The book under review is the fifth in the series of annuals brought out by Sage Publications in cooperation with the Section on the Political Economy of the World-System of the American, Sociological Association. As indicated by the Series Editor, Immanuel Wallerstein, ‘the intent of this series of annuals is to reflect and inform the intense theoretical and empirical debates about the Political. Economy of the World-System’ (PEWS). The debates assume that the phenomena of the real world cannot be separated into three (or more) categories—Political, economic, and social—which can be studied by different methods and in closed spheres.’
Few will deny that the many complex issues that influence political, economic and social development in different parts of the world at different times, ought to be studied taking PEWS as a whole and examin¬ing developments in a country or group of countries as elements of the World System.
This Annual (for the year 1981-82) opens with a critical introduction by Edward-Friedman and consists of eleven essays grouped-in four parts. Part I, titled ‘Ascent into and Decline from the Core’ examines three themes namely, ‘Economic Crisis and Merger Movements: 1880s, Britain and 1980s United States’; ‘German Ascent and British Decline, 1870-1980: Role of Upper Class Structure and Values’ and ‘Standardization of Time and Space’. Part II, studies ‘Ascent from the Periphery’ analysing ‘Taiwan’s Ascent’, ‘Social Structure of the New International Division of Labour’ and ‘World Economic Crisis and the Periphery’. Part III, (‘Internal Peripheries as Factors in Movement’) deals with problems of particular concern for America namely, ‘American Black Insurgency and the World-Economy’ and ‘The Hawaiian Transformation’. The theme of Part IV is ‘Socialism as a Strategy of Ascent’ which is discussed in three interesting essays ‘Socialist World Market as Strategy for Ascent?’, ‘State Socialism and Development: Why Russian and Chinese Ascent Halted’ and ‘Socialist States: Mercantilist Strategies and Revolutionary Objec-tives’. The last one is by Immanuel Wallerstein, the Series Editor.
TWO POINTS OF VIEW
One encounters in the course of discussions on the political economies of countries, two diametrically opposite points of view, one espoused by votaries of capitalist economic philosophy and the other by those dedicated to the cause of development of societies on the Communist model. The first school argues that free market economies provide conditions for the rapid growth of national economies by the optimal employment of national and global resources. Technological and management expertise is most easily attained in such societies, it is argued, since they are guided by the profit motive and free market conditions enable industries to grow rapidly, utilizing raw materials from the most easily and economically obtainable sources, processing them and converting them into products currently in demand, applying the most cost-effective technologies. The operations bring wealth to the countries carrying out the processing and marketing operations. The argument is carried further to suggest that the poor countries that own and supply raw materials and generally receive comparatively little for their resources, also benefit albeit indirectly and gradually.
The rival school argues that socialist societies utilize natural resources for the good of all their citizens, who share the nation’s wealth equitably and contribute correspondingly to the creation of national wealth. Further, in capitalist societies while a small percentage of people at the top have very high incomes, a fairly sizeable section of the people live on subsistence wages. That is, inequalities within capitalist societies are as pronounced as those between the world’s affluent, the leading free market societies and the world’s poor.
The problem of economic development of nations, how¬ever, is more complex since Communist societies too participate in and depend in varying measure on trade with, among others, free market economies. Further the very concept of economic development itself has to be seen in the context of a country’s historical and social traditions, the aspirations of its people and the way they translate their ideas and aspirations into concrete actions. Nor can countries operate in a vacuum, uninfluenced by and without interactions with the world outside.
Thus, it is not pure economics alone that determines a coun¬try’s economic growth, but a complex amalgam of economics, technology, domestic policies, popular attitudes towards change and progress and external relations This complex amalgam is political economy and Political Econo¬my of the World System (PEWS) is what the eleven analytical essays in this Annual have sought to examine from different points of view.
Each of the essays included in the volume would merit an exhaustive discussion in its own right. Considerations of space, however, preclude such a discussion in this review. Hence, only the salient points made in the essays are referred to. Albert Bergesen in the first chapter relates economic crises and merger movements in Britain and the USA, with the down and upswings of world economy, drawing attention to the changes in the structure of production enterprises in the leading industrial (or core) countries and the growth of industrialization. Thus, while the family firm was the dominant production unit in the period 1790-1873, the modern corporation dominated the commerical/industrial scene in the next phase of 1880-1945. The subsequent phase 1950-1973 saw the rise of the multi¬national corporation while in the current period i.e., 1974 onwards, State owned enter¬prises have become industrial giants, as for example, armament and aircraft producers in France, and Arab Banks and related commercial cum industrial ventures.
Andrew B. Tylecote in the next chapter traces the history of German ascent and British decline during the century 1870-1950. The last major industrial innovation achieved in Britain was in 1860, in the production of steel. Subse¬quently, Germany on the Continent and the United States across the Atlantic became the leaders in indus¬trial innovation. Britain stea¬dily declined, while German industry grew because of insis¬tence on efficiency in produc¬tion on the one hand and development and induction of technologies on the other. Tylecote’s assessment of future prospects for Britain and West Germany ought to be of interest not only to those countries but to all students of PEWS. He notes that in Britain, ‘little, for example, remains of native-owned high technology industry and with it of an economic dynamism, which is much harder to create than maintain. The native and foreign multinationals, which now dominate the economy have little interest in recreating it…’ In the case of Germany, German multi¬nationals like Volkswagen and Siemens are primarily domestic manufacturing firms with plants abroad, whose function is to take advantage of foreign labour and easy access to foreign markets. They have to be technologically up-to-date and stay competitive which is an essential requirement for survival and growth.
Robert Schaeffer’s essay (Chapter 3) on ‘the Standardization of Time and Space’ brings out the point that standardization of Time and Space such as, referring to Greenwich Mean Tine (GMT) and the Greenwich Meridian as the standard coordinate of geographical reference has helped shipping, and, therefore, ship building, navigation, ocean transport of commodities and insurance.
The Second Part of the Annual discussing ‘Ascent from the Periphery’ i.e. the development of what have come to be called the ‘Newly Industrializing Countries’ (NIC) would be of particular interest to NICs as well as other developing countries. Taiwan, examined by George T. Grane, is no doubt a special case. After annexation by Japan, it was developed as a complementary economy to Japan’s as well as to demonstrate to the colonial powers that Japan too was a capable colonial power. Taiwan’s agriculture was developed so that the island met the greater part of the needs of Japan in rice and sugar. A rudimentary industrial structure too was created.
Taiwan’s dark period was from 1945 to 1948, when it reverted to Chinese colonial rule. The Chinese removed Taiwan’s industrial machinery (‘outright theft of inventories’ as Crane describes the outrage) to the mainland and Taiwan was reverted to the status of a ruthlessly exploited colony, when Chiang-Kai-Shek and his troops had to flee from the mainland and reenter Taiwan, things changed. Aware of the dangers of having to coexist with an impoverished peasantry, Chiang’s administration redistributed land and Taiwan’s agriculture started developing.
Subsequently, Chiang’s total dependence on USA and the latter’s interest in maintaining a viable Taiwan, which would enable US to watch the main¬land led to the gradual industrialization of Taiwan. The Korean war helped. The critical factor, however, was USA’s policy of encouraging Taiwan to build up its industries and open US markets for Taiwanese goods. The key to the development of the economies of peripheral states is the opening up of markets of major industrial countries. This opening up is not governed by economic considerations but by the strategic and political interests of a super-power.
In ‘Social Structure of the New International Division of Labour’ Philip McMichael quotes approvingly Stephen Hymers conclusion regarding international corporate division of labour:—
‘To maintain the separation between work and control, capital has erected elaborate corporate superstructures to unite labour in production, but divide it in power’. This, in sum, is utilizing cheap Third World labour to increase the profits of advanced capitalist economies. The next (sixth chapter) by Sevket Pamuk discusses ‘World Economic Crises and the Periphery. The Case of Turkey’. Pamuk’s arguments broadly follow the earlier arguments concerning ‘peripheral’ economies. He points out that ‘in the last two decades, international capital has started; to relocate labour-intensive manufacturing, processes to regions of the periphery, where remuneration of labour power relative to productivity levels is among the lowest in the world’. He also notes that ‘the hegemonic power (USA, in Turkey’s ease) might not hesitate to impose ‘political, economic and military sanctions on peripheral states, which attempt even a partial and temporary withdrawal.’ Some food for thought indeed for Third World countries!
The seventh and eighth chapters deal with ‘American Black Insurgency and the World Economy’ by Arnold Anderson-Sheman and Dong McAdam and ‘The Hawaiian Transformation’ (by James A. Geschwender). The generation of social insurgency frequent¬ly corresponds to a favourable shift in the ‘structure of political opportunities.’ Oppressed sections of a society tend to assert themselves, as the American Blacks did in the Southern States and as Afri¬cans are now doing in South Africa, when repression or denial of legitimate opportu¬nities cross tolerance levels and when, from the point of view, of the dominant sections of society, the cost of repres¬sion exceeds the cost of con¬ceding concessions.
In Hawaii, in contrast, the people had a less exacting struggle because the United States did not want Hawaii for its natural resources, but for its strategic importance. Had Hawaii possessed rich natural resources ‘it certainly would have been colonized in a more traditional way’, Geschwender remarks. Hence, despite the diversity of the local population, which con¬sists of Portuguese planters, immigrant Japanese, Phili¬ppines and local Hawaiians, Hawaii’s transformation has been relatively painless.
The concluding part of the work analyses the consent of ‘Socialism as a Strategy of Assent’. David Ost in his dissertation on ‘Socialist World Market as Strategy for Ascent?’ observes that the Soviet Union and East European countries have been maintaining varying degrees of separation from the capitalist world economy. USSR’s economy is considered ‘peripheral’ (Wallerstein) and also ‘to some degree ‘withdrawn’, from the capitalist world-economy’. David Ost pertinently asks, if it has ‘with¬drawn or has the ability to withdraw and run its economy by plan (or command) and not by market, does it augur the transition to the socialist world governments’—as some fear. ‘State Socialist Economies’ (SSE) organize their economic development and commerce on the principle of bilateralism.
The unexpressed fear of the capitalist world and especially for its leader, USA, is that bilateralism among SSEs and in a larger context among countries of the South will erode its own authority and primacy is the world economy. Andrew Tylecote and Martin Lensdale-Brown point out that socialist economies, no doubt, have exhibited some weaknesses. After a certain stage in development has been attained, they may not be able to allot adequate resources for all sectors. But, progress is possible if the State interval actively support high technology areas. Ascent to the core—or highly industrialized stage, improves the terms of trade of the country; other core countries would tacitly accept it and it can start ex¬porting ‘appropriate, technologies’ to less developed societies. If Socialist countries attain ‘core’ status,, their cases would provide models for peripheral countries to follow.
The last essay by Immanuel Wallerstein deals with ‘Socia¬list State: Mercantilist Strate¬gies and Revolutionary Objec¬tives’. He points out the Soviet Union’s doctrine is that USSR and East European countries constitute a socialist community within which there exists a socialist division of labour and within which USSR has the right to inter¬vene, citing the examples of Hungary (1956), Czechos-lovakia (1968) and Afghanistan (1979). Most analysts, how¬ever, would consider that Afghanistan’s case is different. Wallerstein has also not con¬sidered the cases of Albania, Yugoslavia, Romania and China which in their own ways and at different times have expressed their disagree¬ments with USSR.
Third World countries seeking to secure better terms of trade and a reasonable proportion of world trade in manufac¬tures would do well to remem¬ber President Truman’s postu¬late that ‘the American system could survive in America only if it became a World System’, and seek to foster South-South cooperation in trade and technology transfer.
(Col.) R. Rama Rao