The Global Economy

Divergent Perspectives On Economic Change

Edward W Gondolf, Irwin M Marcus, James Dougherty

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781000301892
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

This collection of contemporary essays addresses the imposing changes occurring in the global economy and presents thoughtful policy options for managing them. The debate among these experts vividly illustrates the dimensions and consequences of the new global economy for the U.S. population and suggests appropriate policies for mitigating its impact. Contrasting perspectives on the origin and trends of the current international economic order are offered. Each contributor presents a complex position in nontechnical terms and with helpful examples. The result is a work accessible to readers from a variety of professions.

Part I
Charting the Dimensions

1
Origins of the Global Economy

1.A
The World-System: Myths and Historical Shifts

Immanuel Wallerstein
Distinguished Professor of Sociology, State University of New York at Binghamton

Immanuel Wallerstein, writing from his noted world-system perspective, argues that the two principal historical myths about the modern world lead us astray. The first myth is that the modern world represents the triumph of the progressive middle class over the aristocracy. Wallerstein counters that the modern world was built by a reconversion of the upper class from landed seigniors to capitalist bourgeois in order to maintain and expand their hold on surplus-value. The second myth, according to Wallerstein, is that the world-economy is the culmination of a slow expansion from urban-manorial economies to national economies to a world-wide economy. The world-economy was actually constructed first and, within its framework, nation-states developed through a process of "densification." Using this analysis, Wallerstein concludes with a brief interpretation of the current "decline" of the United States.

The Role of Historical Myths

Historical "myths" are a fundamental means of organizing our knowledge of the world. Many people feel that to call something a myth is to deny its reality, but I think that is to misunderstand what a myth is. The concept of myth comes to us from the Greeks, and what the Greeks meant by a myth was not an invention of a fertile mind, but a mode of resuming social reality and historical reality in a simple tale that incarnated both the truth of the past and the moral for the present. This kind of myth-making pervades our present understanding of our world. We have myths which reflect our consensus, and also maintain our consensus. They serve in many ways as the unseen premises of the ways in which we look at the world; or if you want to use another metaphor, they serve as the pairs of glasses with which we see the world. They organize our intellectual debates and our knowledge, albeit without announcing at each moment that they do this.

The particular myths around which we live our contemporary lives, the historical myths, are in fact not all that old. They came into existence in the nineteenth century, basically in the wake of the French Revolution, which should be seen not as a kind of local French political event but as a moment of intellectual transformation of the modern world-system. It was the moment in which this system brought its ideological analysis into line with the socio-economic reality, which had existed for 200-300 years before that. The French Revolution, in particular, led us to believe that not only can our structures of the state and economy be changed, but also that we have the moral and legal right to change them. This has come down to us in the concept of "popular sovereignty," a concept which has since swept the world. As a result, today we largely "choose" our structures; they are not legitimated anywhere on any other grounds.

A few problems result, however, if the people legitimate their own structures. First of all, what are the boundaries within which there is a "people"? That is not a small problem. Secondly, which people within these boundaries constitute "the people"? Thirdly, how do you know that the "people's will" is being carried out? These very serious and very important political and moral questions have organized a large portion of the intellectual discussion of history and the social sciences in the nineteenth and twentieth centuries.

Liberal and Marxist Notions of Progress

This debate had led to a certain way of organizing historical knowledge. The nineteenth century's dominant intellectual mode of thought was something which generically we call "liberalism." It swept the world, only to confront later in the century a counter ideology, Marxism. We have been living this confrontation ever since. Nevertheless, although the differences between the Liberals and the Marxists are well known, it is also the case that Liberals and Marxists shared several fundamental premises. They shared, first of all, the notion that the world was a world of progress. That is, they shared the ideology of the Enlightenment in which it is assumed that that which comes after is more progressive than that which comes before. The line of progress was thought to be straight upward over historical time. Furthermore, this progress was not merely desirable, but inevitable. History was in fact the story of progress, and therefore its unfolding should be analyzed in linear fashion.

Secondly, Liberals and Marxists shared the fundamental idea that the real social entities of the modern world were the states which had societies, or the societies which had states. These state-societies existed side by side with each other, moving forward in some pattern, which we can translate into the language of stages, punctuated by moments of significant change. The "periods" of these stages have different names in the Liberal and Marxist lexicon, but basically there is no fundamental difference, insofar as the theory of stages presumes some process in which there is steady progress and which, at specific historical moments, requires some kinds of rupture to bring us still further forward.

Two Conventional Historical Myths

Out of this common Liberal-Marxist view of the world, there arose two historical myths—two ways of summarizing our collective history. The first myth of the modern world is basically the story of the rise of the middle class. That is to say, once upon a time there was a world made up of people who lived largely in rural areas who were divided into two generic categories: landlords, on the one hand, who were few in number, powerful, and relatively wealthy; and peasants, on the other, who were large in number, weak, and relatively poor. They were bound together in a system called feudalism.

At some point in time and for some reason, there grew up in certain urban areas, which were few in number, a group of people who were called urban dwellers, that is "bourgeois" or burghers. These were people who were neither landlords nor peasants. Their approach to the processes of economic production was different. Slowly, this group became economically more important. Basically, they proved themselves more efficacious economically than the others, and thus gradually they began to expand and displace the aristocrats, the landlords operating under antiquated systems.

This process culminated in something which we call the "Industrial Revolution." This economic shift resulted over time in a political shift. By one means or another, the bourgeoisie found that, although it was getting more powerful economically, it really didn't control the political structures, so it overthrew, or replaced, the old aristocracy as the ruling group. The form this took was a series of bourgeois revolutions, or of modern democratic revolutions, the language depending on whether you are Liberal or Marxist. This has been a continuous process in the eyes of most people, which occurred not once but multiple times. That is to say, this is a story of what happened in England, and of what happened in France and of what happened in Germany, and so forth.

The second myth has to do with space. It constitutes an imagery denoting how space was initially organized for economic and political purposes in very small units, and subsequently the size of those unite grew. We moved from the city (cum manorial) economy, to the "great jump" in modern times, that is, to a national economy located in a nation-state. This national economy and nation-state is currently moving, according to myth, in the direction of a world-economy and world political structures. Most people would say that this "world" phenomenon has only occurred in the twentieth century, or in the period since the Second World War. Indeed, some people would say that the world-economy began only in the 1970's, or even that it is just now beginning to develop.

To be sure, these nation-states with national economies engaged in something called "international relations." As the myth goes, there were these states with "real lives," and occasionally on their borders, they have had to engage in diplomatic relations with each other and in a certain amount of trade. Most people, however, would emphasize that the trade between states did not represent at all that much in terms of real value. In fact, therefore, as a social phenomenon, it must take a relative back seat to the "real" units, which are the states

Anomalies in the Modern Historical Myths

There are some problems with these two basic myths. They served us very well, because they did in fact organize a lot of the world as people saw it and as historians were able to reconstitute it. However, a number of things have come to disturb these myths in the last ten to thirty years. From the beginning, of course, there had been things that did not fit. The usual way to handle things that did not fit in any myth has been to say that they are anomalies, leftovers, or survivals that will, so to speak, go away. Such an argument may be perfectly reasonable and plausible for a long time, but if the anomalies and the survivals become too persistent or more marked, then people begin to say "perhaps we haven't organized our knowledge very well."

Let us consider one of these anomalies as an example of this process. One implication of the mythology concerning expanding space is that, in sociological jargon, we have been moving from a kind of smallish interpersonal world, organized as a Gemeinschaft, to an increasingly larger and more impersonal Gesellschaft. That is, the world moved progressively toward more contractual, less emotional, and less traditionally organized entities, which were, in some sense, more rational. It therefore organized entities, which were, in some sense, more rational. It therefore should be expected, and indeed was expected during the nineteenth century and indeed right up to the Second World War, that we would see a diminution of "irrational" passions, nationalism, religious zeal, ethnic stirrings, etc. In point of fact, we have not really seen that at all. Nationalism, for instance, has never been stronger than it was in 1984. If anything has been on a steady upward curve, it is Gemeinschaft.

Another expectation has been that more and more people would move from the rural areas to the urban areas, from non-wage labor to wage-labor, away from being peasants and towards being workers, etc. But I suggest that if you look at the last 200-300 years, the striking thing is not how much urbanization and wage labor has been created in the world, but how relatively little urbanization and wage-labor has emerged. The slowness of the process, rather than its rapidity, should be what strikes us. One then has to ask whether there are all sorts of things built into the structure which are slowing us down with great deliberateness, instead of accepting the assumption that there are all sorts of things built in which are pushing us forward.

The Alternative “No Progress” Myth

Having posed some objections to the predominant myths about the modern world, let me now suggest some alternative myths. These organize the same reality along the lines of different stories with different conclusions. Let me take the first myth: the rise of the middle class, meaning the rise of a small group of urban burghers, who came along with "modern ideas" and modern ways to overthrow conservative, traditional aristocrats, first economically and secondly politically. This myth allows us to conclude, if one was a liberal in the nineteenth century, that the history of the modern world is the history of the rise of individuality and freedom from arbitrariness, and, if one was a Marxist, that the capitalist world was a progressive step beyond the feudal world. The only difference between the Marxists and the Liberals is in what each considers to be the last stage of "progress." For the Liberals, we have arrived there; for the Marxists, we have yet one stage to go. In both cases, however, we interpret what happened in modern history as a story of enormous progress.

Now for an alternative myth, which you may think is far more mythical than the one to which you are accustomed. Suppose I suggest that what was happening in the Late Middle Ages in the European continent was a crises in the existing system, such that the real wealth and real power of that aristocracy, vis-a-vis the peasantry, was significantly declining; it had not disappeared but it was significantly declining. This notion sometimes goes in the history books under the tide "the crisis of seigniorial revenues/' which offers some hint of the social problem with structural consequences. The reasons for this are complex, of course, but in essence I suggest that the powerful, whose power was diminishing, being very imaginative, decided to change the system. That is the usefulness of a myth; it changes a complex social reality into a story which is comfortable in the telling, although not in fact totally accurate. One of the lessons of 10,000 years of history, or even 50,000 years of history, as opposed to 500, is that humans are very imaginative. Therefore, we might say that the upper strata of the so-called "European societies," aghast at the possibility of a "paradise of the kulaks," a sort of pseudo-egalitarian, peasant-dominated world, decided that feudalism must go.* Capitalism was to be the wave of the future. That is to say, the people of power and privilege transformed the whole mode by which surplus was extracted, because the old method was, for various reasons, working no longer.

In sum, aristocrats transformed themselves into bourgeois and forced the peasants to transform themselves into workers, or proletarians, in response to the 105-year decline in seigniorial revenue. This change brought a new system which allowed the former aristocrats to extract even more surplus than previously. The transition to the modern world from the medieval world is consequently not the story of a small group of progressive bourgeois in the cities overthrowing those rural aristrocratic seigniors, either economically or politically, but of the whole upper stratum transforming itself from a feudal to a capitalist upper stratum. If I tell the story that way, instead of the usual way, it follows that I do not necessarily draw the conclusion that it represented historical progress. In fact, I make the opposite case, that the amount of surplus extraction and exploitation has been significantly greater in the capitalist era than in the pre-capitalist eras.

Without any attempt to romanticize the nature of a peasant's life in the Middle Ages, either in Europe or anywhere else in the world, let me offer this brief analysis. If you compare similar strata of the population of the world-economy as a whole, with 70-80% at the bottom, this "bottom" appears worse off today than they were 500-600 years ago, and the top 20% is unevenly spaced geographically throughout the world, and live primarily in such countries as the United States, France, Britain, Germany, and Japan. Those who make up the top 20% of the world population may comprise up to 50-70% of the population of those industrial countries. Consequently, if someone from one of those countries asks, "Are we better off than our ancestors were 500 years ago?" their answer is not only "yes," but obviously "yes." But that is because those countries have a high percentage of the world's upper strata.

The Alternative “Densification” Myth

Let us reconsider the second myth—the myth of widening economic circles. According to this myth, people are initially organized in small economic units that grow bigger until they become national economies. Currently, these national economies are reaching out and forming a world-economy. This development is incidentally very hard to operationalize with statistical parameters, but as a story it worked for a time fairly well. Nevertheless, I suggest to you an alternative story. When that aristocratic enclave formed and decided to "create" capitalism to replace feudalism, their method was to take not little units and make them bigger, but to take a very big unit, which I call the world-economy, and densify it. That is, they transformed long-distance trade into trade in necessities and moved inward from the outer rim, rather than move outward from the inner core.

They also densified "the world," not merely economically—a densification which has in fact been going on continuously over the last 500 years—but also filled it in politically. Political densification means creating, first of all, the concept of an interstate systems, which was a new concept historically. This system became the political superstructure of the existing world-economy and brought into being the sovereign states.

The Nature of Sovereignty

Sovereignty is a word that came into the political jargon in the sixteenth century. It does not mean that a state is all powerful and can do anything it wants, since there is no state in the modern world that can do anything it wishes, even in juridical terms. Sovereignty means that a state has the right to a monopoly of force within its boundaries, provided it is organized with respect to and recognized by the existing interstate system. It is not enough simply for a state to proclaim sovereignty in order to be recognized by the other members of "the club." The club creates the members, and it is not the members who create the club. Also, the club can expand the number of members, and this it has been doing since the Second World War with great speed.

Rather than states first existing, then beginning to have diplomatic relations, and finally creating interstate structures, I see the sequence quite the other way around. Our preoccupation with the nation-state misses the whole point of what has been happening sociologically over the last several hundred years. It is not that societies have been creating states, or states creating societies. In fact, we have not had multiple societies; we have had only one society—if by "society" we mean a contractually organized arena of action that has been the capitalist world-economy within an interstate system. That is the only "society" we have had; that is what has been developing; that is what has had a history.

Within this world-economy we have created political entities called states, just as we have created many other kinds of institutions as part of the operations of the economy. To legitimate these ...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Acknowledgments
• Preface
• Introduction: A Historical Overview of the Global Economy
• PART I: CHARTING THE DIMENSIONS
• PART II: FACING THE DILEMMAS
• Conclusion: A Sociological Assessment of Divergent Perspectives
• Epilogue: Seeking an Alternative to the Global Economy
• About the Contributors