Immanuel Wallerstein - Does Capitalism Have a Future?

Such were the main political and economic parameters of recent decades. If anything, the same dilemmas are bound to get worse in the short to medium run. Wallerstein’s theory of self-limiting capitalist aggrandizement thus parallels Mann’s argument on the present-day limits to geopolitical aggrandizement. In the absence of organized and effective opposition, the accumulation of financial resources at one pole can reach exorbitant proportions. But just as the military monopoly of the United States could not be exploited anywhere near its full potential in order to reach its imperial objectives, so the financial monopoly inevitably had to falter at some point like a house of cards. The accumulated sums of nominal money could not be used productively and thus were proven fictitious.

This big picture relates mostly to the West and former Soviet bloc. Would it change substantially if we bring in the rest? Of course, the miracle of China looms here very large. Some of us, however, are old enough to remember the times when the experts in economic development were generally dismissive of East Asia’s prospects. Their rising stars were rather the Philippines, the Shah’s Iran, or Nigeria and Senegal with their Western-modeled institutions, modern infrastructure, sizable domestic markets, educated technocrats, and middle classes. By contrast, the embattled “garrison states” of South Korea and Taiwan or the relic porto franco colonies of Singapore and Hong Kong were found lacking in almost everything: national sovereignty, middle classes, natural resources, and modern education. The East Asian states seemed to contemporary experts weighed down by overpopulation, destitute refugees, endemic cronyism and corruption, and other such allegedly immobile Asian traditions. Communist China, with its mad Maoist experiments and fanatical guerrilla cadres, was dismissed outright, virtually like North Korea now. Ironically, the same factors would be later cited as standard explanations for East Asia’s success: its abundant cheap labor, the shallow domestic markets suggesting openness to export opportunities, the fortuitous absence of a “resource curse” like oil, and moreover the same Asian values of discipline, hard work, support networks, and obedience to authority. Even these regimes’ authoritarianism somehow turned out to be stabilizing, or adaptable and even visionary, rather than cronyist and corrupt.

Randall Collins in his earlier research pointed to the indigenous medieval origins of East Asian capitalism growing from the organizational economies of Buddhist monasticism. [2] Randall Collins, Macro-History: Essays in Sociology of the Long Run . (Stanford): Stanford University Press, 1999, CA. It is now firmly established that East Asia for a thousand years or more has been a world region or world-system of its own, boasting some of the most extensive and dynamic markets of the epoch. The inherited skills, assets, and social networks of East Asia reemerged during the twentieth century in a variety of contingent and often violent pathways. It was the expansion of Japanese imperialism prior to 1945, and later the American wars to contain communism, that fostered in their wake a series of developmentalist dictatorships. Georgi Derluguian shows that the ultimate joining of continental China into this export-oriented capitalist dynamic was occasioned essentially by the conjuncture of international and domestic political accidents, albeit the sort of accidents that were structurally waiting to happen.

Free-market ideologists seek to enlist recent East Asian examples as their major proof of unfettered markets eliciting a wonderful burst of entrepreneurship. Such claims lack historical analysis and empirical evidence. East Asia has long been the prime example of regulated corporatist states. If the policies of neoliberal deregulation had anything to do with the reemergence of East Asia, it was by draining even more productive activities from the West and sending them into locales with cheaper labor. However, this does not mean that labor was not regulated at the new investment destinations. There are many other countries with large impoverished populations willing to accept, as a start, working long hours for low wages. But labor first had to be organized and disciplined in order to be put to work. The ambitions and greed of local elites had to be organized and disciplined as well. This is where the coherence of formal state institutions and less formal infrastructural capacities to regulate the social realm through accepted practices and networks could make a crucial difference. Corruption scandals reveal a central element in corporatist state compacts. The kickbacks from businesses in such states form a major part of officials’ remuneration. Yet, as the old-time New York politician George Washington Plunkett famously put it, there is “honest graft, and there is dishonest graft.” State capacity in this case largely turns on its ability to select officials on the merits of performance, including loyalty to the hierarchy and paternalistic sharing via “honest” graft. This provides a predictable sort of institutional environment that capitalists find attractive.

The cultural and economic legacies of East Asian history, however peculiar they might be, are not entirely unique in their kind. As the global flows of capital continue shifting in the search for new production locales, we can expect more miraculous economic renaissances. India and Turkey already remind us that the past economic geography of Asia was never limited to China. A whole different sector of possibilities seems now emerging from the leftist turn in Latin America where Brazil is laying the tracks. Whatever the ideological rhetoric and tactics of the civic, socialist, nationalist, or indigenous popular movements, in effect they are disestablishing the traditional Latin American politics of oligarchic and military factionalism predicated on foreign dependence. The highly contentious and uneven process spanning the whole continent is now forging, for all its contradictions, genuinely national states. When the leaders of social movements reach state power, they can prevail only by curbing the local powers of provincial notables along with their paramilitary forces, including the drug cartels. One way of doing this is through the imposition of democratic civilian supervision over the armies and police. Another and related way for the consolidation of new democracies is through integrating their citizenry in the centrally sponsored institutions providing for the defense of human rights, social welfare, land tenure, and jobs. Perhaps this is not socialism. It is rather a new and decidedly better variety of capitalism. In the twenty-first century Latin America could at last catch up with social democratic and corporatist state transformations resembling earlier Western patterns, thus also laying foundations for a new wave of industrial development.

A lasting recession in the West, Japan, and the former Soviet bloc, unless things get truly disastrous, might yet boost the industrial ascendance of the former Third World zone. In the past the peripheral and semiperipheral countries often benefited from turmoil in the core because such crisis helped to lower the costs of importing advanced technologies, loosened political controls over world markets, and opened profitable niches to producers with lower labor costs. It is not incidental that the earlier wave of the import-substitution industrializations along the perimeter of the European continent and in Latin America took off in the 1930s–1940s; the export-oriented industrialization of East Asia after the 1970s was fed by outsourcing from the deindustrializing core, and the export markets and drain of resources from the former Soviet republics ought to play a role in the economic expansion of China and especially Turkey.