The two main factors that characterize the modern world system as capitalist are the division of labor and the priority for a infinite accumulation of wealth above all else. Wallerstein argues that not only is capitalism the only world economic structure that has survived for a significant length of time, but it is also conversely dependent on a world structure to be successful. Capitalism needs the political advantage of multiple different states to work with, but also the enormous market provided by a global system. While many argue for the benefits of total deregulation and the "invisible hand" of the free market, Wallerstein says that capitalism needs a mostly, but not entirely, free market to succeed. Were the market completely free, profit would cease to be endless.
The world capitalist system in fact relies on state regulations such as patents, protectionist measures, state subsidies, and tax benefits, to be as successful as it is. States also serve as large-scale consumers of goods and services.
Wallerstein goes on to discuss the concept of unequal exchange in the capitalist world system, which is founded upon the idea of "core-periphery". Basically, there are core production processes, which are quasi-monopolistic and profit the most, and periphery production processes, which are genuinely competitive and thus less profitable; allowing for a continuous flow of capital from periphery to core. In the modern world system, this manifests into core states and peripheral states who take on differing roles of production. However, there is constant shifting among these elements because monopoly is self-liquidating; thus, core producers eventually become peripheral.
Politically, strong states tend to have more core production processes and will act to protect quasi-monopolies, while weaker states containing a disproportionate amount of peripheral processes, are usually powerless to change the division of labor that allots them a peripheral role. There also exist semiperipheral states, which occupy a very difficult position sandwiched between pressure from core states and attempts not to become peripheral states.
Wallerstein claims that due to the natural capitalist rhythm of core monopolies dissolving into peripheral production, the world economy is cyclical in nature. It will continuously alternate between economic expansion and surges in prosperity; and then a slowing down that results in recession and lower wealth.
It's hard for me to formulate an opinion on this article because it is rather abstract economic information, but it was very valuable to my understanding of how capitalism functions in the modern world system. I am one to view things from a humanitarian perspective, so my interest in this issue is how the capitalist world system, especially in relation to core and peripheral states, affects citizens of those states. What I see in the capitalist world system is exploitation of the developing world in the Global South to further privilege the already wealthy states in the North. The mostly deregulated free market translates into an unrestricted domination of wealthy, industrialized nations over the rest of the world. Even though in some ways the world capitalist system benefits developing nations by stimulating economies and providing employment, it is a system dependent upon keeping them impoverished so that the elite handful of rich nations can prosper beyond all limits. In my opinion, it is disgraceful at best that a minority of the global population accumulates endless wealth and luxury, while the vast majority suffer in unspeakable poverty without the basic necessities of survival.
