World Systems Theory

This article offers an overview of the origins and the main features of the world-systems analytical framework. Both the historical roots of long-term social change and the global scope of the large-scale transformations of the modern world-system are emphasized. According to the world-systems theory, the global division of labor separates nation states into three tiers: the core, the periphery, and the semiperiphery. The world capitalist economy is characterized by waves of economic expansion and decline. Each cycle of expansion gives rise to a leading state from the core of the world-system, a hegemon, which is able to control the world's most powerful financial and economic institutions. The historical perspective afforded by the world-systems analysis reveals a hegemonic sequence, or a succession of the powerful leading states, presiding over large-scale social change. Lastly, the world-systems analysis is employed to examine what scholars consider to be a current hegemonic crisis of the modern world-system.

Keywords Core; Division of Labor; Hegemon; Hegemonic Sequence; Periphery; Semiperiphery; World-System; World-Systems Analysis

Global Stratification > World Systems Theory

Overview

The world-systems theory is a macro-sociological approach that uses a historical perspective and considers the global economy as the unit of analysis. The concept of world-system implies that various actors — traditionally examined as separate units of social analysis — such as individuals, communities, cities and nations, international and transnational actors, geographic regions, and geopolitical alliances are connected in a systematic way. The world-systems approach examines historical development over long periods of time and draws on several social science disciplines. It allows us to place any social process or structure in their proper historical and global context.

The world-systems theory was first developed in Immanuel Wallerstein's (1974) work on the world economy that described the ceaseless expansion of capitalism as a market force. Further elaborated and expanded by Andre Gunder Frank, Samir Amin, Giovanni Arrighi, Christopher Chase-Dunn, and others, the world-systems analysis views the dynamics of international economy as the defining force that shapes the world order and global governance. Most broadly, the world-systems analysts suggest that the single, global world economy is characterized by waves of economic expansion and decline. Each new wave of economic growth brings to the fore one nation-state as a leader of the global economy who is in control of the powerful international institutions.

Moreover, the world organization is hierarchical — or unequal — and national economies are relegated to either the core, the periphery, or the semi-periphery of the world-system. Some world-systems analysts have traditionally focused more on the systemic features of the world-system, such as its core-periphery structure and the power struggles within (Wallerstein, 1974). Others have favored an analysis of the cyclical dynamics of change in the world-system, focusing on the similarities or differences between the various historical periods (Frank, 1998; Arrighi, 1994).

The world-systems theoretical approach holds great potential for understanding long-term and large-scale social change. Furthermore, it offers us insights for possible social change and for acting "in a collectively rational way to avoid predictable disasters, such as global war and environmental collapse" (Chase-Dunn & Grimes, 1995, p. 414).

Division of Labor: Core, Periphery, Semiperiphery

The world-systems approach examines the world-system of states in search of "generalizations about interdependence among a system's components and of principles of variation among systemic conditions across space and time" (Arrighi, 2000). That means finding regularities in the types of connections and relationships between the different parts of the world-system, and uncovering the social mechanisms underlying these processes in different time periods or parts of the globe.

Capitalism is considered to be the central mechanism regulating the global network of economic relationships in the modern world-system. Driven by its internal logic to maximize profit and minimize production costs, capitalism as a mode of economic production first spun the globe in the 16th century (Arrighi, 1994). In the centuries that followed, capitalism solidified a global hierarchical organization of national economies. What determined the nation-states' positions within the global hierarchy as well as relationships between them, was the international division of labor.

The world-systems analysis divides national economies into three broad groups:

• The core
• The periphery
• The semiperiphery

The core of the modern world-system is comprised of the wealthy industrialized economies which collectively absorb the lion's share of the world's exports and raw materials. The core economies also benefit the most from the international division of labor. The G-7 countries (Canada, the United States, the United Kingdom, Japan, Germany, France, and Italy) belong to the core of the modern world-system and are the more technologically advanced economies, also dominating the world's banking and financial sector.

In contrast, the periphery consists of poor economies that are dependent on exporting a few commodities, such as coffee or rice, or mineral resources such as zinc or copper, to the core countries. The historic origins of the peripheral economies' dependence on the core can be traced to colonialism. Most African and Latin American countries belong to the periphery of the modern world system.

Finally, a number of countries are positioned in the semiperiphery and are dominated by the core, while themselves taking advantage of the periphery. India, Brazil, and China are examples of semiperipheral economies, with a moderately developed industrial and financial base. Semiperipheral economies are also somewhat diversified and are moderately wealthy.

One of the main economic mechanisms via which the core is able to dominate and exploit the periphery is through 'price inequality.' Through military and political suppression of wages in the periphery, the surplus (or additional value) of the global market is channeled to the core. To put it simply, peripheral labor is cheaper than that of the core, and "an hour of labor in the periphery costs capital only a fraction of its cost in the core, so that a commodity produced there is much cheaper than the same commodity produced in the core" (Chase-Dunn & Grimes, 1995, p. 396).

Mobility within the World-System

Although there are individual cases of core/periphery upward and downward mobility over time, for the most part core and peripheral countries retain their relative positions (Chase-Dunn & Grimes, 1995). It is important to note that moving upward in the hierarchy is not necessarily the same as rising to a leading position with in the hierarchical world-system. Japan is often cited as an illustrious example of upward mobility into the core during the post World War II period (Arrighi, 1994). Japan's 'catching up' would have been impossible without the fast rates of industrial expansion and its' rising competitiveness in the world of global high finance. But what truly propelled Japan upward in the world hierarchy was the political, economic, and military protectionism by the US government. In the context of the Cold War, the US was actively engaged in "buttressing Japanese regional economic power as a means of US world political power" (Arrighi, 1994, p. 339). Through military and economic control, the US government and its Western allies ensured that the Japanese economy would develop into a successful capitalist competitor to the neighboring Chinese socialism. The case of Japan's upward mobility within the hierarchy of the world system is what Wallerstein has called "development by invitation" (as cited in Arrighi, 1994, p. 341), whereby Japan was invited to join the exclusive core.

Another example of mobility within the system is the rapid slide of the former Soviet Union is economy from a central position in the semiperiphery to a peripheral role. As the state-run economy disintegrated in the late 1980s-early 1990s, formerly industrialized Russia deteriorated to the level of the periphery in the global economy and currently relies on revenue from exports of natural resources, such as oil. The accompanying crumbling of most infrastructures, like subsidized health care and education, intensified the growing inequality within Russia.

The important feature of the world-systems analysis however, is that while the balance of power between the interconnected states may shift over time, the overall structure of the system remains. The whole system develops and changes, but the underlying hierarchical organization of states into tiers persists through these historical changes.

Hegemonic Powers

Another aspect of the world-systems approach considers the cycles of expansion, maturation, and decline of the capitalist world-system and introduces the concept of the hegemon, or leading power, as national economies rise to power and are — in time — displaced. Wallerstein suggests that hegemony arises as a result of a great economic power harnessing new technologies and developing the most profitable and cutting edge industries, aided by considerable military power (Wallerstein, 1984). The hegemonic, or leading, core states are able — through militarily enforced rules of international trade — to protect their own privileged status. The hegemon is usually also able to spread "its language, culture, and currency as 'global' standards" (Chase-Dunn & Grimes, 1995, p. 412).

Although there are some disagreements among world-systems scholars on the subject of hegemonic sequences, there are four most commonly recognized systemic cycles of accumulation, or periods of economic growth, which gave rise to four hegemonic powers:

• Genoese

• Dutch

• British

• U.S.

The first (Genoese) wave of economic growth was dominated by Italian merchant capitalism of the second half of the sixteenth century. The seventeenth century saw the rise of the Dutch, who dominated the inter-state economy with powerful joint-stock chartered companies and are the second hegemon. The British economy rose to power and British free trade imperialism reigned from the early nineteenth to the early twentieth century. And finally, in the post–World War II era, with the ascendance of big business and the large multinational corporation, the United States became the reigning hegemonic power (Arrighi, 1994).

Often, what propels a new hegemon to a dominant position in the world-system is its ability to harness a new technology and products based on it. Being able to enjoy higher returns ahead of other competitors allows rapid accumulation of capital and further economic growth. This, in turn, allows the hegemon to sustain further growth and to further invest in infrastructure and military build-up. Waves of expansion are followed by slowing down of the cycle of economic growth. This gradually leads to stagnation and recession, only to be followed by the next spiral of growth.

Each new hegemon rides the waves of economic growth, and uses unique sets of strategies to control the major institutions and preserve its dominance. With each cycle of financial expansion, the "leading organizing centers of world capitalism reap the fruits of their leadership" (Arrighi, 2000) just as they are being displaced by the new hegemonic powers. Moreover, each new "complex of governmental and business agencies" (Arrighi, 2000) that arises to replace the previous one, produces institutions that are more powerful both financially and militarily. A good example of a system of such institutions is the so-called Bretton Woods system inaugurated by the world's major industrial powers in the aftermath of World War II. With the goal of regulating and controlling financial and trade relations, the Bretton Woods system established the International Monetary Fund (IMF), the World Bank (WB), and the International Bank for Reconstruction and Development (IBRD). Until its collapse in the early 1970s, the Bretton Woods system functioned to secure the economic and military advantages of its main architects, primarily the United States.

Further Insights

Developmentalism, Globalization, & the World-Systems Theory

Wallerstein's initial conception of the world-systems theory sought to address what he considered inadequate in the developmentalism approach. In the second half of the twentieth century, a doctrine of 'development' was taking shape, precipitated by mounting anticolonial movements in Asia and Africa. Proponents of developmental policies asserted that it was possible for the 'backward' countries of the South to develop along the lines of the more advanced Northern economies. The logic of that argument assumed that "if the countries of the South would only adopt the proper policies, they would one day, some time in the future, become as technologically modern and as wealthy as the countries of the North" (Wallerstein, 2005, p. 1264).

In sum, the developmentalist approach argued that the poor countries could "catch up" if they industrialized their economies. From the late 1940s to the 1970s, a number of economic policies emanating from the core and directed toward the developing economies were based on that assumption. In contrast, the central argument of the world-systems theory is that economic division of labor between the core and the periphery reproduces and solidifies a hierarchical system. According to the world-systems approach, lack of 'development' and poverty in the periphery of the world-system stem largely from the international division of labor between the core and the periphery. The world-systems approach thus challenges this rather optimistic view advanced by developmentalism by emphasizing the inherent inequality that underpins the modern world-system. In fact, the economic success enjoyed by the core is predicated on the global division of labor that channels the surplus of the global market from the periphery.

Wallerstein (2005) poses the following theoretical questions:

• Is it possible for all parts of the world to one day in the future reach the standard of living now enjoyed in the wealthy, industrialized countries?
• Will the present unequal world system survive?
• What alternatives to the current world order exist?

His answer to the first two questions is no. The world's resources are finite; the productivity of the world economy has limits; there is no magical source of inexhaustible profits needed to sustain growth and development. According to Wallerstein, it is impossible to preserve the present high standards of living and consumption in the core, while simultaneously increasing it in the periphery as well.

Perpetuation of the System

For over five centuries of the global capitalist economy's existence, the hierarchical structure of the world-system has remained intact. Moreover, the gap between the core and the periphery — the very idea on which the world systems approach is based — has only grown larger. While some countries undoubtedly have improved their positions in this hierarchy, others have slipped. But most revealingly, while the core and the periphery players may be have been reshuffled slightly over the centuries, the immutable and unequal structure of the world-system remains intact.

Wallerstein argues that there is simply "no way in which, within the framework of a capitalist economy, we can approach a general equalization of the distribution of wealth in the world" (Wallerstein, 2005, p. 1268). If the modern world-system remains stratified as it is, will it then survive?

The primary economic mechanisms allowing for sustained economic growth are: keeping the cost of labor and taxes low, and externalizing the cost of production. Historically, the existence of untapped pools of labor enabled cycles of relocating production to lower labor-costs areas, the so-called 'runaway factory.' A good example of lowering labor costs is the massive migration of the textile and garment industries from North America to South America or South Asia. Presently though, it seems that "the world is running out of new zones into which to relocate" (Wallerstein, 2005, p. 1270). Externalization of the cost of production is simply shifting the costs to others — usually the state or the public, as in dumping waste or depleting finite resources or using the infrastructure. Currently the pressures both from the governments and the civil society are mounting for the producers to internalize (or take responsibility for) such costs, which naturally results in growing cost of production. And lastly, the costs of security, welfare, and administration have been rising steadily, resulting in ever growing taxation, levied either on the producer directly or indirectly on the employees, who in turn require higher wages.

In true hegemonic fashion however, the economic elites of the core mount numerous ideological, political, and economic campaigns to compensate for the falling rates of capital accumulation and declining profits. As Wallerstein suggests, that "is what neoliberal globalization is all about-a massive political attempt to roll back renumeration costs, to counter demands for internationalization of costs, and of course to reduce levels of taxation" (Wallerstein, 2005, p. 1273).

The Current Hegemonic Crisis

The twentieth century saw the United States become a dominant force in world production and the world-system hegemon (Wallerstein, 2006). The United States exemplifies a remarkable case of swift upward mobility in the modern world-system, as it rapidly progressed from the periphery to the semiperiphery and to the core in the late eighteenth century, finally attaining hegemony in the post–World War II era (Chase-Dunn & Grimes, 1995).

Determined to a great extent by the outcome of World War II, the United States emerged as the strongest military force and the largest economy, and the ensuing world order of the second half of the last century reflects the hegemon's endeavor to preserve its power. From the world-systems point of view, the major financial, economic, and military institutions and arrangements are representative of and protected by the US hegemony. These include the International Monetary Fund (IMF) and the World Bank (WB) as the world's most powerful financial institutions; the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO); and various military alliances such as the North Atlantic Treaty Organization (NATO). Through these institutions, the United States has been able to advance its economic interests, dictate the rules of the geopolitical game, and exercise tremendous political pressure in all corners of the globe.

The main consensus in the world-systems analysis of the twenty-first century, however, is that the United States is in economic downturn and political turmoil, and its hegemony is in decline. In fact, many scholars trace the beginning of the downturn to the 1970s. As Wallerstein (2006) points out, this decline is not a simple result of erroneous policies or geopolitical miscalculations of successive US governments. Instead, they are the "normal consequence of the operations of the modern world-system, in which the moments of true hegemony are not, and cannot be, long-lasting" (Wallerstein, 2006, p. 9). This decline of hegemonic powers will likely increase struggles for power in the core of the world system.

Viewpoints: The Future of the World System

The world-system in the early twenty-first century is experiencing a structural crisis, and the transition to some other world-system is likely to last anywhere from 25 to 50 years (Wallerstein, 2005). The structural contradictions stem from the relentless pursuit of profit and seeking cheap labor inherent in a capitalist global economy, and the depletion of finite resources as well as environmental degradation. What shape the new world-system will take is uncertain, but at the same time, collective and individual actions are likely to determine which path lies ahead.

The widely speculative analysis of the potential future shape of the world-system rests as much on historical analysis as on examination of geopolitical and economic patterns that characterize the current world-system. For instance, Arrighi (1994) suggests that currently, East Asia stands as the growing center of economic power. Frank (1998) argues that what is customarily viewed as the triumph of the West is in fact an aberration in a long history of Asian dominance, and that we are witnessing a resurgence of the East Asian — particularly Chinese — powers in the global world system. Wallerstein (2005) posits that there may be a dyadic split in which the United State will align with Japan and East Asia to vie for hegemony against western Europe and Russia.

What remains uncertain, however, is whether the new world-system will remain organized hierarchically or will become more egalitarian. In order to address such historical possibilities seriously, "we must first of all comprehend with some clarity the historical development of our present system, appreciate its structural dilemmas today, and open our mind to radical alternatives for the future" (Wallerstein, 2005, p. 1277).

Conclusion

The world-systems approach offers a powerful analytical framework for examining large-scale processes of social change over long periods of time. By maintaining a dual focus on the historical antecedents of social structures and on the global scope of societal processes, this approach holds tremendous explanatory and predictive potential.

Thus, the large-scale civilizational scope afforded by the world-systems approach allows an examination of the global social order of any era in its proper historical perspective. Understanding the past of the modern world-system allows us to debate its future trajectory.

Terms & Concepts

Core: Strong states with diversified economy, skilled and capital-intensive production, strong military. Depend on extracting surplus value from the periphery.

Division of Labor: Single global division of labor within the world-system, reproducing the hierarchical core-semiperiphery-periphery structure.

Hegemon: A leading core state dominating economic and political processes within the world-system through control of the leading financial institutions and military force.

Hegemonic Sequence: The succession of hegemons within the world-system presiding over the cycles of economic expansion.

Periphery: Weak states with non-diversified economy dependant on raw materials export; low skilled and labor intensive production.

Semiperiphery: States with more diversified economy than the periphery; dependant on exports to the core and exploitation of the periphery.

World-System: Any historical system of interaction networks (economic, political, and cultural) connecting individuals, communities, cities and nations, international and transnational actors, geographic regions, and geopolitical alliances. The modern capitalist world-system dates back to the sixteenth century.

World-Systems Analysis: A macro-sociological approach which utilizes historical and global economic perspective and considers the world (system) as the unit of analysis.

Bibliography

Arrighi, G. (2000). Globalization and historical macrosociology. In J. Abu-Lughod (Ed.), Sociology for the Twenty-First Century: Continuities and Cutting Edges (pp. 117–133). Chicago: University of Chicago Press.

Branch, J. (2012). ‘Colonial reflection’ and territoriality: The peripheral origins of sovereign statehood. European Journal of International Relations, 18, 277–297. Retrieved October 23, 2013 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=76331398

Chase-Dunn, C., & Grimes, P. (1995). World-systems analysis. American Review of Sociology, 21, 387–417. Retrieved June 19, 2008 from EBSCO online database Academic Search Premier: http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=9509242618&site=ehost-live

Clark, R. (2012). World-system position and democracy, 1972–2008. International Journal of Comparative Sociology, 53(5/6), 367–399. Retrieved October 23, 2013 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=85788210

Frank, A. G. (1998). ReOrient: Global economy in the Asian age. Berkeley: University of California Press.

Kwon, R. (2011). Hegemonies in the world-system: An empirical assessment of hegemonic sequences from the 16th to 20th century. Sociological Perspectives, 54, 593–617. Retrieved October 23, 2013 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=70739038

Wallerstein, I. (1974). The modern world system I: Capitalist agriculture and the origins of the European world economy in the sixteenth century. New York: Academic Press.

Wallerstein, I. (1984). The politics of the world-economy: The states, the movements and the civilizations. Cambridge: Cambridge University Press.

Wallerstein, I. (2005). After developmentalism and globalization, what? Social Forces, 83, 1263–1278. Retrieved June 19, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=16832485&site=ehost-live

Wallerstein, I. (2006). An American dilemma of the 21st century? Societies without Borders, 1, 7–20. Retrieved June 19, 2008 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=24668078&site=ehost-live

Suggested Readings

Arrighi, G. (1994). The Long Twentieth Century: Money, Power, and the Origins of Our Times. London: Verso.

Chase-Dunn, C., Kwon, R., Lawrence, K., & Inoue, H. (2011). Last of the hegemons: U.S. decline and global governance. International Review of Modern Sociology, 37, 1–29. Retrieved October 23, 2013 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=60388468

Chase-Dunn, C., & Lawrence, K. S. (2011). The next three futures, part two: Possibilities of another round of US hegemony, global collapse, or global democracy. Global Society: Journal of Interdisciplinary International Relations, 25, 269–285. Retrieved October 23, 2013 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=74637823

Dunaway, W. A. (Ed.). (2003). Emerging Issues in the 21st Century World-System. Vol. I: Crises and Resistance in the Twenty-First Century World-System. Westport, CT: Praeger.

Dunaway, W. A. (Ed.). (2003). Emerging Issues in the 21st Century World-System. Vol. II: New Theoretical Directions for the Twenty-First Century World-System. Westport, CT: Praeger.

Giesen, K., & Nobre, M. (2010). World-system inequalities before and after the crisis. Peace Review, 22, 339–348. Retrieved October 23, 2013 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=55308453

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

Wallerstein, I. (2012). Land, space, and people: Constraints of the capitalist world-economy. Journal of World-Systems Research, 18, 6–14. Retrieved October 23, 2013 from EBSCO online database SocINDEX with Full Text: http://search.ebscohost.com/login.aspx?direct=true&db=sih&AN=76455157