My provocative post about Immanuel Wallerstein seems to have antagonised Mark Bahnisch. I devoutly hope that won’t prove terminal to his participation at Troppo, partly because he’s a valued blogging colleague, and partly because his prolific posting takes the pressure off me, but mostly because I think we’re all better served by writing in a “broad church” milieu that deliberately courts a generally-educated audience with diverse views. Otherwise you might as well stick with purely scholarly writing and forget about “public intellectualism” (because we’re just preaching to the converted, so to speak).
In any event, there’s obviously a lot more to say about Wallerstein, and I’m going to have a stab at saying at least some of it, despite lacking the depth of reading on the topic that Mark can bring to it.
I also intend providing a hyperlinked bibliography of writings by and about Wallerstein, listing works provided by both Bahnischs but especially Brian.
My focus in the following discussion is the following extract from Wallerstein’s own summary of his thinking. On my reading, the passage encapsulates the central aspects of Wallerstein’s hypothesis about the future of global capitalism:
I believe that a number of trends have today at last reached points where they threaten the basic functioning of the system. I shall summarize briefly here what I have expounded at length elsewhere.3 Capitalism as a historical system is defined by the fact that it makes structurally central and primary the endless accumulation of capital. This means that the institutions which constitute its framework reward those who pursue the endless accumulation of capital and penalize those who don’t.
But how does one accumulate capital? The crucial prerequisite is obtaining profit from economic operations, the more the better. And profit is a function of the differential between real costs and possible prices. I say possible prices because of course no seller can infinitely increase the price demanded for a commodity and expect to sell it. There are always limits. Economists call this the elasticity of demand. Within the limits of the rate of elasticity, the actual profit depends upon three costs: the cost of labor, the cost of inputs and infrastructure, the cost of taxation.
Now suppose we were to measure these costs globally as percentages of total sales prices and arrive hypothetically at average levels. Of course, this is an operation no one has ever done, and is perhaps not doable. But it is possible to conceive of it, and to approximate the results. I would suggest to you that, over 500 years and across the capitalist world-economy as a whole, the three costs have all been steadily rising as a percentage of total value produced. And the net result is that we are in, and ever more coming into, a global profit squeeze that is threatening the ability of capitalists to accumulate capital. …
Not only am I skeptical that global production is more “efficient” from the point of view of the producer, but I am contending that the curve has been steadily downward. All the so-called triumphs of efficient production are simply attempts to slow down the pace of the downward curve. One can regard the entire neoliberal offensive of the last two decades as one gigantic attempt to slow down the increasing costs of production – primarily by lowering the cost of wages and taxation and secondarily by lowering the costs of inputs via technological advance. I believe further that the overall degree of success has been quite limited, however painful it has been for those who have borne the brunt of the attack, and that even the limited gains are about to be reversed.
So Wallerstein reckons capitalism is caught in an inexorable profit squeeze caused by the unavoidable necessity for taxes, wages and production costs to continue rising as a proportion of the total value produced.
There are three obvious questions. Is this correct? Over what time frame are we talking? And if it is correct, what does it mean?
Let’s take taxes first. It’s certainly true that there has been an evident slow rise in taxes as a percentage of GDP over the century (or less) since universal income taxes became the norm in advanced nations (or “core” nations as Wallerstein calls them). It’s mostly because people expect governments to provide more and more, and the costs of many services, especially medical ones and aged care, become greater and greater as science and technology keep advancing. The experience of the 1980s suggests that it would be possible to arrest this gradual growth in tax take if societies are willing to embrace the minimal government, market-based prescriptions of the neoliberals, but at present we seem to be content to take a less purist approach. In other words, the gradual tax rise is the result of deliberate choices our society is making (or “agency”) rather than any inexorable iron law of history or economics.
The other point to make about taxes is that there’s demonstrably a very wide range of total tax take options in various advanced/core nations, under which market capitalism has had no difficulty surviving and thriving. From around 26% or so of GDP in the US to over 50% in some Scandinavian countries, capitalism has had no problem adapting and shows no sign of crisis or collapse.
The picture with wages and other costs of production is slightly more complex. Wallerstein appears to concede that his claims of inexorable rises are counter-factual over the last 30 years or so anyway, but still asserts his hypothesis holds good in the long run. He achieves this by claiming that capitalists are only postponing their inevitable doom by the desperate expedient of “running away” to under-developed third world (“periphery”) nations where they can exploit low wages and lax regulatory regimes to allow them to “externalise” some of the real costs of production (like environmental damage).
Wallerstein largely ignores (or at least treats as a mere afterthought) the fact that a very significant part of the production cost savings achieved by industry over the last 30 years (and indeed since the Industrial Revolution began) have been attained through technological change rather than exploiting workers through ruthlessly driving down wages.
But even if we accept (as I certainly do) that the mobility of industrial capital has also been a major influence on keeping production costs under control, what does that phenomenon actually connote? The doom of market capitalism, as Wallerstein hyperbolically asserts, or something much more benign (if still in remote prospect)?
It’s certainly true that corporations have been able to relocate labour-intensive aspects of their operations to low-wage countries over the last 30 years or so, as improvements in communications and transport technology have made this increasingly feasible. And they’ve also been able to use the threat of disinvestment and relocation to pressure unions and governments in “core” nations to moderate wage demands and reduce the regulatory burden. That has resulted in static real wages in the US and only modest growth in Australia over the last three decades or so. But the real wealth of “core”nations has continued to expand enormously, and it hasn’t all (or even mostly) flowed into the pockets of corporations, at least in countries like Australia. Most of the increase has gone to ageing Australians who now control a much larger proportion of the nation’s wealth than they previously did (because there are a lot more of them proportionately).
And not only is this phenomenon of businesses shifting some of their activities to “periphery” (third world) nations not harming the “core” (advanced) nations. It’s undeniably promoting the development and enrichment of the “periphery” nations, contrary to the determinedly pessimistic impression Wallerstein’s rhetoric seeks to create. Look at the spectacular growth of the world’s two most populous nations, China and India, over the last decade. And the equally spectacular growth in the S-E Asian “tiger” economies in the decade before that. World poverty is falling in both absolute and relative terms, despite a still-growing world population. Is that a sign of a failing capitalist system?
It may conceivably eventually prove true that this process of shifting business activities to regions of low cost, resulting in those regions gradually becoming more prosperous and joining the “core” (first world), might eventually result in there no longer being any low labour cost nations to which the capitalists can “run”. Wallerstein seems to be claiming that day is imminent. I doubt it. China and India alone are such enormous nations that even the explosive growth we’ve seen over the last decade is just a drop in the ocean of poverty. And most of South America is still “semi-periphery” at best, while any advances at all in Africa and the Middle East probably won’t occur until they begin grappling constructively with tribal and religious tensions, primitive superstitions and endemic corruption.
But who wouldn’t hope that Wallerstein eventually proves to be correct? That third world poverty is eventually eliminated through the ‘invisible hand’ operation of the global market economy? But that wouldn’t mean the collapse of capitalism through its own internal contradictions. Instead it would mean that capitalism had been so wildly and utterly successful as to have completely eliminated poverty and material want throughout the world, leading to a likely necessity to evolve still more sophisticated (and yet unforeseeable) forms of social and economic organisation. On one reading at least, that’s what Wallerstein is really prophesying.
So why is he couching it in the quaint rhetoric of leftist class and economic warfare? Is it just because he’s mostly speaking to an audience of lefty academics in the speeches and papers I’ve read? Or am I missing something? Maybe the anti-globalisation protestors should start reading Wallerstein properly, tear up their protest banners, and embrace neoliberal global trade as the best and only means of ultimately bringing about Nirvana.
Brenner, Robert ‘Towards the Precipice ‘, London Review of Books, vol 25, no 3, 6 February, 2003
‘Festschrift for Immanuel Wallerstein ‘, Journal of World-Systems Research vol 6, nos 2-3 2000
Goldfrank, Walter L “Paradigm regained? The rules of Wallerstein’s world-system method ‘ Journal of World-Systems Research vol 6, no 2, 2000, pp150-195
Martin, William G. ‘Still partners and still dissident after all these years? Wallerstein, world revolutions and the world-systems perspective‘ Journal of World-Systems Research vol 6, no 2, 2000, pp 234-263
Wainright, H “Reclaiming ‘The Public’ through the People “ TNI Website, June 2004
Wallerstein, M ‘America and the World: the Twin Towers as metaphor ‘, 2001
Wallerstein, M ‘America Quo Vadis? ‘ Commentary, no. 141, 15 July, 2004
Wallerstein, M ‘Bush bets all he has ‘, Commentary, no. 109, 15 March, 2003
Wallerstein, M ‘The Ecology and the Economy: What is Rational? ‘ 2003
Wallerstein, M ‘Empire and the Capitalists ‘, Commentary, no. 113, 15 May, 2003
Wallerstein, M ‘Globalization or The Age of Transition? A Long-Term View of the Trajectory of the World-System ‘, 1999
Wallerstein, M ‘A Left Politics for an Age of Transition ‘, 2001
Wallerstein, M ‘A Left Politics for the 21st Century? or, Theory and Praxis Once Again‘, 1999 (th essay linked and discussed above)
Wallerstein, M ‘The Modern World System ‘ 1976
Wallerstein, M ‘New Revolts Against the System ‘, New Left Review, 18 November-December, 2002
Wallerstein, M ‘The Rising Strength of the World Social Forum ‘ Commentary, no. 130, 15 February, 2004
Wallerstein, M ‘The U.S. and Europe, 1945 to Today ‘, Commentary, no. 137, 15 May, 2004 (http://fbc.binghamton.edu/137en.htm)