(p) immanuel vallerstein_dynamics of (unresolved) global crisis-thirty years later

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"Dynami cs of ( Unr esol ved) Gl obal Cr i si s:

Thi r t y Years Lat er " *

by I mmanuel Wal l erst ei n

I n 1982, I publ i shed a book, j oi nt l y wi t h t hr ee col l eagues,

ent i t l ed Dynamics of Global Crisis. Thi s was not i t s or i gi nal

t i t l e. We had pr oposed t he t i t l e, Crisis, What Crisis? The U. S.

publ i sher di d not l i ke t hat t i t l e, but we used i t i n t he Fr ench

t r ansl at i on. The book consi st ed of a j oi nt i nt r oduct i on and

concl usi on and a separate essay by each of us on t he topi c.

We opened t he book wi t h our obser vat i on t hat " t hr oughout t he

1970s, `cr i si s' became an i ncreasi ngl y f ami l i ar t heme: f i r st i n

obscur e di scussi ons among i nt el l ect ual s, t hen i n t he popul ar pr ess,

and f i nal l y i n pol i t i cal debat es i n many count r i es. " We not ed t hat

t her e wer e many di f f er ent def i ni t i ons of t he so- cal l ed cr i si s as

wel l as di f f er ent expl anat i ons of i t s or i gi n.

By the 1980s, t he t er m "cr i si s" seemed t o di sappear f r om wor l d

di scour se, t o be repl aced by another buzz word, one wi t h a much

mor e opt i mi st i c gl oss - "gl obal i zat i on. " I t i s onl y begi nni ng i n

2008 t hat t he t one has t ur ned dour agai n, and t he wor d "cr i si s" has

r esur f aced, t hi s t i me mor e shar pl y than i n t he 1970s, but j ust as

l oosel y. So t he quest i on, "cr i si s, what cr i si s?" seems agai n ver y

r el evant .

Somet hi ng di d i ndeed happen t o t he wor l d- syst em i n t he l at e

ress of the International Institute of Sociology, J une 13, 2009, Yerevan, Armenia

* Plenary Session #5, 39th World Cong



1960s, ear l y 1970s. Thi s moment marked t he begi nni ng of t he

why,

one must bear i n mi nd two t hi ngs. Al l syst ems have cycl i cal

ch the endl ess accumul at i on of

capi t

downt ur n i n t wo absol ut el y nor mal cycl es i n t he oper at i on of t he

moder n wor l d- syst em. I t was t he moment when bot h t he hegemoni c

cycl e and t he overal l economi c cycl e each began i t s downt ur n. The

per i od 1945 t o ci r ca 1970 had been t he moment of t he hei ght of

Uni t ed St ates hegemony i n the wor l d- syst em and al so t he moment of

t he most expansi ve Kondr at i ef f A- upt ur n t hat t he capi t al i st wor l d-

economy had ever known i n i t s hi st or y. The Fr ench r ef er t o t hat

per i od as " l es t r ent e gl or i euses" - a most apt expr essi on.

I cal l t hese downt ur ns absol ut el y nor mal . To under st and

r hythms. I t i s t he way t hey l i ve, t he way t hey deal wi t h t he

i nevi t abl e f l uct uat i ons of t hei r oper at i ons. The second t hi ng t o

bear i n mi nd has t o do wi t h how capi t al i sm as a wor l d- syst em

f unct i ons. Ther e ar e two key i ssues: how pr oducer s make pr of i t ; how

st ates guarant ee t he wor l d order wi t hi n whi ch pr oducer s may make

pr of i t . Let us t ake each i n t ur n.

Capi t al i sm i s a syst em i n whi

al i s t he raison d'être. To accumul at e capi t al , pr oducers must

obt ai n pr of i t s f r om t hei r oper at i ons. However , t r ul y si gni f i cant

pr of i t s ar e possi bl e onl y i f t he pr oducer can sel l t he pr oduct f or

consi der abl y mor e t han t he cost of pr oduct i on. I n a si t uat i on of

per f ect compet i t i on, i t i s absol ut el y i mpossi bl e t o make

si gni f i cant pr of i t . I f t her e i s per f ect compet i t i on ( t hat i s , a

mul t i t ude of sel l er s, a mul t i t ude of buyer s, and uni ver sal l y



avai l abl e i nf or mat i on about pr i ces) , any i nt el l i gent buyer wi l l go

f r om sel l er t o sel l er unt i l he f i nds one who wi l l sel l at a penny

above t he cost of pr oduct i on, i f not i ndeed bel ow t he cost of

pr oduct i on.

Obt ai ni ng si gni f i cant pr of i t r equi r es a monopol y, or at l east

a qua

l i qui

si - monopol y of wor l d- economi c power . I f t her e i s a monopol y,

t he sel l er can demand any pr i ce, as l ong as he does not go beyond

what t he el ast i ci t y of demand permi t s. Any t i me the wor l d- economy

i s expandi ng si gni f i cant l y, one wi l l f i nd t hat t her e ar e some

"l eadi ng" pr oduct s, whi ch ar e r el at i vel y monopol i zed. I t i s f r om

t hese pr oduct s t hat gr eat pr of i t s ar e made and l arge amount s of

capi t al can be accumul ated. The f orward and backward l i nkages of

t hese l eadi ng pr oduct s are the basi s of an over al l expansi on of t he

wor l d- economy. We cal l t hi s t he A- phase of a Kondr at i ef f cycl e.

The probl em f or capi t al i st s i s t hat al l monopol i es ar e sel f -

dat i ng. Thi s i s because ther e exi st s a wor l d mar ket i nt o whi ch

new pr oducer s can ent er , however wel l pol i t i cal l y def ended i s a

gi ven monopol y. Of cour se, ent r y t akes t i me. But sooner or l at er ,

others are abl e t o ent er t he mar ket , and t he degr ee of compet i t i on

i ncr eases. And when compet i t i on i ncr eases, pr i ces go down, as t he

her al ds of capi t al i sm have al ways t ol d us. However , at t he same

t i me, pr of i t s go down. When pr of i t s f or t he l eadi ng pr oduct s go

down suf f i ci ent l y, t he wor l d- economy ceases t o expand, and i t

ent er s i nt o a per i od of st agnat i on. We cal l t hi s t he B- phase of a

Kondr at i ef f cycl e. Empi r i cal l y, t he A- and B- phases t oget her have



t ended t o be 50- 60 year s i n l engt h, but t he exact l engt hs have

var i ed. Of cour se, af t er a cert ai n t i me i n a B- phase, new monopo-

l i es can be cr eat ed and a new A- phase can begi n. How t hi s has been

done i s not our t opi c her e.

The second condi t i on f or capi t al i st prof i t i s t hat t her e

exi st

l t of a l ong st r uggl e

wi t h

s some ki nd of r el at i ve wor l d or der . Whi l e wor l d war s of f er

t he possi bi l i t i es f or some ent r epr eneur s t o do ver y wel l , t hey al so

occasi on enor mous dest r uct i on of f i xed capi t al and consi der abl e

i nt er f er ence wi t h wor l d t r ade. The over al l wor l d- economi c bal ance-

sheet of wor l d war s i s not posi t i ve, a poi nt Schumpet er r epeat edl y

made. A r el at i vel y st abl e si t uat i on i s necessar y f or a posi t i ve

over al l bal ance- sheet . Ensur i ng t hi s rel at i vel y st abl e si t uat i on i s

t he t ask of a hegemoni c power, t hat i s, a power st r ong enough t o

i mpose such r el at i ve st abi l i t y on t he wor l d- syst em as a whol e.

Hegemoni c cycl es have been much l onger t han Kondr at i ef f cycl es. I t

i s not so easy, i n a wor l d of mul t i pl e so- cal l ed sover ei gn st at es,

f or one st at e t o est abl i sh i t sel f as t he hegemoni c power . I t has i n

f act been done onl y thr ee t i mes i n sever al hundr ed year s: f i r st by

t he Uni t ed Provi nces i n t he mi d- sevent eent h cent ur y, t hen by the

Uni t ed Ki ngdom i n t he mi d- ni net eent h cent ur y, and f i nal l y by t he

Uni t ed St at es i n t he mi d- t went i et h cent ur y.

The r i se of a hegemoni c power i s t he r esu

other potent i al hegemoni c powers. I t has been won each t i me up

t o now by that st at e whi ch, f or var i ous r easons and by var i ous

met hods, has been abl e t o put t oget her t he most ef f i ci ent



pr oduct i ve machi ner y, and t hen t o wi n a " t hi r t y year s' war " wi t h

i t s pr i nci pal r i val . Agai n how t hi s i s done i s not our t opi c her e.

The key poi nt i s t hat once a gi ven st ate f i nal l y achi eves hegemony,

i t i s abl e t o set t he r ul es by whi ch t he i nt er st at e syst em

oper at es, seeki ng si mul t aneousl y t o assure i t s smoot h f unct i oni ng

and t o maxi mi ze the f l ow of accumul at ed capi t al t o i t s ci t i zens and

pr oduct i ve ent er pr i ses. One coul d cal l t hi s a quasi - monopol y of

geopol i t i cal power .

The pr obl emf or t he hegemoni c power i s t he same as t he pr obl em

for a

hegemoni c power ' s

econo

l eadi ng i ndust r y. The monopol y i s sel f - l i qui dat i ng. Thi s i s

so f or t wo reasons. On t he one hand, t o mai nt ai n t he or der i t

i mposes, t he hegemoni c power has t o make use on occasi on of i t s

mi l i t ar y power . But pot ent i al mi l i t ar y st r engt h i s al ways mor e

i nt i mi dat i ng t han act ual l y- used mi l i t ar y st r engt h. Usi ng t he

mi l i t ar y st r engt h i s cost l y i n money and l i ves. I t has a negat i ve

i mpact on t he ci t i zens of t he hegemoni c power , whose i ni t i al pr i de

i n vi ct or y t ends t o t ur n t o di st r ess as t hey pay the i ncreasi ng

cost s of mi l i t ar y act i on, and t hey begi n t o l ose ent husi asm.

Fur t her mor e, bi g mi l i t ar y oper at i ons t end al most al ways t o be l ess

ef f i caci ous t han both support ers and opponent s of t he hegemoni c

power had f ear ed, and t hi s s t r engt hens t he f ut ur e resi st ance of

ot her s who wi sh t o def y t he hegemoni c power .

Ther e i s a second r eason. Even i f t he

mi c ef f i ci ency does not i mmedi at el y f al t er , t hat of ot her

count r i es begi ns t o r i se. And as t he ot her s r i se, t hey ar e l ess



r eady t o accept t he di ct ates of t he hegemoni c power. The hegemoni c

power ent er s i nt o a pr ocess of sl ow decl i ne r el at i ve t o t he r i si ng

power s. The decl i ne may be sl ow but i t i s nonet hel ess essent i al l y

i r r evers i bl e.

The conj oi ni ng ci r ca 1965- 1970 of t he t wo ki nds of decl i ne -

t hat mar ki ng t he end of t he hi st or i cal l y most expansi ve

hi r d downt ur n, one

howev

d the summi t of t hei r mobi l i zi ng power

i n t h

Kondr at i ef f - A phase and t hat mar ki ng t he begi nni ng of decl i ne of

t he hi st or i cal l y most powerf ul hegemoni c power - i s what made t hat

t ur ni ng poi nt so r emar kabl e. I t i s no acci dent t hat t he wor l d

r evol ut i on of 1968 ( act ual l y 1966- 1970) t ook pl ace at t hat t ur ni ng

poi nt , as an expr essi on of t he t ur ni ng poi nt .

The wor l d r evol ut i on of 1968 mar ked a t

er t hat has occur r ed onl y once i n t he hi st or y of t he moder n

wor l d- syst em - t he decl i ne of t he t r adi t i onal ant i syst emi c

movement s of t he worl d- syst em, t he so- cal l ed Ol d Lef t . The Ol d Lef t

- essent i al l y t he t wo var i et i es of wor l d soci al movement s, t he

Communi st s and t he Soci al - Democr at s; pl us t he nat i onal l i ber at i on

movement s - arose sl owl y and l abor i ousl y acr oss t he wor l d- syst em,

pr i mar i l y t hr oughout t he l ast t hi r d of t he ni net eent h cent ur y and

t he f i r st hal f of t he t went i et h cent ur y. The Ol d Lef t movement s

ascended f r om a posi t i on of pol i t i cal mar gi nal i t y and weakness as

of say 1870 t o one of pol i t i cal cent r al i t y and consi der abl e

st r engt h as of say 1950.

These movement s r eache

e per i od f r om 1945 t o 1968 - exact l y t he moment of both t he



ext r aor di nar y Kondr at i ef f A- phase expansi on and t he hei ght of U. S.

hegemony. I do not t hi nk t hi s was f or t ui t ous, al t hough i t mi ght

seem count er - i nt ui t i ve. The i ncredi bl e wor l d economi c expansi on l ed

t o a st r ong pr ef er ence of ent r epr eneur s not t o suf f er i nt er r upt i ons

of t hei r pr oduct i on pr ocesses because of conf l i ct wi t h t he wor ker s.

I t f ol l owed t hat t hey t ended t o bel i eve t hat concessi ons t o t he

mat er i al demands of t hei r wor ker s cost t hem l ess t han such

i nt er r upt i ons. Of cour se, over t i me, t hi s meant r i si ng cost s of

pr oduct i on, one of t he f act or s t hat l ed t o the end of t he quasi -

monopol i es of l eadi ng i ndust r i es. But most ent r epr eneur s make

deci si ons t hat maxi mi ze shor t - t er m pr of i t s - l et us say, pr of i t s

over t he succeedi ng t hr ee years - and l eave t he f ut ur e t o t he gods.

Par al l el consi der at i ons i nf l uenced t he pol i ci es of t he

hegem

say t hat t he Ol d

Lef t

oni c power . Mai nt ai ni ng r el at i ve st abi l i t y i n t he wor l d- syst em

was an essent i al obj ect i ve. The Uni t ed St at es had t o wei gh t he cost

of r epr essi ve act i vi t y on t he wor l d scene agai nst t he cost of

concessi ons t o the demands of nat i onal l i berat i on movement s. And

r el uctant l y at f i r st , but l at er mor e del i ber at el y, t he Uni t ed

St at es began t o f avor a cont r ol l ed "decol oni zat i on" and t hi s had

t he ef f ect of br i ngi ng such movement s t o power.

Hence, by t he mi ddl e of t he 1960s, one coul d

movement s had achi eved t hei r hi st or i c goal of st ate power

al most ever ywher e - at l east on paper . Communi st par t i es r ul ed one-

t hi r d of t he wor l d - t he so- cal l ed soci al i st bl oc. Soci al -

democr at i c par t i es wer e i n power , at l east al t er nat i ng power , i n



most of anot her t hi r d of t he wor l d - t he pan- Eur opean wor l d. One

has t o bear i n mi nd i n addi t i on t hat , at t hat t i me, t he pr i nci pal

pol i cy of t he soci al - democrat i c par t i es - t he wel f ar e st at e - was

accept ed and pr act i ced as wel l by t hei r conser vat i ve al t er nat i ng

par t i es. And of cour se, t he nat i onal l i ber at i on movement s had come

t o power i n most of t he f or mer col oni al wor l d ( as wel l as var i ous

ver si ons of popul i st movement s i n Lat i n Amer i ca) .

To be sur e, I have sai d "at l east on paper . " Most anal yst s and

mi l i t

1968 changed al l t hat . Thr ee t hemes

perva

ant s t end t oday to be ver y cr i t i cal of t he per f or mance of al l

t hese movement s, and doubt t hat t hei r comi ng t o power made much

di f f er ence. But t hi s i s a r et r ospecti ve vi ew and i s hi st or i cal l y

anachr oni st i c. The cr i t i cs f or get t he sense of wor l dwi de

t r i umphal i sm t hat per vaded t he Ol d Lef t movement s and t hei r

suppor t er s at pr eci sel y t hat t i me, a t r i umphal i sm based pr eci sel y

on t hei r achi evement of st at e power . The cr i t i cs f or get as wel l t he

sense of deep f ear t hat pervaded t he wor l d' s weal t hi er and more

conservat i ve st r at a about what l ooked t o t hem l i ke a j ugger naut of

dest r uct i ve egal i t ar i ani sm.

The wor l d r evol ut i on of

ded t he anal yses and t he rhetor i c of t hose who engaged i n t he

mul t i pl e upr i si ngs. Al l t hr ee t hemes bespoke a r evi sed

t r i umphal i sm. The f i r st t heme was t hat t he U. S. hegemoni c power had

overst r et ched and was vul nerabl e. The Vi etnam war was t he model

exampl e, al bei t not t he onl y one. The Tet of f ensi ve was t aken t o be

t he deat h knel l of t he U. S. mi l i t ar y oper at i on. As par t of t he new



at mospher e, t he r evol ut i onar i es at t acked t he r ol e of t he Sovi et

Uni on whi ch t hey saw as a col l usi ve par t i ci pant i n U. S. hegemony, a

f eel i ng t hat had been gr owi ng ever ywher e, si nce at l east 1956.

The second t heme was t hat t he Ol d Lef t movement s - of al l

three

ef t movement s had i gnor ed

t he f

t i cal

succe

var i et i es - had f ai l ed t o del i ver t hei r hi st or i c pr omi ses.

Al l t hr ee var i et i es had bui l t t hei r st r at egy on t he so- cal l ed t wo-

st ep st r at egy - f i r st t ake st at e power , t hen change t he wor l d. The

mi l i t ant s sai d i n ef f ect t hat you have t aken st at e power but have

not at al l changed t he wor l d. I f we wi sh to change t he wor l d, we

must r epl ace you wi t h new movement s and new st r at egi es. And we

shal l do thi s. The Chi nese Cul t ur al Revol ut i on was t aken by many as

t he model exampl e of t hi s possi bi l i t y.

The t hi r d t heme was t hat t he Ol d L

or got t en peopl es - t hose downt r odden because of t hei r r ace,

t hei r gender , t hei r et hni ci t y, t hei r sexual i t y. The mi l i t ant s

i nsi st ed t hat t he demands f or equal t r eat ment by al l of t hese

gr oups coul d no l onger be def er r ed to some put at i ve f ut ur e t i me

af t er t he mai n Ol d Lef t par t i es had achi eved t hei r hi st or i c

obj ect i ves. These demands, t hey sai d, const i t ut ed par t of t he

ur gent pr esent , not t he def er r ed f ut ur e. I n many ways, t he Bl ack

Power movement i n t he Uni t ed St at es was t he model exampl e.

The wor l d r evol ut i on of 1968 was an enor mous pol i

ss. The wor l d r evol ut i on of 1968 was an enor mous pol i t i cal

f ai l ur e. I t r ose l i ke a phoeni x, bur ned ver y br i ght i ndeed across

t he gl obe, and then by t he mi d- 1970s seemed t o be ext i ngui shed



al most everywhere. What had been accompl i shed by t hi s wi l d

br ushf i r e? Actual l y, qui t e a bi t . Cent r i st l i ber al i sm had been

det hr oned as t he gover ni ng i deol ogy of t he wor l d- syst em. I t was

r educed t o bei ng si mpl y one al t ernat i ve among others. And t he Ol d

Lef t movement s were dest r oyed as mobi l i zer s of any ki nd of

f undament al change. But t he i mmedi at e t r i umphal i sm of t he

r evol ut i onar i es of 1968, l i ber at ed f r om any subor di nat i on t o

cent r i st l i ber al i sm, pr oved shal l ow and unsust ai nabl e.

The wor l d r i ght was equal l y l i ber at ed f r om any at t achment t o

cent r i st l i ber al i sm. I t t ook advant age of t he wor l d economi c

f f ensi ve of t he wor l d r i ght was a gr eat success. The

of f ensi ve of t he wor l d r i ght was a gr eat f ai l ur e. What was

st agnat i on and t he col l apse of t he Ol d Lef t movement s ( and t hei r

gover nment s) t o l aunch a count er - of f ensi ve, whi ch we cal l

neol i ber al ( act ual l y qui t e conser vat i ve) gl obal i zat i on. The pr i me

obj ect i ves wer e t o r ever se al l t he gai ns of t he l ower st r at a dur i ng

t he Kondr at i ef f A- per i od. The wor l d r i ght sought t o r educe al l t he

maj or cost s of pr oduct i on, t o dest r oy the wel f ar e st at e i n al l i t s

ver si ons, and t o sl ow down t he decl i ne of U. S. power i n t he wor l d-

syst em. The onward march of t he wor l d r i ght seemed t o cul mi nate i n

1989. The endi ng of Sovi et cont r ol over i t s East - Cent r al Eur opean

sat el l i t e st at es, and t he di smant l i ng of t he Sovi et Uni on i t sel f

l ed t o a sudden new t r i umphal i sm of t he wor l d r i ght . One mor e

i l l usi on!

The o

sust ai ni ng t he accumul at i on of capi t al si nce t he 1970s was t he



t ur ni ng f r om seeki ng pr of i t s vi a pr oduct i ve ef f i ci ency t o seeki ng

pr of i t s vi a f i nanci al mani pul at i ons, mor e cor r ect l y cal l ed

specul at i on. The key mechani sm of specul at i on i s encour agi ng

consumpt i on vi a i ndebt edness. Thi s was of cour se what has happened

i n ever y Kondr at i ef f B- per i od.

The di f f erence t hi s t i me has been t he scal e of t he specul at i on

and t

essi on i nt o whi ch t he wor l d has f al l en wi l l cont i nue

now f

he i ndebt edness. Af t er t he bi ggest A- per i od expansi on i n t he

hi st or y of t he capi t al i st wor l d- economy, t her e has f ol l owed t he

bi ggest specul at i ve mani a. The bubbl es moved t hr ough t he whol e

wor l d- system - f r om t he nat i onal debt s of t he Thi r d Wor l d count r i es

and t he soci al i st bl oc i n t he 1970s, t o t he j unk bonds of l ar ge

cor por at i ons i n t he 1980s, t o the consumer i ndebt edness of t he

1990s t o t he U. S. government i ndebt edness of t he Bush er a. The

system has gone f r om bubbl e t o bubbl e. The wor l d i s cur r ent l y

t r yi ng one l ast bubbl e - t he bai l out s of t he banks and t he pr i nt i ng

of dol l ar s.

The depr

or qui t e a whi l e and go qui t e deep. I t wi l l dest r oy t he l ast

smal l pi l l ar of r el at i ve economi c st abi l i t y, t he r ol e of t he U. S.

dol l ar as a r eser ve cur r ency of saf eguar di ng weal t h. As t hi s

happens, t he mai n concern of every government i n the wor l d - f r om

t he Uni t ed St at es t o Chi na, f r om France t o Russi a t o Br azi l , not t o

speak of al l t he weaker gover nment s on t he wor l d scene - wi l l be to

aver t t he upr i si ng of t he unempl oyed wor ker s and t he mi ddl e st r at a

whose savi ngs and pensi ons di sappear . The government s ar e t ur ni ng



t o pr ot ect i oni sm and pr i nt i ng money as t hei r f i r st l i ne of def ense,

as ways of deal i ng wi t h popul ar anger .

Such measur es may post pone t he danger s t he government s f ear ,

and m

at l y i mpr oved r el at i ve economi c

posi t

s poi nt t hat we must put

i nto

ay assuage moment ar i l y the pai n of ordi nary peopl e. But t hey

wi l l event ual l y pr obabl y make t he si t uat i on even wor se. We ar e

ent er i ng a gr i dl ock of t he syst em, f r om whi ch t he wor l d wi l l f i nd

i t ext r emel y di f f i cul t t o ext r act i t sel f . The gr i dl ock wi l l expr ess

i t sel f i n t he f or m of a const ant set of ever wi l der f l uctuat i ons,

whi ch wi l l make shor t - t er m pr edi ct i ons - bot h economi c and

pol i t i cal - vi r t ual l y guesswor k. And t hi s i n t ur n wi l l aggr avat e

t he popul ar f ear s and al i enat i on.

Some ar e cl ai mi ng t hat t he gr e

i on of t he Asi an nat i ons - especi al l y f i r st J apan, t hen Sout h

Kor ea and Tai wan, t hen Chi na and t o a l esser extent I ndi a - i s

al l owi ng, wi l l al l ow a r esur gence of capi t al i st ent er pr i se, wi t h a

si mpl e geogr aphi cal shi f t of l ocat i on. One mor e i l l usi on! The

r el at i ve r i se of Asi a i s a r eal i t y, but pr eci sel y one t hat

under mi nes f ur t her t he capi t al i st system. I t does so by over l oadi ng

t he number s of per sons t o whom sur pl us- val ue i s di st r i but ed. The

t op end of t he capi t al i st syst em can never be t oo l ar ge, f or t hi s

r educes ( not i ncr eases) t he over al l accumul at i on of capi t al .

Chi na' s economi c expansi on accel er at es t he st r uct ur al pr of i t

squeeze of t he capi t al i st wor l d- economy.

Wher e do we go f r om her e? I t i s at t hi

t he di scussi on t he ot her el ement , t he secul ar t r ends of t he



wor l d- syst em, as opposed t o i t s cycl i cal r hyt hms. Al l ki nds of

syst ems f unct i on i n t he same f or mal f ashi on. The cycl i cal r hythms

are how t hey operate on a cont i nui ng basi s, how t hey br eathe i f you

wi l l . There are i nnumerabl e ups and downs, some more f undament al

t han others. But t he B- phases never end at t he same poi nt as where

t he pr ecedi ng A- phases began. Ther e i s al ways a syst emi c pr i ce to

pay f or r enewi ng t he upward phase of t he cycl es. The syst em has

al ways t o move j ust a l i t t l e f ur t her f r om equi l i br i um, even i t s

movi ng equi l i br i um.

We may t hi nk of each upt ur n as cont r i but i ons t o sl ow- movi ng

upward curves, each headi ng t owards i t s asympt ote. I n t he

t her ef or e have t o di scer n what goes i nt o t he cost s of

pr odu

capi t al i st wor l d- economy, i t i s not al l t hat di f f i cul t t o di scer n

whi ch cur ves mat t er most . Si nce capi t al i sm i s a system i n whi ch t he

endl ess accumul at i on of capi t al i s par amount , and si nce one

accumul at es capi t al by maki ng pr of i t s i n t he mar ket , t he key i ssue

f or al l capi t al i st s i s how t o pr oduce pr oducts f or pr i ces t hat ar e

l ower , pr ef er abl y f ar l ower , t han t he pr i ces f or whi ch t hey can be

sol d.

We

ct i on and what det er mi nes t he pr i ces. Logi cal l y, t her e ar e

t hr ee di f f er ent ki nds of cost s of pr oduct i on: t he cost s of

per sonnel ( al l per sonnel ) ; t he cost s of i nput s ( al l ki nds of

i nput s) ; and t he cost s of t axat i on ( al l ki nds of t axat i on) . I t hi nk

i t i s not t oo har d t o demonst r at e t hat al l t hr ee cost s have been

goi ng up over t i me as a per cent age of t he act ual pr i ces f or whi ch



pr oduct s ar e sol d. And t hi s i s so despi t e t he r epeat ed ef f or t s of

capi t al i st s t o push t hem down, and despi t e the r epeat ed

t echnol ogi cal and organi zat i onal i mpr ovement s whi ch have i ncr eased

t he so- cal l ed ef f i ci ency of pr oduct i on. I shal l r esume br i ef l y why

t hi s i s so, and t hen r esume br i ef l y why t her e ar e l i mi t s t o t he

el ast i ci t y of demand.

The cost s of per sonnel may be di vi ded i nto t hree cat egor i es -

t he r

t he cost s of cadr es i s t he r esul t of t wo

di f f e

el at i vel y unski l l ed wor kf or ce, t he i nt er medi at e cadr es, and

t he top manager s. The cost s of t he unski l l ed t end t o go up i n A-

per i ods as a r esul t of some ki nd of syndi cal act i on. When t hese

cost s go t oo hi gh f or gi ven ent r epr eneur s and par t i cul ar l y f or

t hose i n t he l eadi ng i ndust r i es, r el ocat i on t o hi st or i cal l y l ower -

wage ar eas i n t he B- per i od i s t he mai n r emedy. When t here i s l ater

on si mi l ar syndi cal act i on i n t he new l ocat i on, a new move occur s.

The moves ar e cost l y but ef f ect i ve. But wor l dwi de t her e i s a

r at chet ef f ect . The r educt i ons never el i mi nat e t ot al l y t he

i ncr eases. Over 500 year s, t hi s r epeat ed pr ocess has exhaust ed t he

l oci i nt o whi ch t o move. Thi s can be measur ed by the der ur al i zat i on

of t he wor l d- syst em.

The i ncr ease i n

r ent consi der at i ons. One, t he i ncr eased scal e of pr oduct i ve

uni t s r equi r es mor e i nt ermedi at e per sonnel , whose sal ar i es augment

t he per sonnel bi l l . And t wo, t he pol i t i cal danger s t hat r esul t f r om

t he r epeat ed syndi cal or gani zat i on of t he r el at i vel y l ow- ski l l ed

per sonnel i s count er ed by t he cr eat i on of a l ar ger i nt er medi at e



st r at um who can be bot h pol i t i cal al l i es f or t he r ul i ng st r at um and

model s of a possi bl e upwar d mobi l i t y f or t he unski l l ed maj or i t y,

t her eby bl unt i ng i t s pol i t i cal mobi l i zat i on.

The i ncr ease i n t he cost s of t op managers i s t he di r ect r esul t

o f th

al ogous r easons.

The b

went y- f i r st cent ur y, when cl i mat e change i s wi del y

debat

e i ncr eased compl exi t y of ent r epr eneur i al st r uct ur es - t he

f amous separ at i on of owner shi p and cont r ol . Thi s makes i t possi bl e

f or t hese t op manager s t o appr opr i at e ever l ar ger por t i ons of t he

f i r m' s r ecei pt s as r ent , t her eby reduci ng what goes t o t he "owner s"

as pr of i t or t o r ei nvest ment by t he f i r m. Thi s l ast i ncr ease was

spect acul ar i n si ze dur i ng t he l ast f ew decades.

The cost s of i nputs have been goi ng up f or an

asi c ef f or t of capi t al i st s i s to ext er nal i ze costs, t hat i s ,

t o not pay t he f ul l bi l l f or t he i nput s t hey use. Ther e ar e t hr ee

mai n cost s one may ext ernal i ze - handl i ng t oxi c wast e, r enewi ng r aw

mat er i al s, and bui l di ng i nf r ast r uctur e. For a ver y l ong t i me, f r om

t he or i gi ns of t he capi t al i st wor l d- economy i n t he si xt eent h

cent ur y t o the 1960s, such exter nal i zat i on of cost s has been t aken

as absol ut el y nor mal . I t was basi cal l y unquest i oned by pol i t i cal

aut hor i t i es.

I n t he t

ed, and "gr een" and "organi c" have become uni ver sal buzz

wor ds, i t i s har d t o r emember t hat , f or f i ve cent ur i es, t oxi c wast e

was normal l y and al most al ways si mpl y dumped i n t he publ i c domai n.

What happened i s t hat t he wor l d has been r unni ng out of such vacant

publ i c domai ns - t he equi val ent of der ur al i zat i on of t he wor l d' s



work f orce. Suddenl y, t he heal t h consequences and cost s have become

so hi gh and so cl ose t o home that a maj or pol i t i cal r esponse has

occur r ed, i n the f or m of demands f or envi r onment al cl ean- up and

cont r ol .

The second ext er nal i zat i on, t hat of r enewi ng r esour ces, has

al so

hi r d ext er nal i zat i on has been t hat of i nf r ast r uct ur e.

Produ

t hr ust f or

government s t o assume di r ect l y some of t he necessar y cost s of

er e ar e mul t i pl e

pol i t

onl y recent l y become a maj or concer n, t he consequence of t he

shar p i ncr ease i n wor l d popul at i on. Suddenl y, t her e i s a wi de

concer n about shor t ages - of ener gy sour ces, of wat er , of

f or est at i on, of pr oduct s of t he soi l , of f i sh and meat . Suddenl y,

we ar e worr i ed about who uses what , f or what pur poses, and who pays

the bi l l .

The t

ct s produced f or sal e on t he wor l d market need t r anspor t and

communi cat i on, t he cost s of whi ch have gone up as t hey have become

mor e ef f i ci ent and f ast er . Ent r epr eneur s have hi st or i cal l y onl y

pai d a smal l par t of t he r eal bi l l f or i nf r ast r uctur e.

The consequence of al l of t hi s has been a pol i t i cal

det oxi f i cat i on, r esour ce r enewal , and f ur t her i nf r ast r uctur e

expansi on. To do t hi s, gover nment s must i ncr ease t axes. And, unl ess

t hey wi sh t o go bankr upt , government s have t o i nsi st on more

i nt er nal i zat i on of cost s by ent r epr eneur s, whi ch of cour se cut s

shar pl y i nt o mar gi ns of pr of i t of ent er pr i ses.

Fi nal l y, t axat i on has been goi ng up. Th

i cal l evel s of t axat i on. Ther e i s al so t he pr i vat e t axat i on of



cor r upt i on and or gani zed maf i as. For t he ent r epr eneur , i t does not

r eal l y mat t er t o whom t he taxes go. They ar e a cost . The si ze of

pr i vat e t axat i on has r i sen as t he extensi veness of wor l d economi c

act i vi t y has gone up and t he st r uct ur at i on of st at e bur eaucr aci es

has expanded. However, t he maj or i mpetus f or i ncr eased t axat i on has

been the i mpact of t he wor l d' s ant i syt emi c movement s on pol i t i cal

cul t ur e - what mi ght be cal l ed t he democr at i zat i on of wor l d

pol i t i cs.

Popul ar movement s have pushed f or t hr ee basi c st ate guarant ees

- edu

s a

perce

cat i on, heal t h, and l i f e- l ong r evenue f l ows. Each of t hese has

expanded i n t wo ways over t he past 200 years: i n t he l evel s of

servi ces demanded; and the geogr aphi cal l ocal es i n whi ch the

demands have been made. The wel f are st at e i s good shor t hand f or

such demands. And t here i s no government t oday exempt f r om t he

pr essur e t o mai nt ai n a wel f ar e st at e, even i f t he l evel s var y,

pr i mar i l y accor di ng t o t he col l ect i ve weal t h of t he count r y.

Al l t hr ee cost s of pr oduct i on have r i sen st eadi l y a

nt age of t he r eal sal es pr i ces of pr oducts, al bei t i n t he f or m

of an A- B r atchet , over 500 year s. The most dr amat i c i ncr eases have

been i n t he post - 1945 per i od. Cannot t he pr i ces f or whi ch pr oduct s

ar e sol d si mpl y be rai sed, i n or der t o mai nt ai n t he mar gi ns of r eal

pr of i t ? That i s pr eci sel y what has been t r i ed i n t he post - 1970

per i od. Thi s has t aken t he f or m of pr i ce r i ses sust ai ned by

expanded consumpt i on sust ai ned by i ndebt edness. The economi c

col l apse i n t he mi dst of whi ch we f i nd our sel ves i s not hi ng but t he



expr essi on of t he l i mi t s of el ast i ci t y of demand. When ever yone

l i ves f ar beyond t hei r r eal i ncome, t her e comes a poi nt wher e

someone has t o st op, and f ai r l y qui ckl y ever yone f eel s t hey have t o

st op.

The comi ng t oget her of t he t hree el ement s - t he magni t ude of

t he "

we ar e l i vi ng ami dst t he bi f ur cat i on of t he

syst emi c pr ocess. The quest i on i s no l onger , how wi l l t he

i s awar e of t hi s as yet . Most peopl e

cont i

nor mal " cr ash, t he r eal r i se i n cost s of pr oduct i on, and t he

ext r a pr essur e on the syst emof Chi nese ( and Asi an) gr owt h - means

t hat Humpt y Dumpt y has f al l en of f t he wal l , and t he pi eces can no

l onger be put t oget her agai n. The system i s ver y, ver y f ar f r om

equi l i br i um, and t he f l uct uat i ons ar e enor mous. As a consequence,

t he shor t - t er m pr edi ct i ons have become i mpossi bl e to make, and t hi s

t ends t o f r eeze consumpt i on deci si ons. Thi s i s what one cal l s

s t ruct ural cr i s i s .

From her e on i n,

capi t al i st syst em mend i t sel f , and r enew i t s f or war d t hr ust ? The

quest i on i s what wi l l r epl ace t hi s syst em? What or der wi l l be

chosen out of t hi s chaos?

Of cour se, not ever yone

nue t o operate as t hough somehow t he syst em were cont i nui ng,

usi ng i t s ol d r ul es. They ar e not r eal l y wr ong. The system does

cont i nue t o oper at e, usi ng i t s ol d r ul es. But now, usi ng t he ol d

r ul es onl y exacer bat es t he st r uct ur al cr i si s. However , some act or s

ar e qui t e awar e that we ar e i n a bi f ur cat i on. And t hey know,

per haps onl y t aci t l y, t hat at some poi nt i n a bi f ur cat i on, t he



col l ect i vi t y of al l act or s l eans def i ni t i vel y i n one di r ect i on or

another. One can say t hat a deci si on has been made, even i f t he use

of t he word "deci si on" sounds ant hr opomorphi c.

We may thi nk of t hi s per i od of syst emi c cr i si s as t he ar ena of

a str

essent i al l y r esembl es t he pr esent syst em i n some basi c

wo al t er nat i ves " t he spi r i t of Davos"

and "

t r ategi es, one must not e two

cruci al char acter i st i cs of a st r uctur al cri si s. Because t he

uggl e f or t he successor syst em. The out come may be i nherent l y

unpr edi ct abl e but t he nat ur e of t he st r uggl e i s ver y cl ear . We ar e

bef or e al t er nat i ve choi ces. They cannot be spel l ed out i n

i nst i t ut i onal det ai l , but t hey can be suggest ed i n br oad out l i ne.

We can "choose" col l ect i vel y a new st abl e syst em t hat

char act er i st i cs - a syst em t hat i s hi er ar chi cal , expl oi t at i ve, and

pol ar i zi ng. Ther e ar e, no doubt , many f or ms t hi s coul d t ake, and

some of t hese f or ms coul d be har sher t han t he capi t al i st wor l d-

syst em i n whi ch we have been l i vi ng. Al t er nat i vel y we can "choose"

col l ect i vel y a r adi cal l y di f f er ent f or m of syst em, one t hat has

never pr evi ousl y exi st ed - a syst em t hat i s r el at i vel y democrat i c

and r el at i vel y egal i t ar i an.

I have been cal l i ng t he t

t he spi r i t of Por t o Al egr e. " But t he names are uni mpor t ant .

What i s i mpor t ant i s t o see t he possi bl e or gani zat i onal st r at egi es

on each si de i n t hi s def i ni t i ve st r uggl e - a st r uggl e t hat has been

goi ng on i n some f orm si nce the wor l d r evol ut i on of 1968 and may

not be resol ved bef or e ci r ca 2050.

Bef or e, however , one l ooks at s



f l uctuat i ons ar e so wi l d, t her e i s l i t t l e pr essur e t o r et ur n t o

r et ur n t o equi l i br i um. Dur i ng t he l ong, "nor mal " l i f et i me of t he

syst em, t hese pr essur es were t he means by whi ch ext ensi ve soci al

mobi l i zat i ons ( so- cal l ed "r evol ut i ons" ) had al ways been l i mi t ed i n

t hei r ef f ects. But when t he system i s f ar f r om equi l i br i um, exactl y

t he opposi t e happens. Smal l soci al mobi l i zat i ons have ver y gr eat

ef f ect s.

Thi s i s what compl exi t y sci ence r ef er s t o as t he "but t er f l y"

ef f ec

i st i c of a st r uctural cr i si s i s

t hat nei t her of t he t wo camps has, nor can have, a ver t i cal

awar e mi l i t ant s on bot h si des ar e al so f i ndi ng i t di f f i cul t t o

1 Ilya Prigogine, The End of Certainty, New York: The Free Press, 1996, 187-188.

t . We mi ght al so, i n anci ent phi l osophi c di scour se, cal l i t

t he moment when f r ee wi l l pr evai l s over det er mi ni sm. Pr i gogi ne

cal l s t hi s way of underst andi ng compl ex syst ems t he "narr ow path

bet ween t wo concept i ons t hat bot h l ead t o al i enat i on: a wor l d r ul ed

by det er mi ni st i c l aws, whi ch l eaves no pl ace f or novel t y, and a

wor l d r ul ed by a di ce- pl ayi ng God, wher e ever ythi ng i s absurd,

acausal , and i ncompr ehensi bl e. " 1

The second cr uci al char act er

st r uct ur e wi t h a smal l gr oup at t he t op cal l i ng al l t he shot s.

Ther e i s nei t her a f unct i oni ng execut i ve commi t t ee of t he r ul i ng

cl ass nor a pol i t bur o of t he oppr essed masses, nor can t her e be.

Even among those aware of and commi t t ed t o t he st r uggl e f or a

successor system, t her e ar e mul t i pl e pl ayer s, pushi ng di f f er ent

emphases, co- ordi nat i ng poor l y wi t h each other . These t wo gr oups of



per suade t he l ar ger gr oups t hat f or m t he pot ent i al base of t hei r

st r engt h of t he ut i l i t y and possi bi l i t y of or gani zi ng t he

t r ansi t i on. I n shor t , t he chaos of t he str uct ur al cr i s i s i s

r ef l ected as wel l i n t he r el at i vel y chaot i c st r uct ur es of t he t wo

camps s t r uggl i ng over t he successor syst em.

What we can do, whi l e i n t he ver y mi ddl e of t hi s st r uct ur al

cr i si s, i s t o t r y t o anal yze t he emer gi ng st r at egi es t hat each camp

i s de

opt

t he l

vel opi ng, t he bet t er t o or i ent our own pol i t i cal choi ces i n

t he l i ght of our own mor al pr ef er ences. We can st ar t wi t h t he

st r at egy of t he camp of t he "spi r i t of Davos. " They ar e deepl y

di vi ded. Ther e ar e t hose who wi sh t o i nst i t ut e a hi ghl y r epr essi ve

syst em whi ch openl y pr opagat es a wor l dvi ew t hat gl or i f i es t he r ol e

of ski l l ed, secret i ve, hi ghl y pr i vi l eged r ul er s and submi ssi ve

subj ect s. They not onl y pr opagat e t hi s wor l dvi ew but pr opose to

or gani ze t he net wor k of ar med enf or cer s t o cr ush opposi t i on.

Ther e i s a second group who bel i eve t hat t he r oad t o cont r ol

and pr i vi l ege i s vi a a hi ghl y mer i t ocrat i c syst em t hat woul d co-

arge number of cadr es necessary t o mai nt ai n the syst em wi t h a

mi ni mum of f orce and a maxi mum of persuasi on. Thi s gr oup speaks a

l anguage of f undament al change, ut i l i zi ng al l t he sl ogans t hat have

emer ged f r om t he ant i syst emi c movement s - i ncl udi ng a gr een

uni ver se, a mul t i cul t ur al ut opi a, and mer i t ocrat i c oppor t uni t i es

f or al l - al l t hi s whi l e mai nt ai ni ng a pol ar i zed and unequal

syst em.

And on t he si de of t he camp of t he "spi r i t of Por t o Al egr e, "



t her e i s a par al l el spl i t . Ther e ar e t hose who envi sage a hi ghl y

decent r al i zed wor l d, one whi ch pr i vi l eges r at i onal l ong- t er m

speci

ne bet ween the two great camps and

a sec

i ver se ki nds and st r engt hs, can and

shoul

al l ocat i ons over economi c gr owt h, one whi ch makes possi bl e

i nnovat i on wi t hout cr eat i ng cocoons of exper t i se unanswer abl e t o

t he l ar ger soci et y. Thi s gr oup envi sages a system i n whi ch a

uni ver sal uni ver sal i sm wi l l be bui l t out of t he never - endi ng

pi eci ng t ogether of t he mul t i pl e wi sdoms t hat humans have cr eat ed

and wi l l cont i nue t o creat e i n t hei r di f f er ent cul t ur al f l ower i ngs.

Ther e i s a second group who have been, and cont i nue t o be,

mor e or i ent ed t o t r ansf or mat i on f r om above, by cadr es and

al i st s who bel i eve t hey see mor e cl ear l y t han t he r est . Far

f r om bei ng decent r al i zi ng, t hey envi sage an ever mor e coor di nat ed

and i nt egr at ed wor l d- system, a f or mal egal i t ar i ani sm wi t hout r eal

i nnovat i on and wi t hout t he pat i ence t o const r uct a t r ul y uni ver sal

but mul t i f acet ed uni ver sal i sm.

So, f ar f r om a si mpl e t wof ol d bat t l e f or t he successor syst em,

I envi sage a f our f ol d bat t l e - o

ond one wi t hi n each of t he gr eat camps. Thi s i s a conf usi ng

si t uat i on - conf usi ng i nt el l ectual l y, mor al l y, and pol i t i cal l y. Al l

t he mor e r eason t o i nsi st t hat t he out come i s f undament al l y

unpr edi ct abl e and uncer t ai n.

What t hen can we say of t he pr act i cal st eps any of us, as

i ndi vi dual s and as gr oups of d

d do to f ur t her t hi s process? Ther e i s no f or mul ai c agenda of

act i on. Ther e ar e onl y l i nes of emphasi s. I woul d put at t he head



of t he l i st act i ons t hat we can t ake, i n t he shor t r un, t o mi ni mi ze

t he pai n - t he pai n t hat ar i ses f r om t he br eakdown of t he exi st i ng

system, t he pai n t hat ar i ses f r om t he conf usi ons of t he t r ansi t i on.

Per sonal l y, I woul d not sneer at wi nni ng an el ect i on, at obt ai ni ng

some more benef i t s wi t hi n t he st ates f or t hose who have l east

mat er i al l y. I woul d not sneer at some pr ot ect i on of j udi ci al and

pol i t i cal r i ght s. I woul d not sneer at combat i ng some f ur t her

er osi on of our pl anet ar y weal t h and condi t i ons f or col l ect i ve

sur vi val . I woul d not sneer at any of t hese, even t hough I do not

consi der any of t hese achi evement s more than moment ary pal l i at i ves

f or i mmedi ate pai n. They are not i n t hemsel ves i n any ways s t eps

t owards cr eat i ng t he new successor syst emt hat we want .

The second t hi ng t hat we can do i s engage i n endl ess ser i ous

i nt el l ect ual debat e about t he par amet er s of t he ki nd of wor l d-

syste

r l ar ge scal e, al t er nat i ve decommodi f i ed

modes

m we want , and t he st r at egy of t r ansi t i on. We not onl y need t o

do t hi s ceasel essl y, but we need t o do i t wi t h a wi l l i ngness t o

hear , as par t of t he debat e, per sons we deem of good wi l l i f not of

our i mmedi at e vi ewpoi nt . A const ant open debat e may br i ng more

i nsi ght , wi l l sur el y bui l d gr eat er camar ader i e, and wi l l keep us

per haps f r om f al l i ng i nt o t he sectar i ani sm t hat has al ways def eat ed

ant i syst emi c movement s.

The t hi r d t hi ng we can i s t o const r uct , here and t her e and

everywhere, on a smal l o

of pr oduct i on. We can l ear n f r om doi ng t hi s t he l i mi t s of

many par t i cul ar methods. We can demonst r ate by doi ng thi s t hat



t her e ar e ot her modes of ensur i ng sensi bl e and sust ai nabl e

pr oduct i on t han r el i ance on t he pr of i t mot i ve as t he basi s of our

r ewar d syst em.

The f our t h t hi ng we can do i s t o engage i n mor al debat e, t o

shar pen our sense of t he mor al negat i ves of any and al l par t i cul ar

modes

l e agai nst t he t hr ee

f undament al i nequal i t i es of t he wor l d - gender , cl ass, and

i f on

of act i on, t o real i ze t hat bal ances must be made bet ween t he

r eal i zat i on of al t er nat i ve good out comes.

And t hr ough t hi s al l , we must put at t he f or ef r ont of our

consci ousness and our act i on t he st r ugg

r ace/ et hni ci t y/ r el i gi on. Thi s i s t he har dest t ask of al l , s i nce

t her e ar e none of us gui l t l ess and none of us pur e. And t he ent i r e

wor l d cul t ur e t hat we have al l i nher i t ed mi l i t at es agai nst t hi s.

Fi nal l y, we must r un l i ke t he pl ague f r om any sense t hat

hi st or y i s on our si de, t hat t he good soci et y i s cer t ai n t o come,

l y x or y. Hi st or y i s on no one' s si de. A cent ur y f r om now,

our descendants may regr et al l t hat we have done. We have at best a

50- 50 chance of cr eat i ng a bet t er wor l d- syst em t han t he one i n

whi ch we now l i ve. But 50- 50 i s a l ot . We must t r y to sei ze

For t una, even i f i t escapes us. What mor e usef ul t hi ng can any of

us do?

(p) immanuel vallerstein_dynamics of (unresolved) global crisis-thirty years later

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