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Capitalist World Economy

Capitalist World Economy

Author: Zach Lamb

This lesson will examine the contribution of Immanuel Wallerstein and the concept of capitalist world economy.

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Source: Intro Music by Mark Hannan; Public Domain

Video Transcription

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Hello. Welcome to sociological studies. In this lesson, we're going to discuss world systems theory and also capitalist world economy-- ideas given to us by Immanuel Wallerstein, an influential US sociologist. He was influenced by dependency theory, which we'll discuss in another tutorial, and Karl Marx as well. Wallerstein theorized that the world was divided into core countries, rich countries that is, and layers. And we had a periphery and a semi-periphery. This is what the world looks like. We have peripheral countries and semi-peripheral.

So what do you think is in the core? Who are the rich countries? The United States, Great Britain, maybe Germany, Japan, et cetera. So Wallerstein maintained, he theorized that with colonial expansion, beginning some 500 years ago, world powers were spreading all over the globe setting up their empires.

This structured the world economy that we see today. It integrated peripheral countries into an economic system where they would supply the core the power, the need-- they would supply their needs with raw materials, that is, things needed for production-- cotton, copper, tin, coal, et cetera. The core, through colonization, extracted resources from the periphery. They were sent back to the core.

Well, the core had heavy industry. They gave people jobs, had an advanced division of labor. So the core would then take these raw materials from the periphery, assemble them into products, into shirts, if it was textiles, for instance. And then they would, in a nice trick, send those products back to the periphery, and say, hey, why don't you buy our shirts when you could have just produced them yourself, but we didn't let you? So European colonization did this. And Wallerstein then recognized that peripheral countries were in a relationship of dependence with the core.

Now the semi-peripheral countries benefit from a little bit closer connections with the core. They're a little bit richer. They benefit from the exploitation of the periphery as well. So the semi-periphery, we have Brazil, and perhaps China as examples today. What about Bangladesh up here? Or Mauritius? Or anywhere? If you look at where your shirt is produced, might be in a peripheral country.

So the central point of Wallerstein is that the capitalist world system and the global economy, world system is fundamentally exploitative with the core exploiting the periphery, enriching themselves at the expense of the periphery. This is brooding in colonialism as countries became integrated in the world economy. As I said, the core exploited the periphery.

Raw materials were extracted from the periphery and used to make products in the core, and then buying the products back at first world prices that maybe they couldn't afford. So this induced debt. And debt is a key way that the periphery continues to be enslaved or entrapped by the core, because they have large amounts of debt. The rich countries in the core, the core contries, hold much of the debt of peripheral countries, thereby putting them at their beck and call.

So it's not that these peripheral countries were somehow lagging, or couldn't develop or just can develop as quickly as the peripheral countries, and can develop in the same fashion. This theory holds, world systems theory holds, that no, they can't, because the world is united in one economic system, having roots in colonialism where the core exploited the periphery. They can't develop in the same way.

This was a hugely influential idea in sociology. And Wallerstein laid out world systems theory in four books, all huge volumes. So there's a lot to this, but we boiled down the central ideas for you in this lesson. I hope you have a great day.

  • Immanuel Wallerstein

    American sociologist who developed World Systems Theory (Capitalist World Economy) to explain global economic stratification.

  • Capitalist World Economy (World Systems Theory)

    A theory that holds that core countries are intimately connected with peripheral and semi-peripheral countries in a world system, and that the core exploits the periphery.

  • Core Countries

    Powerful countries that economically, politically, and culturally control most of the world system.

  • Periphery Countries

    Weak countries that have been integrated into the world system in a dependent position.

  • Semi-Periphery Countries

    Countries in the middle that benefit from close relationships with core countries in the exploitation of periphery countries.