© 1997 Keith Rankin
Sunday, 26 October 1997
Linda Skates' interview with Immanuel Wallerstein
Immanuel Wallerstein is director of the Fernand Braudel Centre and president of the International Sociological Association. He is a world leader in "world systems" theory. The Braudel Centre, named after the great French historian and founder of the Annales School, is a leading centre for research into historically evolving socio-economic systems.
Wallerstein' three Auckland lectures (the 1997 Robb Lectures): were titled "The Failure of the Dreams or Paradise Lost?" (16 October), "The Difficult Transition or Hell on Earth?" (21 October), and "A Substantially Rational World or Can Paradise be Regained?" (22 October).
(In introducing the second lecture university chancellor Dr. Kit Carson drew a parallel between Wallerstein's title for that lecture and the September Tertiary Education Review Green Paper A Future Tertiary Education Policy for New Zealand. The least unkind word used by Carson to describe the green paper was "tedious", and he urged as many people as possible to make submissions on the future of tertiary education in New Zealand before the December closing date.)
In my comments on Wallerstein's first lecture (World Revolutions: 1848, 1968 and sometime next century?), I drew an interpretation of the future from his insights that I suspected would be quite different to Wallerstein's own interpretation. This turned out to be so.
In his second and third lectures Wallerstein shifted from a century perspective to a millennial perspective. The message from the first lecture was that we could expect world revolutions every 120 years or so, and I can make sense of that notion, whether taking it forward to next century, or taking it to the early centuries of the modern world system (late 15th to mid 18th centuries).
Wallerstein however sees the post-1968 phase as being an unstable transition in millennial time, rather than a stable phase in century time such as the liberal-technocratic state system of the 19th and 20th centuries. The previous revolution on this millennial time scale was the evolution of the world system itself in the 15th century, marking a transition from feudalism to capitalism; from the medieval system to the modern system.
Support for such a millennial transition came in an interesting BBC documentary "The New Middle Ages" in BBC World's The Late Show series (screened 24/9/95, 6:25 am NZ time, first screened in Britain in 1994). Drawing on a French book called The New Middle Age, and other sources, the programme depicted a coming world of insecurity, disease, and Malthusian tragedies. But it also portrayed the idea of a genuinely international intellectual community (thanks to the Internet), a return to a better balance between market and non-market work and a return to an emphasis on craftsmanship in work. This millennial future is a single-scenario mixture of good and bad.
In contrast, Wallerstein sees the current millennial transition as being a period of historical "bifurcation", a fork in history, a period in which revolutionary political action can make a huge difference to macrohistorical outcomes, and in which there are two basic scenarios to emerge from the collapse of the capitalist world system: a "black" scenario, and a good scenario.
The good scenario, Wallerstein emphasised, would not be utopia; rather it would be something "better" than what we have today (perhaps an "agathotopia" to use a term favoured by the late James Meade, Nobel laureate in economics, and author in 1995 of Full Employment Regained? an Agathotopian Dream). While the correct actions on the part of the non-privileged could not guarantee the coming of the better society following the imminent collapse of the "states system", a failure of the people to act would ensure the arrival of the "black" scenario; a dystopia characterised by the effective rule of global mafiosa. Wallerstein used the metaphor of persons caught at sea in a whirlpool; if they can see the shore then they will head in the correct direction. Swimming towards the shore does not guarantee that all or even any will make it. But swimming without any sense of direction inevitably leads to failure.
I remain suspicious, however, of the claim that we live in the midst of a very special period of history, a millennial transition. Christians in the year 1000 AD believed the same kinds of things about their world. But, today, the period around the year 1000 seems to be of little historical significance. (Europeans may be mistaken on this however, because the Sung dynasty in China, which began at around that date, can be seen with hindsight as the world's first liberal technocratic capitalist society, and whose inventions were indispensable to the later industrialisation of Europe.)
I believe that we cannot simply divide the world's people into the "privileged" and the "non-privileged" as Wallerstein does. And I believe that we are coming into an era in which economic class and social class are diverging (meaning that most of us will have more diverse sources of income than in the past - see Class: Economic, Social, Political), and that such divergence will in itself take the heat out of the class struggle which Wallerstein sees as intensifying. Furthermore, a divergence between economic and social class creates new counter-intuitive possibilities in the formation of political classes. I think that we are coming to see more capitalists who, like Jim Anderton, a successful businessman, do not identify with capitalism as an ideology.
For Wallerstein, there are no democratic nations in the world, just "liberal states"; democracies which only exist in the rich corners of today's world. His better society certainly does embrace the ideal of democracy - government of the people for the people by the people. Of interest here is that the conceptual idea of the "sovereign" - especially that of the people as sovereign - is a quite distinct concept from that of the "state". States are polities, political machines, set of political institutions that play a central role in the capitalist world system. While Wallerstein didn't make this distinction between sovereignty and statehood, his analysis would have lost nothing if he had.
Why does Wallerstein believe that the liberal world "states system" of global capitalism is collapsing? He identified three key contradictions that apply in particular to a world system that uses state structures as key props.
Wallerstein's contradictions relate to diminishing returns ("asymptotes") in key areas of the global economy that have nourished world capitalism in the 20th century. The first asymptote relates to the labour market. Global capitalism seeks ever cheaper labour from wherever it can be found. China is the present flavour of the month, with labour in places like Malaysia now being too expensive. With most labour already integrated into the world system, there is a limit to ongoing supplies of traditional cheap labour. Here nation states are important in propping up the world system by using legislation (like the NZ Employment Contracts Act) to place downward pressure on wages in each integrated country. Nevertheless, despite national governments beggaring their neighbours through low wage policies, Wallerstein sees the supplies of cheap labour as coming to an end.
The second asymptote relates to taxation. Tax-funded public goods have nourished world capitalism. There are limits to how far states can lower their tax rates as a means of attracting global capital, without destroying the publicly-funded resource base.
The third asymptote relates to the natural environment. There are limits to the extent that global businesses can "externalise their costs" by using natural resources and public goods as if they were free when really it is someone else who is paying, through environmental degradation and infrastructural depreciation on a global scale. In Wallerstein's better society, all business costs will be "internalised", meaning that businesses will be required to pay for all the resources that they use. My idea of treating income tax as a production tax - a royalty for the use of the people's resources - certainly fits well into Wallerstein's vision of the possible.
For the people to reach the shore next century, and not to drown at sea, they will have to be very alert to the deceptive strategies of the privileged (see Conflict, Damned Lies, and mere Deception). Indeed, in her summing up of the final lecture, Ivanica Vodanovich (Senior Lecturer in Sociology, University of Auckland), said that it looks like the people "will have to be devious in order to regain paradise". Merely resisting the deception of the ruling capitalist class might not be enough, given Wallerstein's analysis of the present state of the world system.
In particular, Wallerstein believes that the ruling capitalist elite will play a "wolf in sheep's clothing" strategy, where, when confronted with the contradictions of the present system, will themselves seek to promote radical institutional change. But the purpose of the radical changes promoted by the privileged will be to create a particular kind of new system that preserves their privilege. "They will seek to change everything in order to change nothing"!
Wallerstein sees the transition from feudalism to capitalism as having been such a change in history, whereby the feudal barons maintained their place at the top of the hierarchy by becoming capitalists in the new order. Wallerstein does not see this as a conspiracy of the privileged, however. He freely acknowledges that many of the privileged will oppose such change, in that they will not understand its true purpose.
While ordinary people should not be naive about the deceptions of the privileged classes, and their coming to terms with a major historical transition, there are dangers in that it is easy for a proletariat conditioned to deception to see deception where there is none. (There is also the possibility of seeing through a bluff, when the real deception is a double-bluff.) If we take Wallerstein too literally, then many good people with good ideas and sound analysis will be seen, by the self-appointed leaders of the unprivileged, as dupes of the capitalists when in reality they are good people with good ideas.
I must therefore conclude that political action motivated by grand historical visions is likely to prove unhelpful to the evolution of a better human society. Rather, we might seek to contribute to the world by doing the things we each do best, be it music, research, teaching, manufacturing, or simply treading lightly. And we should be awake to what is going on around us by participating in existing democratic institutions, and seeking to improve them when opportunities arise to so do. By being awake, we recognise that other people have different interests which may conflict with our own; and we recognise that interest is much more complex than a polarisation of humanity into haves and have-nots.
While there are many feature's of Wallerstein's analysis that I find attractive and insightful, I must reject his view that the future will be either dystopia or agathotopia. As he says, "utopistics" is "the serious assessment of historical alternatives and their constraints", "the study of historically possible futures", and a "mixture of science, morality and politics". In spite of his own words of caution, he paints a dangerously simplistic picture.
The future has always been uncertain, and fraught with fears of impending crisis. Today, as in the past, there is enough science, morality and political nous in the modern world for us to believe that the problems arising from the current phase of globalisation can be resolved without resorting to political struggle on a grand revolutionary scale. We need not fear a substantially rational world; after all global 'economic rationalism' is really delusion. Wallerstein showed how capitalist rationalisation is contradictory, which means irrational.
We will not recreate the paradises that the French and Russian revolutionaries sought. As Wallerstein noted, "utopias bread illusions and, eventually, disillusion". Paradise on earth is not even desirable.
Our world - the real world - is a mixture of rationality and perverseness. Likewise, the good society is a mixture of rationality and paradox. Can we bring about the convergence of the real with the ideal, given that the ideal we seek is not a utopia? Let's do what each of us can to ensure a better mix, or at least to avoid contributing to an explosive mix. To do this, we need to reject complacent short-term views of self-interest that lead us to incur costs with the expectation that others will pay.
As Wallerstein notes, democracy means internalising social cost. The owners of private capital should be required to pay for the public capital that they consume. And the owners of public capital should get a return. That's the way out of the whirlpool.
CONTRADICTIONS OF WORLD CAPITALISM
Immanuel Wallerstein Interview by Linda Skates, Radio New Zealand. Transcribed by Bruce Dyer, with permission from Radio New Zealand and Immanuel Wallerstein.
Skates: Its worked so far with capitalism. Why don't you think it can't keep on going on?
Wallerstein: Well first of all in general principle nothing can go on for ever. All systems come to an end. That's a general principle. Now why this particular system is in difficult straits at the moment in my view has to do not with anything that goes on up and down in short run terms but some very long run trends of the system. One of the things about capitalism is that it doesn't really work the way it claims it does. And its moving in the direction of working the way it claims it does and it can't really work in the way it claims it does. That sounds a bit mysterious, but if you really have a system with truly free markets, with no limitations on the market system whatsoever which is the way capitalism claims it works, then it can't work. You can't make profit in such a system. That's the first principle. And we are moving in that direction as everybody is saying and that is exactly the problem for capitalism as a system.
Skates: Why can't you make profit in a system where there is free market?
Wallerstein: Its very simple. Suppose you had a perfect Adam Smith-like market with endless numbers of sellers, endless numbers of buyers and perfect information. This is the presumed ideal of the free market with no restraints and restrictions. At that point the buyers would simply go from one seller to the next until they found the lowest possible price because they would have perfect information and the lowest possible price would soon be battered down to an infinitesimal amount over the cost of production price and you couldn't make a profit. This is in fact what happens with most of the poorly profitable industries in the world. If today you don't make very much money from selling clothing, its because everybody's doing it. There are an infinite number of sellers, an infinite number of buyers and the margin you can make on that is very small. What you need for capitalism to make real profits is relative monopolies. This is not a late adaptation of the system as some people say, but is in fact the basic principle. You have to create a situation in which there are relatively few sellers and their position as sellers is relatively protected. That's not a free market. For that you need the intervention of the State in many different ways and capitalism needs the State, desperately needs the State. It talks an anti-State line but it is really very very pro-State. And, in fact, States are indeed truly beginning to lose that ability to help capitalism in this way.
Skates: So you believe that Governments around the world are necessary for capitalism to flourish which is the system that has existed over the last 150 - 200 years.
Wallerstein: 500 years as far as I'm concerned. Capitalism has been around since the16th Century as a basic system organising first the European economy which then expanded to be a global world-economy, a capitalist world-economy.
Skates: So its lasted for 500 years albeit with warts here and there but you think that now ....what the process is speeding up and its getting to the point ...
Wallerstein: Well its been magnificently successful and success has bred the problem. It has expanded production throughout the world. It has done what it sought to do which is an enormous accumulation of capital. Capitalism is built on the principle of the endless accumulation of capital and it has worked at this very well, very successfully and has pushed itself to the far corners of the world, involved everybody in it more and more and that's exactly its problem today, that its working so well that it is ruining the bases on which is has been historically built. I point to several long term trends. One of the problems of a capitalist producer of course is to hold wages in check relatively speaking. He doesn't want his entire profit eaten up by wages. So how do keep wages relatively in check over a long period of time? Basically workers, wherever they are, can organize in various ways in order to defend their interests and pursue them quasi-politically either directly through the state or through direct action of various kinds. What capitalists do when that happens is either repress or flee.... its usually successful relatively at a local level. What capitalists basically do is flee, that is to say it is the old story of the runaway factory. Capitalists move their structures eventually to other places where they can find relatively lower wage levels. This is a constant process but it requires certain possibilities. It requires zones of the world into which to move where the workers are going to be willing to accept significantly objectively lower real wage rates.
Skates: What kind of areas are these?
Wallerstein: Basically the areas ultimately into which all this has been happening for 500 years are areas where you move populations from essentially rural zones into urbanized zones. Workers are willing in this condition when they're first moved to accept this - astonishingly low wages by world standards for two reasons. (1) They're disorganized, disoriented, they're in new situations, they don't know how to operate politically yet, but (2) and more important, often moving into these urban zones at phenomenally low wages represents in fact an important increase in their real income. So they see it as a plus. But after 20, 30, 40, 50 years in these zones, they begin to become more clever politically, more aware of their of their possibilities, they begin to organize and begin to push up in effect the real world-wide wage level that they're being paid.
Skates: But we're still told, if you take places like China where there's an enormous population, areas in South east Asia, even areas in South America where people are willing to accept lower wages but high wages compared to a peasant subsistence life-style...
Wallerstein: You're absolutely right. It still holds. We're seeing the tail-end of this process. But if you look at it on a statistical, structural basis over 500 years what you see is the de-ruralisation of the world whereas, even as late as 1945, something like 75% of the worlds population was in rural areas. We are way under 50% now and going down very very fast. We're exhausting the zones. I see a pattern, a trend over a long period of time that is in fact increasing real wage rates and therefore is squeezing profit rates. Now if this were the only thing it wouldn't be a problem or it might be a relatively lesser problem. It goes along with other long-run trends.
A second secret of capital which it doesn't boast about is that the way you make money in capitalism is that you don't pay all your bills. For example, If I have a factory do I pay the entire costs of production in the factory and in fact we don't. Economists have a fancy name for this. They call it the externalization of costs. Let me take a simple problem. Suppose I have a factory and there is some kind of chemical waste. If I throw it into a river obviously it saves me a lot of money. If I had to produce the object without creating the waste or store the waste in some expensive way or restore the original ecological balance etc. that would add very significantly to the costs of production. I externalize the costs and it is the State that permits me to do that. They aid me in doing this. Now again you can do this and do this and do this, but you use up possibilities. The reason ecology is such a big issue today is not that its a new problem. It was a problem in the 17th Century - all the trees of Ireland were cut down. Nobody screamed about it because there were other trees in other parts of the world. But we've got to a point in the last 25-50 years where we are all talking about the exhaustion of various kinds of resources.
Skates: And the Governments are now making companies pay for these costs as well.
Wallerstein: If they were...let us say the Governments are now responding to a political demand that something be done about because catastrophe looms etc. But in fact there are really only two things Governments could do. One is that they could tax. You see the bill at this point for true clean up, and for creating process which in fact would not recreate the situation 25 years down the line, is a not a small bill. Its an astronomical bill in point of fact. So where is that money going to come from? It can come from two places. We could increase the taxes absolutely significantly and collectively pay that bill and then the industries would yell correctly that they were being taxed out of existence, or we could say to companies you have to internalize all costs. There are no costs that can be externalized. Every cost involved in production has to be taken into account by the enterprise and put into its bill and then they'll say we can't make any profit on this basis. They are correct. So I see this as in fact not a minor problem that can be solved by a little legislation here and there but a basic squeeze on profits to which I don't see any fundamental solution within the framework of the present system. Internalizing all costs would in fact make accumulation of capital virtually impossible. That's the second thing. You see I have first the long term rise in the cost of labour, and second the long term rise in the cost of real production insofar as we ask for internalisation of costs.
Then I say there's something called democracy. People talk about it all the time and its a reality. If you mean by democracy that ordinary people are making demands that they have a certain say in how things go on and a certain right to a decent life etc - it is true that over 500 years, the degree of such demand and the quantity of such demand has grown world-wide and is today quite significant. Now what do ordinary people really want? Whenever we talk about democracy we emphasize civil rights, freedom of speech etc. and those are all part of it, but for most ordinary people it isn't the first thing on their mind. Really there are three things on their minds. They want decent healthcare facilities, they want educational facilities and they want a certain minimum life income which involves not only the wage levels but pensions etc. Now the level of demand keeps going up and it doesn't stop.
This has created what people call the fiscal crisis of the State i.e. the expectations of the average New Zealander today compared with the expectation of 1945 of the average family of what they thought should be provided in terms of education, health and lifetime income has gone up. Now New Zealand is a very small country. If you now take all the Chinese and all the Indians which is 50% of the worlds population and you begin to think of Governments meeting these demands even at New Zealand levels in the 1920s, the cost of that is quite enormous. Its not something that within the present framework I could see the system actually meeting because so much money is taken up in terms of the accumulation of capital. But the pressure is very real on States to do this at the same time that they are reaching the limits of their ability politically to tackle.
Skates: So what we have at this point is higher wage costs which go up throughout the world some pressure on companies to pay for the costs of what they are doing and people demanding more health, education and more pensions.
Wallerstein: All of which sums up as in my view, a long term real squeeze on profits which goes back to the question you started out with, its worked up till now, why shouldn't continue to work. These are some of the reasons. Now I have a fourth and last element in that and perhaps the most paradoxical of all. It is the collapse of the world-wide socialist movement. This is one of the reasons why capitalism can no longer survive.
Skates: Hang on. Are you saying that the collapse of communism now means that capitalism will fall over?
Wallerstein: A bigger problem than ever. But it is more than the collapse of communism. We've had over the last hundred years three major forms of what I call anti-systemic movements. The communist movements were one of them, social-democratic movements were another variant of it. The third variant of it was the national liberation movements in Asia, Africa and Latin-America. All these movements were movements of under-strata for more rights. All these movements said that the important thing was to take over the State structure and to use the State structures to transform the world in better ways and if you look at the situation in the post second world-war period these movements actually for the very first time came to power. The communist movements came to power in a third of the world which was called the communist world, national liberation movements come to power in most countries of the third world, and social-democratic movements, using the word loosely and broadly come to power at least alternating power, in what I call the pan-European world, Western Europe, North America, Australasia etc.
These movements actually came to power and they came to power historically on what they claimed was a two-step strategy. Step one achieve power one way or the other, and step two transform the world, make it into a better world. More or less after 25 years in power people looked around and said "you have achieved stage one but there are no signs of stage two." "The world doesn't look fundamentally better. Its still fundamentally inegalitarian, it is still fundamentally authoritarian, all our complaints for hundred of years haven't really been resolved by this."
Skates: Although there is a widespread health and education system in place and more money being spent on those.
Wallerstein: Yes, there is, although there is some attempt to cut back on these benefits today. The real problem however is the sense that it is no longer likely that the states will be able to move the structures in an egalitarian direction. So the hope that bred patience is dying out, in many cases has died out. As a result, they withdraw legitimacy from the states, and are less willing to support the states in efforts to suppress so-called anti-social activities. As the states' legitimacy declines, the states' ability to guarantee order declines. There is also an increase in crime and what do people do when they see or feel such phenomenon, or feel afraid? They do something very simple. They resume the process of providing for their own physical security, they get guns, they organise in neighbourhoods, they organise in many other ways. Or they may organise in even worse ways as whole collectivities against other collectivities etc. and this undoes a process which has been going on for 500 years, which has been to remove the process of assuring physical security from individuals to State structures.
I remind you such a simple structure as the police system is a great achievement of capitalism. It only comes in the 1830s or 1840s - spreads around the world. Before that we didn't have police. People in sense provided their own police. What's happened in the last 10 - 15 years is were moving back to people providing their own police, at which point its a vicious circle. You start providing your own police, your own school systems, your own health systems etc. then you say why are we paying these taxes. So you ask that the taxes be reduced, at which point the State can produce even less, at which point more people say we've got to do these things ourselves. So you a sort of crumbling of the State structures resulting in kind of uncontrolled situation and that's the situation in which we have begun to live and which I see becoming much more extensive over the next 25 years in a situation of transition.
Skates: If you are right then and the capitalist system fails what do you think will replace it?
Wallerstein: We don't know and we can't know. That's on principle. On principle when a system collapses, you get what is technically these days being called chaos, out of chaos will come order. It always does. But what you mean by chaos is a situation which has wild fluctuations, in which very small pushes in one direction or another can determine whether it bifurcates in one direction or another. What you mean by a normal system is that very big pushes have very small effects to bring it back to equilibrium. That's what we've had for 500 years. The system works wonderfully. When you get to this kind of system where very small pushes have very big effects then you don't know, cannot know how it will come out.
Skates: Do you think that we will then see more and more regularly, things like the stock markets around the world crashing, rebounding, crashing, rebounding so that those sorts of effects go all over the place?
Wallerstein: Well I think yes, we shall certainly see that. More importantly we shall see the expansion of various kinds of, dare I call them, irrational violence of the multiple forms we have been seeing and not merely in the poorer areas of the world. Because I think we are seeing them quite strongly emerging in the major industrialised countries as well. So greater personal insecurity, greater ups and downs yes, and politically of course all bets are off. That is to say, it is surely the case that people will try to react in multiple ways and there in fact will be a struggle, that will go on over what kind of system or systems should replace this system. This struggle probably will have the basic line-up of people who want an inegalitarian system that maintains privileged groups, and ones who don't. You ask what form that's going to take. You ask me who is going to win it, I say I don't know, I can't know. I can best say its 50:50, or its uncertain. What I can say which is the only positive thing I can say is that individual action matters more in a period like this, than it does in a so-called normal period when all your individual action however great add up to a small impact.
Skates: You are not optimistic about the future?
Wallerstein: No I'm neither optimistic or pessimistic. I think its an uncertain future and we have to live with that reality, we have to adjust to that reality. In fact I don't want this to be read by anyone as to go off into the woods and ignore everything. In fact its a time in which people ought to be talking with each other about what kinds of world-systems they really want and they ought to be trying to move in that direction. That's why I call the talks I gave at the university "Utopistics" - not utopia. I coined a new word utopistics by which I mean the serious study of historical alternatives. Weighing the real alternatives and trying to act upon them. That requires a good deal of collective action and collective thinking and I'm trying to encourage it in any way that I can, anywhere, because it will have to be a world-wide debate, discussion and analysis. In the meantime no doubt all sorts of people with vision are organising - some in good ways, some in bad ways. Some for ends that I don't like some for ends that I do like.