Immanuel Wallerstein, the founder of the World-System Theory approach, has left us today. We publish in his memory a beautiful piece we did for The Myth of Europa back in 2009.
The real crisis is a structural crisis in the capitalist world economy. It began about 35 years ago and it is going to go on for about another 30-35 years. We’re in a transition from this system to something else. The world revolution of 1968 shook up the cultural realities of the world, but the underlying crisis is basically an economic crisis – it has to do with the fact that the capitalist world economy has had some standard measures of getting out of its repeated periodic stagnation, which have worked for 400 or 500 years, but what they have done is they have pushed the curve steadily upwards. You have to think of all systems as having a combination of cyclical rhythms which maintain their systemicity and secular trends which are the focus of continual change.
Basically it has to do with how capitalists make money. Capitalists make money essentially because they produce for a lower cost than they can sell and use it for capital accumulation. Now, the three basic costs of capital are personnel costs, input costs and taxation costs. The way we got out of each successive downturn in the world economy was to steadily increase each of these a little bit. After 500 years we’ve reached a point where we’re approaching the asymptote because the price for which you sell items is not infinitely extensible: you run against people’s unwillingness to buy at certain levels. There is therefore a sort of upward curve which as long as it is at the 20% or 25% level can go up to the 30% with a mere shrug of the shoulders, but when it reaches the 60% level or 75% level then you are beginning to shake terribly. This is basically how all systems work: it is how biological systems work, physical systems, chemical systems and the universe works, and solar systems works the same way. We are in that structural crisis.
Many people misread the crisis it because they see two normal phenomena as the crisis. The first is the Kondratieff B downturn. We’ve been in that since 1970 more or less, it always escalates at the end, and we are at that end point. The other normal phenomenon is the hegemonic cycle, and we are at the point where the US has more or less exhausted its hegemonic advantages. Those two things are not a crisis – all of that is absolutely normal – they happen to coincide with this other fundamental structural crisis, which manifests itself as chaos, enormous oscillations, and out of them comes a bifurcation. A bifurcation means technically there can be two ways of filling in the same equation, which you normally can’t do. But in social science terms it means the system can’t survive, we can know that for sure, but what we can’t know is what will replace it. That is a big political struggle, it has been going on for a while, it will now intensify and go on for the next 20 to 30 years and the outcome is intrinsically unpredictable. No-one can say who will win that struggle, but at some point in 2040 or 2050, we’ll enter into some new system.
The Kondratieff A phase – 1945 to 1970 more or less – was the biggest expansion of the world economy in the history of the modern world system. The Kondratieff B phase, which has been following absolutely normal patterns, with a shift to the relocation of no longer profitable major industries, a shift of attempts to acquire capital from construction to finance, rising indebtedness, rising unemployment etc. etc. All of that led to the most incredible expansion of debt also in the history of the modern world system. Suddenly the bubble burst, in fact several bubbles burst and we’re all living in the consequences. Probably nothing can be done about it. It doesn’t matter if we follow Angela Merkel’s policies or the US policies under Obama. Neither the one nor the other is going to pull us out of this. We’re going to down in real terms for real people for a good period, this will take the form of a big deflation, and the alternative mode of deflation is runaway inflation, but that is also deflation.
What is lacking is a kind of coherent, unified response across the world of what might be called the world left.
In this people are going to be hurt very hard, people who are at the bottom are going to be hurt most hard because they have the least fat, so to speak. The major problem for governments today is to prevent uprisings. The way they will handle it is social democratic things: more healthcare, more unemployment insurance etc – just like Sarkozy gave in to the Guadeloupians … People are starting to rebel. It hasn’t gotten violent yet – it will – it will be nasty all over the place, there will be right-wing reactions of all kinds, there is xenophobia in all societies….
What is lacking is a kind of coherent, unified response across the world of what might be called the world left. There isn’t one, yet. That is part of their problem. That is part of the uncertainty of what is going to happen in the next 10 or 20 years. There is no coherent centre, it is dispersed. But that is true on the other side as well.
The thing about a crisis is that precisely that it liberates the imagination, the mere uncertainty of the future liberates the imagination. But that is what is so impossible to predict – where will it move? To speak for myself I think we have to try to decommoditise things that have been commoditised. I personally don’t see why a steel company can’t be run like a hospital – not for profit, but for all sorts of other things. Maybe when the steel company shunts down someone will take it over and try that. I always say I don’t have the solutions in my right hand pocket … I’m only trying to say things can be done.
I also have another way of putting this: the old philosophical debate in the Western world between determinism and free will. This debate has been going on for several hundred years, the arguments have become standard, but I think that they should be historicised – it is not the one or the other, it is that when a system is operating ‘normally’, when it is operating according to the rules by which it was set up, then the system is very determinist, in the sense that every time you pull away from the way things are normally done there are enormous pressures to return to equilibrium. In a structural crisis things are precisely opposite because the oscillations are so violent and so enormous and so unpredictable, we are actually in a situation of free will – it is the butterfly effect, every little butterfly effects at every moment effects where we come out, but no one can control all those butterflies, so every action every day has some impact. Globally that is a situation of relative free will – that is the plus of being in a structural crisis, that you matter much more than before.
I have never understood why the left thinks they can win better in whatever their national sphere is than in Europe as a whole, but they do, or at least they do in northern Europe.
With regards to Europe, we should look the decline of US hegemony and the emergence of multiple centres of real power, of which Europe is clearly one. Europe is trying to solidify its reality. Within a European context I’ve always been much more on the federalist side, I think their strength requires that they create much stronger political institutions which they haven’t been able to do because they have been foot-dragging at both ends of the political spectrum, from the national right who don’t want to give up x, y and z and on the left, or at least the left in the northern part of Europe, who have seen this as essentially somehow giving into the neoliberal Brussels bureaucracy and so forth. I have never understood why the left thinks they can win better in whatever their national sphere is than in Europe as a whole, but they do, or at least they do in northern Europe. The European Union is in a very curious situation right now, they have one great strength at the moment, that is the euro, which everyone who is not a member now wants to be a member of. Take the example of Britain: I’m impressed by the degree to which Gordon Brown has tilted towards the European end of things. The crisis is such that in order to survive Britain needs to throw its lot in with Western Europe, and it needs to become part of the euro, and I think they will, eventually.
Globally the outcome of the crisis is a struggle between the ‘spirit of davos’ and the ‘spirit of porto allegre’. It is a struggle between people who want to replace the capitalist world economy with a system which is also, perhaps more so, exploitative, polarising and hierarchical but is not capitalist – some other system which probably will be much worse – or a system that is going to be democratic and radically egalitarian. That is the political struggle the world is in.