Introduction
In the last two to three decades, the world has experienced unprecedented economic growth in all spheres of economy. Despite such encouraging progress in the economy, the gap between the poor and rich people has widened. The rich are getting richer as the poor get poorer.
Further, the world has moved to a more integrated and globalised economy where there is interrelatedness between nations of the world.
Although such globalisation might ideally mean more prosperity for nations based on their increased accessibility and market interaction levels, it has instead acted to increase economic inequalities among societies and nations. In addition, at the global political stage, the powerful countries have amassed more power.
Periphery countries are becoming less influential in the political and economic realms. While trying to explain the growing disparities in wealth and power in the global political economy, different scholars have advanced different theories.
Of the many theories and approaches, Immanuel Wallerstein’s world-systems analysis has been credited for its detailed analysis of the functioning of the world economy. The theory incorporates different arguments from the existing knowledge in sociology, political science, and economics.
However, it significantly shifts from the existing theories of economic development that focus on the nations as independent units that can traverse their own paths towards civilisation and modernity.
This paper will analyse whether the world systems analysis has been able to explain successfully the wealth and power inequalities in the world. Further, it will discuss various criticisms that have been put forward against the approach.
World-Systems Analysis
According to Makki, the world-system analysis, which is also referred to as world-system hypothesis, is a modern macro-sociological viewpoint that regards the changes of capitalism and world economy as a ‘total collective system’.
The theory draws from the tenets of historical sociology and economic history. It is also linked to Immanuel Wallerstein who is credited for building its credibility. According to Jones, developmental theorists have adopted the theory for its synthesis of developmental and unequal opportunities across the world.
Although the theory’s views on capitalism and the global economy differ from those expressed by Marx and Weber, these two theorists have offered a great inspiration to the theory.
The main agenda of the theory is that the world as a whole plays an important role in determining the economic and social dynamics between and among nations. In other words, the theory emphasises the world-system as the main unit of social analysis.
The theory is a shift from Marxist approaches that viewed the nation as the main unit of analysis in the global political economy. By world-system, the theory indicates the inter-regional and transnational divisions of labour that divide the world between the rich and the poor, and the powerful and the weak as Macedo and Gounari confirm.
Accordingly, Wallerstein views the world-system as a social system with no boundaries, structures, coherence, or rules of legitimating but rather a body that comprises conflicting forces that hold it together or threaten to tear it apart as each group tries to remould it to its advantage.
Further, as an organism, the world-system has a life span. It changes over time while other characteristics remain constant. According to Harvey, its life is not only largely self-contained, but also has some internal developmental changes.
In the world classification, nations are joined together through market financial system rather than through affairs of the state. In this incorporation of nations, the relationship is based on the exchange of goods and products that characterise a market financial system.
According to O’Brien and Williams, although there is competition among polities to dominate the system, none lasts forever.
As a shift from the thinking of the 19th century with reference to society, politics, and economy, the world-system analysis criticises Marxist and other theories of economic development and approaches to modernisation. For instance, it criticises the modernisation theory for its focus on the state as the only unit of analysis.
It claims the existence of one path through which all nations experience economic development. It disregards the transnational structure that hinders local and national economic development.
World-system analysis is a shift from the modernisation hypothesis, which holds that nations follow a given course and stages of development from pre-modern to modern states and that nations are accountable for their individual growth.
Through small assistance to its internal strictures of economy, Wallerstein asserts that any nation can become modern just like other developed countries have.
As such, capitalism is an inevitable outcome of the previous failures of structures of economy such as feudalism since nations have progressed in their path to modernity.
However, world-system theorists disapprove this notion on capitalism. They view it as a deliberate move through which Europe came to dominate the world economy to create inequalities.
While explaining the inequalities in wealth and power, the world-system analysis views the world economy as having divisions based on the kind of labour each country or region offers and/or contributes to the system and market economy.
The theory regards the world economy as a body that comprises three groups of countries, that is, the core countries, semi-periphery, and the periphery countries.
Core nations concentrate on capital–demanding and proficient work production as opposed to a wanting toil or raw-material assembly that is characteristic of semi-periphery and marginalised nations. By focusing on proficient production, the mainstay nations govern the sidelined or marginalised nations.
However, changes in the system mean that countries may lose or gain more on their status. In this case, Clark says that periphery countries may upgrade to semi-periphery and further to core countries.
At different periods, some nations may raise to hegemonic status in the system. For example, hegemonic status has passed from Netherlands to the Great Britain and then to the United States of America.
World-System Analysis’ Approach to Power and Wealth Inequality
As previously explained, the world-system analysis tries to explain the inequalities in the world by viewing the world economy as a single unit where division of labour among its members contributes immensely to inequalities in power and wealth.
In this case, the countries that fall under the core category dominate the world economy since they control the means of production while the peripheral ones control labour.
Tracing the history of the world’s economy from the start of capitalism, O’Brien and Williams see a trend where the world is constantly in a core/periphery economic relationship that began with Europe.
In this case, Gareau reveals that countries that controlled production were always more prosperous at the expense of those that supplied labour.
For more than 5 centuries, many European countries have been in the core countries category while the others such as African, Asian, and South American countries, which have historically provided labour for European nations, remain at the periphery.
According to Harvey, the most important structure of the present-day world system is what he refers to as power hierarchy between core countries and the peripheral ones. In this affiliation, powerful countries govern and take advantage of the underprivileged ones.
Their driving force is to use unrefined ways of getting hold of the weak countries’ wealth. According to Goldfrank, in this equation, technology plays an important role in determining the category where each county falls.
The countries that have advanced technology such as the United States, Britain, Japan, and Germany among others form the core countries while the less technologically developed countries such as Kenya, Venezuela, and other third-world countries form the periphery.
Over the years, the core nations have used their advantaged positions to amass great power both economically and socially over their disadvantaged nations as Tarrow reveals.
According to the world-system analysis, the core nations’ access to enormous financial resources by controlling the highly lucrative means of production implies that they are able to finance other core areas of their economy and standings in the global stage.
For instance, looking at the hegemonic status of countries over the years, a peculiar trend emerges. For instance, during the reign of the Great Britain in the 19th century, it controlled more than 85% of world’s industries.
Further, it amassed great powers through its advanced military and superior economic status that allowed it to ‘acquire’ and colonise many territories across the world. One of the main reasons of establishing colonies was to have a ready access of raw materials and a ready market of the finished products.
In this interaction between the Great Britain as the core and its overseas territories as the periphery, it is evident that the interaction was not mutually beneficial. The Great Britain benefited more. It amassed more wealth and more power at the expense of the periphery countries.
In another case, during the reign of the US as the hegemony after the World War II, the nation accounted for more than 50% of the global finished products.
The interaction between the poor and the wealth nations is characterised by unequal exchange. Unequal exchange refers to the systematic substitution of excess material possessions between sectors that lie in the peripheral category and the highly industrialised and powerful countries.
The powerful homelands amass immense resources using marginal surplus. On the other hand, the continuous deprivation of the periphery’s surplus leads to stagnated or reducing capital for those countries.
The implication is that they are unable to break from the yoke of poverty to a higher economic status as a way of standing in the global arena.
In the process of domination by the core nations, three key processes ensure that these countries amass power and wealth in the end. Firstly, it starts with productivity dominance where the core countries have control over technology and other means of production, which are not accessible to the periphery countries.
In this case, as Macedo and Gounari confirm, with the superior technology and means of production, the countries can produce high superior products at a cheaper cost, thus tilting trade to their advantage.
As long as the periphery countries do not have access to such technology due to many factors, including capital resources, the core countries achieve dominance whereas the peripheral ones feed the core countries’ productivity with cheap raw materials in exchange of expensive finished products.
The core countries’ act of accumulating more productivity powers leads to the second process of gaining power and wealth, which is trade dominance. According to Moore, since the cost of production is cheaper and hence able to benefit more from international trade, core countries easily dominate the trade.
The core nations control trade by selling, as opposed to purchasing, more of their products to other states. Consequently, there is a favourable balance of trade for the core nations. With trade dominance, more money comes relative to the amount that goes out, thus resulting in economic supremacy.
For instance, the US and European countries get a large percentage of the global monetary possessions.
With strong financial resources, the core nations are able to invest more in activities such as education, economic diversification, healthcare, poverty elimination programmes, research and development, and military among other activities that ensure that they strengthen their dominant position in the world system.
On the other hand, as Harvey says, the peripheral countries are characterised by underdeveloped technologies, less industrialisation, large populations of poor people, and high levels of illiteracy. In addition, the peripheral nations are greatly influenced by the core nations through their multinational corporations.
In many instances, they have to adhere to the economic policies of the former, although such policies are obviously skewed to the advantage of the rich ones as Firebaugh confirms.
Due to their focus on few financial means that involve the processing and selling of materials, marginalised states enjoy less fiscal diversity as compared to the major countries. Further, there is a high availability of cheap and unskilled labour, which is exploited by the core nations through their multinational corporations.
Since the peripheral countries struggle to meet the needs of the people who have little financial resources, no surplus has been availed to invest in high-technology production activities that are done by the core nations.
Further, due to the basic nature of the technology that is available for these nations, the high cost of production makes it difficult for them to industrialise.
Consequently, such nations are locked in a vicious cycle where they are unable to expand beyond their focus on production of raw materials to feed the ever-expanding production capacities of the core nations.
Therefore, with all the odds against the periphery countries, McCarthy asserts that it is difficult for the poor nations to prosper in the highly skewed world system that benefits the rich while exploiting the poor.
In many ways, the world-system analysis presents the bitter reality of globalisation where issues such as free trade and elimination of previous barriers of trade are advantageous for the prosperity of the ‘world-economy.’
However, upon further analysis, world-economy is a tool that is supported by the core nations as long as it benefits their interests in the world-system.
It is evident that the notion that globalisation is beneficial to all countries is not valid in all its assertions as it has led to the increase of the difference between the underprivileged peripheral countries and the well-off major ones.
In this case, globalisation has provided an opportunity for the rich to exploit the poor countries in an arrangement that benefits the former while disadvantaging the latter. Hence, the world-system analytical approach provides a detailed and a convincing explanation of the present-day power and wealth inequalities in the world.
Criticisms of World-System Analysis
Like any other theory, the world-system analysis has received a lot of criticism from different theorists and economic experts who are not satisfied with its main assertions.
The first criticism is that unlike other social theories that explain the economy and inequality in the society, world-system theory focuses on the economy and less on other important issues such as culture.
While this criticism is strong, it does not lead to a disregard of key concepts other than the world-system analysis. However, there is a need to find a way through which culture can be incorporated into the theory to make it more reflective of the social dynamics of the world economy, power, and inequalities.
Further, the theory is criticised for being overly core-centric. In this case, the critiques such as Gregory assert that Wallerstein concentrates on explaining why and how the core nations have amassed wealth.
At the end, he does not focus on the plight of the peripheral nations. Further, he does not offer elaborate solutions of how such inequalities and power can be eliminated.
However, this claim is not a valid argument since his reference to a ‘system’ is an indication of the fact that perfection can never be achieved.
The theory compensates for this argument by pointing out that just like a system, the various changes that occur with time change the balance where the periphery and semi-peripheral countries change their status up and/or down the classification.
Another valid argument by Hall is that by focusing on the world market and economy, the theory makes a great supposition by assuming the local class struggles and class divisions that play an important part in one way or another in the state and global economy.
Conclusion
The world-system analysis satisfactorily explains the main causes of disparities in wealth and power in the global political economy. The theory views the world as a unitary system that is divided into core, semi-peripheral, and peripheral nations as dictated by divisions of labour between them.
The core countries dominate the economy of the system through their focus on production of high-end finished products and high-skilled labour while others focus on low-skilled labour and production of raw materials.
Accordingly, due to these differences between nations in the system, core countries exploit the poor nations for their raw materials, which create surplus in productivity. In this way, the key countries dictate business and monetary wealth at the disadvantage of the marginalised states that remain underprivileged.
However, the theory has been criticised for its focus on the economy at the expense of other important factors such as culture and class struggles within individual nations. Further, it has been criticised for its focus on core nations whilst showing less attention to the peripheral nations.
As such, a room has been left for expansion of the theory to address valid criticisms that have been advanced by its critics. Overall, the theory has been able to capture and explain the ‘politics’ of the global economy and the inequalities of power and wealth.
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