World Systems Theory View on Power and Inequality in the Contemporary Global Economy

WORLD SYSTEMS THEORY VIEW ON POWER AND INEQUALITY IN THE CONTEMPORARY GLOBAL ECONOMY
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1.0 Introduction
World systems theory is a framework for understanding the dynamics of economic and political power in the global economy (Wallerstein 2005). Wallerstein (1979) argues that the modern world is divided into a core of industrialized, capitalist countries that dominate the periphery of less developed countries. This core-periphery relationship is maintained through a system of unequal exchange in which peripheral countries are exploited for their resources and labour, while core countries profit from their dominance (Wallerstein 2005). This theory helps us understand how power and inequality are built into the structure of the global economy, and how they are perpetuated over time. Additionally, it helps us to understand how the global economy is not an even playing field, but rather that there are centre nations that have more power and resources than peripheral nations.
2.0 Building Blocks
2.1 The Annales School
World-systems theory, developed by Immanuel Wallerstein, is heavily influenced by the historical approach of the Annales School, particularly by the work of Fernand Braudel (Wallerstein 1991). The Annales School, which emerged in the early 20th century, sought to understand history through a long-term, structural perspective, rather than focusing on individual events or actors (Wallerstein 1991). Braudel argued that economic and social structures have a profound impact on historical change and that these structures operate on different levels of time and space (Wallerstein 1991). He identified three distinct levels of analysis: the "longue durée," which refers to slow-moving structural changes that occur over centuries or millennia; the "moyenne durée," which refers to medium-term changes that occur over decades or generations; and the "short term" or "event," which refers to individual events or actions. Wallerstein (1974) draws heavily on Braudel's concept of the longue durée and the moyenne durée, arguing that the global economy has been shaped by structural forces that have operated over centuries. He contends that the modern world system has existed for at least five centuries and that it is a single unit with the division of labour.
2.2 Marx
Karl Marx's theory of historical materialism provides the building blocks for Wallerstein's world-system theory. Marx (2000) argues that the economic base of society, or the mode of production, determines the nature of the superstructure, which includes the political, legal, and ideological institutions that shape society. He contends that the mode of production is the foundation of society and that it is driven by the struggle between different social classes, which have different interests and different relations to the means of production (Marx, 2000). Wallerstein (1979; 2005) draws heavily on Marx's theory of historical materialism in his development of world-systems theory. He argues that the global economy is divided into a core of industrialized, capitalist countries that dominate the periphery of less developed countries. Furthermore, Wallerstein (1979) also argues that this core-periphery relationship is driven by the struggle between different social classes, who have different interests and different relations to the means of production.
2.3 Dependence Theory
World-systems theory, developed by Immanuel Wallerstein, is in many ways an adaptation of dependency theory, which is a framework for understanding the relationship between developed and underdeveloped countries in the global economy (Palat 2014). Both theories argue that the global economy is not a level playing field and that there is a fundamental power imbalance between developed and underdeveloped countries. Dependency theory, which was developed in the 1960s and 1970s, argues that underdeveloped countries are dependent on developed countries for trade and investment and that this dependence leads to a situation in which underdeveloped countries are exploited for their resources and labour (Palat 2014). Dependency theorists argue that this exploitation is the root cause of underdevelopment and poverty in peripheral countries (Petras 1981). World systems theory also argues that the global economy is divided into a core of industrialized, capitalist countries that dominate the periphery of less developed countries. This core-periphery relationship is maintained through a system of unequal exchange, in which peripheral countries are exploited for their resources and labour, while core countries profit from their dominance (Petras 1981). Both theories also argue that the core-periphery relationship is perpetuated over time and that it is difficult for peripheral countries to break out of this pattern of dependence and develop their economies.
3.0 World System Theory
As noted, the world system theory borrows from Marxist thinkers. At the beginning of his theory, Wallerstein (1979) posited that the world has evolved with time through three main social systems. The first social system was known as the mini-system. A mini-system involved a small, self-sufficient economic system that operated independently from the larger world economy. These systems were usually found in isolated regions or remote areas, and they typically involved a small number of people engaged in subsistence agriculture or hunting and gathering. The second social system is the world empire. A world empire is a large, centralized political and economic system that controls multiple regions or territories. These empires are typically dominated by a single powerful state that uses military and economic means to control the periphery regions and extract resources and labour from them, with the Napoleon territory at the start of the Nineteenth Century forming such a system. The third system is the world economy. A world economy is a global system of economic exchange that links regions and countries around the world, and Wallerstein observes that it has been the dominant social system since the sixteenth Century. This system is characterized by the movement of goods, services, capital, and labour across borders, as well as by the existence of a global division of labour.
The posited theory contends that the world is currently a capitalist world economy that includes even socialist countries. As a social system, the capitalist world economy has a defined structure that allows for the exchange of goods between buyers and sellers, with the basis of its existence being the endless accumulation of capital. In such a way, the contemporary world economy is largely considered a capitalist economy. Apart from the existence of a central market to allow for the exchange of goods and services, Wallerstein (2005) posits that a capitalist economy is characterized by the existence of multiple political units that have loose ties and combine to establish an interstate system. Regardless of the differences in political ideologies of the states within a given interstate, all of them meet in the market to exchange goods and services, with the goal of each state being the alteration of its system to facilitate the accumulation of capital and advantages associated with having more capital than other states.
Wallerstein (2005) posits that the various states within the capitalist economy do not collapse due to the efficacy of labour division. A world market means that a division of labour has to exist in the production of goods that are exchanged in the market. Wallerstein (2005) describes the labour division in the capitalist economy into core-like products and peripheral products, with the degree of profitability determining how the products are divided in the market. To this end, Wallerstein (2005) suggests that a link exists between the degrees of profitability in the world market and monopolization. Core-like products, according to Wallerstein (2004) are produced by quasi-monopolies while the periphery products are produced in a more competitive environment. Consequently, the peripheral products end up being less competitive than the core products when the two are sold in the world markets. As a consequence, surplus-value peripheral products are readily available to the producers of core-like products, which contributes to the emergence of an unequal exchange situation in the world market. The extent to which one can monopolize the production process, according to Wallerstein (2005) ends up being significantly dependent upon the extent to which one is supported by the state machinery. Deference in state machinery means that some states can be able to enforce unequal exchange on the periphery producers, leading to the emergence of the core-periphery state dynamics.
Wallerstein (1974) proposes that the production of core products tends to aggregate in a few states and makes up a large portion of production in such states. Comparatively, peripheral processes will be scattered in the majority of states and make up a significant portion of the production activities of such nations. As a consequence, a geographical relationship exists between the various states due to the relationship. The world-system theory posits that the relationship between the core and peripheral products has led to the core, periphery, and semi-periphery states within the capitalist economy. The core is made up of the industrialized, capitalist countries that dominate the global economy. These countries have higher levels of economic development and advanced technology, and they control the productio...