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After Capitalism triumphed in the nineties nowadays in the light of financial, climate and food crises more and more people wonder if this economic system is capable of solving the problems or rather is part of the problem itself. Immanuel Wallerstein, world renowned world-systems theorist of Yale University in the U.S. talked to Kontext TV at the World Social Forum in Dakar about the limits of the capatalist system.


Immanuel Wallerstein, Senior Research Scholar at Yale University, USA. Co-Founder of the World-Systems Theory, President of the International Sociological Association from 1994-1998 and Author of numerous books


Fabian Scheidler: After Capitalism triumphed in the nineties nowadays in the light of financial, climate and food crises more and more people ask whether this economic systems is capable of solving the problems or rather is part of the problem itself.

David Goessmann: Immanuel Wallerstein is the world renowned world-systems theorist in the U.S.. He is Professor of Sociology at Yale University in Conneticut. For decades he has intensivly researched the economic system that has spread around the world in the last 500 years and developed a world-systems theoriy that sparked a lot of attention and debate internationally.

Fabian Scheidler: We talked to Wallerstein at the World Social Forum in Dakar, Senegal. We are here at the Savanna Hotel in Dakar. With us is Immanuel Wallerstein.

David Goessmann: Mr. Wallerstein, you have predicted some years ago, that global capitalism will not survive the next 30 years. Explain why you have come to this prediction.

Immanuel Wallerstein: Well, first of all you start with a couple of assumptions: all systems have lives, no system is eternal. The reason all systems – and that goes from the universe as an entire system to the smallest sub atom system, all systems have lives - and the reason all systems have lives is, they all have internal contradictions and over time they move far from equilibrium and when they move far enough from equilibrium they begin to oscillate enormously and they have what the scientists of complexity call in this chaotic situation a bifurcation. At that point the system cannot survive but where it will go is uncertain because there’re two alternative possibilities. That is a general premise. Now if you look at the capitalist system as a particular historical social system, then you see that there are certain phenomena which have lead it to the point where it is moved far from equilibrium. Basically, capitalism is a system seeking the endless accumulation of capital. That’s its only objective. It continuously attempts to do this. In order to attempt to do this, they have to create enterprises which obtain profit and therefore accumulate capital. If you look at the costs for a capitalist of any enterprise, he has three basic costs. One cost is the cost of personnel; paying the personnel from the top personnel to the bottom personnel. The second basic cost of a capitalist is paying for the inputs that go into the production of whatever he is producing and the third basic cost is taxation in all its forms which is a phenomenon that is standard throughout the system. Now, if you look at the history, this will take a long time to account in detail, but if you look at the history of all three phenomena the costs of personnel the costs of inputs and the costs of taxation they have been steadily going up for 500 years. And if you, at the same time, realize that there is a limit to how much you can raise prices, which is the limit of the willingness of people to purchase items, then, what you have is an increasing cost level going up for 500 years, reaching what I call asymptotes. At which point, when it gets close enough to the top, the system begins to oscillate and you get enormous constant shifts in what’s going on.  That’s a chaotic situation and that’s where we are. I’ve written about this in great detail in various places. But basically, the basic argument is that it is no longer possible for capitalists to really accumulate capital and since that’s the whole point of the system to accumulate capital, the system no longer makes sense from the point of view of capitalists. Of course, it never made sense from the point of view of the populations of the world who were exploited and suffered. That’s not new, that’s a constant and it isn’t that the populations of the world are more upset than they have always been. They have always been upset, but what has really changed is the degree to which for capitalists themselves capitalism is a useful system. So, that’s the crisis, the structural crisis of the system in which we find ourselves today. 

Fabian Scheidler: In Europe we have stagnating labour costs or stagnating at least in income. We have globalization with the production going to Romania, to China, to cheaper countries.

Immanuel Wallerstein: Well, well but you have to look at it in terms of costs going up and down. The costs always go up and down, right? And if you look at how it has worked over 500 years with all these costs levels you will see that in periods of expansion which last about 25 or 30 years - we tend to call them Kondratiev phases, but the name is unimportant – that when in periods of expansion the costs go up and in periods of stagnation the costs go down again - they are pushed down - they are never pushed down as much as they have gone up. It’s what I call a ratchet effect; it goes up two, it goes down one, it goes up two, it goes down one and that’s been happening for 500 years. If you take simple costs - this your readers will or your listeners will understand - if you compare the costs, the price of labour not with 1970 which is a high point and its lower today, but if you compare it to 1945, it’s higher today. So while not from 1945 to 70, it went down from 70 to 2010, no question about that, but it didn’t go down to the 1945 level and that’s the point. You can move that back in time, in time, in time and you will see you can trace it very easily on a chart. It constantly goes up two goes down one and if you start - how shall I say - if you measure it on some kind of scale in which a 100% is the maximum and you start at 20% for let’s say, labour costs and then you move up to 30 and then down to 25 up to 35 and down to 30 and so on. When you get to 80 you’re too close and that’s when the system begins to shake. So basically, there is a limit to how long you can continue this process. We have continued it for 500 years. It has worked very well. Capitalism has been a magnificently successful system in its own terms. It has achieved what it set out to achieve which was this enormous expansion of accumulated capital, right? But it can’t continue to do that. It’s reached the limits of what it can possibly do and at that point it loses its interest for the capitalist. If he can’t really accumulate capital anymore then why put in the effort and the energy and so forth. So, I think that’s the basic situation now. I am saying this as the analyst. If you ask me, does every capitalist in the world realize this? No, every capitalist in the world does not realize this. Every worker in the world does not realize this. But there are enough who realize it. And the objective reality is such, that it forces them to make certain kinds of decisions. These days basically as in any long stagnation period money is not made from production, money is made from financial speculation and speculation works, but it only works up to a point. Speculation works by indebting people and you run through bubbles. We’ve had magnificent bubbles since the 70ies, one after another, after another. In fact we just had the next to the last bubble that was the so called great crises of 2007, 2008. It’s not the last one, because the last one is now going to be the indebtedness of governments and one after another is going to collapse under its debt which it cannot figure out any way of paying. That’s a reality. So, I think capitalism is in great trouble as a system and the question is what happens? There I say, well, it bifurcates. There are two alternatives one is, for those who are privileged in the existing system and would like to maintain their position of privilege, to find another kind of system that would give them the same privileges. That is the same kind of a system which would be hierarchical exploitative and polarizing. It doesn’t have to be a capitalist system. It isn’t the only way you can achieve that objective. In fact, it could be a much worse system than capitalism. Capitalism may not be the worst system the world has ever seen, ok? So that’s alternative A and alternative B is quite the opposite, it’s a system that is relatively democratic and relatively egalitarian, a system that the world has never seen and basically, that is our historical choice. Now, I have to throw in a last element. What you can say in this kind of situation of bifurcation is, it’s absolutely inherently impossible to predict which of the choices we will collectively make and that is because it’s the result of an infinity of detailed decision-making by an infinity of persons over an infinity of moments and it’s impossible to predict. You can only predict that the existing system will collapse and one of the choices will be made. So the battle, the political battle of the next 20 30 40 years is whether the system will go in one direction or another, will tilt in one way or another. At some point, in a chaotic situation of this kind, the system tilts sort of definitively and then you get a new order, a new kind of system that succeeds and then goes on for whatever its natural life will turn out to be. Somewhere down the line, 500 or a 1000 years later, that system too may be in trouble. But you know we won’t be around to worry about that one. What I can say is that if you come back in the year 2050 we will be living in a different kind of system. I don’t know which kind of system. I know which kind of system I prefer that we live in but I don’t know which kind of system we will be living in.