Supporting theory: Immanuel M. Wallerstein

1. IR 720/ Caroline EmeryFocus author: Christopher Chase-DunnInterstate System and Capitalist World Economy: One Logic or Two?International Studies Quarterly, Vol.25:1, 1981 Supporting theory: Immanuel M. Wallerstein The Rise and future demise of the world capitalist system: concepts for comparative analysis The capitalist world-economy, Cambridge University Press, 1979 Opposing Theory: William R. Thompson Uneven Economic Growth, Systemic Challenges, and Global Wars International Studies Quarterly, Vol. 27:3, 1983

2. Summary Main Argument: The capitalist mode of production has a single logic in which both the interstate system and the capital accumulation process are interdependent. • In capitalism, there is not a single state that dominates the entire arena of economic competition. Rather than a world state there is the international system of competing states within the world market. • The interstate system allows for the continuity of the capital accumulation process. • The opportunities presented by the world market allow for the continuity of the interstate system.

3. Chase-Dunn/Yes! …the capitalist world economy hasno overarching single state which encompasses the entire arena of economic competition…the competitive nature of the state system prevents any single state from maintaining a system wide monopoly… (p.27) Wallerstein/Yes! …groups pursue their economic interests within a single world market while seeking to distort this market for their benefit by organizing to exert influence on states, some of which are far more powerful than others but none of which controls the world market in its entirety. (p.25) 1)Is a single state incapable of controlling the entire global market in the capitalist world-economy?

4. Chase-Dunn/Yes! Peripheral areas [in the capitalist mode of production] are not seen as “precapitalist” but rather as integrated, exploited, and essential parts of the larger system. (p.26) Wallerstein/Yes! Once you get a difference in the strength of the state machineries, we get the operation of ‘unequal exchange’ which is enforced by strong states on weak ones, by core areas on peripheral areas. Thus capitalism involves…an appropriation of the surplus of the whole world-economy by the core areas. (p.18,19) 2) Should it be assumed that peripheral (weak) areas are exploited by core (strong) areas?

5. Chase-Dunn/Yes! A world economy is an economic division of labor which is overlaid by multicentric system of states. …Barker…makes the important point that the political system of capitalism is not the state, but the larger competitive state system. (p. 25) Wallerstein/Yes! Capitalism…[is] an affair of the world-economy and not of nation-states…capital has never allowed its aspirations to be determined by national boundaries in a capitalist world-economy… sectors of the capitalist classes…have at all points in time sought to maximize their profits within the real economic market, that of the world-economy. (p. 19, 20) 3) Should capitalism be seen from the system rather than the state level of analysis?

6. 4) In the capitalist system, is capital able to evade pressures from organized groups or politicians and flow to where profits are higher? • Chase-Dunn/Yes! Capital is subjected to controls by states, but it can still flow from areas where profits are low to areas where profits are higher. This allows capital to escape political claims which exploited classes attempt to impose on it. If workers are successful in creating organizations which enable them to demand higher wages, or if communities demand that corporations spend more money on pollution controls, capital can usually escape these demands by moving to areas where there is less opposition. (pg. 31)

7. 4) In the capitalist system, is capital able to evade pressures from organized groups or politicians and flow to where profits are higher? (cont.) Supporting Data Ashack Deo Bardhan and Cynthia A. Kroll The New Wave of Outsourcing. Fisher Center for Real State and Urban Economics. University of California, Berkeley- Research Report, Fall 2003. …[This] continues a long history of foreign outsourcing in US manufacturing…Indeed, one of the attributes of the modern stage of globalization for advanced industrial countries is the offshore production of intermediate inputs, usually in low cost developing countries. The motivation, on the part of the US firms, has been driven by the low costs of manufacturing abroad… (p. 02)

8. 4) In the capitalist system, is capital able to evade pressures from organized groups or politicians and flow to where profits are higher? (cont.) Percentage of U.S. Jobs Moving Offshore, 2004-2015 Source: Forrester Research, May 2004

9. 4) In the capitalist system, is capital able to evade pressures from organized groups or politicians and flow to where profits are higher? (cont.) Offshore IT Services Spending in the U.S., 2004 and 2007 (in billions) Source: International Data Group (IDC), Dec. 2003

10. 5) Within a core state, do we find groups with contrasting interests? Do these contrasting interests affect the policy making process? • Chase-Dunn/Yes! …hegemonic core states develop fractions of their capitalist classes having different interests. There evolves a fraction of “international capitalists” who support…supranational federation, and “national” capitalists who seek protection… This explains the ambivalent and contradictory policies of hegemonic core powers…(p.37, 38)

11. 5) Within a core state, do we find groups with contrasting interests? Do these contrasting interests affect the policy making process?(cont.) Supporting Data William P. Avery, Domestic Interests in NAFTA Bargaining Political Science Quarterly, Vol. 113:2, 2004. • During the negotiation and ratifications processes [of NAFTA], political leaders were subjected to the push and pull of powerful and often contradictory political pressures so intense that agreement of the various trade issues was nearly impossible…72 percent of business executives supported NAFTA…Support for NAFTA among agricultural groups was mixed throughout the negotiations….As for the environment groups many opposed the treaty, but some did not…Opposition for the agreement…included more than 60 organizations representing labor unions, environmental and consumer advocacy groups, some segments of agriculture…and some religious and civic groups. (p.281,285-288)

12. 6) Does capitalist competitiveness lead to the decline of hegemonic core states after sometime? • Chase-Dunn/Yes! In the competitive state system it has been impossible for any single state to monopolize the entire world market, and to maintain hegemony indefinitely. Hegemonic core powers such as Britain and the United States, have, in the long run, lost their relative domination to more efficient producers. (p.29)

13. 6) Does capitalist competitiveness lead to the decline of hegemonic core states after sometime? (cont.) U.S. Current Account Balance ( billions of dollars) Source: U.S. Department of Commerce.

14. 6) Does capitalist competitiveness lead to the decline of hegemonic core states after sometime? (cont.) Supporting Data Uchitelle, Louis “Is The U.S. huge deficit sustainable after all?” The Herald Tribune Online Sep. 20, 2004 …rather than crisis, the United States is caught in a gradual deterioration brought on by yawning deficit in trade and other international transactions… The focus on whether the current account deficit will produce a crisis draws attention from the deterioration in America’s global economic status. Interest income that once went to lenders within the U.S. now goes to overseas lenders. Foreigners own more than 40 percent of all treasury securities, up from less than 15 percent a decade ago.

15. Chase-Dunn/ Yes! …the interstate system is dependent on the opportunities presented by the world market for its survival. There are two main characteristics of the interstate system which need to be sustained: the division of sovereignty in the core… and the maintenance of a network of exchange among states. (p.40) W. Thompson/ No! …if members of an interstate system choose or are forced to develop exclusively autarchic national economies…, it is difficult to see how or why this must be equated with the demise of all interstate relations and therefore the interstate system itself. (p.346) 7) Is the international ‘exchange network’ one of the elements needed for the survival of the interstate system?

16. Chase-Dunn/Yes! Again, it is not the most powerful actor that tries to impose imperium, but upwardly mobile second runners….(p.38) W. Thompson/No! Aspiring conquerors may well have dreamed…of seeking a unicentric world empire. But in reality most, if not all, of the past five centuries of global conflict have been revolved around variations on or toward the multicentric end of the continuum. (p.348) 8) Should it be assumed that the bids for expansion from second runner core states are attempts to establish world empire?

17. Chase-Dunn/Yes! …hegemonic core powers lose their competitive advantage in production to other areas. This causes the export of capital, which restrains the hegemonic power from attempting to impose political imperium. (p.40) W. Thompson/No! Uneven economic development cannot account for the system’s leading state’s disinclination to create a world-empire [because world-empire]… has yet to appear feasible, attractive, or particularly necessary to the respective world power. (p.352) 9) Does the competitiveness of the system, and the consequent uneven economic development, restrain the most powerful core states from pursuing a world empire?

18. 10) Is integration among states difficult to be obtained due to nationalism, and cultural differences? • Chase-Dunn/Yes! The maintenance of interimperial rivalry is facilitated by a number of institutional processes. At any point in time national sentiments, language, and cultural differences make supranational integration difficult, as is well illustrated by the EEC. (p.40)

19. 10) Is integration among states difficult to be obtained due to nationalism, and cultural differences? • Opposing Data “European Union.” Britannica Student Encyclopedia. 2004 Encyclopedia Britannica Online. 27 Sept. 2004 http://0-search.eb.com.opac.edu:80/ebi/article?tocld=9274229 The organization for the economic and political integration of Europe known as the European Union (EU) came into being on Nov. 1, 1993…It started with the formation of the European Coal and Steel Community (ECSC), followed by the creation of the European Economic Community (EEC), the establishment of Euratom, and adoption of the Maastricht Treaty of 1991. With the goal of establishing a common currency for all member countries of the European Union (EU), the European Monetary Union (EMU) was found in 1999.

20. 11) Does capitalist competitiveness lead to the decline of hegemonic core states? • Chase-Dunn/Yes! In the competitive state system it has been impossible for any single state to monopolize the entire world market, and to maintain hegemony indefinitely. Hegemonic core powers such as Britain and the United States, have, in the long run, lost their relative domination to more efficient producers. (p.29)

21. 11) Does capitalist competitiveness lead to the decline of hegemonic core states? (cont.) Opposing Data Robert Hunter Wade The American Economic Empire. Challenge, vol. 47:1, 2004 I use “empire” to refer to a wider world order, based on economic rules, such that the normal workings of apparently powerless markets generate disproportionate benefits to the United States without its having to throw its military weight around more than occasionally. This is the world order thatsustain the present situation in which the United States, with less than 5 percent of the world’s population, accrues about a third of the world income (measured in market exchange rates), and is responsible for more than 40 percent of the world’s spending on military activity. The present world economic order must be working very well from the U.S. standing point to go on sustaining such imbalances in its favor. (p.65, 66)

22. 12) Is it impossible for a firm to maintain its worldwide monopoly in the capitalist system? • Chase-Dunn/Yes! There are no long-run monopolies. Even the largest organizations (both states and firms) are subjected to the pressures of politicoeconomic competition. (p.28)

23. 12) Is it impossible for a firm to maintain its worldwide monopoly in the capitalist system? (cont.) Opposing Data Worldwide new operating system licenses for PC’s in 2001 Source: IDC through Fuller, Thomas. “How Microsoft Warded Off Rival Software”. The New York Times 14 May 2003.

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