Contemporary CapitalistDilemmas, the Social Sciences, and the Geopolitics of the Twenty-firstCentury1

ImmanuelWallerstein

World capitalismis facing a long-termstrucWe are at a triple turning-point. its tural squeeze on profits, and majorinstitutionalprop, the modern state, is of knowledge thathas been producedin this undersevere attack.The structure is also capitalistworld-systemand has served as its intellectualunderpinnings container of the system is going through undersevere attack.And the interstate one of its periodic restructurings, but this time it is as likely to decenter the In as to hold it we are not at an ordinarymoment of reshort, system together. within the of at a moment of framework the shuffling existing systembutrather of of the demise one kind of and of the transition, system gestationof another. Let us startwith what seems today the strongestelement, but is in fact the weakest link, of the modern world-system: the continued viability of the is a system thatpermitsand validates Capitalism capitalistmode of production. of capital.It has been marvelouslysuccessfulin doing the endless accumulation this over the last 400-500 years.Of course,in orderto maintainsuch a system, capitalists (or at least some capitalists) must make large profits on their investments.It is less easy than we thinkto make large profits. For one thing, competition is inimical to large profit-making,since competitorsdrive down prices and thereforeprofit margins. Any productcosts x to produce and is sold at y. Y minus x is the profit. It follows that the higher is y and the lower is x, the greaterthe profit. To what degree can any capitalist firm control either x or y? The answer is, to some
1. Keynote speech at Colloquiumof the JapanSociological Society, Tokyo, Sept. 24, 1997
CanadianJournalof Sociology/Cahierscanadiensde sociologie 23(2/3) 1998

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142 Canadian Journal of Sociology degree but not totally. This partial control creates the basic dilemmas of bothindividually andcollectively. Anotherway of saying operating capitalists, this is to assertthat the "hand" thatdeterminessupply and demand,cost and price,is neitherinvisiblenorfully visible,butis locatedin a shadowyworld inzones"of capitalism. between,whatBraudelcalls the "opaque Price is affected first of all, as capitalisttheoryasserts,by the strengthof competition.It follows thatthe moremonopolizedthe actualmarketto which have access,the higherthe pricecan be set by the seller,within given producers the limitsthatthe elasticityof demandaffords.Obviously,then,any individual capitalist prefersto increasehis share of the market,not only because it inrateof profit)but also because,aftera certain creasestotalprofit(at the current point,it increasesthe rateof profititself. And equallyobviously,the degree to can monopolizea given market which any individual capitalist dependsin large on state action of the legitimating monopoly, requiringit, and/or part first of all via This it state actioncan be not only direct (and patents). protecting defined as but and indirect.An example therefore also (and political) long-term of the latterwould be the efforts to impose the use of a languagein the world or a currency. Suchactionsaresometimesdesignatedby the analystas market, cultural effects, or the invisible hand of the world market,but their state can easily be tracedwith a little diligence. underpinnings withinsome limits thatderive In short,pricesarelargelypoliticalconstructs from the fact that no single state can totally controlthe world market,which economic band translatesinto the fact thatthereexists a socially-constructed within which prices must fall, a band however that is quite wide. States thereforematterfor capitalistsseeking to increasey, their sales prices. Not however any state, but preferably strongstates and ones vis-a-vis which they individuallyhave some claim and some standing.Japanesecapitalistsdepend primarily on the Japanese state, but not only. They may also depend, for example,albeitusuallyto a lesser degree,on the Indonesianstateand the U.S. state. The point is double. All capitalistsneed some state or states. And their may dependon a differentset of states.Geopoliticsis not a minor competitors the degreeto whichparticular elementin determining may or may not producers increasetheirsales prices significantly. theorists, followingAdam Smith,have deploredthe Traditionally, capitalist of states in the "interference" markets,andhave assertedthatthis interference has negativelyaffectedratesof profit.Since, however,capitalistentrepreneurs have paid virtuallyno attentionto this theory in their practice,except when I believe it is safe negatively, arguingthis theorycould affectdirectcompetitors to say thatthe assertionthatunlimitedlaissez-faireis a pillarof capitalismis simply dust on our eyes. Sales prices are however a functionof two things: not only the degree of monopolisationof a possible market,but also the effective demand in that

Dilemmas143 Contemporary Capitalist dilemmafor capitalists, the strainbetweenthe market.And this createsa further andthe wages they do wages they pay, which increaseworldwideconsumption not pay, which increase their savings/investment.The more consumptionthe more currenteffective demand.The more savings/investmentthe greaterthe accumulation of capital.It is in parta differenceof time-spanof objective. It is in part the interests of one group of capitalists against anotherat any given moment.No doubtthis is a long-standing problem,but it is one thathas become much more acute today because of the way it impinges upon costs of production. Effectivedemandis a functionultimately of the totalexpenditure on wages since at the end of chain andsalaries, theremustbe individual every commodity consumers.It follows that it is simultaneouslyand paradoxicallytrue that the largerthe overall wage bill, the higher the potentialprofits, and the lower the overall wage bill the higher the immediateprofits. The first statementis true about the world-economyas a whole, the second aboutthe individualfirms. Let us turnto x, the costs of production. We may dividethese costs into three main crudedivisions:the wage bill, the tax bill, and the purchaseof machinery and inputs.The cost of machineryand inputsof course leads producersto seek technologies that will reduce these costs. But it also pits given sets of capitalist producers againstall others.The lower the others'y, the lower the given sets of producers' x. This accountsfor partof the political activity of any given set of producers,who tend to act againststate actions thatresult in increasingthe sales pricesof othersets of producers. However,reducingthe cost of inputsmay not at all lead to higher profits, since, via marketcompetition,it may merely reduce sales prices, leaving the marginof profitconstantor near-constant. therefore Capitalist producers spendmuchenergyseekingto reducethe wage bill andthe tax bill. Once againwe must see this as a dilemma.If the wage bill became nearzero, no doubtthe immediatemarginof profit would soar, but the middle-runimpact on effective demandwould be disastrous.The same is true of the tax bill. Taxes are payment for services, services that producersneed, the effortsof the statesto ensurepartialmonopolisaincludingmost importantly tion of marketsfor given sets of producers. So again,if taxes went to near zero, the immediatemarginof profit would soar, but the middle-runimpact on both effective demandand sales price would be disastrous.On the other hand, each rise in the wage bill and the tax bill cuts into the marginof profit. It is Scylla and Charybdis, andeach producermust navigate as best he can. Indeed, this is the testing-groundfor success amongstcapitalists,a game in which the most astute and/orthe most politically well-connectedwin. What is of interestto us is not the mechanismsby which given capitalists maneuverto be more successfulthanothersin this difficult game, but what the overallhistoricaltrendshave been. In the last 10-20 years,we have seen a massive ideologicalonslaughtintendedto reduce everywherethe wage bill and the tax bill, andthis onslaughthas seemedto be so successfulthatwe miss the real-

144 Canadian Journal of Sociology in wages andtaxes has been short-term andminoramidst ity thatthe downturn theirlong-term, historic rise and for this structural reasons. continuing globally, The partof surplus-value thatis transferred to individualemployees in the formof wages and salariesabove the socially-definedcosts of reproduction is the result of the class struggle,fought in the workplaceand in the political this is how it works.A relativelylocal groupof workers arena.Schematically, organize, eitherin the workplaceor in the politicalarenaor more likely both, andmakethe cost to the producers of refusingreal wage increaseshigherthan the cost of acceptingthem,at leastin the shortrun.Of course,an increasein the wage bill is also an increasein effective demand,and thereforeis a plus for some set of producers,not however necessarilythe set that is providingthe increasedwages.Whensuch an increasebegins to seem onerousto a given set andtheycannoteffectivelycombatit politicallyin the local arena, of producers, to areas of partor all of theirproduction they may seek a solutionby relocation the workers workers which means that of are wherethe historical lower, wages therearepoliticallyweaker,for some reason. is relocatingmust be The cost of labourin the areato which the production of not the costs of transfer since the is lower producer paying only significantly costs (a continuing site (a one-timecost) but almost surelyhighertransaction cost). This is why suchrelocations,which occurespeciallyin times of cyclical downturn,tend eventually to reach the areas where workersare politically the weakestgroupsof workersarethose broughtfor the weakest.Historically, first time into urban productionzones (or at least more fully-monetized zones) out of zones thatwereruralandless monetized.The reasons production for initial political weakness are both culturaland economic. On the cultural due to the physical anddisorganisation side thereoccursa certaindisorientation migrationof the workforce plus a certaindegreeof inexperienceon theirpart with the available politics. On the economic side, there is the fact that, zone thatareextremelylow by objectively,the wages in the urbanproduction in this local arenaan income thatis higherthan oftenrepresent worldstandards the one that had been availablein the ruralsetting, or at least that had been politicallyavailable. Neither of these conditions for political weakness (the culturaland the Onecan posit thatany particular groupof economic)is inherently long-lasting. workers in such a situationcan overcomeits weakness in circa 30-50 years, today probablyin even fewer. This means that,from the point of view of the relocatingproducers,the advantageof the move is in the long run temporary and that, if they are to maintainsuch an advantage,they must contemplate repeated middle-runrelocations.This has in fact been one of the principal stories of the capitalistworld-systemfor 500 years.But the curvedesignating the percentageof the globe into which thereexist possible zones of relocation trends like so manycurvesthataredrawnto represent is reachingan asymptote,

Dilemmas145 Contemporary Capitalist in a system. The planet is running out of such zones. This is called the of the world, which is proceedingat a vertiginouspace. And as deruralisation the numberof such zones diminish,the worldwidebargaining power of workers increases.This has resultedin a worldwidetrendof increasein the wage bill. If the pricesof productswere infinitely expansible,this might cause little worry. But they are not, because of the limits imposed by competitionand the ability of the states to impose monopolisation. The cost of labour is often discussed in terms of something called the But whatis efficiency? It is in partbettertechnology, efficiency of production. but it is in equalpartthe will of the workerto performtaskswell at a reasonably fast speed. But how fast should the speed be? Taylorismwas the doctrinethat the speed should be as fast as physiologically possible. But this assumes that this top speed does not harmthe organism.To the degree that it does, we are speed with long-rundepletionof the capacity of the organism buyingshort-run economic cost from the point of view of to survive.Even as a strictlyshort-run the employer,the maximumspeedin an hourmay not at all be the optimalspeed over a week or a month. At this point, however, there comes in a conflict of values: for example, the value to the workerof psychic pleasuresof "leisure" versus the needs of the employer.The employermay then hope to invoke the psychic pleasures of "work satisfaction"as a spur to the worker, but that assumes that the employer is willing to structurethe work situationsuch that in work completion.The issue thereuponbecomes thereis some "satisfaction" a politicalone, resolvedby bargaining power.Hence, efficiency brings us right back to the political strengthof labour. The same problemof an asymptotelimiting a trendis visible in the tax bill. The basic cause of the historic trend to increase the tax bill has been the confluence of two pressures: the demands on the states by the capitalist on the one producersfor more and more services and financialredistributions hand,and the demandsof the rest of the populationwhich we can place under which translatesinto, among the headingand impulsionof "democratisation," other things, demandson the states for more and more services and financial redistributions.In short, everyone has wanted the states to spend more, not merelyworkersbutcapitalistsas well, andif statesareto spendmore,they must tax more. This results in an elementarycontradiction:as consumers of state demandmore;as furnishersof state income, taxpayers expenditures, taxpayers naturallydesire to pay less, and this feeling escalates as the tax percentageof theirincomerises. The pressureson the statesto spendmorebut simultaneously tax less is what we mean by the "fiscal crisis of the states." There is a third curve that is reaching an asymptote. It is the curve of exhaustion of the conditions of survival. The demand for attention to the ecological damage to the biospherehas become very strongin recent decades. This is not because the modern world-system has become inherently more

146 Canadian Journal of Sociology destructive of the ecosystem in its ways, but because there is much more andbecausethis destruction andhencemuchmoredestruction, "development" has for the first time been reachingtwo asymptotes:the point of serious, in some cases irreparable, damage;and the point of absolutedepletion not of economic,butof social,goods.We shouldelaborateon the latterasymptote.If all the treesin the worldwerecut down,it mightbe possible to invent artificial but their for the uses of wood products as inputsto otherproduction, substitutes thatis, as a social good, would value as an estheticelementin ourenvironment, still disappear. The main reason that capitalism as a system has been so incredibly who profit of the biosphereis that,for the most part,the producers destructive do not recordsuch destruction as a cost of productionbut, by the destruction quite the opposite, as a reductionof cost. For example,if a producerdumps waste in a streamand therebypollutes it, thatproduceris saving the cost of have othersafer,butmoreexpensive,formsof disposalof the waste. Producers of been doingthis for 500 years,andin increasing as quantity, development the in neo-classicaleconomics the has This is called world-economy proceeded. of publicgoods, exteralisation of costs. It is usuallydefendedas theproduction of costs is butmost often it is publicevils thatare created.The externalisation to eitherthe stateor the "society" merelythe shiftingof costs fromtheproducer at large, therebysignificantlyincreasingthe rateof profitof the producer. Now thatthis process has become a centralpoliticalissue, statesare under pressure to consider ways of preserving the environment.The essential economic realityis thatany measuresto deal with this problemmust increase the costs of the producers,eitherdirectlyby forcingthem to internalizecosts that were previously externalizedor indirectlyby increasingtheir tax bill to furnishfundswith whichthe statescanengagein repair work,or moreprobably both.Werethe bill for such repairsandfor the prevention of further damagea small one, we mightthinkof this effort as simplyone moreminorwelfarecost and But the bill is not small;it is monumental, imposedon capitalist producers. on And it is the the both daily. growing already increasing profit squeeze it is to that and the fiscal in fact fair crisis of the states, say although producers the ecological problemshave scarcelybegunto be addressed as yet. If a more worldpublicopinion,say a seriouswideningof the urgentcrisiswereto capture hole in the ozone layer, and thereforea serious level of expenditurewere we could expect a very seriousincreasein the worldwideprofit contemplated, the fiscal crisis of the states. and squeeze Let us resume what has been said. There is a long-termworldwidetrend the wage bill of producers, fromthe long-term increasing resulting improvement in the worldwidebargaining the consequenceof of workers (primarily position the deruralisation of the world).Thereis a worldwidetrendof increasingstate expendituresresultingfrom the demandsboth of capitalistproducersand of the tax bill of producers. Thereis a worldworkers,whichhas been increasing

Dilemmas147 Contemporary Capitalist wide trendof increasingdemandfor payingfor repairof the globalecology and adequatepreventivemeasuresfor the future,which threatensto increase both the tax bill and the other costs of productiveactivity for the producers.What capitalistsneed at this point obviously are pressuresto weaken the bargaining position of workers, a reductionof their tax bill without a reductionof state services (direct and indirect)to capitalistproducers,and severe limits on the internalisationof costs. This is the of course the programof neoliberalism, which has appearedto be so successful in the last decade. The program of neoliberalism suffers, however, from two inherent limitations.The increasingbargaining position of the workersis long-termand structural,and must lead, is alreadyleading, to a serious reboundagainst the neoliberalagendaat the level of the politicalactivityof the states.But secondly, and muchmore important, need the states far more than do capitalist producers the workers, and their principal long-term problem will not be that state structures aretoo strongbutthatthey arein the processof declining,for the first time in 500 years. Withoutstrong states, therecan be no relative monopolies, andcapitalistswill have to sufferthe negativesof a competitivemarket.Without financialtransfers to producers, and strongstates,therecan be no state-mediated no state-sanctioned externalisation of costs. But why are the states growing less strong?Insofaras analyststalk of this, they usuallyarguethatit is becausetransnational corporationsare now so truly the states.This is howevernothingnew, merely global thatthey can circumvent more talkedabout.And this assumesthattransnational corporationswant weak states, which is simply false. They cannot survive without strong state structures,and especially in the core zones. Strong states are their guarantee, theirlifeblood, andthe crucialelementin the creationof largeprofits.States are of the ideology of liberalismand growingless strongnot becauseof the strength of transnational but because of the corporations growing weakness of both the and the The of ideology corporations. ideology liberalismhas been the global since the mid-nineteenth geoculture century.It is only in the last twenty years that it has suffered a serious loss of capacityto providelegitimacy to the state andit was this capacitythatin fact hadcontainedworkerpressurefor structures, over a century.Whatgloballiberalismhadpromisedwas reform,amelioration, and the growing narrowingof the social and economic polarisation of the capitalist world-system. It has lost its magic because of the widespread realisation in the last twenty years that, in fact, not only has there been no of polarisation, but thatthe story of the last 125 years, indeed of the narrowing last 500 years, has been one of constantand growing polarisationat a global level. And this polarisationis continuingapace today.2

2. The argumentabout the historic role of liberalismand the presentsituation is spelled out in Wallerstein(1995).

148 Canadian Journal of Sociology The consequencesof the globalprofitsqueeze mightperhapsbe mitigated by the interventionof strong states, and its effect postponed.But even this consolationis not therefor capitalistproducers, becausethe power (andtherefore the will) of the statesis slippingaway.We hearall aroundus the voices of I have beenarguingthatthe neoliberal anti-statism. antistatist voices are in part in are aimed at hypocritical, partself-defeating. They weakeningthe bargaining the of world work force. The anti-statist voices are coming power significant fromthe worldworkforce,andthey aretheproduct of disillusionment with the reformist agenda of the liberal states - whetherin the modulatedWestern "socialeconomy"model,or in the now-discredited Sovietmodel,or in the Third World"developmentalist" model. The growing weakness of the transnational derives from the corporations increaseddemocratisation of the world and the linked delegitimationof the states. Let me be clear. The world work force will still struggle to retain But they no longerlegitimate benefitsthatinvolvestateredistribution. acquired the states, and they no longer expect that reforms will lead to an end to Thatis why we have entereda time of troubles,or an worldwidepolarisation. for the existing world-system. age of transition We have entered into a parallel critical moment for the structuresof of knowledgemay seem to be rather knowledge.The dilemmasof the structures remotefromthe squeezein capitalist profits,butbothendlesscapitalaccumulahistorical tion andmoder science arepartandparcelof a particular system,and must necessarilybe affected by the stabilityof this system. Since the moder to a successorworldis enteringa periodof demiseandtransition world-system of knowledgeare inevitablyundergoinga system (or systems), the structures structures of knowledgewere transition as well. As we know,ourcontemporary of the worldof knowledgethat themselvesthe resultof a majorreorganisation of the moder world-system.If we review the accompaniedthe construction structures of knowledge,we can immediately see why we of the moder history in find ourselves such an unclearanddifficulttransition today. The functioning of a capitalist secularized authority world-economy required andhencesecularized knowledge.This was notonly becausethe religionsof the world insistedon value-systemsthatnegatedthe possibilityof giving priority to the endless accumulation of capital,and thereforehad to have their moral the arenaof personallife. It to certainarenas,primarily jurisdictionrestricted andthese structures state was also becausecapitalism structures, strong required could never become strongif they were constrained by religious authorities. a control. had be subordinated to to tighter Theology therewas a sleightof handthatoccurred In theevolutionof Western thought, haddefinedtwo at the beginningof the modemera.MedievalChristian thought arenasof knowledge, the heavenly and the earthly,about both of which the knowlclaimedto definethe truth. Secularknowledgesoughtto liberate Church

Dilemmas149 Contemporary Capitalist edge about the earthlyfrom the hands of the Church.They found the key to doing this in the Cartesianedict that there were two kinds of knowledge, knowledge about natureand knowledge about humans, claiming exemption in the quest for truthaboutnature.The sleight of hand from religiousauthority was the shift from the category "heavenly"to the category "humans."This required the removal of "humans"from the "earthly,"which now became defined as "physical(non-human) nature". It was a sleight of hand because, all the while, those perpetrating it were insisting that they were not denying the truthsof theology.But this shift of the antinomyof naturefrom the heavenly to the human opened the way for the philosophersto appropriate the sphere of about humans for themselves. knowledge This redefinition of the situation, which is generallyspoken of as the liberation of philosophyfromtheology, was in fact only the first step in the process. The second step was the so-called divorce of science from philosophy, which involved the assertionthatknowledge about natureand knowledge about humans were epistemologically distinct,andshouldbe pursuedby distinct groups of scholars.In this way, the scientistsremovedthemselvesone step furtherfrom to battleit out with the theologians theologicalcontrol,leavingthe philosophers for control of knowledge abouthumans,an arenathe scientists foreswore. This process took several centuriesto complete but it was clearly and fully in the nineteenth institutionalized centuryin the newly reinvigorateduniversity systems of the modem world.At thatpoint, science's claim to exclusive rights over the searchfor truthsaboutthe natural worldceased to be contested. In this arena,they offered the prospectsof eventualcertaintyin the form of universal laws universallyapplicable, laws thatwere said to be trueboth aboutthe infinite and the infinite future. These laws were natural, andnot moral, since in the past scientificworldview, to be natural was objectiveandto be moralwas subjective (that is, to consist of statements that were a human construct, and which thereforehad no scientificvalidity,which meantthat they offered no guarantee of lasting value). Science claimed two justifications:its ability to understandthe universe, which was a virtueper se, an aestheticvirtueif you will; andits abilityto derive from its theoreticalunderstanding of the universepracticalknowledge which could improve the materialconditions of the world, a social and economic virtue. It was this latterclaim thatenabledthe scientists to win the plaudits as well as the moral and financialsupportof the states and the enterpriseswhich becametheirpatrons.And it was this latterclaim thatenabledscience to benefit from a social hierarchy of knowledgein which science was consideredsuperior to philosophy.The gap betweenthe social esteem accordedto science and that accorded to philosophy was to grow considerablythroughoutthe nineteenth century and even more in the twentiethcentury,reaching a high point in the post-1945 period.

Journal of Sociology 150 Canadian of knowledge,philosophy As science was gaininggroundin the structures the worldof natureand soughtto build fromits claims to understand retreated a counter-system to sciencein the arenasciencehadabandoned, thatof humans and of values. It was a somewhatdefensive stance,but it permittedthe instiwithintheuniversities of whatis sometimescalledthe humanities tutionalisation or sometimesKulturwissenschaften). in German (and Geisteswissenschaften, of science and philosophyin the form of The parallelinstitutionalisation led to the divisionof the erstwhileFaculty of instruction university departments facultiesfor the natural sciencesandthe humanities. of Philosophyinto separate Each offered a distinctive epistemology. Science was based on rigorous fromwhichone couldinducegeneralisations thatcould investigation empirical laws. This was cumulative and verified as universal be knowledge ultimately claimed to be objective,thatis, as not being influencedby eitherteleological All truth was saidto be only provisionallyvalid, conceptsor moralpreferences. butthe sciena theorem research sincefurther untenable, mightprove particular of the universe, led to a zeroingin on a trueunderstanding tificquestnonetheless a possibly completabletask.Whatwas truewas general,andwhatwas general in thatthetruths to everyoneequallyand was true.Sciencewasegalitarian applied the search for scientific could knowledge. replicate everyoneequally The humanitiesstartedwith a concernfor moralvalues (and also aesthetic since values), and were repelledby the idea of homogenizinggeneralisations, the and the humanwas saidto be irreducibly subjective, subjectbeing singular the heir of the theological soul. Truthexisted, but it was achieved through In a real sense, insight and empathy,and never by soulless experimentation. the truthof God, difficultto ascertainand uncertain remained truth humanistic of access, but hovering over us constantly. In a sense, too, humanists or man betweenthe ordinary hadbecomesecularpriests,intervening philosophers truths of the universe,to which they claimedprivileged andthe moral/aesthetic knowledgeand thereforethe rightto establishthe canons. The scientists and the humanists were now locked in unremitting in theircorer battle.However,theymighteachhaveremained epistemological in this samenineteenth century ignoringthe other,wereit not for the emergence of an acute interestin knowing the truthabout the social arena(which was considered differentfrom both the arenaof physical phenomenaand that of individual moral choice). This impulsion was itself the consequence of the of the world-systemit French Revolutionand the geoculturaltransformation of political normsof the normality the widely-accepted impelledin establishing the urgent was immediate The and consequence sovereignty. popular change need of the political and social authoritiesto find means of controllingthe betterempiricalknowledgeabout modes andpace of change,andthis required how the social world actuallyworked.

Contemporary CapitalistDilemmas 151

In short,therearosea demandfor whatwe have come to call social science. And immediately,both naturalscience and the humanitieslay claim to having the epistemologybest suitedfor the production of social science. Social science thus became the primebattleground of the war between the so-called two cultures, and it would be torn apartby this epistemological battle. We know in broad terms the results. As the social sciences became institutionalized in the last nineteenthand early twentiethcenturies,there emerged three disciplines which were largelyscientific(or nomothetic) in orientation, and threethat were Theformer wereeconomics,politicalscience, (oridiographic). largelyhumanistic andsociology. The latterwere history,anthropology, andOrientalstudies.3 At the time C.P. Snow gave his lectures on the two culturesin 1957, the division was quite rigid, and within the social sciences as well. It would come into question,nonetheless,as a resultboth of changes in the world-systemand to the worldof knowledge. The post-1945 hegemony of developmentsinternal the United States combined with the political reassertionof the non-Western worldjointly explainthe emergenceof areastudies, a concept thatdid much to underminethe legitimacy of anthropologyand Orientalstudies, based as they had been on the need for them as special disciplines to study the non-Western world. The same two realities, combined with the world revolution of 1968 (both its deep andvery subversivequestioningof the liberal geocultureand its limited political successes) led to the proliferationof new quasi-disciplines (women's studies,ethnicstudiesof all kinds,ecology, social studiesof science), and in generalto an intellectualturmoilwithin social science as of the 1970's that contrastsstronglywith the atmosphereof social science certaintiesin the 1950's and 1960's. The most basic attackon the two cultures,however, derives from developments not within social science but within the natural sciences and the humanities.I refer to complexity studies and culturalstudies. I shall not here expoundat lengthon either.I wish merelyto pointout theirimpact.Complexity studies has essentially questioned the fundamentalpremises of NewtonianCartesian science that has served as the base of scientific activity for four centuries. Complexity studies denies determinism, denies the distinction between nature and humans (but in order to insist not that humans are like nature but ratherthat natureis like humans), insists on the mortalityof all structures through bifurcation,and asserts that consequently nature is selforganizingand creative. Above all, complexity studies insists on the arrowof time, and therebydenies the crucialNewtonianpremise of time-reversibility.

3. Thisstoryis recounted in Wallerstein et al. (1996).

152 Canadian Journal of Sociology Culturalstudies denies the legitimacyof canons, insistingthatall canonic truthis simplythe reflection of particular andhighly subjectiveimpositionsby the powerful on the less powerful. It insists on the crucial importanceof in shapingthe socialworld,andthe irreducibility of difknowledge(discourse) ference.But above all, it insists on the social origins of all culturalproducts, definitionof the good therebydenying the possibility of some transcendental or the beautiful. Whatis to be noticedaboutboththesepositions,andis not often noticed,is thatbothof themhavean attitude the socialsciencesthatis the opposite towards of thatassertedby the natural sciences andthe humanities in the previoustwo centuries. Instead of insisting on the polarity of two cultures and two andtherefore exercisingcentrifugal epistemologies, pullson the social sciences, are that fall well within the traditionalmode of they formulatingpositions social exercise tendenciesin the of and therefore sciences, thinking centripetal the worldof knowledge.Complexity studiesandculturalstudiesare approaching each otherin the arenaof the social sciences, andtherebylay the basis for the establishmentof a new reunifiedepistemology,in which adventurethe social sciences aredestinedto play the crucialmediatingrole. to use It will have to be an epistemologybasedon the "endof certainties," refuses the It will be that have to an epistemology Prigogine's expression. Cartesianseparationof humansand nature- their separationas objects of differentways, as realitiesthatoperatein fundamentally study,theirseparation rooted in termsof the role of the scholar(who is irremediably theirseparation that in his physicalandsocial reality).It will have to be an epistemology gives prideof place to the conceptof creativity,andthereforeto the studyof historical choice. It will then be an epistemologythatcan assist us in the transition from our existing world-systemto a successorsystem (or systems), a system rationalthanour one may hope (but not be certain)will be moresubstantively one. present of knowledgeis a majorlocus of struggle In short,the arenaof the structures whether not in whole)determine and will in the during transition, part(certainly the outcomeis a systembetteror worse thanourpresentone. The strugglewill And finallyit will takeplace in the also takeplace in the worldof production. worldof geopolitics,in the interstate system as we know system.Theinterstate It may not survivethe deof the modemworld-system. it is of coursea product mise of this system.But it is thereat the moment,andit still plays a majorrole in the evolving political (andintellectual)strugglesin which we areengaged. Let us thereforereview wherewe areat the moment.The interstate system of the modernworld-systemhas as an essentialinstitution thatwas constructed from the beginning operatedmythologicallyon the basis of the equality of sovereign nations. No one is deceived, but everyone insists on it publicly, advocatesof Realpolitik,whose views are generally except a few hard-nosed

Dilemmas153 Capitalist Contemporary dismissed as too cynical. To be sure, theoreticalequalityas a norm does have some limitedeffectiveness,in thatit can be used by the weak to constrainsomewhat the rapacityof the strong.But in the end, as we know, powerful states get their way more often than not. The majorimpedimentto powerful states is otherpowerful states, which is what we mean by the "balanceof power."We have alreadynoted how crucial the interestsof capitalistproducers, the powerfulstatesarein advancing and the Since links particular have to sets of states. producers producersare particular also competitivewith each other,it follows thattheirindividualfates are linked to the fate of certainstate structures.It is often said that states search for increased power per se, but this seems to me disembodied.States are political andtheirpolicies arethe outcomeof politicalstrugglesanddecisions. structures, If the state authoritiesseek more power vis-a-vis other states at any given moment,it is becausesome actorswithinthe states(includingthe state authorities themselves) have pushedthe state in that directionfor specific reasons. institution,one can Looking at the interstate systemas a world-system-wide of relationsamongstrongstates. At one see thattherearethreepossiblepatterns in which no single strongstate can dominate extremeis a situationof "rivalry," the others. The moder world-systemhas had long stretchesof time in which this descriptionholds true. At the other extreme is a situationof a process of world conquest, in which one strong state sets out to conquerthe others, and a world-economy into a world-empire. The moder worldtherebyto transform system has had several attemptsof this sort, all ultimatelyfailures. The third situation is, if you will, in-between these two extremes. It is the situation in which one state is sufficiently strong (economically, politically, militarily, to establisha set of rules governingthe worldfinancially,andeven culturally) them on the other and system impose strongstates. This is the situationwe call hegemony. It is relativelyrare,and has occurredthree times only: the United Provinces in the mid-seventeenthcentury, the United Kingdom in the midnineteenthcentury,and the United States in the mid-twentiethcentury. Therearenot only threepossible situations but thereseems to be a patterned at least to them. a situationof great power Given now, among sequence, up the seek two of and seem to be able to strengthentheir rivalry, strongpowers relativeposition,the two being in directcompetitionwith each other.This was the case, for example,of GreatBritainandFrancein the eighteenthcentury,and in the latterhalf of the nineteenthcentury.In of the UnitedStatesandGermany of the heart the many ways, competitionlies in the ability of the competing states to achieve the most efficient productionin what are at that moment the potentialleading industriesof the world-economy.Up to now the competition has been betweena land-based power anda sea/air-based power, andup to now of the erstwhilehegemonicpower (thus,Great the latterhas securedthe support Britainof the UnitedProvinces,andthe UnitedStatesof GreatBritain).And up

154 Canadian of Sociology Journal to now, the land-basedpower moved down a pathof militaryinvestmentand at worldconquest(Napoleon,Hitler),while the sea-based eventuallyan attempt has moved down a pathof low militaryexpenditures and an attemptat power has endedwith a thirty achievinghegemony.Up to now, eachsuchcompetition of all the years' war, which resultedin greatmaterialand humandestruction main powers (except the sea-basedaspiringhegemonicpower), the military mobilisation of the sea-based power during the thirty years' war, and the ultimatevictoryof the aspiringhegemonicpower. of a new Victory in the thirtyyears' war has resultedin the establishment world orderby the victorious,now hegemonicpower. Hegemonyhowever is It requiresmilitaryinvestmentwhich saps economic strength, self-liquidating. and which,if used muchmorethanas a threat,undermines hegemonybecause of its economic costs and becauseit reducesover time the willingness of the of the hegemonicpower to supportsuch uses. Hegemonyalso selfpopulation destructs, because the economic privileges it offers through the de facto targetfor entry by producers monopolies make these industriesan attractive locatedin otherstrongpowers.Sooneror later,the competitiveedge which the hegemonicpower had attainedand whichhadenabledit to achieve hegemony slips away. Of course, the hegemonicpowerhas many weaponsat its disposition to stretchout its political influencebeyondthe time thatit has an actual economic competitiveedge, but eventuallythe politicaldominancetoo wears thin, and we are back in a situationof rivalry. It seems to me clear thatthe hegemonyof the UnitedStateswas at its high point in the period 1945-1967/73, thatit beganto slip in the period 1967/73ever since 1991. The 1991, and that it has been on a downwardtrajectory in easternEurope of the U.S.S.R. and the of the Communisms collapse breakup not strengthened, thehegemonicrole andtheerstwhileU.S.S.R.haveweakened, of the United States. The Cold War was an integrating element,enablingthe on its alliesandtojustifyinternally UnitedStatesbothto placepoliticalpressure of hegemony.The hegemonicorder necessaryto the maintenance expenditures thatthe UnitedStatesimposedafter1945 will fritter awayalmostentirelyin the next 25 years. The question is what will happen as a consequence. If we follow past Union would the answeris straightforward. Japanand the European precedent, the E.U. as the two is emerge competitivegreatpowers. Japan sea/air-based, obtain the of the erstwhile would land-based. hegemonicpower, Japan support the UnitedStates,andin fifty yearsor so, therewould be anotherthirtyyears' I expect thatwe shall collectively war.I do not expectthis to happen,or rather this time is what startdown thispath,butshallnot completeit. Whatis different difficulties of capitalism and the we have already discussed, the structural consequentcrisis of the modernworld-systemas an historicalsystem, and the correlativeupheavalin the worldof knowledge.

Dilemmas155 Contemporary Capitalist We shouldstartwith the weaknessesof the UnitedStates.In the late 1990's, the United States has been boasting of its relative economic strengthvis-a-vis Union. Its producers areshowinghigherprofitmargins; Japanandthe European there is less unemployment;and there is no inflation. This description is of with the 1980's, when profitmarginswere lower, courseby implicitcomparison higher,andinflationgreater,and when both Japanand the E.U. unemployment looked betterthanthey do now on these variousmeasures. All three seeming strengthsare deceptive. The high profit rates have been arenow more "efficient." But achievedlargelyby downsizing.These producers three things need to be noted. One, this is a once-only advantage.Downsized firms cannot be furtherdownsized, normally. Secondly, downsizing affects negativelyworldeffective demand.Thirdly,downsizinghas long-termnegative politicaleffects, creatingwhole segments of reasonablywell-educatedpersons who have had a lifetime downsizing of income, and who do not appreciateit. If U.S. firmshave downsized,how come thereis full employment?Because these downsizedworkershave been employed in new jobs, of an inferiorkind. This has been made possible by the United States assuming some of the economic functions that had been the purview of states in peripheralzones during prior times of world economic expansion. This changes the politics of the UnitedStatesin a directionof greater instability,while harmingthe capacity of ThirdWorldstatesto provideminimalincomesto theirpopulations. This can be seen easily by looking at the statistics on income polarisationwithin the United States and within the world as a whole. Both have increasedin the last twenty years - considerably. Finally,the end of inflationis not necessarilyeconomic good news. First of all, it is not an exclusively U.S. phenomenon, but has been happening throughoutmuch of the world-economy.It is more probablythe sign of the beginning of a long deflation, akin to the one the capitalist world-economy knew in the seventeenthandnineteenth centuries,withouthoweverthis time the to expandthe frontiers of the system, and therecapacityof the world-economy fore to combat the long-termdownturn. One consequencefor the United States is that, even more than other strong powers (Japanandthe E.U.), it is andwill continueto be the targetof very large transfers of populations,for the most partillegal, from the rest of the world. This is because,especiallysince the downsizing,thereare an increasednumber of what on a world scale are middle-incomejobs, the kind thatmigrantlabour can underbid and still come out aheadeconomically. Of course, these migrants enterinto competitionwith the downsized workersfor these jobs, which gives rise to strong anti-immigrant, racist movements. And this is turnleads to internal political instabilityof a most volatile kind. To be sure, the U.S. is not in all the strongstates,fueled as the worldunique.The same thingis occurring system currentlyis by a double polarisation,economic and demographic.It is

156 Canadian of Sociology Journal just that this process of in-migrationis most acute in the U.S. The resulting internal conflicts alone will make it very difficult for the U.S. to act as a hegemonicpower in the decadesto come. Finally, the liquidationof the Cold War has ended definitivelyany sense thatthey shouldrisklives in foreignconflicts.There amongthe U.S. population had always been a strongisolationaliststrainin the U.S. politicalculture,one and giddy attractiveness thathadbeen overridden momentarily by the demands of being the hegemonicpower. But as this powerrecedes,willingnessto fight recedes, and this in turnmakesthe powerrecedeeven more. What can we expect in western Europe?WesternEurope has only one possibility of not fading away in the face of the economicrise of East Asia. It needs to consolidateEuropeanunity, and createboth a Europeanarmyand a This requiresan end to its politicaland culturalsuborpoliticalsuperstructure. dinationto the United States.It has been struggling,uneasilyand againstU.S. opposition,to do this, but it seems likely now, with the passing of a post-1945 emotional links to the U.S., thatthis will occur in thatfelt particular generation TheE.U. will receivethe benefitsof the firstdecadeof the twenty-first century. the fact that, for the most part, it has retainedthe "social economy," and therefore will not suffer the acute degree of internalturmoil that we can shoulddisappear for the UnitedStates.Its present highunemployment anticipate in the coming upturnof the world-economy.Once that happens, its future moves will be takenmore with an eye to EastAsia thanto the UnitedStates. of the relocationof world EastAsia has of coursebeenthe greatbeneficiary which we have known since the Kondratieff B-phase productionduring long one are and relocations 1967/73.Such normal, normally only regioncan benefit. Japanof course was the leaderin this shift, and is the wealthieststate in the andmagnifythe economicpositionof East Asia in region.In orderto maintain areessential.One is thatJapan the coming25 years,two politicaldevelopments and the United States come to termsaboutthe future.Japanneeds the United States, and the United States needs Japaneven more.Japanneeds the United States so that it can postpone, for both economic and political reasons, any seriousmilitarydevelopment.It also needs the UnitedStatesso thattherewill be genuine economic collaboration,between them, ratherthan competition, especiallyin the developmentof new technology.Japanneeds the U.S. so that so thatit can it can keep westernEuropeat economicbay.The U.S. needsJapan the of in of the the a corner world-economy.The coming expansion pie get will be verydifficult. it but is almost of the two collaboration inevitable, powers to It took GreatBritaineighty years (roughly1873-1943) admitthe economic and then the political leadershipof the U.S. withinthe duo. It will take a long time for the U.S. to acceptthis possibilityvis-a-vis Japan. thatJapanneeds to make is with China, The second political arrangement with the U.S. Chinais and this will be even moredifficultthanan arrangement

Dilemmas157 Contemporary Capitalist to become the MiddleKingdomonce again.This very effortmay be determined the strawthat breaksthe camel's back of capitalismas a system. The idea that even half the Chinese populationcould be broughtto a modestly reasonably standardof living within the frameworkof a capitalistworld-economystrains credulity. It would requirea massive reallocationof world surplus-value,and leave preciouslittle for capitalaccumulation. Yet the Chinese are proceedingto createa very strongmilitarystructure, andaredetermined to reintegrate Taiwan. a are not to role. Yet the East very willing play secondarygeopolitical They in the world-economy Asian continuedcentrality is dependent on continuedand increasedaccess to Chineserelativelylow-wage labour,andChinaas a locus of effective demand. Of course,China'spositiondependson its abilityto maintaininternalunity, which is still an open question.But shouldChinabe unableto maintaininternal unity, this will add a majorelement to the disintegrationof the state system the world,as a resultof the disruption to which it will lead. So either throughout If matters. it will China unified, way, place very high demandson the attempt to constructa NorthAmerican/East Asian politico-economic coalition,demands thatmay seriouslycut into the accumulationpotentialof such a coalition. And if disintegrated,it may cause the kind of turmoilthat could also seriously cut into the accumulationpotentialof such a coalition. Shouldsome uneasymiddlegroundbe found,thenthe fate of the E.U. would depend on its ability to include Russia within its counter-coalition.And this would depend both on the ability to reconstructa viable Russian state (still in doubt) and its ability to contain the anti-Russianattitudes and fears of the erstwhile East European satellite states, many of which themselves have unstable political structures. This is not an easy row to hoe, even for a successfully unitedEuropeanUnion. In the meantime,the rest of the world,the erstwhileThirdWorld,will not be sitting by silently, simply watchingall this. One can expect that, since there is limited capacity to extend investment,especially to the degree that there is a will accelerate.This will profitsqueeze,the normalpolarisationof distribution increase the pressure on out-migration.It will also increase the pressure to challengeovertlyand rudelythe centers of accumulation,both throughradical ideological rejection and through military efforts. It is almost certain that nuclear proliferation,alreadyfar advanced,will not be contained.And, given the projectedincreasingisolationismof the centralstates,particularly thatof the United States, the military leverage of the non-centralstates will increase considerablyover the next 25 years. All this must be placed within the context of the issues I originally raised, andthe pressuresof the globalprofit aboutthe ceilings on capitalaccumulation, The states are less strongbecause of delegisqueeze.The causationis circular. timation and widespreadskepticismthat a worldwidereformistagenda could

158 Canadian Journal of Sociology This in turnaffects actually lead to overcominggrowing world polarisation. of the the to the kind of maintain seriously ability producers politico-economic This is turnleads orderthatwill guarantee high ratesof capitalaccumulation. the to further of state structures due to both fiscal crises and internal weakening conflicts. The ability of some new hegemonicpower to come forwardin this context seems very constrainedby the crumblingbasis of such attempts,the endless accumulation of capital. a transition Whatis farmorelikelyis thatthe difficulttimesaheadconstitute to some new kindof historicalsystem.4Such a fromthe existingworld-system in outcome,andeven in direction.But one is by definitionuncertain transition can see why immediatelylooking at the variablesI have outlinedboth in the structureof the world-economy,the tensionsof the interstate system, and the are indeed in the We structures of havingto knowledge. prospectiveupheaval direction of in the and maneuver nonetheless lear to live with uncertainties, to the world-systemin the directionof the good society. We may reconstructing succeed;we may not. References
Hopkins,TerenceK. & ImmanuelWallerstein,coords. 1945-2025. London:Zed Press. 1996 TheAge of Transition: of the World-System, Trajectory Wallerstein,Immanuel 1995 After Liberalism.New York:New Press. Wallerstein,Immanuelet al. Stanford 1996 Open the Social Sciences. Stanford: UniversityPress

4. This is discussed in detail in Hopkins& Wallerstein(1996).