Andy Blunden September 2006

Wallerstein: Utopistics and Simplistics

Immanuel Wallerstein: “The Decline of American Power. The U.S. in a Chaotic World” (2003) and “Utopistics” (1997)

The subtitle ‘The U.S. in a Chaotic World’ is evocative, bringing to mind speculations on the application of chaos theory to the world economy, particularly popular after the sudden collapse of the Soviet Union and the entire post World War Two balance of power in the 1990s. But you can’t have chaos theory, and economic cycles with regular 50, 200 and 1000 year periods at the same time.

Wallerstein claims that the underlying conditions which support the equilibrating processes maintaining the world-system, reflected in the periodicity of the economic fluctuations, are ‘asymptoting’, that is, coming up against absolute limits to their capacity to support the restoration of equilibrium within the world-system. He thus sees a sudden breakdown in these equilibrating forces as their foundations are exhausted, but at the same time, he relies on the continuation of these forces right to the end, so as to predict the course of economic activity over the next 50 years. He relies on the continuation of cyclical actions up until the rapid economic expansion of the upcoming Kondratiev phase leads to instability and catastrophe and the end of the capitalist world-system.

These conditions which are ‘asymptoting’, in some cases involving ‘vicious circles’, are:

Wallerstein remarks offhandedly from time to time, that capitalism will not be the world-system in 30 to 50 years time, as a result of these processes.

Wallerstein takes for granted that the ‘world-system’ acts as a single, self-regulating totality, and that this has been the case for 500 years. The world economy is not the outcome of capitalist development for Wallerstein, but a given pre-condition.

The thesis is that this system will enter a period of technically chaotic instability and ‘bifurcate’ in 30 to 50 years time, leading to a new world-system, whose nature is in principle unknowable at this point. Nevertheless, he claims that what people do during this period of chaos and approaching bifurcation will determine what comes next. But the movement of an objective, systemic process into indeterminacy does not imply its transformation into a subjective process or its susceptibility to subjective intervention; on the contrary in fact. In a world system in which institutional forms of regulation are active, it is possible to make subjective interventions into the operation of the whole system; catastrophe is precisely the situation in which subjective intervention can have no effect – in Wallerstein’s words, history “is intrinsically not possible to determine ... since [the alternatives] are not systemically constrained.”

But if the alternatives are open, on what basis can Wallerstein rule out that after this bifurcation, the new system will be ... capitalism?


Wallerstein’s economics is na´ve and simplistic. He holds that profit can only be made in a market if there is monopoly, since in an ideal market, prices would be forced down to costs of production. This intuitively compelling argument led eighteenth century political economists to draw the conclusion profit must represent the value of the service capitalists deliver through supervision and organisation of labour, or alternatively on the basis of an inherent tendency of capital to expand itself, through use in production. But Marx showed that while profit does not arise from the market, profit is made from the exploitation of labour power, and is only realised through the market, and that the apparent forcing of prices down to costs-of-production, masks the appropriation of surpluses by other means (interest, tax, rent, licences, etc.).

The naivety of believing that capital accumulation could be eliminated by instituting a genuinely free market, is breathtaking. Wallerstein proposes in his “Utopistics” (which he described as “the serious assessment of historical alternatives”) that non-profit organisations could operate in a “real” market, without capital accumulation taking hold. “Real” in the sense of ‘ideal’ or ‘pure’, as opposed to “real” in the sense of ‘actual’ and ‘existing’. And to the criticism that such a ‘pure’ market would require a bureaucracy to regulate it, he says, “yes,” but such a bureaucracy would not develop into a nomenklatura, because in the egalitarian society, there is nothing to be gained by membership of a nomenklatura. Hear the laughter this thesis would generate among those who lived through the egalitarian society which gave us the word ‘nomenklatura’! To the problems of social inequality rooted in gender, race and other cultural constructs, he proposes the drawing of lots to distribute social position arbitrarily. Hah!

Speculation about utopia is always going to open you to ridicule, and yet it remains a worthwhile occupation. But the social and economic naivety displayed in this speculation makes it difficult to take seriously his political economic analyses of the past and immediate future.

The current Kondratiev cycle

According to Wallerstein, the B-phase of the Kondratiev cycle, the period of contraction, expected to run from about 2020 to 2050, will bring about an end to capitalism. The current Kondratiev wave began in 1945, topped out in 1967-73, with a period of contraction from then up until the late 1990s. But before the currently scheduled upswing which can get going, the phase of contraction has to be completed with the collapse of the US debt. Counting the 50-year Kondratiev period from 1945, this event is already 11 years overdue. How does it help us understand the prospects for the collapse of the US debt and its impact, to know about a Kondratiev cycle which began in 1945? And would the collapse of the US debt mark the beginning of a period of expansion in the world economy anyway?

And is it sufficient to simply describe the period of world capitalist development since the collapse of the Bretton Woods arrangements in 1968-73 as economic contraction, export of industry to low-wage economies and a turn of the dominant power to finance capital? Although I would agree with almost everything Wallerstein says about this period, there are a lot things which don’t fit the stereotype of a Kondratiev B-phase. For example, the massive corporate restructure which took place in this period, among whose side effects has been the decimation of the union movement in the old capitalist countries, some real progress in the unification of Europe, the lowest share of US GDP accruing to wages ever and China’s steady economic growth exceeding everyone’s expectations. Luc Bolatanski, for example, sees the events of 1968 as having generated a new wave of capitalist development, and I think the facts support this thesis just as well as they support the thesis of a downturn.

When Wallerstein says there is nothing new about ‘globalisation’, it has been going on for 500 years, surely this misses the point of identifying what is it about the past two decades which is new. The more so given that his late colleague Gunder Frank traces the activity of this ‘world system’ back to the Bronze Age. Hegel and Marx have been accused of ‘totalising’ history, but they had nothing on this! Surely we must accept the maxim that world economy and world history are outcomes of the process of capitalist development, not their pre-conditions. Wallerstein’s continual reference to the ‘world-system’ is specifically alluding to this idea of a long-existing, integral, i.e., totalising, ‘world system’. Of course, it is quite possible to talk about a world-system as a collectivity whose unity is only relative, partial and in the process of formation, but I don’t think this is how Frank and Wallerstein see it.

The US is clearly in decline as a world power, however, and Wallerstein’s claim that the various system-sustaining processes are approaching exhaustion is worthy of examination. Let’s take them one at a time.

The exhaustion of supplies of cheap labour

1945 was year zero for Japan, the archetypal cheap-labour economy of our times. Over the 60 years since, Japan has exported its heavy industry to South Korea, where in turn, the working class got organised and exported capital to China, and China is now just beginning the climb out of cheap labour to genuine industrial muscle, giving us two complete cycles in a period of about 60 years. So Wallerstein’s suggestion of a 30-year lag between the between the entry of capital in search of cheap labour and the completion of a cycle with its later flight, seems to be justified.

And indeed, opportunities for the exploitation of cheap labour from de-ruralising workers seem to be running out. Cities now contain more than half the world’s population and the countryside of all continents have been emptied into the growing number of mega-cities. I think Wallerstein is right in believing that the residents of the barrios and favelas of these mega-cities have other ways of earning a living and can exert strong bargaining power. Cheap labour is still to be had in India and Vietnam and some other countries in South-East Asia, but Latin America is already organised. Africa is perhaps today where China was in 1945. How long will it take to exhaust this process, until capital runs out of new sources of cheap labour to exploit, just as it ran out of colonies circa 1900? Wallerstein’s estimate of 30 to 50 years seems reasonable. And he is right when he says that the odds are against the capitalists when they have to fight the class struggle where they are presently located, rather than fleeing the country.

But the question is: what will happen when those supplies of cheap labour are exhausted? The export of capital to locations where cheap labour can be exploited is surely the most powerful weapon capitalism has had in its armoury since 1945. On the face of it, this would be really good news for everybody except a few wealthy capitalists. Although capitalists and the citizens of rich countries would be denied the super-profits derived from cheap labour and unfair trade, the benefits of the higher productivity of labour in newly-developed countries will surely more than counterbalance this? Combined with the improved bargaining power of labour, this points to a spur for the development of capitalism, and it could just as well be argued that this situation could lead at last to the ‘civilisation’ of capitalism, rather than its collapse. It would also put an end to the incessant migration of labour out of poor countries into rich countries.

However, either over-exploitation of fossil fuels and similar environmental barbarism would have to stop or the world would become unliveable. But does this necessarily imply difficulty in generating surplus value and extracting profit? Is it possible that environmental protection and energy-saving can serve the rate of profit just as well as environmental vandalism and energy profligacy? Either way, it is clear that this process presages radical changes in the world economy and every country.

The world-wide rise in the real wage level

Wallerstein claims that there is a secular trend for the rise in real wages as a proportion of the costs of production, averaged on a world-wide basis. This is of course the opposite of Marx’s claim of a tendency towards the growth of the organic composition of capital, i.e., a fall in the component of the costs of production associated with wages. Wallerstein, on the other hand, does not consider the proportions of constant and variable capital a factor in profitability, only the changing cost of each component. And nor does he consider the proportions of necessary and surplus labour time a question worth examining.

That real wages have tended to increase on a worldwide basis, especially with the shrinking of the zones of cheap labour, is possible. But high wages have not historically been associated with a reduction in profitability. Henry Ford proved that. Recently, the US announced that wages had fallen to their lowest level as a proportion of the gross domestic household income, ever. I do not know what the trend for wages is in China. But I do question what significance there could be for a world average of real wages.

The rising cost of the state

That every conservative government which gets elected on a promise to do away with big government and cut taxes always does the exact opposite, is indeed a curiosity. The burgeoning cost of welfare and war, appeasement and repression, seems unstoppable. But I see no evidence that economies where there is a large public sector are less profitable than those which have a genuinely small public sector. I don’t see this as a real problem for capitalism, even if the capitalists do. There was a time when the ‘military industrial complex’ was accused of launching wars just for the sake of business.

The retreat from public space and rising crime rate

The cycle of retreat from public space for fear of crime, and the resulting increase in crime, and the various analogues of this process in other domains of ‘public space’ is a real problem. But Wallerstein is mistaken in thinking that it is actually manifest in the growth of crime. It should be noted however, that as a matter of fact, the crime rate is falling, at least it is in the imperialist countries. Despite growing fear and a growing perception of crime and lawlessness, society is actually becoming more law-abiding.

But understanding ‘public space’ in the more general sense of shared activity and public consciousness, we do have a retreat into individualism and this is a problem. But ‘anti-statism’ is not identical to retreat from public space. The loss of interest on the part of anti-systemic movement in the idea of using state power as a vehicle for achieving their ends is not at all identical with a turn away from collectivism. On the contrary, the strong state is the inevitable partner of individualism.

Wallerstein repeatedly makes the point that social justice movements that have promised to take state power, and then deliver social justice by using the state as a lever to change society, have consistently failed and disappointed their supporters. As Wallerstein sees it, this is broadly because such movements have under-estimated the strength with which injustice is rooted in the world-system within which a state operates. Not only is the system all-powerful in relation to an individual subject, it is also all-powerful in relation to a state, limiting and determining the option available to a state power and constraining states to operate according to the rules of the world-system. Only a change in the world-system can open the opportunity to real change.

One of the conclusions which Wallerstein draws from this is that social justice movements should not look to the capture of state power as a solution to their grievance, since state power would leave them hostages to the world system, unable to deliver on their promises. The twentieth century has convinced many people in the social justice movements that state power provides no short-cut to changing society, but the idea that states are hostages to the world-system is hardly an argument for not using state power, since groups and movements are just as much hostages to the world-system if they do not hold state power.

The growth of ethnic conflict

I think we can say that ethnic conflict continues, but glancing through previous centuries of pogroms, conquests and holocausts, I don’t think we can say it’s getting worse.

Exhaustion of the scope for externalisation of costs

I think the case can be well made, that the scope for externalising costs by dumping waste in public space or natural sinks is fast becoming exhausted. Individualism, short-term thinking, selfishness and overall ethical bankruptcy is now going to get its come-uppance, and those political currents which advocate this mode of life are going to find life more difficult as such attitudes and practices are wreaking havoc for everyone.

Externalisation of costs in terms of exporting costs of production to the natural conditions of living, or the community generally, can give one capitalist a competitive edge over another and contribute to the profitability of one capitalist against her rivals, but I know of no argument that the capacity to generate surplus value overall is in any way dependent on the externalisation of production costs.

This issue points to the sharpening of political struggles over capitalist piracy, but I cannot see at as something which threatens the viability of capitalism as such. Capitalism is capable of incorporating communitarianism and environmental responsibility. It could be argued that if more ethical norms of environmental activity are enforced as against the anarchy of capitalist individualism, the result could be an increase in profitability. This is more likely than the levying of taxes to pay for public sector clean-ups.

Exhaustion of natural conditions for survival

This threat is real enough. If we prove politically incapable of reining in capitalist plunder even when faced with extinction of the species, then good-bye humanity, never mind capitalism. But if the human race manages to turn back from extinction, I don’t see that this necessarily means the collapse of capitalism. But it does imply big changes and conflicts over these problems in the decades ahead. And as Wallerstein says, “there is no wise chauffeur in the capitalist world economy.”

Wallerstein has shown that there is instability and major change on the way, but nothing he has said supports his contention that the world-system will no longer be capitalist in 30-50 years time. According to Wallerstein, the future is cyclical for the next 50 years or so, and then indeterminate. It might or might not be capitalist.

See also my article “On Periodic processes in History.”