periods of time are most useful for comparisons with contemporary peripheral and semiperipheral states.  John Stephens's (1987) most recent study, which finds considerable support for Moore's thesis by comparing European states, is exemplary in this regard.

     The class power approach is complementary with Moore's approach in that it focuses on the organizational power of the urban working class.  Crudely stated, industrialization expands the urban working class, which engages in

class struggle, building strong autonomous political organizations (unions and parties) which exert power on the state to extend citizenship rights and welfare rights.  This is, of course, a restatement in Marxist terms of

T. H. Marshall's (1965) thesis.

     The relative size of the urban working class and middle stratum is known to vary with the level of national industrialization and the position of each country in the core/periphery hierarchy.  When we add this to Moore's focus on agrarian class structure we provide a fairly powerful account of why corestates have more stable democracies than peripheral and semiperipheral states.  Of course, this does not explain every case, and it does not explain why these differences persist despite the increasing industrialization of the periphery and semiperiphery.

     Evans and Stephens (1988) add two other factors.  They argue that late industrialization is more capitalintensive and thus creates a relatively smaller industrial working class, and this weakens the association between industrialization and democracy.  Also they argue that state strength and democracy are inversely related, contrary to the argument I have made above.  In support of this last contention they interpret Mouzelis's (1986) study of semiperipheral oscillation between populism and authoritarianism (see below) as the consequence of a precociously overdeveloped state apparatus.  Similarly they attribute the authoritarian nature of the East Asian NICs to their relatively strong and interventionist state apparati.  And conversely, they characterize the formerly British Caribbean states (the same ones analyzed by Thomas as authoritarian) as being democratic because of the weakness of the military and state apparatus inherited from British colonialism.

     The contention that state strength is inversely related to the stability of democratic regimes is another instance of the confusion (discussed above) of state strength with authoritarianism.  I argued above that democratic states are more likely to be internally strong than authoritarian ones.  I know of no cross-national comparative research which has directly addressed this question. The easiest empirical test is the relationship between government revenues per capita (or per GNP) and regime form.  This would not completely answer the question because of the problem mentioned above  there is a potential discrepancy between the actual amount of resources a stateobtains through taxation and the amount it might obtain from supporters if its power were challenged.  Even so I would guess that the correlation between this somewhat faulty proxy for internal state strength and authoritarianism would be negative in cross-national comparison.

     Some support for this surmise is had from the study by Thomas, Ramirez, Meyer and Gobalet (1973:table 11.3).  They demonstrate that the level of economic development has a negative effect over time on the centralization of the party system and the likelihood of having a military regime.  If internal state strength is associated with the level of economic development (as indicated by my table 6.1), then it is likely that authoritarian regimes are associated with (and perhaps caused by) weaker states, not stronger ones.

     To the agrarian class relations and working class power explanations we can also add some other features which come from our analysis of the capitalist world-system.  We have already mentioned the world-wide long business cycle (Kwave) which affects political developments in all states.  There are several major forces operating which, in combination, account for the overall core/periphery differences in regime form.  All states are more likely to take an authoritarian form when they are significantly threatened by internal or external opposition. Thus authoritarianism is a sign of weakness, not of strength.  This applies to both core and peripheral states.  Most analyses of fascism understand it as a reactive response to strong opposition from the Left.  Socialist states are thought to move toward authoritarianism as a result of both internal opposition and threats from foreign capitalist states. 

Political and economic crises in the core and in the periphery tend to evoke a rise in centralization and authoritarian actions by states.  Even the strongly institutionalized core democracies do this during time of war, and recentpolitical commentary from the Trilateral Commission has suggested that democracy in the core may have to be tightened up as the increasing "cacophony of equity demands" produce an "ungovernable" situation (Wolfe, 1980).

     Against this tendency for states to become more authoritarian in the face of increasing opposition is an opposing tendency which affects all states in the capitalist world-economy (but not equally).  This is the tendency for capitalism to structurally sustain a political ideology of egalitarianism.  Commodity production and markets assume that buyers and sellers have equal political standing, and the process of the commodification of labor-power supports an ideology in which both capitalists and workers are defined as equal citizens freely exchanging labor for wages.  These institutional supports for democratic ideology exert pressure on states to adopt a form of government based on legitimation from below, from the "people" or citizens.  Rather than states as agents of God, most modern states are constitutionally defined as agents of the people.  This institutional push on modern states stems from the process of commodification.  It has resulted in the nearly worldwide shift from legitimation based on the divine right of kings to legitimation based on the consent of the governed.  Authoritarianism is, of course, contrary to democratic ideology, but most contemporary forms of authoritarianism are defined as temporary and necessary exercises, rather than the restoration of legitimation from above.4

     The ideological pressure toward democratization affects the core and the periphery to different extents precisely because commodification is more complete in the core than in the periphery.  This partly explains core/

periphery differences in both the degree and the form of authoritarianism.  Not only are authoritarian regimes more common in the periphery, but some of theseare legitimated by traditional hierarchical ideologies.  The world's few really powerful remaining monarchs are in Saudi Arabia, Thailand, and Nepal.  But equally important as a cause of the core/periphery correlation with democracy and authoritarianism are the differences in both internal and external state strength.  The relative weakness of peripheral states means that they are more likely to confront strong opposition and to face crisis situations.

      Recent studies demonstrate that peripheral states in which the majority of citizens are freeholding peasants have difficulty enforcing policies and appropriating resources when peasants are opposed (Hyden, 1980).  Stephen Bunker (1983) has shown that it is not really land tenure as such, but rather the combination of local effective control of land use with the production of export crops on which state development plans depend. This is a crucial combination that allows local oppositional groups to effectively resist the peripheral state.  These and many other possible combinations which create openings for either state autonomy or effective local resistance may account for a good deal of the variation in state strength, and thus affect the tendency to form an authoritarian regime. 

     In addition to the ideological effect which commodification has on politics, there is another connection between core capitalism and democracy.  It is an interesting fact that all the hegemonic core powers, both citystates and nation-states, which have been analyzed as hegemonic centers of the European capitalist world-economy by Braudel (1984) have been republics or  federations, or both.  This could be explained by the ideological connection with commodity production, but it may also be due to the need for a hegemonic core state to have a responsive state apparatus which can adjust quickly to changing needs for appropriate state policy in a rapidly changing world marketand geopolitical environment.  If this sounds too functionalist, run it the other way.  Those core states that happen to have such a democratic, pluralist regime are better able, in combination with other necessary ingredients, to take on the role of a hegemon in a worldsystem in which commodity production is an important form of competition.  Thus Venice, Antwerp, Genoa, Amsterdam, London, and New York were (are) world cities in states which are relatively democratic, or at least pluralistic, compared to the states with which they were (are) in competition.

     This factor does not contradict Moore's analysis because none of these states, save England, had a significantly powerful landed aristocracy to sustain a centralized monarchy.  The citystates, as Braudel says, had the

advantage of leaving primary production to others.  Amsterdam struggled with the land-based House of Orange, but this did not much interfere with the mercantile use of the Dutch state.  Indeed, this was part of what made it a strong nation-state with an important internal market.  The English landed aristocracy was itself heavily involved in both agricultural and urban capitalism, and played an important and complementary role in geopolitics.

     The matter of working class power must be reinterpreted, but not discarded.  It is not so much a matter of the industrial revolution la the factory system creating an industrial proletariat as usually conceived.  Many

of these core powers did contain a significant industrial and productive sector which facilitated their centrality in the expanding world market, but in addition to this, the fact of being at the center of a world-system, with higher rates of profit and more opportunities for "clean" work, made class struggle a less contentious matter than it was in other areas (see chapters 10 and 11).  This extension of Lenin's aristocracy of labor thesis back in timeadds a consideration to the explanation of regime form which is not suggested by analyses which focus only on national development and ignore the core/

periphery hierarchy.

     Wallerstein suggests that the internal strength and spatial scope of state power is an important difference between semiperipheral and peripheral areas.  Evans (1979) analyzes the strengthening of the semiperipheral Brazilian state after the military coup of 1964, and the way in which the state

effectively mediated bargaining between transnational firms and national capitalists.  Evans notes that the effectiveness and autonomy of the authoritarian Brazilian state varied across different sectors of the economy depending upon the production and market characteristics of different

industries.  Bunker (1985:chapter 4) shows that the Brazilian state's autonomy was quite limited when it attempted to regulate an internal extractive periphery, the Amazon region.

     O'Donnell's (1978, 1979) work on bureaucratic authoritarianism contends that the semiperipheral states in South America have been quite effective in regulating their national economies, and have demonstrated a high degree of autonomy vis--vis both internal private power groups and transnational firms.  The recent reversion of these same states back toward populist and democratic

constitutional forms supports the idea that they are relatively strong states, at least if my argument about the relationship between regime form and state strength is correct.  Portes and Kincaid (1985) have argued that the recent shift back toward democratic forms in Argentina and Uruguay resulted from a "crisis of authoritarianism" in which the economic policies of the authoritarian regimes were exhausted and largely ineffective, and the level of opposition had risen high enough to promote a return to democratic government, albeit under difficult economic and political conditions.5 

     Nicos Mouzelis (1986) has explicated a theory of semiperipheral politics which accounts for an apparent long-run cyclical swing between authoritarian and populist regimes based on the contradictory tendencies of dependent capitalist development.  Mouzelis applies his theory to interpret the political history of Greece since World War II, but it is intended for wider application as well.  His explanation is based on the idea that semiperipheral states differ most significantly from both core and periphery because they have a relatively large "modern" capitalist sector which is nevertheless strongly linked with the reproduction of a more traditional sector of petty commodity producers.  Mouzelis argues that the late development of industrial capitalism in the semiperiphery, which followed rather than preceded the political shift from oligarchic patrimonial to bourgeois state forms, created a contradictory situation in which "civil society" (especially autonomous trade unions) is weak, and thus the state shifts back and forth between populist and

authoritarian regimes depending on the shortrun successes or failures of particular development schemes, and ups and downs in the world market.

     This explanation differs from that of O'Donnell in two ways.  First it tries to explain semiperipheral politics in longrun structural terms rather than focusing on the details of particular conjunctures.  Secondly, Mouzelis and O'Donnell differ in their portrayals of the strength or weakness of "civil society."  O'Donnell claims that it is the middleclass groups demanding more from the state which precipitate authoritarianism, while for Mouzelis it is the lack of strong and supportive middleclass organizations which underlies the instability of democracy.  Of course both could be correct if there is a nonlinear relationship between middleclass strength and authoritarian regimes.  A middle class may be strong enough to press political demands, but not sufficiently strong to resist the opposition which such demands engender.

     The growing scale of economic production has stimulated greater involvement of states in the economy and the increasingly frequent use of the ideology of corporatism.  As local economic circuits become more completely integrated into national and international networks, states come to be the only organizations which are large enough to exert leverage in the economy.  Corporatist ideology, the notion of an interclass organic unity of interest which is mediated by the state, takes many forms.  In semiperipheral countries both the bureaucratic-authoritarian and populist-democratic regimes have utilized corporatist ideology.

     Some of the apparently contradictory implications of case studies of particular states with the analysis of states located in the core/periphery hierarchy may result from confusion between different types of comparison.  Many case studies compare a state to itself at an earlier point in time, whereas world-system studies most often compare states to one another.  Thus a state may indeed gain in internal strength relative to itself, as Evans and O'Donnell have claimed for Brazil, but not much change its level of internal strength compared to other states.  Another possible example of this is Evans's "externally strong, internally weak" characterization of core states which export a lot of capital (see page 177 above).  There is considerable evidence that all states are increasing their powers vis--vis internal opposition, but that core/periphery differences in internal state strength are not changing.  This contention is supported by Table 6.1 and other findings.  John Boli has shown that state authority vis--vis other groups in society, as formalized innational constitutions, has increased since 1870 in core, semiperipheral and peripheral states (Boli, 1979:table 13.5).  Thomas, et al. (1979) show that the centralization of regimes has increased in peripheral and semiperipheral regions since 1950, but this has not occurred in core countries, which remain much less centralized and exhibit no trend (Thomas, et al. 1979:figure 11.2).

     To summarize, I have argued that core states are stronger internally and externally than peripheral states, and they are more democratic.  These features of states are thought to result from a combination of several world-system processes interacting with nation-building, state formation, and class struggles.  Only further comparative research can place weights on

these various factors and settle matters of controversy.  The matter of internal state strength needs further conceptual clarification and empirical operationalization, as does the relationship between state strength and regime form.  For now we have established for certain that important characteristics of states are associated with their position in the larger world-system.  Let us now turn to the analysis of a larger structure, the interstate system which is composed of these contending and unequally powerful states.


Chapter 7: Geopolitics and Capitalism: One Logic or Two?


As we have seen in previous chapters, the focus on the world-system has raised anew the issue of the relationship between economic and political processes in the capitalist mode of production.  This has coincided with a new emphasis on the autonomy of political processes by neo-Marxists seeking to correct the overemphasis on economic determinism in earlier Marxist analyses.1  While focusing most directly on the capitalist state and class relations within the core of the world-system, Nicos Poulantzas (1973) and Perry Anderson (1974) have stressed the autonomy of political processes and the "relative autonomy" of state managers from determination by capitalist class interests.2  This emphasis on the autonomy of politics, long central among political scientists, has been extended to a critique of the alleged "economism" of the world-system perspective.  At the international level this critique argues that geopolitics is an autonomous game in its own right which can be understood separately from an analysis of world economic structures.  Theda Skocpol (1977, 1979) is the neo-Weberian sociologist who has most explicitly made this argument, but it has also been made by several political scientists who share a state-centric approach to social science, e.g. George Modelski (1978), Aristide Zolberg (1981), and Kenneth Waltz (1979).

     All these authors claim that Immanuel Wallerstein has reduced the operation of the "international" system to a consequence of the process of capitalist accumulation.  Indeed some have contended that geopolitics and

state-building are themselves the main motors of the modern world-system (e.g. Winckler, 1979; Gilpin, 1981).  Here I will argue that the capitalist mode of production exhibits a single logic in which both political-military power and the appropriation of surplus value through production of commodities for sale on the world market play an integrated role.  This chapter discusses a metatheoretical issue, and presents an argument about the interdependence of the interstate system and the capital accumulation process.

     First I will present a case for a change in terminology.  The world-system scholars of the Braudel Center have employed the term "interstate system" in their discussions of geopolitics.  The term most frequently used by other students of geopolitics is "international system."  The units which compose the system I wish to focus upon are states, not nations.  In addition to nation-states, in which the state encompasses and represents a single "nation" (in the sense of a national community of culture-sharing people) there are modern states which represent only part of a nation (e.g. South Korea) and other states which rule over several nations.  The phenomenon of nations and the processes of nation-building are certainly related to states and the interstate system, but this important distinction ought not to be confused by our terminology.  Interstate system refers exclusively to the relations (economic, political, social, and military) among the formal organizations which monopolize legitimate violence within a specified territory.  Interstate systems as entities themselves vary historically as to the kinds of states which compose them, the relative distribution of power among states within them, and the nature of the institutions which regulate relations among the states.  In this chapter we are focusing on a particular interstate system, the one which emerged in Europe in the long sixteenth century, and which has subsequently spread to encompass the earth.3

A Metatheoretical Issue

In this chapter, rather than arguing at a metatheoretical level about economics, politics, and political economy in general, I shall ground the

discussion in the particular processes which have been operating in the capitalist world-economy since the sixteenth century.  But before I advance arguments for my contention that the interstate system and the capitalist accumulation process are part of the same interactive socio-economic logic I would like to briefly discuss a metatheoretical problem raised by this issue.

     In order to know whether it is most elegant to conceive of capitalism as a singular process which incorporates both economic and political dynamics, or, on the other hand, if it is more powerful to emphasize the autonomy of these processes, we should be able to specify formally and compare a unified theory with a theory which posits spearate economic and political subsystems. 

     Ideally these two theories should have different implications for concrete social change, and for our understanding of the dialectical transformation of capitalism into a qualitatively different system.  Unfortunately my argument here does not proceed at this level of theoretical clarity.  Rather I only adduce a case for the superiority of a unified theory.  But it is important to cast this argument in the context of the attempt to develop the world-system perspective into a formalized theory of capitalist development.

     Why have most of the theorists who focus on politics tended to adopt a narrowly historicist approach to capitalist development?  Marx made a broad distinction between the growth of the forces of production (technology) which occurs in the capital accumulation process, and the reorganization of social relations of production (class relations, forms of property, and other institutions which structure exploitation and the accumulation process). Samir Amin (1980a) has applied this broad distinction to the world-system.  The widening of the world market and the deepening of commodity production to moreand more spheres of life has occurred in conjunction with a series of 40 to 60 year business cycles, the Kwave.  The Kwave is associated with "noneconomic" political events such as wars, revolutions, etc.  This has caused some economists (e.g. Adelman, 1965) to argue that long waves are not really economic cycles at all, but are set off by "exogenous" political events.

     The causal links between wars, revolutions and long business cycles are not precisely understood despite a vast literature on Kwaves (see Barr, 1979), but Amin (1980a) and Mandel (1980) have made the insightful argument that the accumulation process expands within a certain political framework to the point where that framework is no longer adequate to the scale of world commodity production and distribution.  Thus world wars and the rise and fall of hegemonic core powers can be understood as the violent reorganization of production relations on a world scale which allows the accumulation process to adjust to its own contradictions and to begin again on a reorganized political foundation.  Political relations among core powers and the colonial empires which are the formal political structure of core/periphery relations are reorganized in a way which allows the increasing internationalization of capitalist production and the spatial shifts which accompany uneven development.  The observation that capitalism has always been "international" (and transnational) does not contradict the existence of a longrun increase in the proportion of all production decisions and commodity chains which cross state boundaries  the upward secular trend of the transnationalization of capital.

     The above discussion does not establish causal priority between accumulation and political reorganization.  But it implies that these are truly interdependent processes.  The tendency to a narrowly historicist approach on the part of those who focus on political events may be due to the low predictability of politics and the apparently more direct involvement of human collective rationality in political action.  On the other hand, the over emphasis on determinism and mechanical models on the part of those who focus exclusively on economic processes may be due to the greater regularity of these phenomena and their law-like aggregation of many individual wills seemingly independent of collective intentions.

     These perceptions are correct to a considerable extent precisely because capitalism as a system mystifies the social nature of investment decisions by separating the calculation of profit to the enterprise from the calculation of more general social needs.  Anti-capitalist movements have tried to reintegrate economics and politics in practice, but up to now, the expanding scale of the commodity economy has evaded them.  The interaction of the world economy and the interstate system is fundamental to an understanding of capitalist development and also to its potential transformation into a more collectively rational system.  Neither mechanical determinism nor narrow historicism is useful in this project.

States as Production Relations

The critiques of Wallerstein's work mentioned above contain implicit assumptions about the nature of capitalism which tend to conceptualize it as an exclusively "economic" process.  Skocpol (1979:22) formulates the issue by

arguing that Wallerstein "assumes that individual nation-states are instruments used by economically dominant groups to pursue world-market oriented development at home and international economic advantages abroad."  She continues, explaining her own position:

          but a different perspective is adopted here, one which holds that nation-states are, more fundamentally, organizations geared to maintain control of home territories and populations and to undertake actual or potential militarycompetition with other states in the international system.  The international states system as a transnational structure of military competition was not originally created by capitalism.  Throughout modern world history, it represents an analytically autonomous level of transnational reality  interdependent in its structure and dynamics with world capitalism, but not reducible to it, (Emphasis in the original).


     Modelski (1978) and Zolberg (1981) argue even more strongly for the autonomy of the interstate system in opposition to what they see as Wallerstein's economic reductionism.  These authors raise the important question about the extent to which it is theoretically valuable to conceptualize economic and political processes as independent subsystems, but in so doing they over-simplify Wallerstein's perspective.

     Wallerstein's work suggests a reconceptualization of the capitalist mode of production itself such that references to capitalism do not point simply to market-oriented strategies for accumulating surplus value.  According to Wallerstein the capitalist mode of production is a system in which groups pursue both political-military goals and profit-making strategies, and the winners are those who effectively combine the two.  Thus the interstate system, state-building, and geopolitics are the political side of the capitalist mode of production.

     As discussed in chapter 1, Wallerstein argues that a mode of production is a feature of a whole world-system, not of parts or subunits.  His distinction between world-economies and world-empires as different types of world-systems emphasizes important structural differences in formal political organization across economic networks.  In Wallerstein's view it is very important that modern capitalism became dominant in the context of an interstate system of competing states.  This view is shared by many other analysts of the rise ofthe West, who focus on the decentralized features of European feudalism which were conducive to the emergence of a strong commodity-producing economy.  In the more centralized world-empires the logic of the tributary mode of production was able to fend off the emergence of capitalism.

     Max Weber was most explicit about the connection betwen capitalism and the competitive interstate system.  Inspired by Leopold von Ranke's study of early European states4 (von Ranke, 1887; see Weber, 1978:354) Weber added the interstate system to his list of necessary structural conditions for the emergence and reproduction of modern capitalism (see Collins, 1986:chapter 2).  After mentioning in his General Economic History (Weber, 1981:337) that the European states were "competing national states in a condition of perpetual struggle for power in peace or war," Weber continues:

          This competitive struggle created the largest opportunities for modern western capitalism.  The separate states had to compete for mobile capital, which dictated to them the conditions under which it would assist them to power.  Out of this alliance of the state with capital, dictated by necessity, arose the national citizen class, the bourgeoisie in the modern sense of the word.  Hence it is the closed national state which afforded to capitalism its chance for development  and as long as the national state does not give place to a world empire capitalism also will endure.


In Economy and Society Weber elaborates:


          "Finally, at the beginning of modern history, the various countries engaged in the struggle for power needed ever more capital for political reasons and because of the expanding money economy.  This resulted in that memorable alliance between the rising states and the sought-after and privileged capitalist powers that was a major factor in creating modern capitalism and fully justifies the designation "mercantilist" for the policies of that epoch.  ....At any rate, from that time dates that European competitive struggle between large, approximately equal and purely political structures which has had such a global impact.  It is well known that this political competition has remained one of the most important motives of the capitalist protectionism that emerged then and todaycontinues in different forms.  Neither the trade nor the monetary policies of the modern states  those policies most closely linked to the central interests of the present economic system  can be understood without this peculiar political competition and "equilibrium" among the European states during the last five hundred years  a phenomenon which Ranke recognized in his first work as the world-

          historical distinctiveness of this era. (1978:3534)


To this I can only add that the neoWeberians ought to pay more attention to Weber.

     Some Marxists, such as Colin Barker (1978) also recognize that the political basis of capitalism is not the state but the interstate system.  Particular states vary in their emphasis on politicomilitary aggrandizement or free market accumulating depending, in part, on their position in the larger system.  And the system as a whole alternates between periods in which there is greater emphasis on competition based on state power versus periods in which a relatively freer world market of price competition comes to the fore (see chapter 13).

     Core states with a clear competitive advantage in production are usually the most enthusiastic advocates of free trade.  And, similarly, peripheral states under the control of peripheral capitalist producers of low wage goods

for export to the core usually support the "open economy" of free international exchange.  As Stephen Krasner (1976) points out, smaller core states heavily dependent on international trade also tend to support a liberal economic order.  Semiperipheral states and larger second tier core states contending for hegemony utilize tariff protectionism and mercantilist monopoly to protect and expand their access to world surplus value.  Periods of rapid world-wide economic growth are generally characterized by a relatively unobstructed world market of commodity exchange as the interests of consumers in low prices come to outweigh the interests of producers in protection (ChaseDunn, 1980).  Inperiods of stagnation protectionism is more frequently utilized to protect shares of the diminishing pie.

     According to the model proposed in chapter 1, the capitalist mode of production includes both commodity producers employing wage labor in the core areas and coerced labor in the peripheral areas.  Peripheral areas are not seen as "precapitalist" but rather as integrated, exploited and essential parts of the larger system.  Capitalist production relations, in this view, are not limited to wage labor (which is nevertheless understood to be very important to the expanded reproduction of the core areas) but rather production relations are composed of the articulation of wage labor with coerced labor in the periphery.  This articulation is accomplished not only by the world market exchange of commodities, but also by the forms of political coercion which the core powers often exercise over peripheral areas.  The direct and indirect use of political-military power by core states is emphasized by James Petras (1981) as the most central way in which imperialism operates to constrain political action in peripheral areas.  Petras's research clearly reveals the operation of this kind of coercive power, and its importance is without doubt.  Albert Bergesen (1983) in combating charges that the world-system perspective is "circulationist" (i.e. a theory based on relations of exchange rather than class relations of production) has emphasized the importance of colonialism, core ownership, and other direct forms of control. 

     The states, and the system of competing states, which compose the

world polity, constitute the basic structural support for capitalist production relations.  Marx saw that the state stood behind the opaque exploitation of wage labor by capital in nineteenthcentury England.  The much more direct and obvious involvement of the state in the extraction of peripheral surplus valuefrom slave labor or serf labor was another important way in which the state was essential to production relations.  And this kind of direct political coercion over labor continues to operate under different forms within the contemporary periphery, and in core/periphery relations.  The power of core states rein

forces the commodified capital/wage labor relationship in the core, the coerced labor extraction in the periphery, and the extra-economic forms of exploitation between the core and the periphery.  This constitutes the basis of production relations for the capitalist system. 

     States are the organizations which are often utilized by the classes that control them to help appropriate shares of the world surplus value.  Market forces are either reinforced or regulated depending on the world market position of the classes controlling a particular state.  When I say "classes that control the state" I am including state managers.  I am not a vulgar instrumentalist arguing that the state is simply the executive committee of the bourgeoisie.  The extent to which business interests directly control a state

apparatus versus a situation in which state managers successfully achieve a certain autonomy by balancing off different economic interests is an important variable characteristic of states. 

     Richard Rubinson (1978) has made the important point that state managers are most capable of effectively pursing a policy of national development and upward mobility in the world-system when there is a considerable convergence of political interests within the dominant class in a nation.  This clarifies an issue which is posed by the "relative autonomy" theorists, who ask whether or not the state represents the "general interests" of capital.  As Barker (1978) reminds us, the world capitalist class exhibits a high degree of interclass competition and conflict.  There is no single world capitalist state torepresent the interests of capital as a whole, so the various national states represent the interests of subgroups of capital.  The extent to which they do this effectively depends on the degree to which the interests of the subgroups within a state converge or diverge as a consequence of their market position and options within the larger world economy.  Fred Block (1978) reminds us that state managers are often able to expand the capabilities of the state in response to the demands of workers and peasants, and thus states not only come to institutionalize the interests of capitalists, but also, especially in the core, they take on redistributive functions which benefit workers. 

     Both political organizations and economic producers are subjected to a longrun "competing down" process in the capitalist world-economy, whereas in the ancient empires the monopoly of violence held by a single center minimized both market and political competition between different organizational forms.  This accounts for the much more rapid transformation of both production

technology and political organization by capitalism.  State structures themselves are submitted to a political version of the "competing down" process which subjects firms to price competition in the realm of the market.  Inefficient state structures, ones that tax their citizens too heavily or do not spend their revenues in ways which facilitate political-economic competition in the world-economy, lose the struggle for domination.  In Marxist theoretical terms, the interstate system produces an equalization of surplus profits, the profits which return due to the use of political power to enforce local monopolies.  There are no corewide monopolies.  Even the largest organizations (both states and firms) are subjected to the pressures of political-economic competition.

The Emergence of Capitalism and the Interstate System

It has been pointed out by Zolberg (1981) and many others (Ekholm and Friedman, 1982) that not all precapitalist world-systems were world-empires. 

Wallerstein's discussion implies that earlier world-economies were short-

lived, tending to either dissolve into economically delinked local systems or to experience empire formation.  But Ekholm and Friedman (1982) have

noted that many ancient world-systems had interstate systems which were quite stable in the sense that a balance of power mechanism operated to prevent empire formation for rather long periods.  Their most important example is the Sumerian world-economy of city-states, but others have described rather stable interstate systems in ancient China (Walker, 1953) and ancient India (Modelski, 1964).

     The fact that there have been long-lived interstate systems prior to the emergence of the European world-economy raises the question of whether or not these were structurally or behaviorally different.  Clearly the normative rules of diplomacy were different (see Modelski, 1964), but it is unclear if these are important determinants of the dynamics of an interstate system.  A comparative study of interstate systems which employs a world-system perspective could perhaps answer this question, but such a study has not yet been done (see Chase-Dunn, 1986).  My guess is that the most important difference between ancient and modern interstate systems is the nature of the competition among states, and therefore the substantive content of state policies.  The modern interstate system is composed mostly of states which are significantly controlled by capitalists, which means that the goals of market protection and expansion constitute a larger proportion of state action than in precapitalist interstate systems.  This characteristic probably also leads to other differences. It is likely that threatened hegemons in ancient interstate systems engaged in a policy of empire-formation, while in the capitalist world-economy this does not happen.

     Feudalism is another type of precapitalist system which is not a world-empire.  Zolberg (1981) is correct to point out that classical European feudalism (i.e. around the ninth century) was not a world-empire, but additionally it was a very strange kind of world-system.  As a devolved residue of the Roman world-empire classical European feudalism was characterized by a regional political and cultural matrix organized across an economy which was almost completely delinked into self-subsistent manors.  The medieval states were so weak that in most places most of the time the lord of each manor constituted a mini-state.  Anderson (1974a) and many others have pointed out that it was the "parcellization of sovereignty" within this very decentralized system which allowed the capitalist mode of production to expand in institutional interstices, and to begin to dominate exchange, production, and politics.

     The growth of commodity production for both local, urban/rural, and long distance exchange was stimulated by the limitations of the manorial economy and the opportunities for profit-making presented by a system which had little regional political ability to regulate production and exchange.  The constitution of cities as relatively autonomous elements within the segmented matrix of manors enabled merchants and artisans to obtain "state power" within a jurisdiction (the medieval city) which could then be used to legitimate and militarily back capitalist exchange and production.  The fact that successful cities soon tried to protect their market advantages with politically-guaranteed monopolies simply drove the market economy to expand elsewhere and to increase its spatial dimensions.  This process of capitalist urban growthalso spurred the strengthening of the nation-state, as kings were able to gain resources from capitalists to use against recalcitrant local lords.  Thus the nation-states and the European interstate system came into existence.  It was the dynamic of mercantile and commodity production competition between both state and private enterprises in the long sixteenth century, together with the emergence of a core/periphery hierarchy, which led Wallerstein to argue that the capitalist world-system was then born.

     Anderson (1974b) insists that absolutism, the formation of strong centralized monarchies, was primarily an expression of feudal reorganization in the face of the crisis of feudalism in Western Europe.  In Eastern Europe, according to Anderson, state-formation was a response to the formation of a

militarily threatening international state system emanating from Western Europe.  His emphasis downplays the role which the growth of commodity production and the emergent core/periphery division of labor between East and West played in the formation and extension of the European interstate system.  He subsumes mercantilist international policy and state-sponsored development of crucial sectors of production into his complex definition of "absolutism."  I would argue that these developments can be better understood as variants of state capitalism which were appropriate to the first epoch of the capitalist world-economy.

     In the competitive interstate system it has been impossible for any single state to monopolize the entire world market, and to maintain hegemony indefinitely.  Hegemonic core powers, such as Britain and the United States, have in the longrun, lost their relative dominance to more efficient producers.  This means that, unlike the agrarian empires, success in the capitalist world-system is based on a combination of effective state power andcompetitive advantage in production.  The extraction of surplus value stands on two legs:  the ability to use political power to protect (and expand) profit

able commodity production; and the ability to produce efficiently for the competitive world economy.  This is not the statecentric system which some analysts describe, because states cannot escape, for long, the competitive forces of the world economy.  States that attempt to cut themselves off or who overtax their domestic producers condemn themselves to marginality.  On the other hand, the system is not simply a free world market of competing producers.  The successful combination of political power and competitive advantage in production is a delicate balance.

     There have been important differences among European states in terms of the strategies of development that they have followed.  Some have relied more on continental military advantage and centralized fiscal structures while others, the more successful ones, have employed a low overhead policy of strategic protection of the vital business interests of their national capitalists.  Again, I don't claim that all states equally employ a policy of support for their capitalists.  Frederic Lane's (1979) concept of protection rent is again relevant here.  Some states provide effective protection at or near "cost" and allow the profitable expansion of the businesses under their protection.  Others are less efficient and promote less economic growth even though they may be quite able to extract taxes from their own citizens.  All states pursue both military and market objectives, but the mix differs.  What makes the game differ from precapitalist systems is the relatively larger proportion of the sum of all efforts which are devoted to strategies of profit-taking rather than tribute-taking.

     The most successful core states have achieved their hegemony by having strong and convergent business class interests which unified state policy behind a sustained drive for successful commodity production and trade in the world economy.  Second-runners have often achieved some centrality in the world economy by relying on a more directly state-organized effort to catch up with the hegemonic state. 

     It could be argued that the existence of states which successfully follow a more political-military development path is evidence in favor of the thesis that geopolitical and economic processes operate independently.  The existence of such a development path is unquestionable (e.g. Prussia, Sweden, Japan,

USSR) but the upward mobility of these states was certainly conditioned by its context, a world-economy in which commodity production and capitalist accumulation were becoming general.  If all states had followed such a path the modern world-system would be a very different kind of entity.  It is argued below that the reproduction and expansion of the kind of interstate system which emerged in Europe requires the institutional forms and dynamic processes which are associated with commodity production and capitalist accumulation.  First, though, let us discuss the ways in which the interstate system helps to preserve the dynamics of the capitalist process of accumulation.

The Reproduction of Capitalist Accumulation

There are several ways in which the competitive interstate system allows the capitalist accumulation process to temporarily overcome the contradictions it creates, and to expand.  The balance of power in the interstate system prevents any single state from controlling the world-economy, and from imposing a political monopoly over accumulation.  This means that "factors of production" cannot be politically controlled to the degree that they could be if there werean overarching world state.  Capital is subjected to some controls by states, but it can still flow from areas where profits are low to areas where profits are higher.  This allows capital to escape most of the political claims which exploited classes attempt to impose on it.  If workers are successful in creating unions which enable them to demand higher wages, or if communities demand that corporations spend more money on pollution controls, capital can usually escape these demands by moving to areas where opposition is weaker.  This process of "capital flight" can also be seen to operate inside of countries with federal states. 

     Class struggles are most often oriented toward and constrained within particular territorial state structures.  Thus the interstate system provides the political underpinning of the mobility of capital, and also the institutional basis for the continuing expansion of capitalist development.  States which successfully prevent domestic capital from emigrating do not necessarily solve this problem, because foreign competitors are likely to take advantage of the less costly production opportunities outside the national boundaries, and thus push the domestic products out of the international market.5

     The implication of the above is that capitalism is not possible in the context of a single world state, as Weber claimed.  The transformation of the interstate system into a world state would eventually develop the political regulation of resource allocation.  If this world state were socialist it would more regularly and fully include social desiderata in the calculation of investment decisions.  The dynamic of the present system, in which profit criteria and national power are the main controllers of the use of resources, would eventually be transformed into a system in which development combinesefficiency with a calculation of the individual and collective use values of human society.  Such a collectively rational system would not constitute a utopia in which the problems of production and distribution would be completely solved, but the political struggles for resources which would be oriented toward a single overarching world government would exhibit a very different longrun dynamic of political change and economic development than that which has characterized the capitalist world-economy.

     Of course this is an optimistic assessment.  It is also possible that world state formation would bring about a transformation to a new version of the tributary mode of production.  Both socialism and the tributary modes utilize primarily political means of accumulation, but the tributary modes employ large amounts of coercion, while socialism produces, distributes, and invests democratically.  Either way though, capitalism would no longer be the dominant mode of production.

Capitalist Reproduction of the Interstate System

Thus the interstate system is important for the continued viability of the capitalist accumulation process.  But is the accumulation process equally as important for the generation and reproduction of the interstate system?  First, what do I mean by reproduction of the interstate system?  I am not making fine distinctions between types of interstate systems such as those introduced by Partha Chatterjee (1975).  By an interstate system I mean a system of unequally powerful and competing states in which no single state is capable of imposing control on all others.  These states are in interaction with one another through a set of shifting alliances and wars.  Changes in the relative power of states upsets any temporary set of alliances leading to a restructuring of the balance of power.  When is such a system not reproduced? If an interstate system either:

     1 disintegrates due to the dissolution of the individual states;

     2 dramatically reduces to nearly zero the amount of material exchange     and political-military interaction among the states; or

     3 becomes dominated by a single overarching state,

the system can be said to have fundamentally changed (i.e. it has been transformed, not reproduced).  In this definition the stages of classical, imperial, bipolar, and "contemporary" interstate systems identified by Chatterjee are subsumed into a single broad type which is nevertheless quite different from the precapitalist agrarian empires or the economically self-

subsistent and "stateless" system which existed in feudal Europe.

Which Came First?

Skocpol (1979) contends that the European interstate system predates the emergence of capitalism6 and she implies that this is evidence of its relative autonomy.7  No one denies that states predate capitalism.  At issue is the genesis of a dynamic interstate system which is self-reproducing rather than a transitional stage on the way toward empire-formation.  It is clearly the case that multistate systems exhibiting some of the characteristics of the European interstate system existed prior to the emergence of the dominant capitalist mode of production.  The multicentric "international system" which developed among the Italian city-states and their trade partners in the East and West invented many of the institutions of diplomacy and shifting alliance which were later adopted by the European states.  As Lane says of the sixteenth century, "The Italian state system was being expanded into a European state system" (1973:241).  While this constitutes prior development, it may not be evidence in favor of the autonomy of the interstate system, as we shall see. Many of the capitalistic financial and legal institutions later elaborated in the European capitalist world-economy were invented in the Italian city-

states.  The Christian Mediterranean was part of an interstitial proto-capitalist regional economy.  Analogous to Marx's analysis of merchant capitalism, the Mediterranean regional economy, though developing the seeds of capitalist production with labor as a commodity, was primarily based on the exchange of "unequals" between social systems which were not integrated into a single commodity economy.8  Nevertheless this proto-capitalist regional economy succeeded in developing several institutional features which were only later fully elaborated in the capitalist world-economy which emerged in Europe and Latin America in the long sixteenth century.  One of these was the interstate system, which as Zolberg (1981) agrees, only became stably formed after its emergence in Europe.

     But doesn't the continuity of the Italian interstate system, and its failure to develop into a world-empire, constitute a case for the independence of the interstate system?  Two factors militate against this conclusion.  The states of the Italian system were already rather capitalistic, thus explaining the weakness of attempts at empire-formation, and the Italian system became incorporated into the larger European world-economy, which was already becoming dominated by production capitalism in the sixteenth century.

     I am not arguing that capitalist institutions are the only factors which enable an interstate system to resist empire formation.  It is likely that a common cultural matrix also works against empire-formation by facilitating the diffusion of military and other technologies, and thus maintaining a relatively equal distribution of power among contending core states.  The European system shared this feature (an interstate common cultural matrix) with earlierlong-lived interstate systems such as those in ancient Mesopotamia, China, and India (Mann, 1986).  Nevertheless the widespread existence of capitalist

institutions such as international markets, money, banking, and opportunities for investment further stabilize an interstate system by inhibiting efforts at empire formation.

     Skocpol's contention about the prior emergence of the interstate system also receives support from Anderson's (1974b) interpretation of the rise of absolutist states in Western and Eastern Europe.  But this contention rides on one's definition of capitalism.  Anderson holds with the school which sees

the "fully formed capitalist mode of production" as becoming dominant only in the eighteenth century.  Wallerstein's interpretation contends that "agrarian" capitalism became dominant in the long sixteenth century. Anderson's interpretation of the absolutist states in formation downplays the importance of capitalist production in the growing cities of feudal Europe and ignores the "protoindustrial" emergence of agricultural and artisan production for the market in rural areas (see Kriedte, Medick, and Schlumbohm, 1981).

     Wallerstein's interpretation implies that the capitalist mode of production became the most important stimulus for change well before the "bourgeois revolutions" in which explicitly capitalist interests came to power in nation-states.  Anderson's account does not deny the importance, especially in the West, of the emergence of bourgeois sources of power and financial support, but he chooses to call the cup half empty instead of half full.  His discussion of state formation in Eastern Europe correctly identifies the extent to which it was reactive to the competitive and aggressive interstate system which emerged first in the West.  He ignores, however, the importance of the developing core/periphery division of labor for the shifts in class structure which influenced state formation in the East.

An Outside Alliance

One clue to the dependence or independence of the interstate system is its ability to reproduce itself, or to weather crises without becoming transformed into either a world-empire or experiencing disintegration of its network of international economic exchange.  Wallerstein's analysis of the effort by the Habsburgs to transform the still shaky sixteenthcentury capitalist world-economy into a world-empire (1974:164-221) demonstrates the importance of capitalism in reproducing the interstate system.  I will discuss the later points at which similar challenges to the interstate system were mounted (Louis XIV's, the Napoleonic wars, and the twentiethcentury world wars) and the causes of continuity of the interstate system, but first I want to consider another point made by Zolberg (1981).

     Zolberg argues that the European interstate system occasionally incorporated powers that were outside the capitalist world-economy into alliances which affected the outcome of politico-military struggle.  His main example is the alliance between France and the Ottoman Empire against the house of Habsburg.  Wallerstein argues that the Ottoman Empire was itself a separate world-system, an "external arena" outside of the economic network that was the European world-economy until the nineteenth century.  Zolberg contends that the FrenchOttoman alliance, which was important in France's ability to resist the Habsburgs' move to enclose the emerging European world-economy within a single overarching empire, proves the autonomy of the interstate system.  It is true that this alliance, and other less important ones between European states and states located in areas outside the European-centered division of labor, affected the course of development of the modern world-system.  It may even be true that without this crucial outside alliance the emergence of core capitalism in Europe would have been long postponed.

     Once again this shows that the interstate system was important for the survival and growth of international capitalism.  On this there is little disagreement.  But what would have happened to the European interstate system if international capitalism had been encompassed by the Habsburg empire?  Obviously both international capitalism and the interstate system would have been transformed into a world-empire, and probably one in which capitalism as a mode of production was subordinated to the logic of imperial tribute and taxation.  Though I agree that capitalism had become dominant over the logic of the tributary mode of production in the long sixteenth century it is obvious that its domination in that first epoch was somewhat shaky.  The attempt to convert the nascent capitalist world-system into a tributary world-empire was stemmed, not by the institutional strength of capitalism alone, but in conjunction with the somewhat fortuitous alliance between the French and an "outside" power, the Ottoman Turks.

     As we shall see below, later challenges to the interstate system were undercut by the logic of international capitalism alone.  Zolberg is right in pointing to the FrenchOttoman alliance as evidence of the importance of the interstate system, but in later challenges it was the strengthened

institutions of international capitalism by themselves that prevented the interstate system from becoming a world-empire.

     Another reason why Zolberg argues for the existence of an autonomous logic of the interstate system is his confusion over the difference between

colonial empires and world-empires.  It is perfectly correct that core states engage in imperialism in the sense of using military power to dominate parts of the periphery.  These colonial empires expand cyclically with the growth of the modern world-system (Bergesen and Schoenberg, 1980).  But this phenomenon is very different from the imposition of a single state over the whole system, including other core states. 

More Recent Challenges

The European world-system became a global world-system in a series of waves of expansion which eventually incorporated all the territories and peoples of the earth.  Although political-military alliances with states external to the system occurred after the sixteenth century, they were never again so crucial to the survival and development of capitalism as was the French/Ottoman alliance.  But the capitalist world-economy continued to face challenges of survival based on its own internal contradictions.  Uneven economic development and the vast expansion of productive forces outstripped the structure of political power, causing violent reorganizations of the interstate system (world wars) to accommodate new levels of economic development.  This process can be seen in the sequence of core competition, the rise and fall of hegemonic core states, which has accompanied the expansion and deepening of the

capitalist mode of production (see chapter 9).

     After the failure of the Habsburgs there have been three other efforts to impose a world-empire on the capitalist world-economy: those of France under Louis XIV and Napoleon, and that of Germany and its allies in the twentieth century world wars (Dehio, 1962; Toynbee, 1967).  Each of these came in a period when the hegemonic core power was weak.  Louis XIV tried to expand his monarchy over the whole of the core powers during the decline of Dutch hegemony.  Napoleon's effort came while Britain was still emerging to hegemonicstatus.  The German attempts came after Britain's decline and before the full emergence of the United States.  These three instances constituted threats to the existence of the interstate system and to the capitalist world-economy.

Why Hegemons Don't Try Imperium

It may be argued that one or another of these did not really constitute a serious effort at imperium.  There has been much dispute about German intentions in World War I (see Fischer, 1967, and his critics) but the real issue is not intentions, but the structural consequences which a German victory would have had for the interstate system.  If the balance of power system, and thus the multicentric nature of the core, could have survived such a victory, then these events did not represent real threats to the interstate system as such, but merely a challenge to the extant balance of power.  If none of these efforts presented a real possibility of world imperium (i.e. the formation of a core state large enough to end the operation of the balance of power system) we must ask why there have been no strong challenges to the interstate system since the Habsburgs. 

     Some authors imply that the size of the European states has been limited by the range of effective territorial control, but this cannot explain the absence of empire formation in Europe.  After all, the Roman Empire, using obviously more limited military technology, ruled most of the territory later occupied by the core states of the European world-economy.  The mode of production greatly effects optimalities of state size and the tendencies toward empire formation.

     It is the dynamic uneven development of capitalism which systematically undercuts the possibilities for empire formation, thus reproducing the interstate system.  One of the striking things about these ineffectivechallenges to the interstate system is that they were not perpetrated by the hegemonic core powers themselves, but rather by emerging second runners among the competing core states.  This raises the question of why hegemonic core powers do not try to impose imperium when it becomes obvious that their competitive advantage in commodity production is waning.  Similarly we may ask, as Zolberg did of the sixteenth century, why opposing forces were able to prevent the conversion of the system into a single empire.  To both of these questions I would answer that it is the transnational structures associated with the capitalist commodity economy which operated to tip the balance in favor of preserving the interstate system. 

     Hegemonic core states often use state power to enforce the interests of their "own" producers, although typically they do not rely on it as heavily as other competing core states.  But, when a hegemonic core power begins to lose its competitive edge in production because of the spread of production techniques and differential labor costs, capital is exported from the declining hegemonic core state to areas where profit rates are higher.  This reduces the level at which the capitalists within the hegemonic core state will support the "economic nationalism" of their home state.  Their interests come to be spread across the core.  Another way to say this is that hegemonic core states develop subgroups of their capitalist classes having divergent interests; there comes to be a group of "international capitalists" who support free trade, and a group of "national capitalists" who seek tariff protection.  This explains the ambivalent, contradictory, and zig-zagging policies of hegemonic core powers during the periods of their decline (Goldfrank, 1977; see also chapter 9 below).

     Schumpeter (1955) pointed to the lack of patriotism which many capitalists evince9 as proof that capitalism itself is a peace-loving system.  He claimed that modern warfare is caused by atavistic survivals of the pre-capitalist era which periodically grip the world and lead to violent destruction on a massive scale.  It is important to distinguish between capitalism as a system and the sentiments of those who make investment decisions.  While some capitalists may be peace-loving, it is the export of investment capital to other core states during hegemonic decline which is the major factor which explains why hegemonic core states do not try to impose imperium.  And it is the reproduction of the interstate system, which presumes the legitimacy of warfare, that guarantees recurrent bouts of violent destruction. 

Why Do Challenges Fail?

Why have the second-running core powers who have sought to impose imperium on the world-economy failed?  Most theorists of the interstate system have not addressed this question as such.  The balance of power idea explains why, in a multicentric system, alliances between the most powerful actors weaken.  Coalitions in a triad, for example, balance the power by allying the two weakest actors against the strongest.  But this alliance falls apart when the stronger of the partners gains enough to become the strongest single actor (hegemon) because the weaker power can gain more by allying with the declining former hegemon than by sticking to the original alliance.  This simple game

theory is extended to the interstate system by the theorists of power equi

librium, but it does not answer our question substantively.  Again, in the modern world-system it is not the most powerful actor that tries to impose imperium, but rather upwardly mobile second runners with less than their "fair" share of political influence over weaker areas of the globe.  Organski's (1968) theory explains why these second runners try, but not why they fail.10

     Of course one might employ strictly historical explanations which make use of unique conjunctural factors, a theoretical maneuver (or rather an atheoretical maneuver) which is easy to accomplish when one is explaining only four "events."  Here we seek an explanation of what seems to be a regularity of the world-system based on our hypotheses about its deep structural logic.

     Morganthau (1952) invokes the notion of a normatively organized liberal world culture which successfully mobilizes counterforce against the threat to the balance of power system.  This conceptualization of a normatively

integrated worldsystem has already been described and critiqued in chapter 5.  While I do not deny that some normative patterns are generalized across the system, I emphasize the fact that culture tends to follow state boundaries and that the larger system remains significantly multicultural.  From this perspective it is far fetched to explain the failure of empireformation in terms of commitment to internationally shared norms.

     Craig Murphy (personal communication) contends that another reason why hegemonic core powers do not try to impose imperium on the whole system is the enlightened view of certain core statesmen that the multistate system is necessary for the survival of capitalism.  Disraeli is suggested as an example.  This type of consciousness can be understood as a response to the dispersion of investment capital and consumer interests which accompanies the declining hegemony of the leading core state.  I doubt that liberal internationalist ideology plays much of an independent role in the reproduction of the interstate system.

     On the other hand, I have suggested above that interstate systems in which the states share a consensual regional culture are more likely to resist empire formation because new organizational and military technologies will rapidly diffuse and maintain rough power equality among the contending core states.  This explanation does not invoke normative integration (the regulation of behavior by consensual belief in rules), nor is it dependent on the specific content of cultural forms.  It simply argues that information is more likely to flow across state boundaries when the states have somewhat similar ideological and cultural systems.  Such a condition existed among the core states of the European world-system and this could have partly explained the failure of empire formation in Europe.

     It is my argument, however, that both the attempts and the failures of world imperium can be primarily explained as reactive responses to the pressures of uneven development in the world-economy.  We have already noted that the attempts were fomented, not by the most powerful states in the system, but rather by emerging second-tier core powers contending for hegemony.  One striking thing about all four cases is that they appear, in retrospect, to have been wildly irrational.  The countries who adopted the strategy of aggrandizement reached far beyond their own capacities, and failed to generate sufficient support from allied countries.

     I agree with Modelski (1978) that the predominantly land-oriented continental expansionism of the French monarchy was not a strategy which could lead to hegemony in the capitalist world-economy.  It is notable that the overhead costs of purely geopolitical expansionism (Oliver Cox's [1959] "Florentine model" of domination) could not successfully compete with the low overhead strategy of allowing a more decentralized political system to bearthe costs of administration while surplus value appropriation is accomplished by trade.  It was this "Venetian model" (Cox again) which was followed by the states which became hegemonic core powers (Netherlands, Britain, and the United States) while the land-oriented political centralizers have been relegated to the role of second-runners among the core states.

     Why didn't the French or German attempts at imperium receive more support?  Probably in part because potential allies doubted the extent to which their interests would be protected under the new imperium, and because the path of capitalist growth in the context of the multicentric system appeared preferable to the emerging bourgeoisies of potential allied states.

     If I am correct, the interstate system is dependent on the institutions and opportunities presented by the world market for its survival.  There are two main characteristics of the interstate system which need to be sustained:  the division of sovereignty in the core (interimperial rivalry) and the maintenance of a network of exchange among the states.  The commodified nature of the capitalist world-economy assures that states will continue to exchange due to natural and socially created comparative advantages in production.  Withdrawal from the world market can be accomplished for short periods of time but it is costly and unstable.  Even the "socialist" states which have tried to establish a separate mode of production have eventually returned to production for and exchange with the larger commodity market.

     The maintenance of interimperial rivalry is facilitated by a number of institutional processes.  At any point in time national sentiments, language and cultural differences make supernational integration difficult, as is well illustrated by the EEC.  These "historical" factors may be traced back to the longrun processes of state formation and nation building, and these processeshave themselves been conditioned by the emergence of commodity economy over the past 500 years.

     But the main institutional feature of the world-economy which maintains interimperial rivalry is the uneven nature of capitalist economic development.  As discussed above, hegemonic core powers lose their competitive advantage in production to other areas and this causes the export of capital, which restrains the hegemon from attempting to impose political imperium.  Second-running challengers, who may try to impose imperium, cannot gain sufficient support from other core allies to win, or at least they have not historically been able to do so.  This is in part because the potential for further expansion and deepening of the commodity economy, and development in the context of a decentralized interstate system, appears greater to potential allies than the potential for political and economic power within the proposed imperium.  Success stories in the development history of the interstate system are frequent enough to undermine empire formation.

     Now let us further consider the ways in which the transnational institutions of capitalism interact with geopolitics to reproduce the interstate system.


Chapter 8: Warfare and World-Systems*


Part of this chapter is a response to William R. Thompson's (1983c) valuable criticism of an earlier version of chapter 7.*  The issues raised by Thompson's article are addressed and a problem on which his analysis is conspicuously silent is considered.  Thompson's discussion fails to address the argument that the reproduction of the interstate system is due to the operation of specific institutions characteristic of a capitalist mode of production.  His comparison of generally "political," as opposed to "economic," variables ignores the role of historically specific economic institutions such as commodity production, wage labor, commodified wealth, and capital in the dynamics of the modern interstate system.  I shall make further comparisons of the modern capitalist world-economy to pre-capitalist world-empires and world-economies in order to demonstrate the importance of capitalist institutions for the reproduction of the modern interstate system.  In addition I will examine the arguments and research on the relationship between the long economic wave (Kwave) and world wars.

     Thompson and George Modelski (1978; see also Modelski and Thompson, 1988) have contributed theorization and important research to the study of the modern world-system.  While their conceptualization of that system is somewhat different from mine, they nonetheless recognize it as a hierarchical structure in which unequally powerful nation-states contend with one another for position.  In this they have moved well beyond the still widelyheld view that nationstates can be understood as either "advanced" or "developing" without regard to the larger context in which they are interacting.


*An earlier version of this chapter was coauthored with Joan Sokolovsky.

     On the other hand both Modelski and Thompson proceed without any discussion of capitalism.  They instead focus on the issue of the primacy of either "economic" or "political" variables (Modelski, 1982; Thompson, 1983c).  While this may be a convenient short-hand, an understanding of the underlying dynamics of the modern world-system requires comparison of its specific institutional structures with those of other historical, large-scale social systems.  I do not claim that "economic" variables are more important to the dynamics of the modern system, but rather that several specifically capitalist features of the political economy act to reproduce the interstate system.  The notion of "historical systems," which differ from one another in fundamental ways, is absent from Thompson's analysis, but central to mine.

Commodities and Markets

Thompson reduces the discussion of capitalist institutions to "economic growth" and "uneven development."  This may be, in part, due to a lack of clarity in the work he was criticizing (Chase-Dunn, 1981), which uses such concepts as commodity production without benefit of explanation.  In Marxist theory commodity production refers to the production for sale in a price-setting market of somewhat standardized commodities (including services).  Everything is not a commodity.  Some items are produced, not for exchange in a market, but for direct consumption by the producer.  Other items are produced for exchange in a normative reciprocal system or in a politically administered redistributive system, but not for sale in a market.  Other things are produced for sale, but are sufficiently unique that their conditions of production are not regularly and systematically subjected to price competition, e.g. art objects.  Other things are sold but are not produced for sale, such as untransformed land or other resources appropriated directly from nature. Commodification is a process by which social relations become mediated by markets.  A price-setting market is one in which the competitive interaction of a large number of independent buyers and sellers determines the ratios (prices) at which particular commodities exchange.

     Capitalist commodity production exists when wealth, land, and labor have become largely (but not completely) commodified.  Capitalist production implies a hierarchical division of labor between controllers of commodified means of production (capital) and the workers whose labor produces commodities for profitable sale.

     Empirically there are no perfect price-setting markets.  Prices are always influenced to some extent by normative and political factors.  And there are no completely capitalist social systems, even our own.  Capitalist commodity production and markets have been present to some extent in most of the historical systems since at least the emergence of cities some 5000 years ago in Sumer (Ekholm and Friedman, 1982).  In some parts of the pre-capitalist world-systems capitalists became politically dominant and capitalist relations predominated (e.g. in city-states such as Dilmun, Sidon, Tyre, Carthage, Malacca, and Venice), but not until the long sixteenth century of our own era did capitalist institutions come to dominate the developmental logic of the core zone of a world-system.

     We should note that commodities and markets are, in the final analysis, human institutional artifacts.  As such, they are historically variable.  Most human societies in the history of social development have been predominantly based on either normative reciprocity or politically determined production and exchange in which markets have played only a very limited part.


Capitalists in Power

Weber's analysis of capitalism (1978) stresses the importance of political control by capitalist merchants and producers.  The medieval European cities which, by revolution or accretion, came under the autonomous control of merchants, were important early examples of institutionalized capitalist control of legal systems and coercive power.  The capitalist cities of northwestern Europe provided political and economic resources which enabled kings to gain power over feudal lords and to construct the absolutist monarchies which first formed the European interstate system (Anderson, 1974b).  The first modern nation-state (as opposed to earlier city-states) to become largely controlled by capitalists was the Dutch Republic, which was dominated by the merchants of Amsterdam.  Later, the English Civil War created the second bourgeois nation-state.

     Capitalist merchants and producers have gained power within most of the nation-states of the modern world-system, but capitalist control of states has never been complete.  Some states have been directly dominated by capitalists, while others are in the hands of state managers who aggregate contradictory class interests, but all states include other classes in their ruling coalitions to some extent.  Both the class content of the ruling coalition and the constraints of the world-system are important determinants of state policy.

Precapitalist World-systems

When I say that commodity production dominates world-system dynamics I do not mean that it is all-inclusive.  We must look at the way in which commodity production is systematically interrelated with normative and political institutions.  All social systems are built on a specific articulation of normative, coercive, and economic institutions.  In the modern worldsystem capitalist commodity production is integrated with a set of political processes: state formation, nation building, and the geopolitical game which we know as the interstate system.  Like markets and money, these political institutions are not natural or ahistorical.  They are products of human invention, and their stability, change, and/or transformation must therefore be understood historically.

     We know that the process of state formation has occurred in various forms since the emergence of agrarian civilizations 5000 years ago, and that for most of the history of civilization this has been the most important process by which societies have increased in complexity, hierarchy, and size.  Kinship systems were elaborated vertically into class systems in which various forms of taxes or tribute were appropriated to support a non-producing ruling class.  Temples and palaces thus became controllers of property and surplus product.  Interregional economic exchange networks were most often controlled by states in the precapitalist world-economies.  These often became incorporated by conquest into world-empires based on the extraction of tribute.  In these world-empires competition over political power and status was predominant, although the particular institutional forms varied greatly across the

precapitalist world-systems.  Most systems based on the tributary mode of production tended toward empire formation in which a single state apparatus came to exercise domination over the core area.  This facilitated politically organized extraction of surplus product.  The wage labor that existed in some of the tributary empires was limited to certain sectors and was a very small proportion of the work force.  Slave labor, a partially commodified form of labor control which is directly dependent on political coercion, was important not only in the peripheral regions but also in the core of many tributary empires.

     The relatively large role played by private property, markets, wage labor, and commodity production in the Graeco-Roman world led to the invention of legal institutions particularly appropriate for a capitalist society.  This law later became the basis for municipal legal systems in many of the capitalist cities of the European Renaissance.  But in classical Rome, the main dynamics of expansion and decline remained based on military conquest, tribute, taxation, and the use of captive slave labor (K. Hopkins, 1978).  Rulingclass activities were based much more on private accumulation of profit than in  earlier precapitalist world-empires,1 but political maneuver and competition for status remained the main game (Finley, 1973).


The Modern World-system

In the capitalist world-economy system dynamics are produced by a single logic in which capitalist commodity production interacts with the processes of geopolitics, state formation, class formation, and nation building.  Relative to the precapitalist world-systems, the weight of commodity production is much greater.  The business cycles, rapid technological change, and the relatively rapid changes of fortune of different regions are due to the operation of a world market which is much less constrained by political-military structures than were the trade networks of earlier systems.

     This is not to say that political structures are unimportant, but rather that a particular kind of political structure is most suitable for the continued operation of this competitive economic system.  A centralized system tends to articulate political and normative constraints on resource allocation and to enhance the possibility for longrun monopolies of advantagein which production cost considerations are not important determinants of income.  Decentralized and competitive political systems allow market

efficiency to be a much greater determinant of prices and the distribution of returns.2  The multicentric structure of the interstate system allows competitive advantage in production to be an important continuing determinant of success. 

     Some states succeed in becoming more central in the capitalist world-economy through a mode of operation which bears some resemblance to that of the Roman Republic, i.e. conquest.  But even these operate in the context of a system in which they must ultimately consolidate their gains by developing productive capacity for success in the world market.  The paths to upward mobility are several: military expansion, mercantile armed trade, and commodity production have all been utilized in various mixes.  But the most successful states, the hegemonic core states, have increasingly relied on their ability to gain large shares of the markets for the most profitable commodities, and loss of market advantage has ultimately led to their geopolitical decline.  Thus the multicentric interstate system is important to the maintenance of a capitalist systemic logic, and to the specific institutions which most directly embody this logic: markets for labor, capital, and commodities.  On this Thompson agrees.

Capitalist Institutions Support the Interstate System

More problematic is my contention that capitalist institutions reproduce the contemporary interstate system.  I  need to define clearly what the interstate system is so that we may tell when it has been reproduced or fundamentally changed, and I need to specify clearly my claims about attempts to transform

that system.  Thompson (1983c) correctly points out that my definition of the interstate system overlaps somewhat with my definition of a world-economy.

     A world-economy is any territorial division of labor (network of exchange of fundamental goods) in which there are multiple political entities and multiple cultural systems.  Thus world-economies always have interstate systems.

     An interstate system, by contrast, is defined as a system of three or more states in direct or indirect competition with one another in which none of the states is powerful enough to dominate the whole system.  An inter-

state system could exist in which political interaction occurred without exchange of material goods.  In a sense the European system of classical feudalism in the eighth and ninth centuries was such a system.  The

"states" were the manors, economically self-subsistent units interacting

with one another in a shifting set of military alliances.  While such a system is not a world-economy, it is an interstate system.

     The modern interstate system is composed of nation-states, culturally integrated countries which contain more than one city, whereas world-

economies of the past most usually contained interstate systems composed of city-states and empires.3  Precapitalist world-economies have had interstate systems in which the political and military competition among several states determined the nature and extent of most material exchanges among states.  This is Polanyi's (1977) "state-administered" trade.  Precapitalist world-economies composed of citystates were most often based on class relations in which each urban ruling class utilized political institutions to extract surplus product from its own rural hinterland.  Empires were formed when one of these city-

states succeeded by warfare in conquering others and extracting tribute, and onforming a core/periphery system based on military domination.  Today warfare is less central (though still important) to the workings of the modern world-


     Modelski's (1978) and Thompson's (1983c) explanation of the rise and fall of hegemonic core powers invokes a systemic need for order.  International order is conceptualized as a "public good" which is most effectively provided by a single hegemonic core state.  This functionalist explanation has

difficulty accounting for the decline of core states or decreases in the amount of systemic political order.  In my model relative peace among states is conditioned by a long period of economic growth in which a single hegemonic core state supports both economic and geopolitical order.  This stability has costs, however, and periods of increased conflict emerge with the spread to other states of those economic and technological advantages which enabled the 'great power' to become hegemonic.  World wars represent a reversion to

military competition and a restructuring of the world political order which, up to now, has subsequently allowed for the further expansion of capitalist production.

     My contention that capitalist institutions acted to prevent the interstate system from evolving into a world-empire led in the previous chapter to three questions:

     1 Why have attempts to create a world-empire been so few, and seemed, in  Thompson's and Modelski's eyes (and the eyes of the most central  actors), so unfeasible?

     2 Why have hegemonic core states never attempted imperium?

     3 Why have second-running challengers to hegemonic states been unwilling  or incapable of creating a world-empire?Here I will elaborate some further considerations which these questions raise. 

     An interstate system is basically a game in which multiple players engage in shifting alliances in order to gain advantages.  In a simple threestate version of such a game the two weakest states ally against the stronger,but if their combined resources are fewer than those of the strongest state it (the strongest) will eventually take over.  Thus an interstate system will become a world-empire any time a willing single state or coalition of states can coordinate resources greater than the possible coalitions against it (them).  Why has this not happened during the 500 year history of the capitalist world-economy?

     Some would argue that state formation on a sufficient scale is unfeasible due to technological or cultural constraints.  I have already mentioned in the previous chapter that the Roman empire, utilizing relatively primitive technology and a very different raison d'tat, succeeded in unifying an area which included most of the territory later occupied by the core states of the European world-economy.  The optimality of state size varies greatly with the logic of each socio-economic system.  When tribute is the main form of surplus extraction the expansion of a single state to encompass an entire world-system is a strategy which pays.  In a system in which surplus value is extracted mainly through capitalist commodity production, overhead costs are more crucial for success in the short run.

     Of course, in the long run they are crucial in all systems, as the demise of the Roman Empire and many other empires illustrates.  But in a market system capitalists themselves often enforce limitations on the tax-collecting abilities of states.  Overhead costs are more crucial to profitable commodityproduction than they are to successful tribute-gathering and taxation, and the pressure to keep the cost of political order down operates effectively in the short run.  Most states in such a system are seeking to protect internal markets and to extend trade advantages in the international market to their own capitalist producers and merchants.  Successful state-building itself is somewhat conditional on the ability of each state to provide effective and cost-efficient protection to its commodity producers.  Lane's (1979) analysis of states as "violence-controlling enterprises" which compete with one another to provide protection is as applicable to the contemporary interstate system as it was to the merchant capitalist city-states of Venice and Genoa which Lane studied.

     The more direct and powerful constraints on state budgets in a capitalist world-economy are part of the reason why there are so few attempts to take over the system and to create a world state.  The overhead costs of such a state

would be greater than the costs of supporting competing nation-states, especially to capitalist producers.  And such a centralized world state, while it holds the attractive possibility of world-wide monopoly, also holds the potential for anti-capitalist social movements to coordinate their activities and to concentrate political action toward a single center.  Transnational corporations might enjoy some advantages of centralized control, but they would have much less flexibility to pit political organizations and states against one another.

     Why don't declining hegemonic core states change the rules of the game and attempt to retain their hegemony by organizing a world imperium?  It is curious that no one, not even marginal political ideologues, ever suggest such a project.  The greatest support for international organizations (of a limitedkind) comes from a hegemon during its golden age of hegemony.  Its dominant ideology of free trade, firmly supported at first by its relative advantage in commodity production for the world market, appears later to have a life beyond its basis in competitive advantage.  There is an element of institutional and ideological momentum which carries free trade ideology and liberal internationalism along as a guiding policy in declining hegemons long after most other core states have shifted back toward economic nationalism.

     But the structural basis behind this apparent ideological inertia is the power of "international" capitalists within hegemonic core states.  As a hegemon loses its comparative advantage in production (because competitors abroad adopt and improve upon production techniques, and because labor costs and taxes go up in a successful hegemon as workers and other interest groups use political power to obtain a share of the profits) a significant amount of capital from the hegemonic country gets exported to where greater profits are

to be had.  This gives the "international capitalists," those who have invested abroad, a continuing interest in free trade and a liberal international order.  They oppose political thrusts toward protectionism, and they also would be unsupportive of a policy of aggressive political military expansion over other core powers if, indeed, anyone suggested it.  They do, however, support maintenance of the interstate regime as currently structured against possible challengers who want to create imperium or carve out a protected region.  Some of the interests of workers, national capitalists and international capitalists diverge during the period of hegemonic decline, but because these groups are somewhat evenly balanced, the result is a zig-zagging domestic and international economic policy in the declining hegemonic core states.  This topic is explored further in chapter 9.    But why do the rising powers which militarily challenge the dominance of declining hegemonic powers not go on to establish imperium?  They may be ambivalent about the returns of imperium.  Germany developed a competitive advantage in production but was denied direct access to cheap raw materials from peripheral areas and to markets by the international trade regime dominated by Britain.  The Germans needed to loosen up the existing core/

periphery structures but they did not need to take on the overhead costs of world imperium.  As mentioned in the previous chapter, if a challenger did propose the creation of a world-empire it would be difficult to mobilize sufficient support because most potential powerful allies would likely calculate their opportunities for profitable commodity production in a world market to be greater than their potential returns from participation in an imperium.

World Wars and the Restructuring of the World-economy

Jack Levy's (1985) discussion and critique of different conceptualizations of world wars is a valuable review of recent scholarly works, including the world-system perspective, the long cycle theory of Modelski and Thompson, and Robert Gilpin's (1981) theory of hegemonic war.  Levy compares different criteria for defining world wars, and criticizes those approaches which define these conflicts in terms of their consequences  the restructuring of the international system.  Levy claims that this builds a logical circularity into the definition of world wars which makes it impossible to test important propositions about the relationship between wars and system structure. His proposed criteria are independent of outcomes and result in a list of ten "general" wars since the sixteenth century.  The disputes over definitions and

lists of wars have generated a profuse literature.  The following argument lays out a typology of wars and their hypothesized roles in the world-system.

     Without denying the importance of the periodic emergence of hegemonic states in the development of the modern worldsystem, I am not prepared to accept an explanation for the dynamics of the system that is grounded solely in terms of the ascension to military dominance of these leading states.  This necessitates a reinterpretation of the concept of world wars as presented by Thompson and Modelski.  While I agree with Thompson that world wars represent attempts to restructure political relations among states to correspond with changing economic realities, I also think they may be seen as a way in which states try to convert political-military strength into a greater share of world surplus value.  In part, this is a function of the interdependence of political and economic factors in the capitalist mode of production.  In either case,

world wars, defined as those conflicts in which one state attempts to take over and thus destroy the interstate system or struggles in which leading power status is determined, are not the only important wars in the struggle among states in the capitalist world-economy.

     Extending our consideration beyond the great powers to include the entire hierarchical division of the world-economy since 1500, we can identify three structural roles which wars have played.  Most fundamentally, they may represent struggles for control or dominance over the entire interstate system.  Although disagreements clearly exist over the analysis of particular cases, the world wars identified by Thompson all reflect struggles for preeminence to a greater or lesser degree.  The Napoleonic Wars and World Wars I and II may be considered extreme examples of this type.  There is no definitive answer to the counter-factual question of what would have happened if the unsuccessfulcoalition in one of these wars had managed to achieve its goals; yet it is difficult to argue that the interstate system as we know it could have continued to exist if either the Napoleonic or German attempts to conquer most of the core zone had succeeded.

     Secondly, wars may be used to facilitate the upward or downward mobility of individual states and the creation of a new structure of power that more accurately reflects the strengths and weaknesses of key actors.  Examples of wars of this nature are legion.

     During the eighteenth century when economic and political power was quite evenly distributed throughout the core of the system, wars of this second type were more prevalent.  The War of the Spanish Succession resulted in the exhaustion of Dutch resources and the fall of the Netherlands from leading

status but did not lead to the immediate creation of a successor state.  France was weakened but still strong, maintaining possession of some of its European conquests including the rich province of Alsace and city of Strasbourg.  Its colonial empire was still extensive and Louis XIV's grandson retained the throne of Spain.  England was strengthened but not yet preponderant.  Spain held on to its American empire and Austria gained extensive territories on the European continent.  Hinsley, for example, emphasizes the relative degree of equality that characterized the leading states in the eighteenth century (1967: 176).  Similarly, Davis contends that the British economic hegemony achieved in the nineteenth century could not have been predicted a century earlier (1973: 288).  Under these conditions, the hierarchical structure of the core was fluid and wars like the Seven Years War facilitated the rise to prominence of expanding states like Prussia and Russia.

     Finally, wars may be used to restructure relations between core states and the periphery in keeping with relative changes in power among actors.  The trade wars between Britain and France during the eighteenth century represent the most obvious examples of this kind.  Yet all important wars have resulted in changes in the status of core powers vis-vis peripheral areas.  World wars followed by the emergence of a new hegemonic core power have facilitated decolonization.  The Napoleonic Wars and World War II stand out in this respect.  Free trade works to the advantage of the leading state when its competitive advantage assures market dominance.  The hegemonic power is able to minimize the cost of political control represented by formal empire. 

Conversely, when wars have resulted only in changes in relative position within a more equal framework, victories have been accompanied by changes in formal

control of particular peripheral areas to reflect the new balance of power.  Bergesen and Schoenberg (1980) have documented the close relationship between periods of multicentricity within the core and the development of formal colonial empires as contrasted with periods of hegemony and the movement toward free trade and decolonization.

     Clearly, none of these categories of wars are mutually exclusive, and historically world conflicts have usually involved a combination of them.  Indeed the growth of exchange networks and interlocking alliances within the world-system have insured the spread of conflicts to encompass states with widely divergent motives.  Thus the Seven Years War linked the conflict between Prussia, Austria, and Russia for core status with the struggles between Britain and France for control of the resources of the periphery.

     In analyzing the trajectory of military conflicts it is often nearly impossible to distinguish between the real aims of participants, their statedaims, and the effect that the victory of one or more actors is perceived as portending for the whole system by other states.  To make matters more complicated, war aims regularly change with initial successes or defeats.  However it should be possible to determine the impact of global conflict on the restructuring of the interstate system.

     When examined in these terms wars have operated to reduce discrepancies between economic and military power structures in the world-system.  Some states, like Prussia or Russia, have used military power to increase their share of world surplus.  When this path results in an expanded economic base for capital accumulation, as the addition of resource-rich Silesia did to the Prussian polity, then the improved position of the state may be maintained and extended.  However, the costs of military expansion reduce the percentage of national resources available for productive investments.  When military power is not converted to economic productivity or when the fiscal costs of maintaining the state's international position become too high, core status may be ephemeral.  Thus the outmoded organization of the Russian economy and social structure was eventually reflected in the loss of military superiority in the decades beginning with the Crimean War.

     Conversely, states like Great Britain and the United States which did not have to contend with the expense of maintaining a threatened land frontier and were able to keep the costs of government down, had more capital to devote to the tasks of economic development during their periods of expansion within the system.  This may help to explain the success, noted by Thompson and Modelski, of the naval route to global power.  States without exposed borders were able to devote resources to the maintenance and development of sea power.  When a continental power like France under the direction of Colbert attempted todevelop a comparable fleet, the added drain on national resources needed to maintain both a large land army and an expanded navy provoked considerable resistance within the nation.

     Overall, then, I share basic agreement with Modelski and Thompson on the existence since the sixteenth century of a multicentric world-system tied together by political relations among states and economic exchange networks.  I concur as to the importance of the periodic emergence of a preponderant economic and political power. 

     I differ from the "power cycles" approach in my effort to go beyond a systemic need for order to the construction of a causal model that will explain both the reasons for the recurrent rise of these global powers and their failure to hold their position within the structure of world power.  I believe that these causes lie in the institutions of capitalist development.  Upward mobility within the system has been conceptualized as a two-sided process.  While productive advantage has frequently been converted to political strength by leading states in the system, other states have been able to use the increased share of world surplus value gained through military force to stimulate their own economic expansion.

     The waning of dominant status has also been linked to the operation of the capitalist world-economy.  Changes in competitive advantage, costs of control and diverging interests among capitalists, workers, and state bureau

crats within declining hegemons have been advanced as some of the mechanisms through which this relationship is articulated.

The Kwave and Wars

One aspect of the link between the interstate system and the world economy is revealed in the connection between the Kondratieff cycle (Kwave) and warfare,first posited by Kondratieff himself.  An impressive research literature has blossomed in recent years investigating this linkage, and, although considerable disagreement still exists about the causal connections involved, quite a bit is now known.

     An entire industrial sector of international relations scholars have been working for scores of years to code the timing, participants, territory, costs and destructiveness of warfare in the interstate system.  Levy's (1983) book,

War in the Modern Great Power System, 14951975, presents a recent complete compilation of the data on warfare.  Although visual inspection of the frequency of wars and other measures reveals an obvious sequence of periods of more and less war, Levy reports that warfare does not exhibit any strictly cyclical features.  Joshua Goldstein (1988:244) however, demonstrates that a statistical test (the AutoCorrelation Function) applied to Levy's data on war severity (the number of battle deaths per year) produces clear evidence of a 50 to 60 year cycle over the period from 1495 to 1975.

     Thompson and Zuk (1982) and Goldstein (1988) use time series analysis techniques to examine the relationship between wars and the Kwave.  Goldstein uses several price and production series and the dates given by four earlier scholars (Braudel, Frank, Kondratieff, and Mandel) to produce a set of trough and peak dates for Kwaves between 1494 and 1975.  He argues that strict periodicity is an inappropriate standard for social cycles.  Thus he analyzes sequences of phases with unequal periods in his measure of the Kwave.  Goldstein's results reveal a clear association between the Kwave and the severity cycle (battle deaths per year) of war among core powers.  He argues that severe wars are more likely to occur during the upswing phase of the Kwave and his empirical work finds support for this.  This conclusion isdependent on the dates Goldstein uses to distinguish between upswing and down

swing phases of the Kwave (see 1988: figure 11.3).  Thompson (forthcoming) doubts the soundness of Goldstein's periodization of the Kwave before 1790.  Nevertheless Thompson finds support for the relationship between war and Kwave price upswings in his own analysis of the period between 1816 and 1914.  What is not in doubt is the finding that the Kwave and the war cycle are linked in some systematic way.

     The business cycle is most often measured by price series.  Goldstein argues that there is a productionstagnation cycle which precedes the price cycle by 10 to 15 years.  The war cycle peaks in between the peaks of the

production cycle and the price cycle in Goldstein's model.  The data on long run series which indicate real production and related indicators are rather scanty, so most empirical work has focused on the relationship between price series and war.  Some of that relationship is undoubtedly a rather simple matter of the effects of warfare on inflation, a matter studied by Thompson and Zuk (1982).  They conclude that most Kwave price downturns can be attributed to the ending of major wars, but that Kwave price upswings regularly occur before the outbreak of wars. 

     Goldstein's causal model of the connection between war and the Kwave production cycle posits a negative feedback loop.  According to Goldstein wars occur during Kwave production upswings because, though states always desire to go to war, warfare is expensive and so states do it when economic growth is providing them with more resources.  Goldstein argues that warfare, on the other hand, has a negative effect on economic growth through nonproductive expenditure and destruction of people and property.  Thus the two cycles spur one another on.   Like Thompson, Goldstein does not consider the capitalist nature of the institutions and processes which link warfare and economic growth in the modern worldsystem.  For him states are simply war machines that go after one another when they have the resources to do it, and since capitalist economic growth provides great resources, warfare is endemic.

     Goldstein's study reveals empirical details of the relationship among business cycles, wars, and the rise and fall of hegemons which must be  taken into account in any theory of the world-system.  He shows that Kondratieff waves and peaks in the severity of wars among core powers are closely

associated in time, with nine out of ten peaks in world war since 1500 occurring near the end of an upward phase of the price cycle.  The somewhat surprising finding here is that, according to Goldstein, world wars regularly occur during a period of economic expansion.  This is surprising for two reasons.  Most people think first about World War II, which is the single exception among the ten core war peaks since 1500.  And many theories of core

war are based on the idea that war is caused by increasing competition among core states, [socalled "lateral pressure" (Choucri and North, 1975)] which has been assumed to be most severe during periods of economic stagnation.  

     Examining data series on prices and several indicators of production, innovation and investment, Goldstein concludes that the production cycle and the price cycle are somewhat out of phase with one another, with the production cycle lagged about 10 to 15 years behind the price cycle.  In Goldstein's model (1988:259) the war cycle peaks just between the production cycle and the price cycle.  This model is, of course, an idealized depiction of the exact features which are only generally supported by Goldstein's analysis of actual data.  Nevertheless, if Goldstein's representation is correct we may be able toexplain why there has been considerable disagreement about the timing of the relationship between warfare and the Kwave.  Goldstein follows Kondratieff and many other theorists in arguing that warfare is most likely to be severe during the upswing phase, but his own model implies that warfare actually peaks in between the peak of the price cycle and the production cycle.  If we believe that the psychology and logic of production decisions as well as statecraft are involved in the relationship between warfare and the Kwave, as the

Wallersteinian worldsystem perspective would emphasize, then it is most interesting that the warfare peak is alleged to occur after the peak of the investment cycle, in other words during the beginning of the investment and production downswing.  This is simultaneously a period in which states have a lot of resources available for war and capitalist investors have begun to slacken investments, presumably because they perceive limitations on profit

taking.  Increasing competition for markets and investment opportunities is

due to overproduction by producers of core goods for the world market relative to effective demand, and this kind of competition leads to pressure for the use of extraeconomic power, that is state power, to protect and/or expand market shares and investment opportunities.

     Goldstein does not distinguish the prices of different kinds of commodities, but other researchers have shown that price cycles vary across different kinds of commodities.  Michael Barrat-Brown's (1974) study of the terms of trade between core and peripheral areas demonstrated that there are differences in the degree of price changes such that terms of trade of peripheral goods vis--vis core goods rise and fall over time, and  this finding is confirmed by Paul Bairoch (1986:205-8).  This supports Wallerstein's (1984b) argument that core commodities are overproduced in some periodsrelative to effective demand, that is relative to the politically structured distribution of resources in the world-system.  This causes military conflict among core states, and sometimes results in the restructuring of the inter

national order under a new hegemon. 

     Goldstein's demonstration of the link between war cycles and the Kwave is extremely important evidence in support of the contention that geopolitics and the world economy are interdependent processes.  The connections between the war cycle, the Kwave, and the hegemonic cycle are examined in the next chapter.  Here I would like to quote Goldstein's observations of four trends based on his analysis of warfare over the last 500 years:

          First, the incidence of great power war is declining  more and more "peace" years separate the great power wars.  Second, and related, the great power wars are becoming shorter.  Third, however, those wars are becoming more severe  annual fatalities during war increasing more than a hundredfold over the five centuries.  Fourth (and more

          tentatively), the war cycle may be gradually lenthening in each successive era, from about 40 years in the first era to about 60 years in the third.  The presence of nuclear weapons has continued these trends in great power war from the past five centuries  any great power wars in this era will likely be fewer, shorter and much more deadly.



     Now let us turn our attention to the hegemonic sequence. 


Chapter 9: The Rise and Decline of Hegemonic Core Powers


Here it is argued that three states have been hegemonic in the capitalist world economy since its consolidation in the long sixteenth century ─ the United Provinces of the Netherlands, the United Kingdom of Great Britain, and the United States of America.  The periods in between  these hegemonies were charac­terized, I contend, by a relatively equal (multicentric) distribution of military power and economic competitive  advantage among core states, and by relatively higher levels of conflict and competition within the core.  I also think that these periods were  characterized by more bilateral and politically controlled relationships between the core and the periphery in which each core state attempted to  monopolize exchange with its "own" colonial empire.  Stephen Krasner (1976) has contended that periods in which a single great power has been hegemonic  have been characterized by relatively more free trade among different areas of the world economy.  The interaction between the hegemonic cycle, with its  rise and fall of hegemonic core powers, and changes in the structure of the core/periphery hierarchy is analyzed in chapter 13.  This chapter focuses on  the core zone itself, and processes which cause the rise and fall of hegemons, and it considers the current situation of the United States as a  declining contemporary hegemon.


Rise and Fall in Different Systems

In order to understand the dynamics of the current US decline I will primarily compare hegemonies within the modern world-system.  But it may  also be fruitful to compare the current situation to long-run cycles of centraliza­tion and decentralization which occurred in precapitalist modes of production such as the rise and fall of the Roman Empire.  This has been done in a recent article by Galtung, Heiestad, and Rudeng (1980).  They  compare the decline of Rome in antiquity with what they call the "decline of Western imperialism."  They find some similarities at the level of cultural processes, but in my view they fail to grasp the important structural and systemic differences between the modern world-system and the Roman world-system.

One important difference between the Roman world-empire and the

capital­ist world-economy is the organization of the state.  In Rome a single overarching state apparatus came to encompass nearly the entire economic network, whereas in the capitalist world-economy there is no single state, but rather there is the inter­state system described in previous chapters.  The Roman world-empire had a single center while the capitalist world-economy is politically multicentric.  It is true that at various times within the modern world-system there has been a single most powerful (hegemonic) state, but the hegemon has never been powerful enough to impose imperium over the whole core. 

The main consequence of this structural difference is its effect on the dynamics of competition, reproduction, and growth in these two types of systems.  In the Roman world-empire, competition was primarily mediated through a single state apparatus and, although monetarization of the economy was extensive (Hopkins, 1978a), the competitive price-setting market was not strong enough to regularly encourage increases in economic efficiency on the part of producers.  The main way to gain and hold income was through obtaining access to political power.  Roman property and contract law was quite "modern," but markets remained dominated by political power, and this power was

centralized in a single state apparatus.  The main type of growth was exten­sive, through the addition of control over lands and slaves.  As Keith Hopkins (1978b:62) shows, the dynamic of the Roman economy was fueled by conquest.  Roman military organization and transport technol­ogy, by far the most advanced in antiquity, eventually reached their cost-effective spatial limits, and territorial expansion halted.

The slave mode of production required new inputs as slaves were worked to death on the latifundia of Italy.  Tribute as a form of surplus extrac­tion was most remunerative in newly conquered lands.  The ending of territorial expansion of the empire created a scarcity of slaves and  tribute, and led eventually to a reversion to serfdom in the countryside.  The Roman political constitution was unique in the extent of its ability to incorporate opposi­tional groups into the state by the extension of citizenship.  While the political system was always more oligarchial than the earlier Athenian democracy (Anderson, 1974a) the definition of membership was much more flexible, and allowed power and status to be shared with those in a position to mobilize effective opposition.  The dynamic of cooptation of opposition led to changes in political forms ─ from republic to empire (Brunt, 1971) ─ but the necessity of integrating organiza­tional forms within a single state apparatus slowed the rate of organiza­tional innovation and discouraged experimentation.  Over time the weight of the political super­-structure became greater than the underlying economy could bear.   Because the Roman system was so centralized, the demise of Rome also meant the demise of the system.  It was not possible, in the short run, for a new center to emerge to revitalize the mode of production and to restart its expansion on a new basis.1

By contrast, the capitalist world-economy, with its more decentralized polity, allows for much greater economic and political competition.  The  existence of the price-setting world market (which includes both national and international markets), while it is not a "perfect" market, does regularly encourage investors to increase the efficiency of production (to produce at lower cost) in order to gain a greater share of income.  Thus technical development of productivity is facilitated by the fact that there is no central state that can impose monopoly control on the whole arena of economic competi­tion.  Similarly, the multicentric interstate system encourages the "export of capital" because political opposition to profita­ble investment and labor exploitation is mediated by the individual nation-states and often can be escaped by crossing state boundaries.

Political competition in the capitalist world-economy is also much more dynamic than in world-empires.  The interstate system allows different paths to "success" in the competition among states.  Some emphasize political-military expansion, while others emphasize a strategy of competi­tive commodity produc­tion for the world market.  In such a decentralized political system new forms of political organization can emerge uncon­strained by any central state and are thereby free to compete  with one another for dominance.  What makes the modern world economy a capitalist world-economy, however, is its unique combination of an interstate system with the institutions of commodity production for profit on a market, and a high level of the commodification of labor power.  These  institutions are interwoven, along with the "private" nature of investment decisions, into a competitive interstate system; and it is the institutional combination of all these elements that creates the qualitative uniqueness which differen­tiates the capitalist world-system from earlier world-systems.

The modern system has shown its flexibility over the 500-year period of  its expansion and deepening.  Unlike the Roman world-empire, it has changed its center without going into devolution as a system.  Thus the present period is most probably not a demise of "Western imperialism" (àla Galtung et al. 1980) but rather the demise of the hegemony of the United States.  The main challen­ges to US supremacy are posed by other core powers, not by the periphe­ry.  The possible outcomes, a new hegemony and continuation of the system, or real transformation of the capitalist world-economy into a qualita­tively different system, are options that bear only broad and somewhat superficial similarities to the decline and fall of the Roman Empire.

The main difference between the modern world-system and earlier world­-sys­tems is that commodity production has become the dominant logic of competi­tion at the center of the system.  In the Roman world-empire and many other pre-capitalist world-systems there was much commodity production, but it  flouris­hed mainly in the interstices.  It was the business of clients, freedmen, or the specialty of semiperipheral trading states, while the  "perspective of the world" was a game played exclusively by men more interested in expanding state power as the primary means to wealth, power, and status.  It was the emergence of a different kind of state in the core region of the European world-economy, the hegemonic Dutch state employing its military capabilities primarily to provide protection rents to its capitalists, which signaled the consolidation of a world-system in which capitalism had become the dominant mode of produc­tion. 


Definitions of Hegemony

Wallerstein (1984a) defines hegemony in terms of economic comparative  advantage ─ the concentration of a certain type of commodity production within the borders of a single core state.  Remember that "core production" is commodity production which utilizes relatively capital-intensive technology and skilled, highly paid labor.  Hegemony in this sense is comparative advantage due to a combination of product development ─ producing the most sophisticated and desirable products ─ and competitive prices ─ the ability to price the exported core products at levels which make it hard for competing national economies to avoid purchasing them, and yet, at the same time, to make a profit while selling at such prices.  Wallerstein observes that economic comparative advantage enables one core country to penetrate the home markets of other core countries with capital-intensive commodities.  The production of these types of commodities has, of course, relatively denser forward and backward linkages, and spinoffs which multiply the growth effects of investments within the national economy.

Very different conceptualizations of global power are utilized by  political scientists studying the "international system."  George Modelski and William R. Thompson (1988) propose a theory of a long cycle of political-mili­tary power in which great powers rise and fall.  Their theory is similar in some  respects to the Wallersteinian perspective.  They claim to be studying the world system (without the hyphen ─ see Thompson, ed, 1983) and they agree that  periods of concentrated power correspond with relatively lower levels of conflict among core powers, while periods in which there is a more equal  distribution of power among core states tend to be more conflictive.  But they have a very different notion of what constitutes concentrated power (they do not use the term "hegemony").  For them the central matter is naval power, which is an indicator of the ability of a great power to exercise "global reach."  Predominant naval power enables a great power to maintain order at the level of long-distance international interactions.  Modelski and Thompson contend that land armies and general military expenditures are not useful indicators of "global reach" because these resources are usable  primarily in regional or continental warfare, not for domination of the global power system.  This argument illustrates Modelski and Thompson's "layered" conceptualization of the world system, in which the global level of interaction is analyzed as importantly distinct from local and regional interactions.

Modelski has defined "world powers" as "those units monopolizing (that is controlling more than one half of) the market for (or the supply of) order­keeping in the global layer of interdependence" (1978:216).  The global system since the sixteenth century is said to have experienced the rise and fall of four of these "world powers:"  Portugal, the Netherlands, Britain and the United States (Modelski and Thompson, 1988).  According to Modelski (1978) the power of the "world power" is not really based on controlling the actions of other leading states.  Rather a world power produces order by manipulating alliances to produce relative stability in the core while dominating European interac­tions with the rest of the globe.

Other political scientists speak of hegemony in terms of "power capabili­ty," which is defined broadly as the ability of one state to control or influence the behavior of other states using rewards and punishments.  

Robert Gilpin (1981) explicitly conceptualizes hegemony in terms of relative overall military power, although he analyzes the concentration of economic innovations which provide the economic wherewithal behind superior military  advantage.

For Wallerstein hegemony comes to include productive, commercial, and financial dominance within the world economy.  But productive efficiency must be accompanied by state power.  The creation and maintenance of economic preeminence requires the political and military capacity to preserve a domestic class structure favorable to capital­ist accumulation, innovative production, and the prevention of external restrictions on flows of capital or goods.  In this sense politica­l-military power is a necessary but not a sufficient basis for the attain­ment of hegemony in a capitalist world-economy.

The free market, which initially favors the competitive advantages of a leading power, eventually results in the flow of capital and technological innovations to competing states.  This results in the loss of productive advantage by the hegemonic power.  Further, the costs of maintaining the global order are borne disproportionately by the leader, resulting in rising production costs and an excessive expenditure of national resources in the non-productive military sector.  Recent efforts by the United States to encourage Japan and Western Europe to increase their military budgets reflect a recogni­tion of the disproportionate costs of maintaining world order borne by the hegemon.  Addition­ally, formerly convergent interests of different groups of capitalists in a hegemonic core power become more divergent as important sectors of the national economy lose competitive advantage. 

When they seek to operationalize power capability many researchers have used what Thompson (1983b) somewhat disparagingly calls an "omnibus" measure which combines a number of different indicators of economic and military  resources.  Organski and Kugler (1980:30-8) have argued strongly for "total output," that is total GNP, as the best measure of power capability of the great powers.  They also argue (1980: 68-84) that total output should be combined with a measure of political development, which they define as the ability of the state to mobilize the resources of its own society.  Another study which has explicitly tried to measure variation over time in the degree of concentration of power among the "great powers" is that by Singer, Bremer, and Stuckey (1979).  They combined a number of economic and military indicators of the capacity of states.  A similar composite measure was constructed by Ferris (1973).  Curiously, none of the indicators used are measures of economic development as usually understood, but are rather indicators which combine size and development, as does total GNP.  Of the studies I have reviewed, only that by Doran and Parsons (1980) utilizes measures of economic development, and they combine these into a single composite index along with size indicators.

Some surprises emerge from my review of the studies which have tried to empirically measure changes in the relative power capabilities of states.  Although these have been done by political scientists, only Modelski and Thompson focus exclusively on military power, and they examine only a par­ticular kind of military power ─ naval power.  Organski and Kugler argue that total GNP is the best overall measure of power capability, although later they combine it with a measure of internal state strength.  None of the studies measures hegemony in terms of total military power.  None of the studies examines measures of development separately from measures of size.  And none of the studies tries to examine the relationship between economic and political types of power.

Causes and Conditions of the Rise and Decline of Hegemonic Core States

In this section a set of causes and conditions of the rise and decline of hegemonic core states is hypothesized.  Then I present a brief overview of  the three hegemonies.  Later I describe the few quantitative studies of the hegemonic sequence which have been conducted.

The rise and fall of hegemonic core states can be understood in terms  of the formation of leading sectors of core production and the concentration of these sectors, temporarily, in the territory of a single state, which hence becomes the most economically and politically powerful of the core states.  Decline sets in when the hegemon loses its ability to develop lead industries ahead of its competitors.  This process can be understood as a feature of the world-economy as a whole insofar as it involves the interaction of systemic variables such as the Kondratieff wave, the application of new technologies to production (Mandel, 1978; Rostow, 1978 and Bousquet, 1980); and the violent  reorganiza­tion of the interstate system through warfare.  As noted in the previous chapter the strong association in time between long business cycles and wars among core powers has been empirically demonstrated.  

The uniqueness of the world-system perspective is that it examines the  system-wide dynamics of these cycles as well as the exclusively national processes involved.  The cycles that occur are the consequences of the relative over-production in different periods of different types of commodities (core commodities and peripheral commodities) and the limits on effective demand that particular political structures impose on consumption.  During periods of the expansion of core production labor unions, guilds, and other politically organized interest groups increase their demands for shares of income.  The expansion of core production increases the need for raw material inputs, many of which are produced in the periphery.  The terms of trade between core and periphery shift in favor of the periphery, enabling peripheral producers and the states they control to attain a relatively more favorable market position and to make more effective demands for a larger share of surplus value.  This redounds on the struggle for shares among core states, where wage increases (and the "cacophony of equity demands") are less easily met by increased exploitation of the periphery.  This dynamic leads to heightened class struggle within core countries and to increased competition among core countries for shares of a no longer growing pool of world surplus value.  It is striking that hegemony in the core is consolidated after wars in which potential contenders have destroyed one another, leaving an opening for the emerging dominance of the new hegemon.  The pattern which is documented by Thompson (forthcoming) and Goldstein (1988) is as follows: a rising challenger (B) initiates war against the declining hegemon (A).  (A) makes an alliance with another rising core state (C) to combat the military challenge by (B).  (A) and (C) win the war and (C) emerges as the new hegemon.

Goldstein's study examines the relationship between the war/growth  cycles and the rise and fall of hegemonic core powers.  Utilizing the Wal­lersteinian conceptualization of three hegemonies ─ the Dutch, the British, and the American ─ he demonstrates that they are related, but not in a very regular way.  As Goldstein (1988:287) puts it:

I find the connection between the causal dynamics of these two cycles--long waves and hegemony cycles ─ to be weak.  They are not synchronized, and there is no exact number of long waves that makes up a hegemony cycle.  Rather, I see the two cycles as playing out over time, each according to its own inner dynamic but each condi­tioned by, and interacting with, the other.


And further along he concludes:


Each hegemony cycle contains several long waves, but not  a fixed number.  Each of the long waves within the hegemony cycle ends in a war peak that re-adjusts the international power structure without bringing in a new  hegemony.

(Goldste­in, 1988:288, emphasis in the original) 


In a footnote Goldstein continues: "All great power wars affect relative  positions in the international 'pecking order.'  Hegemonic wars determine the top position in that order" (1988:288).

Although Goldstein does explicate a causal model which explains the relation-ship between economic growth and periodic wars (see chapter 8), his explanation of the linkage between these cycles and the three hegemon­ies is  more historical.  He argues that many contingencies link the particular outcomes which are revealed by the hegemonic sequence and the particular countries which become hegemons, challengers, and "also-­rans."  Goldstein does not, however, address the more system-wide questions which were the focus of chapters 7 and 8 above: why is the interstate system reproduced, rather than evolving into world-empire; why do the successful hegemons rely more on accumulation through trade than military expansion; and why don't hegemons facing decline opt for world-wide imperium?  Also, why are the direct military challengers of hegemons never successful?  As argued in previous chapters these questions require attention to the peculiar nature of competition and accumula­tion in a capitalist world-economy.

Though Goldstein treats the hegemonic sequence historically, it is possible to try to delineate the systematic conditions and processes which  con­tribute to the rise and demise of hegemonic core states.  Let us discuss some similarities of the three hegemons which suggest the kinds of processes  which can account for their rise and decline.


The Three Stages of a Hegemony

Hegemonies have three stages.  The first is based on competitive advantage in mass consumption goods that can penetrate the markets of core producers in competing countries and also can expand the size of the market by lowering the price of the product.  The second stage is based on the expansion of capital goods production, and the third stage is based on the export of financial services and the performance of central place functions for the world-economy (See Wallerstein, 1984a).

   In terms of the cities that became hegemonic world cities over the history of the modern world-systems we may compare Amsterdam, London, and New York to peripheral cities and to other non-hegemonic core cities (i.e. Seville, Paris, etc.).  We should examine the conditions that promote  the development of production in key core industries and those that facilitate the development of the necessary state strength to back up the  expansion of world market shares.

A number of conditions may contribute to the determination of which country becomes a hegemon.  Geographical location would appear to play some  role in facilitating hegemony.  Hegemonic powers have been centrally located

within the economic networks they come to dominate.  This is obviously an  advantage in terms of transport costs, but may become less important as transport costs decrease.  Technology adequate to a breakthrough in competi­tive core production must be available, either from local inventors or through borrowing.  All three hegemonies have involved "industrial revolutions" in the sense that new, more economically efficient technologies were applied that allowed the production of mass consumption goods more cheaply than by competitors.  Another necessary condition is the existence of investment capital sufficient to develop the new types of production in the hands of those willing to risk it in entreprenuerial ventures.  Each  rising hegemonic power has early on developed diversified, capital-intensive agricul­ture for home consumption and for export.  They have eventually developed access to cheap imports of some staple foods and raw materials, most often produced in the periphery, which have been important inputs to industry.  Human capital, that is, labor with skills relevant to the new type of production, must be avail­able.  All these conditions contribute to the ability of an emerging core state to form a leading sector of core production that can serve as the basis for hegemony.

The political conditions of rise to hegemony are rather more compli­cated.  A hegemonic state must be powerful vis-à-vis other states and must also have the strong support of the class coalition that composes its regime.  The quality and unity of this class coalition are also important.  It must strongly include classes with an interest in pursuing a strategy of profitable produc­tion for the world market.  Although the ability of the state apparatus to appropriate resources is undoubtedly important (Tilly, 1985), the conception of state power I am using is not reducable to the extractive power of govern­ment.  As discussed in chapter 6, a state is powerful if the classes that support it will grant it great support during emergencies (Tardanico, 1978).  Its ability to extract surplus through taxation does not automatically show that it is strong in the sense that I mean here.  The Dutch state could raise a navy overnight by convincing the Amsterdam merchants that their interests were at stake, whereas the French state, whose peacetime government revenues per capita were much greater than those of the British throughout the nineteenth century, could not raise so great a subscription during time of war.

The size of the state is also important, and as Wallerstein is fond of pointing out, it is possible to be too large as well as to be too small,2  especially if economic regions with contradictory interests are part of the same state, as was the case with France.  It should also be added that most  hegemonic core states have a relatively egalitarian and pluralistic political system compared to those of their competitors.  This pluralism allows rapid adaptation to changes in the interests of classes in the center coalition, as well as some flexibility in response to the demands of workers and farmers. These characteristics can be advantageous in the world economy, at least during the period of upward mobility.  The relative egalitarianism  of the polity incorporates a larger percentage of the population into the development process and provides some (again temporary) solutions to the Keynesian problem of effective demand.  Another way of saying this is to point out that upwardly mobile core states have larger home markets than their competitors because of relatively more equal distributions of income.3   Nation-building, the formation of a strong social solidarity at the national level, is a process which characterizes the emergence of all three hegemons.  This contributes to political stability and to the expansion of the home market.  It should be pointed out that these political qualities do not  preclude the existence of a domestic underclass (e.g. Hechter, 1975; Zinn, 1980).  Typically this serves both as an outcaste status group that  reinforces the solidarity of the larger nation, as well as a domestic source of economic exploitation.

What, then, are the conditions that lead to the decline of a hegemonic core state?  First it should be pointed out that core states do not decline absolutely.  The entire world-economy continues to grow, albeit at different rates.  What happens is that core states relatively lose their hegemony, but they do not plunge into the periphery.  The most important cause of relative  decline is the spread of leading core industries to other competing core countries, and to parts of the semiperiphery.  Hegemonic states attempt to  monopolize the new types of production, but unsuccessfully because of their inability to politically control the diffusion of techniques, skilled labor,  and investment capital.  Competing producers in other states attempt first to win back their home markets, often employing political regulation of trade (protectionism) as well as the adoption of the new production techniques (Senghaas, 1985).  Later some of them will successfully compete with the hegemonic power in international markets.

Another factor that contributes to the loss of hegemony we may term the turnover time of fixed capital, especially investment (both private and  public) in infrastructural inputs to the production system.  This obviously

operates at the level of heavy investment in technologies such as plant construction and expensive large-scale machinery.  Latecomers have an advantage in that they can adopt newer technical innovations, while earlier investors must wait to recoup initial investment.  Steel plants in the United States and Japan are well-known examples of this.  But the same problem may be seen in other investments in the built environment which are less obviously subject to the logic of profits, but that nevertheless have an effect on competitive production.

Transportation systems, urban structures, communications systems, and  energy systems involve investments of resources that, once made, tend to be relatively permanent or not easily reorganized.  The canal system of Amster­dam, more systematic and spacious than that of Venice, is a permanent feature of the city.  The advent of other forms of transportation, more  economically competitive ones, does not produce the rebuilding of Amsterdam, but rather the removal of some of its economic activities to other loca­tions.  Similarly, the location of cities on rivers is heavily influenced by the transport costs relative to a particular stage of transport technology.  The advent of larger ships does not produce the  removal of cities downstre­am, except in the sense that ports with deeper water become the new centers of trade.  At the level of nations, national  transport systems, energy systems, communications systems, and the locations and division of functions between cities, as well as the types of technology  utilized in factories, are all forms of investment subject to the turnover time of fixed capital.  A second-r­unning core state that is developing a new  type of core produc­tion can more easily incorporate the latest, most competitive techniques and features of overall social production than the already-invested hegemonic core state.  This is one of the components of Gershenkron's (1962) "advantages of backwardness."

It can be asked why entrepreneurs within a declining hegemonic core  state do not invest within their national economies to revitalize material production and increase productivity.  It may be that a particular steel company must wait for its sunk capital to be depreciated before building a new plant that uses more productive technology, but why don't other  corporations make such investments?  Here we may point out that the structure of national tariffs plays a role in the determination of invest­ment locations.  Tariff protection of national industries increases in a period of slower growth as states seek to protect their national markets against international competition.  It may be in the strategic and national interest to make new investments in steel, and indeed states often adopt policies that subsidize such undertakings.  But the purely profit-oriented logic of investment is unlikely to help a country which is losing its competitive position in the world market.  Building a new steel plant next to the old plant means that the national market will have to be shared, while buying steel from more competitive producers abroad and investing in more immediately profitable enterprises (often located in other countries) is the most attractive strategy for private investors. 

Thus economic nationalism by itself might prevent the relocation of certain industries, but declining hegemonic core states are usually ambivalent about the choice between nationalism and internationalism.  This reflects the contradictory interests of their "national" and "international" capitalists as well as the contradictory interests of workers as consumers and job-holders (Hart, 1980).  The road of state-sponsored "revitalization" advocated by those in hegemonic core states most concerned with the interests of national producers (both labor and capital) may be taken, but other competing states will also employ this strategy, and they are more  likely to do it effectively because the coalitions of classes that control these other states are less dominated by those who have international investments (Evans, 1985).  The international capitalists within a declining hegemonic core state can often

convince consumers that it is better to try  to hang on to centrality in world exchange and to benefit from low-cost imports than to adopt an expensive (and risky) program of economic  revitalization.

In addition, organizational features tend to have a certain inertia (or  momentum, if organization is a process).  Once a national economy becomes organized in a certain way there is a tendency to crystallization around  patterns which are then not easy to change.  While organizational forms may be more malleable than the infrastructural features discussed above (because  material sunk capital is less malleable), social rigidities do crystalize around organizational forms. 

A frequently cited explanation for the British decline at the end of  the nineteenth century was the reticence of family-held firms to adopt the newly emerging corporate form (Crouzet, 1982).  In many sectors family firms  apparently preferred continued control to additional profits, and thus British industry was late to adopt the expanded scale and new organizational forms becoming widespread in Germany and the United States.  Albert Bergesen (1981) has argued that US corporations in the twentieth century have displayed a functionally equivalent reticence to adopt a new organizational innovation which is becoming widespread, the state─firm merger.  Also, the US federal government lags behind almost all contemporary states with regard to national economic planning in an era when state capitalism is being successfully employed by most competitors. 

Another factor is the opposition that successful capitalist accumula­tion creates.  The very political pluralism and relative egalitarianism that was earlier a competitive advantage allows the formation of constraints on the

maneuverability of capital and increases the costs of production.  The most obvious example of this is the formation of political organizations that protect and expand the interests of workers.  Wages, both direct and social, tend to go up in a successfully hegemonic core state.  Capitalists who are making big profits are more likely to accept a higher wage bill accompanied by a stable labor supply.  This changes when competition increases and profits decline. 

Similarly, other constraints on the continued revolution of production become politically articulated.  The state begins to respond to the needs of  core workers and other groups (e.g. consumers, environmentalists, etc.), and these "non-economic" demands on capital may reduce the relative profit-

ability of production within the country, at least compared to offshore locations where workers and other groups are less well organized.

Mancur Olson's (1982) The Rise and Decline of Nations stresses rising wages as the most important among the "social rigidities" which cause the decline of formerly successful national economies.  Olson's analysis points to some interesting organizational features which reduce relative efficiency of  production and increase the obstacles to economic growth and revitaliza­tion.  Nations in which interest groups are fragmented and specialized, such as the  US, have more obstacles and inefficiencies than nations in which general organizations such as labor or socialist parties represent broad constituen­cies (i.e. Sweden) because these latter broad-based groups are better able to incorporate matters of national interest into their political agenda.  But Olson's analysis proceeds from the assumption that purely economic efficiency

and the ability to compete effectively in world markets are the best measures of progress.  Thus the policy implication of his analysis is that states and firms should remain as independent as possible of the demands of workers, or other interest groups.  A more balanced definition of progress would suggest that the logic of growth ought to include the needs of workers, consumers and the environment.  "Efficiency" across the world-system should take these needs into account without pitting workers in different countries against one another.  This can be ac­complished only by democratically regulating major investment decisions at the world level.

Another condition, one that is often related to increasing politically-articulated constraints on capital, is the export of investment capital.  Capitalists respond to differentials in profit rates, and so increasing costs of operating in the home economy produce the incentive to invest elsewhere, and thus the phenomenon of the export of capital or "capital flight."  This means that fewer new investments in material production are made in the home economy, although new lead sectors do continue to emerge, especially in the provision of financial services to the larger world economy.  Thus the world cities located in hegemonic core states typically become more important to the economy of the country in the latter days of the hegemony.  This is because the centrality in exchange that developed from the earlier centrality in production is an important resource for the national economy and for the functioning of the larger  world economy.

It may be the case that, although benefiting from centrality to a  certain extent, the hegemonic core state comes to bear too great a propor­tion of the costs of maintaining order in the larger world-economy.  The smooth operation of the world-system requires the repression of deviance and the maintenance of order, as does any social system.  In the contemporary system an important degree of order is maintained through political-military

expendi­tures.  Military expenditures may serve some economic functions (e.g.  Baran and Sweezy, 1966), but several studies demonstrate that they do not contribute to national economic growth (e.g. Szymanski, 1973; Väyrynen, 1988).  The small or non-existent military expenditures of Japan and Germany since World War II have allowed resources to be concentrated on research and development of  profitable commodities.  The costs of maintaining world order tend to be borne disproportionately by the hegemonic core state, and this burden cannot easily be spread  across the core as a whole, although a declining hegemon will try to lessen its share of the costs.  At some point the costs of centrality come to  outweigh its benefits, usually after competing core states, which have been operating under the umbrella of the hegemonic state, begin to effectively  challenge the hegemon's dominance in world markets.


Comparison of Hegemonies

Let us now assess and qualify the generalizations of the previous section by reviewing the characteristics of the three powers that have been hegemonic in the modern world-economy (the United Provinces of the Nether­lands, the United Kingdom of Great Britain, and the United States of  America) and by comparing them with the prior hegemony of Venice and with the powers that contended for hegemony but did not attain it. 

The Habsburg Empire (which included the core "dorsal spine" of the European world-economy in the first half of the long sixteenth century)  (Bousquet, 1980) was based primarily on political-military, rather than economic, centrality.   The mercantile aggressiveness of the Portuguese  (Modelski, 1978) served as the first wave of European expansion, but like the later centrality of Seville, Portugal did not develop centrality in produc­tion.4  The Portuguese expansion, and the "primitive accumulation" of money-capital by the Spanish, had important, although complicated, effects  on the emerging European world-economy (Wallerstein, 1974:67-84), but they did not lead to the development of core production in Lisbon or Seville.  Somewhat like the case of France later on, Spain included areas with interests uncon­ducive to the development of core activities, and the state was weighed down by the necessity of holding together centrifugal regions (Wallerstein, 1974).  The attempt by the Habsburgs to impose imperium on the not yet fully integrated capitalist world-economy represented a precapitalist logic of domination partially reflected in the wholly mercantile model of exploitation that was the main feature of Portuguese and Spanish expansion to external arenas.  These powers, while very important to the formation of the newly emerging system, were not themselves fully formed hegemonic core states of that system.  Capitalists had state power in smaller city states in this period (Venice, Antwerp, Genoa, Florence) but the larger states were still dominated by tribute-oriented classes.

The United Provinces of the Netherlands much better fits the

Wal­lerstein­ian conception of hegemony in a capitalist world-economy.  The Dutch Revolution created a republican federation in which the seafaring capitali­sts of Amsterdam held considerable power.  The religious wars brought refugees to Amsterdam with their skills and what other capital they could manage to convey.  Citizenship in Amsterdam was to be had for the price of eight Florins (Barbour, 1963).  Competitive advantage in production was first evinced in the herring fisheries, which captured a large share of this staple market in the Baltic and the expanding Atlantic economy.  Shipbuilding was another leg of Dutch core production that enabled merchants to out-compete Hanse and English pliers of the carrying trade.  The cost-efficient Fluyt was easily adapted to many specialized uses and effectively manned by small crews (Wallerstein, 1980a).  Angus Maddison (1982:35, table 2.2) shows that the Dutch economy was much more industralized in 1700 than was the British economy.  Both Maddison and Wallerstein demonstrate that the Dutch hegemony was based on production capital in lead industries, contrary to those who have seen the Dutch as primarily merchant capitalists.

The Dutch state is often seen as small, but in terms of the notion of state strength employed in chapter 5, it was estimable (Braudel, 1984:193-5).  Johan DeWitt, the Stadtholder of Amsterdam, could raise suffi­cient funds in a day on the Amsterdam bourse (stock and commodity exchange) to defeat any sea power in the world.  It has been said that the state was split between the capitalist cities and the land-oriented House of Orange, but in comparison to the other core states, the capitalists had great sway indeed.  During national calamities the princes of Orange rallied the populace to defend the nation, while during the peace the less patriotic urban capitalists had their way.  The federation and the republican form of government enabled the state to adapt easily to changing economic and military contingencies and the changing interests of its center coalition.

The ideology of free trade and the rights of all nations to use of the seas were propagated by the Dutch intelligentsia during the period in which  economic competitive advantage enabled the Amsterdam capitalists to under- sell all competitors (Wilson, 1957).  This did not prove incompatible with a policy of "armed trade" employed in the periphery to deprive the Por­tuguese of their monopoly of spices from the East Indies (Parry, 1966).

Barbour (1963) contends that in many respects Amsterdam is the last city-state, more similar to Venice and Genoa than to England or the United  States, and Braudel (1984) concurs.  The Dutch orientation toward the seafaring international market was undiluted by commitments to continental territorial aggrandizement.  In this respect it was much like Venice, and Peter Burke's (1974) comparison of Dutch and Venetian entreprenuers and rentiers is reveal­ing.  The Venetian city-state was the  hegemonic core state of a protocapital­ist Mediterranean regional economy (Braudel, 1984).  Barbour's comment on city-states and nation-states in the core suggests the observation that hegemonic core states are larger the larger is the system as a whole.   

Lane (1973) observes that the Venetian ruling classes became land oriented during the period of their decline, and he interprets this as an  attempt to form a nation-state that could compete with the larger states of the European world-economy in formation.  The United Provinces seems rather small in terms of land area and population size compared to the other states of Europe, but it nevertheless played the role  of hegemonic core state rather effectively during the seventeenth century.5  The United Provinces may be seen as a kind of midpoint between Venice and England.  The hegemonic state became increasingly a nation-state, and the size of the national market became larger and larger, with the US national market being an immense share of the world economy it dominates. 

The Dutch decline exhibited the tendencies mentioned in my description  of hegemonic stages:  the shift toward financial services, the export of capital, and the transformation of the capitalists from entrepreneurs to  rentiers (Burke, 1974; Riley, 1980).  Amsterdam remained an important center of international commerce and finance 300 years after it lost  first position.  World cities decline relatively, not absolutely.

The United Kingdom fits the stages of hegemony best.6  Eric Hobsbawm's (1968) study, Industry and Empire, depicts the three stages of hegemony in the rise of English cotton textile production, its replacement in the middle of the nineteenth century  by the production and export of machinery, railroads, and steamships, and the increasing importance of London in the later nineteenth century as a center  of world financial services.  The Dutch hegemony, however, matches the three stages formulation rather well, although the middle period of export of  ships, arms, and land reclamation projects fits the notion of "capital goods" somewhat loosely.

The English Revolution, like the Dutch, exhibits relative egalitarianism, pluralism, and the firm incorporation of diverse capitalist interests into a flexible state capable of mobilizing immense resources for international war while maintaining a somewhat sparse and inexpensive peacetime bureaucracy.  It should be repeated here that we are describing features of the core of a larger capitalist system, not features of capitalism as a whole.  We do not want to repeat the mistake of identify­ing capitalism as a system with the laissez-faire state.

The unity of the center coalition in the United Kingdom was not without contention, as can be seen by the history of the rise and fall of the Corn Law.  But the agrarian capitalist landowners were much more integrated into successful production for the world market than were the aristocrats of France.  France was a case of too large a nation-state in which the formation of the absolute monarchy was necessitated by the divergent interests of economic regions (Braudel, 1984: 315-51).  The cities of the west were anxious to participate in the expanding Atlantic economy, while the older Mediter­ranean-oriented Occitania (Wallerstein, 1974:262-9; 1980a) displayed the tendencies of downward mobility charac­teristic of other areas that had become semiperipheral to the system.  The mercantilist and industrializing policies of Colbert were undercut by the renewed focus on continental diplomacy and political-military aggrandizement (Lane, 1966).  The "bourgeois revolution" was delayed until 1789, by which time England had stolen the march on the newly emerging core industries.  Paris remained the cultural and diplomatic center of Europe, while London became the hegemonic city of the global economy.

The export of capital from England in the latter half of the nineteenth century is legendary (Crouzet, 1982).  English capital went both to the periphery and to other core states.  That this phenomenon was by no means new is shown by the earlier Dutch case.  It must be seen less as a cause of the spread of the new types of core production to other areas than as a response to that spread.  The discussion of the "climacteric" of British maturity (Phelps-Brown and Handfield-Jones, 1952) often alleges a loss of entrepreneur­ial spirit among business leaders, which reminds us of Pareto's foxes, but this, like the Dutch shift toward low-risk, steady rentier  incomes, can be understood mainly as a response to changing opportunities for investment.  Venture capital did not disappear; it was sent abroad.

Sometime after 1850 the average incomes of workers in Britain began to rise (Emmanuel, 1972; Braudel, 1984).  This was largely the result of the  successful formation of trade unions and political organizations of the working class, which succeeded in obtaining some influence in the British  state.  The increasing power of organized labor raised the cost of exploita­tion in Britain and created political resistance to the maneuverability of capital.  These factors further encouraged the export of investment capital.   The United States exhibited many of the general characteristics I have attributed to hegemonic core states.  The infant core industries of New  England in the eighteenth century (shipbuilding, salt cod, distilling of rum made from Caribbean sugar, and light manufacturing) emerged in tandem with  profitable opportunities provided by the semiperiheral location of New England merchants as carriers between core and periphery in the expanding Atlantic economy ─ the so-called "triangle trades."  An alliance between the merchants of New England, farmers of the middle colonies, and planters of the  South, with the help of the French army and navy, managed to create a sovereign state out of a collection of British colonies. The policy of the  federal state toward the protection and development of core industry varied with the price of wheat in the world market.7  Alexander Hamilton's "Report on Manufactures" recom­mended a protectionist and import substitution policy which would develop the home market and enable the United States to become a core power, but Hamilton's policy was not immediately adopted.  The merchant capitalists of New England were ambivalent at first, gaining much of their profit from  carrying Southern cotton to the English midlands.  They allied with the South to oppose protec­tion until, "In 1825, the great firm of W. and S. Lawrence of Boston turned its interest and capital from importing to domestic manufactur­ing, and the rest of State Street fell in behind it.  So did Daniel Webster, who was now to become Congress' most eloquent supporter of protection" (Forsythe, 1977).

In general the Southern peripheral capitalists, exporting raw materials  to core industry in England, opposed protectionism because it raised the cost of imported manufactured goods and risked British tariff retaliation.  Northern manufacturers generally supported tariffs.  Henry Clay's "American system" was a policy of protection for domestic manufacturers combined with state-spon­sored expenditures on transport infrastructure to integrate agricul­ture and manufac­turing in the home market.  Farmers supported this policy when the world price of wheat was low.  During price booms the farmers sided with the South, as they too became primarily interested in exports.

The slave South was the most successful peripheral economy the world has ever known, and it sought to extend its political control over the West and over the Federal state.  After a series of confrontations and com­promises the "irrepressible conflict" was settled by the Civil War, which resulted in the consolidation of control by core capital in alliance with core labor and Western farmers.  In the 1880s the United States attained core status in the world-system.

The further rise to hegemony by the US was due to a combination of  production for the home market and the international market.  It is somewhat harder than for the earlier Dutch and British hegemonies to identify a single mass consumption commodity that led to the development of a new sector around which economic hegemony was consolidated.  Agricultural commodities were important exports throughout the rise of the United States, as they still are.  Agricultural commodities may be either core or peripheral products depending on the way they are produced.  Slave-grown cotton was clearly a labor-intensive peripheral commodity.  Western wheat and other agricultural exports became more and more capital-intensive, such that now they are definitely core products relative to the kind of agricultural production occurring in the rest of the world-economy.

The success of core production in the industrial North during the nineteenth century led to the early export of cotton textiles, and not long after, to the export of machinery.  Electrical appliances and automobiles became important mass consumption exports, along with other industrial products.  As discussed above, the home market seems to have played a relative­ly larger role in the early development of the United States than did the home market of earlier hegemonies.  This was possible because of the successful and relatively egalitarian territorial expansion of the United States (egalitarian in the sense that land acquisition by small and middle-size owners was substantial).

Let us compare the US hegemony with the Dutch and British hegemonies.  The size of the home market of the hegemonic core power increased with the size of the world market.  All three hegemonies rose after competing core powers weakened themselves in intracore war.  Their success relied more on economic competitive advantages in the production of material commodities than on military superiority, although both were important.  The maturation of hegemony brought increasing political and military centrality, as well as  economic advantage.  Decline in each case has had more to do with the catching up of competing core powers than absolute decreases in levels of production or consumption.

The US hegemony differs from the Dutch and British hegemonies in some important ways, however (Goldfrank, 1983).  The length of US hegemony will probably be relatively short, and this may correspond with the increasing frequency of other world-system cycles which has been noted by Albert Bergesen and Ronald Schoenberg (1980:271).  Thus it does not make sense to mechanically extrapolate from the earlier sequences of core rise and decline.  Such an ex­trapola­tion based on the late nineteenth century would go as follows: The downswing of the Kondratieff, which began in 1873, could be compared with the period of the early 1970s.  The United States would still have relative centrality but would begin worrying about its economic competi­tiveness and its ability to have its way in the world polity.  A period of increased core competition would bring rising tariffs, increased colonial expansion, division (and redivision) of the periphery.  This period would be followed by the Edwardian Indian summer, the economic upturn which began in 1895.  The world economy would appear to regain stability and growth, but war preparations and shifting alliances would result in a bid for political­-military hegemony by an upwardly mobile power that had not succeeded in attaining much integration into the structure of world power  (Germany in 1914, the Soviet Union in the second decade of the twenty-first century).  This extrapolation would predict the outbreak of a new world war sometime early in the twenty-first century, and a

resulting reorganization of the world political structure that would allow a new hegemonic core  power ─ not the Soviet Union but perhaps Japan ─ to emerge and a new period of capitalist accumulation to begin.

The apparently shortening period of world-system cycles may reveal imminent changes in the dynamics of the system which could alter the above  scenario.  Since the late nineteenth century the system as a whole has begun to experience certain natural and social "ceiling effects."  Previously the  contradictory aspects of the logic of capitalist development have led to conjunctural reorganizations of the political structure of the system through intracore war.  This is what has pushed the decline of old hegemonic powers and the rise of new ones able to operate on scales more appropriate to the expanded size and intensified nature of the system.  These reor­ganizations have allowed the capitalist accumulation process to begin again on a new basis, that is, to adapt to the problems created by its contradic­tory nature, and to continue expansion and intensification.  In the twentieth century the ceiling effects have resulted in much deeper structural problems for the system than previously (Chase-Dunn and Rubinson, 1979).  The inclusion of virtually all global  territory and population into the capitalist world-ec­onomy in the late nine- teenth century eliminated the possibility of expansion to previously unin­tegrated areas.  And the formal decolonization of the periphe­ry, even though it has not eliminated (or even reduced) the hierarchical core/periphery division of labor, has increased the costs of exploiting the periphery.  This reduces the amount of surplus value from the periphery available for resolving class conflicts within core countries.

How do these ceiling effects create a situation which is different from the one faced by the Dutch or the British in similarly late phases of their hegemonies?  One difference is a consequence of the increased density of  political regulation of the capital accumulation process across the system.  While most of this regulation is nationally controlled, and thus is more an increase in state capitalism than a change in the logic of the competitive accumulation process (Chase-Dunn, ed., 1982b), there are incipient forms of supranational economic regulation, and this provides a greater chance than ever before for the hegemonic core state to engineer a political solution to  the trend toward increasingly bloody confrontation.  Ulrich Pfister and Christian Suter (1987), in their excellent study of recurrent international  financial crises, argue that the ability of the contemporary world debt structure to prevent (or postpone) collapse is due to the increased level of international coordination among banks provided by such institutions as the International Monetary Fund and the World Bank.  The process of world state formation may be unlikely to realize an effective monopoly of legitimate violence in the next 40 years, but this outcome has a greater probability of occurrence than ever before.  The hegemonic core state, and especially that sector of its ruling-class with the greatest dispersion of investments across the globe, has the greatest interest in maintaining both the present order and the global peace (Goldfrank, 1977).

From the point of view of this cycle of core competition, where is the  United States presently?  The US hegemony in core production probably began in the 1920s.  But it was not until after World War II that the United  States actively adopted the role of hegemonic political leader. This leadership

matured in the 1945-70 period of the Pax Americana.  Economic hegemony  began to decline from about 1950 on.  In 1950 the United States produced 42 percent of world goods and services: by 1960 this had dropped to 35.8 percent and by 1970 it was 30 percent (Meyer et al., 1975:table 2).8  The decline of the US position vis-à-vis other core states is convincingly demonstrated by Rupert and Rapkin (1985).

Albert Bergesen and Chintamani Sahoo (1985) show that the dominant position of US-based firms has declined relative to the position of European and Japanese firms in various world industries since the 1950s.  Financial centrality did not begin to slip until 1971, although signs of unrest due to balance of payments deficits were visible earlier, as were pressures to engage in trade protection (Block, 1977).

Examining trends in their network measure of the structure of world trade of commodities at different levels of processing, Smith and White (1986) show that the core is becoming increasingly multicentric (less hierarchical) between 1965 and 1980.  This finding supports the notion that the decline of US hegemony corresponds to a more equal distribution of competitive advantage in core production.

The defeat in Vietnam is often seen as an indicator of declining US political and military centrality.  Perhaps more important have been the  rifts in NATO.  Various attempts to regain US-led unity, such as the Trilateral Commission, have been less than successful.  Reagan's effort to warm up the Cold War with the "evil empire" and to act tough with Libya, Grenada, and the Sandinistas in Nicaragua can be largely understood as an attempt to rees­tablish US political hegemony in a world which is becoming less economical­ly central­ized.

Thus the golden age of US hegemony has clearly passed, but the United  States will remain the largest national market and the most powerful military power for some time to come.  The internal operation of the process  of uneven economic development (to be seen in the emergence of sunbelt cities) will prolong the US hegemony, as will the fact that US based corporations have advantages of scale that cannot be easily matched by the firms (private or public) of other core states.  And, although the United States is dependent on raw material imports due to its high level of consumption, it is less dependent than many of its competitors because of  remaining internal resources.  Thus we can expect the United States to maintain its economic and political centrality, but it can never recover the heights of hegemony reached during the score of years following World War II.

It would seem probable that the United States would attempt to organize a core-wide approach to the problems of a stagnating world economy because it still has the most to lose from increasing levels of core conflict.  But this attempt is likely to be undermined by increasing intranational and internation­al competition in a period of world economic stagnation (Kaldor, 1978).  The relative harmony of labor and capital that has characterized US class relations since the 1950s is likely to move in a direction more similar to other core states ─ increased class consciousness and struggle between labor and capital.

Two trends may portend a reorganization of US politics.  The US political party system has undermined class politics in a number of ways.  The "winner take all" electoral system undercuts the discussion of issues, as all "serious" electoral contenders play for the middle.  The major parties have been supported by cross-class alliances formed on a sectional basis stemming from the regional political history of the US dating back to the Civil War.  And class-based politics have been undermined by the "diamond-s­haped" distribu­tion of income in the US, which locates the majority of families in middle-in­come ranges, and also, of course, by the identification of people from all classes with the "American" nation.

Cross-cutting sectional differences are being evened out by the  develop­ment of the sunbelt, a trend which undercuts the domination of the South by "Dixiecrats."  This makes the South more similar to the North, and may reduce the regional cross-cutting which has been an important reason that the major parties have resisted organization along class lines.  Another factor may also increase the salience of class interests in US politics ─ the trend toward a "shrinking middle class" discovered in the income  distribution statistics since 1978 (Rose, 1986:table 5).

These trends may well change the vocabulary of US politics toward serious consideration of working-class interests and issues of democratic control of the economy, and in this regard the US may catch up with other core states.  On the other hand, recent research has shown that the US class structure has not experienced increasing proletarianization in recent years.  Wright and Martin (1987) show that between 1960 and 1980 the proportion of the currently employed work force composed of non-supervisory wage-earning workers declined from 54.3 percent to 50.5 percent.  Managers, supervisors and "experts" all increased their weight in the work force.  While Wright and Martin interpret most of this trend as due to the rise in the US of a "post-industrial" economy, they also contemplate a world-system explanation:

The Marxist theory of proletarianization is a theory about the trajectory of changes in class structures in capitalism as such, not in national units of capitalism.  In a period of  rapid inter­nationaliza­tion of capital, therefore, national statistics are likely to give a distorted image of transformations of capitalist class structures.  If these arguments are correct, then one would expect that changes in the class structure of world capitalism would be unevenly  distributed globally.  In particular, there should be at least some tendency for managerial class locations to expand more rapidly in the core capital­ist countries and proletarian  positions to expand more rapidly in the Third World.  (1987:22-3)


This continued shift toward a more core-like class structure may work against the other trends noted above with regard to possible changes in US politics.  While the decline of hegemony and the increasingly unequal distribution of income may stimulate some polarization along class lines and alter the focus of politics, it is unlikely that the US will experience any sharp turn toward socialism in the near future.

Conflicting class interests over international economic policy will  continue to make it difficult for the US to engineer a core-wide alliance.  In the face of increasing competition for raw materials, the most likely strategy will involve the solidification of economic and political ties with some areas of the periphery.  This would be the functional equivalent of an old-time colonial empire, although the terms of the alliance are likely to be less exploitative for the peripheral areas than earlier colonial empires were.  For one thing, formal recolonization is impossible (although it is interesting to think about why), so trade agreements and military pacts must exhibit, at least on the surface, the formalities of a relationship between equals.  Of course, the ideology of international liberalism has  never prevented overt interventions in peripheral "backyards."  But we can surmise that the level of peripheral resistance is now greater, and so is the level of resistance to imperial adventures within core countries compared to earlier eras of the world-system.

The tendency for core states to solidify relations with particular  peripheral areas may undercut the tendency, observed since World War II, for violent conflicts among core powers to be fought out in the periphery.  The export of violent confrontation to the less powerful areas of the globe has been the rule during the period of the Pax Americana.  But in a period of multicentricity, wars that break out in the periphery may more easily  become world wars.


Measuring the Hegemonic Sequence

Most of the studies of the hegemonic sequence have been of the type carried out above, a narrative which tends to confirm the theoretical views of the narrator.  The classic example is The Precarious Balance by Ludwig Dehio (1962), a diplomatic history of the clashes among the great powers of Europe.  Charles Doran's The Politics of Assimilation: Hegemony and Its Aftermath is a fascinating analysis of the way in which changes in the relative power of core states affect the decisions of statesmen.  Even Goldstein (1988), who does a sophisticated quantitative analysis of Kondratieff waves and cycles of war severity, simply adopts the Wal­lersteinian designation of the Dutch, British, and United States hegemonies, and launches a narrative when he comes to the hegemonic sequence.

There have, however, been a few studies which have attempted to measure  the sequence of concentration and dispersion of power among core states.  These have been carried out primarily by political scientists studying the inter-

na­tional system, and they have employed very different ideas about what con­stitutes hegemonic power, as reviewed above. 

It would be important, given that there are very different theoretical claims made by students of the hegemonic sequence, to compare different  measures, to study the timing and the magnitude of hegemonic rise and decline, and to discover the causal interactions between economic and political-military  types of power.  It should be noted here that only one of the existing studies (Thompson, 1986) has employed a measure which could be understood as even a rough proxy for the Wallersteinian notion of hegemony (see below).  It is, of course, difficult to measure comparative advantages in core  production and the ability to penetrate foreign markets, especially if we want to quantitatively compare our measures over long periods of time.  I  will contend, however, that certain measures of national economic development are good proxies for the idea of comparative advantage in core  produc­tion.  After all, GNP per capita is highly correlated with national labor productivity (GNP per worker), especially when we compare a large  number of countries.  Other measures known to cross- na­tional researchers to be highly correlated with GNP per capita may also serve fairly well as estimates of comparative advantage in capital-intensive production.  It is well known that the distribution of the national product across economic sectors ─ especially the percentage of the total product in agriculture ─ is highly negatively correlated with other measures of economic development in  cross-national comparisons with large numbers of countries, as is the percentage of the work force in agriculture.

I will contend that these measures of economic development can serve as rough proxies for relative core status in the Wallersteinian sense, at least until we can find the resources to unearth data more directly related to the notion of comparative advantage in core production.  Some results of the analysis of the distribution of economic development measures among core  countries for the nineteenth and twentieth centuries are presented below.

But first let me report what other researchers have found.  George  Modelski and William R. Thompson (Modelski and Thompson, 1988) have completed a monumental coding project which estimates the amount  of naval power controlled by each of the great powers of Europe from 1494 to the present.  In order to be categorized as a "global power" a nation must control either 10 percent of the total "capital ships" or 5 percent of the total naval expenditures of the great powers.  The "world power" (hegemon in my terminol­ogy) initially possesses at least 50 percent of the naval resources available to all the global powers.  In the Modelski/Thompson theory the long cycle of global power moves from one core war to the next.  After a  core war a "world power" theoretically controls a preponderate amount of naval power, enough to enable it to serve as the police-man of the interational system and to keep the peace.  This prepondera­nce of power, however, deteriorates over time until it is challenged by a country whose power is growing.

Because Modelski and Thompson are focusing on naval power and not land-based armies, their list of hegemons and the timing of hegemonic cycles comes out being fairly similar to the sequence posed by Wallerstein.  They are focusing on the highest level of global control, which is the arena of ships of the line, capital ships, and later, aircraft carriers.  The reason that the

Modelski/Thompson list of hegemons is similar to that of Wallerstein is that naval power and global reach are especially important forms of control in a capitalist world-economy in which international markets and core/periphery trade are important in the determination of who wins and who loses.

There are, however, some important differences between the "long cycle" and the Wallersteinian narrative of hegemons.  Modelski (1978) claims that Portugal was the first "world power."  And, like many other political scien­tists studying the "great powers," Russia is seen as an important player beginning in the eighteenth century.   The British are depicted as having enjoyed global power status in two "long cycles," one in the eighteenth

century and a second in the nineteenth century, following the Napoleonic Wars.  Several smaller European states, which became "developed" core countries in the nineteenth century, never make it to the list of great powers.

The Modelski/Thompson approach is similar in some respects to the "transition" theory of Organski and Kugler (1980).  They argue that important core wars occur when a rising dissatisfied great power challenges the interna­tional regime (from which it has been largely excluded) by making war against a declining or stagnating formerly most-powerful state.  Organski and Kugler do not formulate a world-system level hegemonic sequence, but they do see uneven rates of economic growth as the main cause of changes in the relative power among core states.  As mentioned above, they  operationalize this by measuring total GNP.

I have always thought of hegemony (in the sense of comparative advantage in core production) as exhibiting a wave-like pattern in which  troughs are periods of relatively equal distribution of comparative advantage among core powers and peaks are the golden age of a hegemon's economic and military power.  This picture is typified, following Eric Hobsbawm's (1968) Industry and Empire, by the rise of British productive advantage during the late eighteenth-century industrial revolution, consolidated after the victory over France in 1815, with a peak around 1860  and the beginning of a slow downturn in the 1870s.

The picture painted by Modelski and Thompson is very different.  For them the peak of the cycle is right after a core war in which the new  victorious global power is at the zenith of its naval advantage over contenders.  Slow deterioration begins right away (in 1815 in the above example) and core war breaks out again when a new power is able to imagine defeating the old hegemon.  Modelski and Thompson note that the military  challenger never wins, but that the conflict results in a reorganized interna­tional power structure, usually centered on a country which was  allied with the former hegemon.

Thompson's (1983a) analysis of his own data leads, however, to a modifica­tion of the above hypothesized transition model.  He notes that the pattern of an increasingly powerful naval challenger is not regularly revealed in his analysis of the relative power of core states, although there is a tendency for the advantage of the hegemon to deteriorate.  He posits, instead, a "two-step transition model" in which a secondary core power tries to expand regionally through land based military adventures, and this regional war becomes a global war when the old hegemon and another allied core power perceive the regional challenge as a global challenge.9   As Thompson puts it:

It is most unclear, moreover, whether the primary chal­lengers realize, at the outset, the full extent to  which their regional activities will be viewed as  threatening by either the 'reigning' world power or its

eventual succes­sor.  How else are we to account for the repeated surprise with which the primary challengers confront the interven­tion of English, British and American military forces?  How else are we to explain, especially in the twentieth century, war breaking out  before the primary challengers have achieved the  capability base that they themselves have projected as necessary for global competi­tion?  (Thompson, 1983a:112)


Before commenting more on the Thompson/Modelski project I will describe another study of the concentration of power among core states, that by Singer, Bremer, and Stuckey (1979).  This is one of the studies which devises what Thompson (1983b) calls an "omnibus" measure of power concentration which combines six separate in­dicators.  The indicators used are:

"demographic" ─ the number of people living in cities having population sizes larger than 20,000; and the nation's total popula­tion;

"industrial" ─ total energy consumption; and total iron or steel

produc­tion; and

"military" ─ military expenditures and the number of persons in the armed forces (Singer, 1979:273).

It should be noted here that none of the variables used in the composite measure is an indicator of the level of development.  They all combine  aspects of a nation's size with its level of development.  Thus simply being a large country can give a high score on any of the indicators.

The resulting scores were used to calculate a measure of the relative concentration or dispersion of power among the "great powers."  This was done by summing the values of each indicator for all the nations thought to compose the circle of great powers, and then calculating the percentage of that sum held by each country, and then averaging the percentages across the six indicators to determine an individual country's final score.  These country scores were then used to calculate a statistic invented by Ray and Singer (1973) to estimate the concentration of power in an international system.  The resulting concentration scores are presented for five-year time points from 1820 to 1976 (Singer et al., 1979:277).

Thompson (1983b) uses the same concentration formula (the Ray─Singer index) to compare his data on naval power with the Singer (et al., 1979) measure.  He calls the Singer measure the C.O.W. measure after the Corre­lates of War Project, a usage I shall adopt.  Figure 9.1 is taken from Thompson (1983b:152) and shows the relationship between the concentra­tion index as calculated using Thompson's naval data and the C.O.W. indicator from 1816 to 1960.  Inspection of this graph reveals that the concentration indices go way up during periods of core war.  Thompson's  index drops dramatically following the Napoleonic War, contrary to the notion of a slow deterioration, and both measures seem to rise slowly, "mounding" rather than peaking during the nineteenth century before they zoom up during World Wars I and II.

(Figure 9.1 about here)

Although the above raises questions about the pattern of concentration hypothesized by Modelski and Thompson it does not really tell us much about  the Wallersteinian version of hegemony.  This is because none of the indicators used in the above studies examines the distribution of development among the core powers.  A paper by Kugler and Organski (1986) presents data showing the relative distribution of total GNP across the  circle of "great powers" from 1870 to 1980.  Kugler and Organski utilize part of the C.O.W. methodology, summing the total GNP for all the countries and  then calculating each country's percentage of the total.  They use the results of this table to dispute the contentions of many authors who have written about hegemony.  They show, for example, that Russia had a greater percentage of the total GNP among major powers in 1870 than did the United Kingdom.

The problem with this "economic" measure is that it confounds size with  development.  By this same measure India is a "major power" while Belgium is not.  Of course, it all depends on what you mean by hegemony.  Below I have  begun the task of assembling some indicators which examine the distribution of core production among core states.  I have recalculated the percentages  in Kugler and Organski's (1986:table 1) presentation of GNPs, weighting by the population sizes of the countries.  This produces a set of numbers which  show the relative GNP per capita instead of total GNP (see table 9.1). While this is by no means an ideal indicator of the concentration of core production, it ought to be a much better estimator of Wallerstein's type of hegemony than the total GNP measure employed by Kugler and Organski.10

(Table 9.1 about here)

Table 9.1, being a transformed version of the Kugler and Organski table, contains some countries which were not core countries in 1870, such  as Japan and Russia, and does not contain other countries which were core countries by 1870, the Nether­lands, Switzerland, and Belgium.  While this table shows that, by the measure of GNP per capita, Britain was indeed the most developed country in 1870, it also indicates that the United States had caught up by 1880.  We know that GNP per capita can be high because of the production of valuable raw materials as well as core production.  Although the US had achieved a good deal of industrialization by 1880 its GNP was also raised by an agricul­tural sector which was bringing extremely fertile virgin soils into production.  This, and the well-known higher wages paid in the US, may account for part of the early high US GNP per capita.11

Table 9.1 also indicates that, in terms of GNP per capita, British  predominance peaked in the 1890s.  This is well after the slowdown of British growth studied by Crouzet (1982: chapter 12) which ostensibly began in the 1870s.  Crouzet (1982:377) shows that British growth rates between 1870 and 1913 in total output, output per head and output per man-hour were lower than in Germany, Sweden, and the US, and even France increased its output per head and output per man-hour slightly faster than Britain in this period.  But the British growth rates are not significantly different than the average figures for ten European countries during this period.  The depression of the 1870s was hard on all the countries, and it may be that the British relative decline did not gain real momentum until the 1890s.

Another rough proxy for the development of core production is provided by the figures on the distribution of product across economic sectors (Mitchell, 1975).  Table 9.2 contains information on Britain and France as far back as 1790 showing the transforma­tion of the structure of European and US national economies in terms of the proportions of national product in  agriculture.  This measure is known in recent cross-national comparisons utilizing large numbers of countries to be highly negatively correlated with  GNP per capita.  The industrial revolution of the eighteenth and nineteenth centuries occurred primarily in manufacturing, although we know that important productivity increases also occurred in agriculture as well. Nevertheless, all core countries, as table 9.2 shows, have experienced a structural change such that agriculture has become a decreasing proportion of total product.  Table 9.2 shows the timing of that transforma­tion across  countries.

(Table 9.2 about here)

As we can see, the United Kingdom already had a lower proportion of  product in agriculture in 1790 than did France.12  This is probably due to the changes in structure which had already occurred due to the prior growth of industry in Britain.  The proportion of product in agriculture decreased rapidly in Britain between 1790 and 1830, while in France it varied around 50 percent.  By 1850 the French proportion began to come down, and it continued to do so slowly until 1969.  The British proportion continued a rapid decline until it reached 4 percent in 1930.  In 1850 Germany's proportion was 47 percent, comparable to that of France, while Britain's had already dropped to 21 percent.

In 1860 we have data for Italy, Sweden and Norway, as well as Germany.  The German transformation had slowly begun. Italy was still predominantly  agricultural and did not begin to change until 1890.  Norway and Sweden were already less agricultural in 1860 than the other countries, except Britain.  Sweden did not change much until the 1890s, while Norway was steadily being transformed from 1860 on.  In 1870 we have data for Denmark and the United  States.  Denmark was still very agricultural, although it begins its trans-

for­mation immediately.  The US had only 21 percent of its product in agricul­ture in 1870.  Only Britain was more industrialized, with 15 percent.  The early catching up to Britain by the US is further supported by Gilpin's (1975: 89, table 7) calcula­tion of the percentage distribution of the world's

manufacturing production, and also by Thompson's (1986) study of the  con­centra­tion of lead industries (see below).  On the other hand Maddison (1982:table C5) indicates that fifty percent of the US work force was still in agriculture in 1870.

I have examined the relative concentration of several specific types of economic production and other indicators (Chase-Dunn, 1976).  Several of these indicators were presented by Eric Hobsbawm in Industry and Empire 1968: diagrams 23-25c).  Hobsbawm calculated his figures in terms  of ratios, the per­centage of various things such as world trade, industrial output, coal production, pig iron production, steel production and cotton comsumption which occurred in, or were attributable to, Britain.  When these concentrations are calculated in this ratio form two things are  striking.  Except for pig iron production and the percentage of world trade which is British trade, all the indicators of British economic hegemony decline from the time of earliest measurement, usually around 1800.  I submit that this does not mean that the peak of British economic hegemony was before 1800, but rather that the way in which the indicator has been calculated makes it very difficult for British advantage to increase.  This is because, for most of the indicators, the British were the first produce­rs.  For example, we may wish to examine the changing distribution of railway lines.  Since the British developed the first steam-driven railway, the ratio of British advantage to the other core powers starts at infinity.  The British have one and the other powers have zero.  It is difficult to go up from there.  For this reason I have constructed an alternate measure which examines difference scores rather than ratio scores.  Thus, with a difference score the first instance is a value of one instead of infinity.

When we examine the same distributions utilizing difference scores we  indeed find peaks during the nineteenth century, or more usually "mounds."  The British advantage over the sum of French, German and US quantities generally rises to some point between 1870 and 1890 and then declines.  For example, installed railway line per kilometer of land area peaks around 1870.  Crude steel output peaks in 1890.  Raw cotton consumption peaks twice, once in 1880 and again in 1890.  Pig iron production peaks in about 1880.  Coal  output peaks in about 1885.  National income per capita peaks between 1890 and 1900, but then rises again between 1910 and 1913.  Foreign trade doesn't really peak in the nineteenth century but rather rises and continues to rise, as Hobsbawm (1968:diagram 26) shows, until about 1930.  Similarly, steam engine power peaks in 1880 and then rises even higher after 1890.

Two things can be inferred from the above.  The generalization about an  overall peaking of British hegemony in the 1870s must be considered a sort of average.  When we look at particular sectors or particular types of  production the peaks come at different times.  And in some respects the British hegemony continued on into the twentieth century.  This was  especially true in terms of British centrality in international trade.  The US did not begin to be the hegemon with respect to international trade  until the 1930s.

A study which focuses on leading industries as the measure of economic advantage in the hegemonic sequence has been presented by Thompson (1986).  He uses Rostow's (1978) description of leading sectors in national development to construct a list and periodiza­tion of leading sectors in the development of the world economy (Thompson, 1986:table 3).  He then computes national propor­tions for several great powers beginning in 1790 for each of the lead industries, and then averages the proportions across industries for each core country to produce a measure of the concentration/d­ispersion of core production in lead industries (Thompson, 1986:table 5).  Thompson's results produce a rise and decline for both the United Kingdom and the United States, and he compares this measure with the Thompson/Modelski measure of the concentration of global naval and air force reach.  This important empirical work is accompanied by an insightful discussion of the interaction between economic and military power in the hegemonic sequence.

Thompson's measure of leading sector concentration is undoubted­ly the best effort so far to operationalize the rise and fall of economic competitive advantage in the hegemonic sequence.  And, like most good empirical studies,

it produces some surprises.  Contrary to the description found in Hobsbawm (1968) and suggested by my analysis above, Thompson's measure shows the British hegemony peaking earlier, between 1810 and 1830, and his measure also indicates that the US hegemony peaks earlier than most analysts have supposed.  According to Thompson's measure the US surpasses Britain around  1890 and the US hegemony peaks in 1920, and then again to a lesser extent in 1950 (Thompson, 1986:

fig­ure 6).