1. SOCI 323 – World Systems February 28, 2014

2. The Modern World-System as a Capitalist World Economy - Immanuel Wallerstein World economy is not bounded by a unitary political structure The world economy is capitalist

3. Features of a Capitalist World Economy We are in a capitalist system ONLY when the system gives priority to the endless accumulation of capital A capitalist world economy is a collection of many institutions, the combination of which accounts for its processes, and all of which are intertwined with each other Free markets are a myth

4. Basic Institutions of a Capitalist World Economy Market - Concrete & Virtual - Quasi-Monopoly Firms - Main actors in the market - Core, periphery, semi-periphery (degree of profitability in the production process) - Cyclical rhythm and Curve (Kandratieff Cycles)

5. Basic Institutions of a Capitalist World Economy State maintains quasi-monopolies by: - Maintaining patents - Putting restrictions on imports - Providing subsidies and tax benefits - Regulations

6. The Rise of the State-System States Sovereignty Borders Reciprocal Recognition from other States Legitimacy Part of an Interstate System

7. The Rise of the State-System States assert authority in at least seven principal arenas of direct interest to them 1 – Sets rules on how capital & labour flows in and out of its border 2 – Sets rules on property 3 – Sets rules about employment and compensation 4 – Decides which costs are internalized 5 – Decides which economic process may be monopolized and to what degree 6 - They tax 7 – They protect its own core production process internationally

8. The Rise of the State-System Sets rules on how capital & labour flows in and out of its border Three principal types of trans-border transactions 1 - Movement of goods 2 - Movement of capital 3 - Movement of people

9. Basic Institutions of a Capitalist World Economy Household - Kinds of income Wage Labour Subsistence Activity Petty Commodity Production Rent Transfer Payments Types of Households - Proletariat - Semi-Proletariat

10. Basic Institutions of a Capitalist World Economy Classes Status Group Households maintain class and identity cohesion - Identity may vary between individual members of a household - The class of a household is does not usually vary between members of the same household

11. The Modern World-System in Crisis Capitalism is in a systemic crisis Kandratieff Cycles are more frequent Phase A – Growth and expansion Phase B – Stagnation Constraints - Selling (competition and purchasing power) - Buying (effective demand)

12. The Modern World-System in Crisis To avoid ‘Phase B’ firms: Seek lower wage employees (runaway factories) Look to charge more for products and services Try to pay less taxes or get more subsidies Constraints on Phase B relief Machinery and resources cost more We are running out of runaway factory space

13. The Modern World-System in Crisis If capitalism is in systemic crisis, what should we do?