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CAPITALIST WORLD ECONOMY.   Term Paper ID:21531 Click to get this paper

Essay Subject: Definition, development & structure, colonialism, conflicting theories, dependency, economic inequality, growth, human & financial capital.... More...

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Paper Abstract: Definition, development & structure, colonialism, conflicting theories, dependency, economic inequality, growth, human & financial capital. Paper Introduction: THE CAPITALIST WORLD-ECONOMY: A REVIEW Introduction This research reviews the concept of the capitalist world-economy as that concept was developed by Immanuel Wallerstein (1979, pp. 1-293) and as that concept is perceived by other political-economists and historians. The initial discussion in this research reviews the development and structure of the capitalist world-economy, while the second discussion addresses the conflicting ideas relevant to world development, and the third discussion considers the conceptualization and actualization of world inequality. Development and Structure: Capitalist World-Economy Following the end of the Second World War, the industrialized countries of the world began to loosen their political co Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Social Justice, 19(1), 22-33.Williams, Eric. Wallerstein (1979, pp. Someobservers take a dim view of multinational activity in developingcountries. Studenmund. (Ed.). In the wake of the explanatory failure of the existing models,dependency theory evolved (Palma, 1978, pp. Dependency theoryrelies on an analysis of peripheral development within an internationalcapitalist economic order (Wallerstein, 1979, pp. A secular decline is a long-termdownward trend. The diffusion model holdsthat progress is a function of the spread of modernism to backward,archaic, and traditional economies, and that the principal factors leadingto development are advanced technology and an infusion of foreign capital(Wallerstein, 1979, p. 83-1 9). (197 ). New Left Review, 74, 83-95.Cardoso, Fernando H. 3. Foreign Policy, (9 ), 145-157.Wallerstein, Immanuel. Extensiveeconomic growth refers to an expansion of the total output of goods andservices, regardless of the change in per capita output. 891-924). The "locus of power of an international ruling classis the global corporation," and this international ruling class, throughthe multinational corporation, seeks to "rationalize the world economy intheir interest" (Sklar, 1984, p. P. 122-137). An internal obstacle to development isdefined as a condition existing within the domestic economy of a developingcountry which, in theory at least, could be addressed effectively by thedeveloping country concerned. Boston: South End Press, pp. As the industrial countries began to grant political independence toformer colonies subsequent to the end of the Second World War, newlyindependent countries were often confronted with the daunting task ofdeveloping a means of economic survival within an often hostile environmentof international trade and domestic poverty (Wolf and Hansen, 1972, p.2 5). J. (199 ). Dependency and development in Latin America. Berkeley, California: University of California Press.Dooley, M. In Sklar, Holly. 121-141). 22-33). The desperate need for hard currency typically meant that thegovernments of the newly independent countries emphasized the internationalcomponent in their development programs. P., & Mathiesen, D. For allcountries, and, particularly for developing countries, the allocation ofresources to the development of human capital means that some other sectorof the economy or of the society will be deprived, to some extent, in theshort-run. 881-924). Among the factors thatmust be considered are the following conditions (Wallerstein and Swanson,199 , pp. Wallerstein's system and the international context of early modern Southeast Asian history. Thirlwall (199 , pp. (1991). (199 ). 1). London: Longman Publishers.Wallerstein, Immanuel. psychologicaldependence leads to an ever growing economic and cultural dependence on theoutside world." "On the one side are national and regional producers whostand to be squeezed out with further centralization and concentration ofcapital, which is the net effect of multinational corporate activities"(Tabb, 1984, p. There are two general types of economic growth. The development of a population into human capital, however, does notmean that a country will be capable of effectively employing all of theavailable human capital (Wallerstein, 1992, pp. . Dynamic industry in peripheral economies, primarily foreignowned, subordinates traditional industry in peripheral economies. As it happened, political freedom did not translate into the economictransformation that had been predicted for the former colonies. In this context, Thirlwall (199 , pp. While theapologists for capitalism were stumped, however, so too were the defendersof Marxist economics (Palma, 1978, pp. The world was soon introduced to a seemingly ever-changingdescription of these countries--"poor countries," "peripheral economies,""Third World countries," "undeveloped countries," "under developedcountries," and "developing countries." In essence, all of thedescriptions conveyed the same meaning, although such designations as"Third World countries" also had political connotations, and although suchterms as "peripheral economies" implied that specific poorer countries weretied to specific richer countries (Wallerstein, 1993, pp. The human condition in Latin America. H. ed.). (1993, Spring-Summer). 83-1 9) stated that thecapital of a country increases through the process of net investment, whichis the difference between a country's net income and how much it consumesout of that income. 83-1 9) contended that economic growth anddevelopment depends upon the formation of two types of capital--humancapital and financial capital. These universal factors were described well by British economist A. 87). Through the multinationalcorporation, foreign capital flowing into peripheral economies areincreasingly directed toward the manufacturing sectors of the peripheraleconomies that produce goods primarily for the core economies. A secular decline in terms of trade is devastating for thecapital generation process that is crucial to development. The generaldependency model holds that underdeveloped countries are controlledeconomically by developed countries. Journal of Modern History, 63(2), 354-361.Wallerstein, Immanuel. A second approachconceived of dependency as the development of underdevelopment(Wallerstein, 1979, pp. The general model further holds thatunder development is not an original state, contemporary under developmentresulted from the economic imperialism of developed countries, the economicsurplus in developing countries is drained to developed countries, andmultinational business activity is the means of perpetuating dependency. 891-924). New Left Review, (2 4), 3-17.Wallerstein, Immanuel. When assessing the concept of world inequality in the contemporaryglobal environment, one must bear in mind that such a state may derive froma variety of factors (McCaughan, 1993, pp. Economics: Private and public choice. Development and Structure: Capitalist World-Economy Following the end of the Second World War, the industrializedcountries of the world began to loosen their political control over thosecountries that were formerly their colonies. H., & Faletto, E. (199 , Spring). More rapiddevelopment and growth may be spurred by land which permits highlyproductive agriculture, which, in turn, releases labor for employment inindustry. (3rd ed.). World inequality generally is perceived within the context of economicgrowth (Wallerstein, 1994, pp. Thus, a secular decline in the terms of trade fordeveloping countries reflects a change in the export/import price indexratio for these countries, wherein export prices are constricting in arelative sense, while import prices, again in a relative sense, areexpanding. (1987). 66-94) also contended thatonly limited potentials existed for the transition of peripheral states toa semi-peripheral status. 31). (1992, Spring). London: Oxford University Press. Trilateralism. Through constricting economic ties,the core countries maintained the peripheral countries in a state ofunderdevelopment for the benefit of the core countries. Intensiveeconomic growth refers to an increase in per capita output. Journal of Asian History, 24(1), 7 -9 .McCaughan, Edward J. 82-1 3). 1-293) and asthat concept is perceived by other political-economists and historians.The initial discussion in this research reviews the development andstructure of the capitalist world-economy, while the second discussionaddresses the conflicting ideas relevant to world development, and thethird discussion considers the conceptualization and actualization of worldinequality. (1984). If the land of thecountry does not provide the resources required for intensive industrialdevelopment, a surplus of human capital will be created by improving theproductivity of agriculture (low productivity agriculture creates a usefulpurpose for a large population which cannot be accommodated by industrialdevelopment). In the long-run, of course, all other factors remaining equal,the economy of the country will ultimately benefit from the formation of apopulation into human capital. Development is associated withindustrialization, and industrialization is associated with capitalaccumulation. In this model, development is equated withindustrialization and increased economic diversification. (4th ed.). The initialdiscussion in this research reviewed the development and structure of thecapitalist world-economy, while the second discussion addressed theconflicting ideas relevant to world development, and the third discussionconsidered the conceptualization and actualization of world inequality. (1984). In this model, as is true of other approaches todependency, the peripheral economies are perceived as integral to theinternational capitalist economy. (1968). .financial markets, or . From Columbus to Castro. 7 -9 ). In this context, financialcapital includes both monetary goods and other capital goods which may beacquired with monetary goods. Financial liberalization in developing countries. . Economic growth is defined inpositive terms as the rate of change in gross national product--GNP(Gwartney, Stroup, and Studenmund, 1994, p. Wallerstein (1979, pp. 83-1 9). Boston: South End Press, pp. (1991, June). Conflicting Ideas Relative to World Development Adherents of dependency theory could not agree among themselves as toexactly how dependency inhibited economic development (Palma, 1978, pp. THE CAPITALIST WORLD-ECONOMY: A REVIEW Introduction This research reviews the concept of the capitalist world-economy asthat concept was developed by Immanuel Wallerstein (1979, pp. 354-361). Economics for a developing world. In Sklar, Holly. Development and growth may also be spurred by land whichprovides the natural resources required for industrial development, or itmay be spurred by a combination of these conditions, although such acombination has not occurred often. (1987). An ineffective transmission isdefined as a state of affairs where export gains by a developing countryare not translated into (a) the introduction of new skills and techniquesinto the economy, (b) an increase in the proportional use of skilled laborin the economy, (c) an increasing development of economies of scale in theeconomy, (d) an increase in the proportion of raw materials processedwithin the economy, as opposed to finished goods imported and raw materialsexported, and (e) an increase in domestic consumption levels. P.Thirlwall (199 , pp. Ineffective transmission. 215-241.Thirlwall, A. Growth and development. Attempted explanationsoffered within the contexts of the then well accepted diffusion andstructuralist models were simply ineffective. Inequalizing trade? Primary products are, in effect, raw,or unprocessed, goods. During theColonial Period, terms of trade had been manipulated in favor of theoccupying countries, and the terms of trade for developing countries in thepost Second World War period were, it was contended, a legacy of theColonial Period (Spraos, 1983, p. Political development and associated dependency: Industrial ideologies in Argentina and Brazil. 4. Terms of trade refer to the ratio of the index of export pricesto the index of import prices. Capital accumulation enlarges a country's capacity toproduce goods. 1 1-154). Sao Paulo: Octavio.Cardoso, F. Conceptualizations and Actualizations of World Inequality Although studies have found that financial assistance to traditionaleconomies yields highly positive results for developing countries, theemphasis remains, for the most part, on larger enterprises, includingmultinational corporations (Wallerstein, 1991, pp. 31). New York: Harper & Row, Publishers.Wolf, Eric R., & Hansen, Edward C. Historical capitalism. (1978). An unfavorable dependence isdefined as a situation of vulnerability for a developing country, whereinthe options for development are limited by factors beyond the control ofthe developing country. Most capitalist and anti-imperialist economists had postulated thatonce free of the colonial yoke underdeveloped countries would move rapidlytoward industrialization and higher standards of living (Palma, 1978, pp.881-924). (1972). New York: Academic Press.Lieberman, Victor. (199 , May). (1979). Marxist economists did not share this opinion, contendinginstead that the proletariat in these countries would need to wrest controlof the state from the oligarchy before an improvement in the economic wellbeing of the masses could occur. (1967). In almost every instance, the countries that were decolonized becameworse off economically in the immediate aftermath of freedom than they hadbeen as colonies. Development is a normative concept that encompasses economic growth,but which also includes structural and distributional changes which shouldlead to improvements in the living standard for a majority of an economy'spopulation (Todaro, 1987, p. 793). It holdsthat underdeveloped countries are controlled economically by developedcountries. This conception of dependency was a sort of neo-Marxistexplanation of why the predicted bourgeois-democratic revolutions has notoccurred in newly politically independent countries. Social Justice, 2 (1- 2), 82-1 3.Palma, J. This action was consistent withthe concept of associated-dependent development. Developing countries typically find themselves insituations wherein they export primary products, while they importsecondary, or processed, products. There are, however,factors that are general to the developmental and inequality problems ofdeveloping countries regardless of which theoretical model is employed. Unfavorable dependence. A fourth approach to dependency was proposed by Cardoso and Faletto(1967, pp. One ofthe principal reasons for the changing designations was the attempt to finda designation that was not considered demeaning by the poorer countries,but that still implied that economic assistance to those countries by thericher countries remained an essential requirement. The diffusionmodel views development as a gradual process. World Development, 6, 881-924.Sklar, Holly. (Ed.). Small- and medium-sized firms in developingcountries are then "forced to seek out credit from the informal . 83-1 9) considered the population of a country to be one of its basicresources, which must be used as a form of capital for its economicdevelopment. 79-1 3) observed thattraditional, or light, industry in peripheral economies require increasedconsumption by the population masses in those countries, while dynamic, orheavy, industry in such countries produce intermediate and capital goodsthat are directed toward restricted markets with massive financialresources. The demise of a rural economy: From subsistence to capitalism in a Latin American village. Braudel on capitalism, or everything upside down. . London: The Macmillan Press Ltd.Todaro, Michael P. (1983). Summary This research reviewed the concept of the capitalist world-economy asthat concept was developed by Immanuel Wallerstein and as that concept isperceived by other political-economists and historians. 1). Internal obstacles. The population of a country is formed into human capitalthrough the process of education and through the replacement of human laborby technology, in order to free human labor for higher uses. The financial capital of a country is typically considered to be thosegoods which yield no immediate utility but which are capable of producinggoods which may (Lieberman, 199 , pp. Oxford, England: Oxford University Press.Tabb, William. (Rev. 1-6 .Spraos, John. The associated-dependent model explicitly recognizes theinfluence of the multinational corporation on the character of peripheraldevelopment (Cardoso, 1972, pp. (Rev. ReferencesCardoso, Fernando H. Cambridge, England: Cambridge University Press.Wallerstein, Immanuel. by Urquidi, Marjory M. 145-157). The capitalist world-economy. (1978). Thirlwall (199 , pp. The Trilateral imprint on domestic economics. Thirlwall (199 , pp. Governments in developingcountries, as well as most international organizations assistingdevelopment in such countries, tend to favor the flow of investment fundsto "capital-intensive projects undertaken by large firms" (Dooley andMatheisen, 1987, p. In order to form a population into human capital, however, resourcesmust be allocated to the task (Wallerstein, 1991, pp. (4th ed.). 24-51) as an analysis of the concrete processes of development.This approach eventually came to be known as the associated-dependentdevelopment model. One approach held that dependency was an outcome of inhibitedcapitalist development in the periphery countries (Wallerstein, 1983, pp.44-68). 83-1 9), as is true ofmost contemporary economists, considers land to be a part of capital,although he does note that differences in the quality of land significantlyaffect the progress of economic development within countries (Thirlwall,199 , pp. Trans. G. Theeconomic benefits of this activity in the peripheral economies deriveprimarily to a societal elite. The quality of land offers a valid explanation as towhy some countries develop more quickly or have experienced faster rates ofeconomic growth than those of their world neighbors. Trilateralism: Managing dependence and democracy. Race, ethnicity, nation, and class within theories of structure and agency. In this approach, developed economieswere perceived as core countries, while undeveloped economies wereclassified as peripheral countries. This model provides a valid explanation of underdevelopment and international trade problems depending upon the conditionsapplicable to specific underdeveloped countries. ed.). The resulting situation is one in which economicdevelopment is associated with and dependent upon entities in coreeconomies, and wherein indigenous industrialists oppose any type of reformthat would create any semblance of balance between dynamic industry servingforeign interests and elite domestic interests, on the one hand, andtraditional industry serving the population masses in peripheral economies. 123), former Prime Minister of Trinidad andTobago, said that the psychological dependence of developing countries onthe industrial countries was born of colonialism, and is fostered by themodern multinational corporation; that such "psychological dependencestrongly reinforces the other forms of dependence," and perpetuatesdependence as "a state of mind"; an action that "seems to have crippledCaribbean self-confidence and Caribbean self-reliance . The associated-dependent model alsocontends that the power in this system lies outside of the peripheraleconomies; thus, limiting the development options of the peripheraleconomies. Dependency: A formal theory of underdevelopment or a methodology for the analysis of concrete situations of underdevelopment? 3-17). 24). The dependency model is a product of revisionist economics. Finance & Development, 24(9), 31-34.Gudeman, Stephen. Geopolitics and geoculture. (1983). Eric Williams (197 , p. An external obstacle to development isdefined as a condition affecting the domestic economy of a developingcountry that emanated from the external environment of the developingcountry, and that is beyond the control of the developing country. . 83-95). Cambridge, England: Cambridge University Press.Wallerstein, Immanuel. Developing economies lay great emphasis on the importanceof capital accumulation, and stress the need to raise the level ofinvestment in relation to output. The structuralist model ofeconomic development attributes under development to structuraldeficiencies in a country's economy (Gudeman, 1978, pp. Thus, if economic growth occurs but mostof the benefits of such growth accrue to a relatively small economic elite,then positive development in that society has not occurred. "The owners and managers of global corporations view the entireworld as their factory, farm, supermarket, and playground" (Sklar, 1984, p.8). 9). Cambridge, England: Cambridge University Press.Wallerstein, Immanuel. Liberalism and the legitimation of nation-states. The associated-dependent model posits that the socio-economic basethus developed in the peripheral economies both accept and foster unequaland antagonistic patterns of social organization and economic exploitation(Wallerstein, 1991, pp. One result was a world full of very poor independentcountries. rely on self-financing" (Dooley and Matheisen,1987, p. . Within this definition,a decline in GNP (gross national product) would be referred to as negativegrowth. External obstacles. Trilateralism. 1 1-154). During the Colonial Period,terms of trade had been manipulated in favor of the occupying countries,and the terms of trade for developing countries in the contemporary periodare, in many ways, a legacy of the Colonial Period (Spraos, 1983, p. (1993, Spring). The agonies of liberalism. (1972). There is merit in eachof the three theories. 2. 215). 354-361). The model further holds that under development is not anoriginal state, contemporary under development resulted from the economicimperialism of developed countries, the economic surplus in developingcountries is drained to developed countries, and multinational businessactivity is the means of perpetuating dependency. "Communities of discourse." Contemporary Sociology, 19(3), 337-343.Wallerstein, Immanuel. Thesituational factors described are consistent with the core-periphery model. 1-164) perceived the developed economies ascore states and the economies of the less developed or developing countriesas peripheral states. 337-343): 1. London: Routledge & Kegan Paul.Gwartney, James, G., Richard Stroup, & A. A third approach to the dependency issue was an effort to modernizethe structuralist model through the introduction of social factors into theanalysis, and a consideration of residual terms of trade (Palma, 1978, pp.891-924). Dependency and development in Latin America. Cardoso (1968, pp. (1979). Thecapital flowing into peripheral economies is directed primarily towarddynamic industry. Thesestructural deficiencies are most often defined in the contexts of the needfor land reform, problems associated with single-crop or single-resourceeconomies, and problems associated with an excessive concentration ofwealth and income within a country. Four approaches to the application of dependency analysis wereproposed. An improvement in the terms of tradefollows if export prices rise more quickly than import prices or if theyfall more slowly than import prices. Foes as friends. (1994, March-April). If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.