Applying Wallerstein's theory to explain the change of the global power and economic poles during financial crisis.

Ilie, Gabriela

In his paper "The modern world system" (1994), Wallerstein offers us an interpretative model based both on the Marxist theory and on the globalization theories, developed by Fernand Braudel. The third approach that bases its ideology on the world system theory is the "dependency theory," which talks about the division of the world into the center (the core), periphery and semi-periphery. Wallerstein believes that the current global system polarization stems from the gap between central and peripheral regions.

In the centre (the core countries) Wallerstein puts some Western countries that are engaged both in trade and in industrial production (Wallerstein, 1994). At the periphery there are situated societies specialized in the production, in order to export a limited range of primary goods that will be consumed in the core. The novelty that Wallerstein's theory is bringing is that between the core and periphery are a group of countries--semi-periphery--that have an intermediate production, more diversified than the periphery, but less diversified than the centre (Wallerstein, 1994: 23).

The first two societies accumulate wealth and, implicitly, take advantage of the world economic power, while the peripheral countries are exploited by both central and semi-peripheral countries. This structure of the international relations also generated a competition for catching up with wealthy countries and states like India or other countries from Latin America or Eastern Asia were strongly involved in this process. At the same time, Wallerstein considered that the economies from Western Europe, China, Japan, and Brazil registered rapid and significant growth, which multiplies the power centres in the world and announce the end of the American political hegemony (a process that started in the '70s in his opinion).

The semi-periphery has an important role (similar to middle class in society), thus "the top layer can not be put in a position to face the united opposition of all the others, because the middle layer is so exploiter and exploited "(Wallerstein, 1994: 31).

The structure of international relations and the positions in different hierarchies (economic, political, military, etc.) registered a permanent dynamics as each power aspired to play a hegemonic role. Since old times, the rivalry between the most powerful states on the globe occurred on multiple levels: politic, economic, military, technologic, and scientific. Thus, for example, if in the years before the crisis, the first places of the tops of the financial institutions in the world were held by the American banks, presently, the first four places are held by the Chinese banks ("China Merchants Bank", "China Citic", "ICBC" and "China Construction Bank"), while "Unibanco do Brasil" is on the fifth place. Of course, nowadays, China is perceived as a zone of financial-bank stability and, consequently, investors prefer working with Chinese banks that are considered more secure. West-European and American banks are considered still vulnerable. For example, the American banks "Goldman Sachs" and "J.P. Morgan" are found at the lower part of the top, on the 22 respectively 31 place, while the Chinese banks are leaders by far.

In 2010, the Chinese succeeded in overcoming also the well-known American ranking agencies, such as "Standard&Poor", "Moody", and "Fitch". These agencies are well-known mainly due to the fact that 'they granted maximum ranking to certain bonds guarantied by real estate investments the emitants of which became insolvent' in 2009. We mention that, in 2009, China took the lead over Germany in the exporters' top. Thus, the Chinese state exported goods and services of more than 1.2 trillion dollars, while German exports totalized 1.17 trillion dollars (816 billion euros). For German economists, losing the first place in the exporters' top is the best proof that the country faces a hard recovery after the crisis. Official forecasts show that exports will reach a level similar to the one before the crisis only in 2014 (Morrison, 2013).

In 2008, the biggest five world powers were the USA (a GDP of 14,204 billion dollars), Japan (4,909 billion dollars), China (3,860), Germany (3,652), and France (2,853). For a couple of years, China has been registering an outstanding growth trend. It is worth mentioning that in 2007 it exceeded Germany reaching the third place in the top of the most important economies of the world after the USA and Japan; certain experts considered it would become the second after 2010.

In the period 2007-2009, the evolution of the Asian giant was extremely prosperous, while other countries fought against the effects of the economic crisis. China has multiple chances in the future: it has an enormous potential as a producer of goods and services, as well as consumption market; it has more than 1.3 billion inhabitants (the USA has 303,290,000 inhabitants; Japan--127,076,183; Germany 82,400,996), which means it is open to any kind of consumption and, most of all, it benefits of one of the cheapest labour force; it is the first in the world in terms of exports and bank system; it became the largest car market in 2009, due to the measures imposed by the state and government to support car industry (Morrisson, 2013).

The economic growth of China during the last years is obvious if we analyse the increase of GDP with 9.8% in 2010; this growth is also reflected by the increase with 76% of car sales. If the previous economic crises were surpassed mainly due to the American consumers, the present saviour might be China, which seems to be the real 'engine' of the world economy in the future. In the first trimester of 2011, the economy of China increased with 9.7% and the country remained the second in the top of the most developed economies in the world. The researchers of the social realities of the country remark that the recovery of the world economy by millions of Chinese consumers is restricted by the reflex of saving money, which has a millenary tradition among the Chinese people (for example, a family with middle incomes from the urban environment saves about 28% of its annual income), as well as by low living standards of the inhabitants from many rural areas, where 'poverty continues to wreak havoc (Morisson, 2013).

According to the estimates of the experts from "Standard Chartered", the economy of China will be two times bigger than that of the USA until 2030, as it will represent 24% of the world GDP compared to 9.8% in 2010. India will exceed Japan and it will become the third economy of the world in the next ten years. "Goldman Sachs" and OECD also anticipate that the economy of China will become the greatest in the world until 2027 (OECD, 2007).

Another study performed by the International Monetary Fund draws our attention upon the risk that China's ascension to be restrained by the present over-consumption and the boom registered in the real estate field. One of the conclusions of the study (published in December 2010 in the journal The economist) is that, in 2016, the GDP of China will reach 19,000 billion dollars compared to 11,200 at present, while in the USA, the GDP will register a slow growth of about 3,000 billion dollars (from 15,200 to 18,000 billion $).

In this context of great changes in the world economic and political hierarchies, we can mention that one of the beneficial effects of the crisis might be a radical change of people's mentality, who, before the start of the crisis, used to buy everything because products were cheap or just because credits were easy to be accessed. The crisis might teach them to establish other criteria and priorities and, eventually, to buy only what they need based on sustainable values (such as good, beauty, etc.) and not only on the futile material utility. According to this study, achieved in our country by Unilock Market Research and called Crisis Monitor, it came out that, after the first year of crisis, the Romanians became more selective when they purchased goods and they started to make shopping lists (including only what was strictly necessary), to postpone or even give up to certain wishes.

Referring to consumption and investments--the study about Romania concludes, for example--the tendency is to rationalize expenses. <<Quite a few interviewed people are worried about not being able to maintain a decent standard of living and less than 50% are worried about not being able to pay their bills. The present state of the economy, as well as the uncertainty of jobs (mentioned by 50% of the questioned people) or the impossibility of obtaining a loan, postpones investments>> (Crisis Monitor, 2009).

The present world financial and economic crisis raised the issue of the value and future of capitalism as a way of organization and functioning of social life and economic, political activities etc. In the book Decline of the American Power, as well as in an interview for a French newspaper (Le monde, January 2009), the American philosopher and sociologist Immanuel Wallerstein considered that we are presently experiencing a period of crisis in term of capitalism, as it gets closer to its own end after a history of almost 500 years. The philosopher came to this conclusion based on the theories of some prestigious sociologists--such as the French sociologist Fernand Braudel (1902-1985)--and economists, such as Nicolai Kondratiev (1882-1930) and Joseph Schumpter (1883-1950). There are equally capitalized some core conclusions rendered by Immanuel Wallerstein in his well-known book The Modern World System (Academic Press Inc., New York, 1980).

Capitalism means, first of all, profit and technical civilization. This social system is defined, in economic terms, through the predominance of private property and its mass extension, through free initiative and unlimited profit, perfecting of work means and serial production, dynamism of activities and wealth.

The capitalist way of living appeared as a natural answer to people's desire of earning more and living better. As this is the purpose of each normal individual, capitalism stood as the most compatible social system to human nature. Thus, it was possible the appearance, promotion, and respect of the fundamental human rights: the right to life, health, liberty, property, and happiness. By assuming these values, the capitalist society created the necessary conditions for the potential development of all individuals (Wallerstein, 2005: 47-49).

Socially, the capitalist economy produced vital goods, necessary to all people, as well as goods affordable only for a reduced part of society, interested in its own progress, merciless with failure, and thus amplifying its glory desires. Personal intelligence, capitalization of physical and intellectual capacities, of individual talent propelled certain persons on prosper social positions, imposing gradually higher living standards and behaviour patterns most people strived for. The serial production technique made possible the coverage of mass needs, but, at the same time, induced consumer-oriented mentality, a thinking pattern based on quantity rather than on quality and authentic values. Thus, consumption became the purpose of production and production became consumption ration. Consequently, there appeared a wide range of goods and wealth, inaugurating an unprecedented consumption epoch.

Capitalist economy offered not only the most adequate answer to the eternal issue of mankind's relations to nature and the material environment, but also the most profitable one during the entire history of humankind. Due to this answer, people's social life radically changed, which represented not only a benefit in material terms, but it was also legally regulated and permanently directed towards civilization. In his fight with vicissitudes of the natural environment, the capitalist working technique allowed him to build his own home, but it also provided the necessary means of provoking irremediable destructions. Thus, most of the world natural resources considerably diminished, some of them reaching different stages of exhaustion.

According to Kondratiev's conception, capitalism, during its historical evolution, underwent alternant progress and decline phases, noted by the philosopher with A and B. Starting from this typology, Immanuel Wallerstein considers we are presently experiencing a B phase of capitalism, which, in order to bring profit, needs financing and speculation (after phase A, when profit was generated by industrial production). The American philosopher observes that three decades ago, there emerged a quasi-general practice, namely everybody used to take loans in order to cover their needs and support investments (state, firms, private households, individuals). After this prolonged financial assault, there appeared consequences: bankruptcy, monopole, unemployment, economic recession. Wallerstein's opinion is that in the last 30 years humanity started experiencing the final phase of the capitalist system; the difference from the other previous cycles resides in the fact that it no longer reacts as a social system (capable of stability and functional balance) and its real possibilities of accumulation reached its limits. 'I believe in progress possibilities--underlined the American philosopher--but not in its unavoidability' (Wallerstein, 2013).

Wallerstein's reflections belong to a savant sincerely preoccupied by humankind's faith and by the role the USA will further play as a country that still represents the biggest political, military, and technological power in the world. The present economic crisis obviously affected all the world states and, of course, their role in the international arena. The state interference for saving the representative national companies, inclusively in the USA and the countries of the European Union, confirms Wallerstein's prediction that capitalist economy is in decline and classical mechanisms that used to regulate it are no longer valid in the contemporary period (Wallerstein, 2005: 123-124).

In these new social-historical and economic circumstances induced by the manifestations of the world crisis (2007-2010), the liberalist conception itself lost its logical justification because the state is really called to interfere as people and institutions' saviour during crisis times and it does no longer play a passive role in economy (resumed to collecting taxes and fees), as it happened during the classical stage of capitalist evolution.

It might seem that we undergo the emergence of a new general type of capitalism state capitalism due to the financial force it represents and, especially, to its capacity of decisively interfering during crisis times. Of course, this situation that generates implications all over the world will have an influence, hard to evaluate at this moment, upon the hierarchy of the institutional roles in any society. This means that the government will control economy (a tragic consequence of the crisis!) and the state may become a fiscal dictator and an oppressive instrument serving the interests of a political party that gained power. This would be an equivalent of the authoritative order or of the model of the political management specific to communist society. The changes occurred in the rapports between state and economy will surely be reflected in social relations or the framework values of any society.

We believe that, on the whole, the capitalist society will continue functioning in the same way, but under other circumstances generated by the crisis period that has not finished yet. The world undergoes a huge economic and social experiment, where the crisis on the one hand and the states leaders' incapacity of surpassing it on the other hand, do not make room for tranquillity and motifs of certitude to humanity.

In the history of the 20th century, there were numerous situations when the state nationalized certain companies of national importance (when debt amount was too high), after which they were sold to private investors (for example, Renault Factories in France). The fact that, in the last three years of the world crisis (2008-2010), the state role in saving certain firms from different western countries increased clearly indicates that these states had a budget high enough to support exceptional measures only state can be able to take. However, particularly or generally, society is still the same capitalist.

However, in the future, capitalism as an economic, social, and political system may undergo major changes able to ensure a controlled evolution, especially during crisis times, but, in our opinion, it will not disappear as type of social order as it functions in 218 societies and, moreover, its dissolution means it must be replaced by something else. So far, economic-financial crises have not benefited from a special management assumed by both private investors and state institutions and, thus, induced the mentality that each bankruptcy is a necessary effect of a free economy (the responsibility belonging to the person involved--owner or manager, as competence eliminates the others and selects the strongest ones).

Presently, each national economy, especially if it is developed, is connected to other national economies within the framework of a world network. The consolidation and prosperity of the national economy is the target of each state, in the same way profit increase is the target of any owner or manager of any economic organization. The lack of state interference for protecting firms, especially of those firms of strategic national importance, would mean the weakening of the national economic power.

Consequently, capitalist economy and society will continue their existence in spite of all negative effects and dysfunctions induced by the recent world financial crisis, but, they will surely find new auto regulation rules and mechanisms, able to support their interference in case of financial turbulence. The most important thing is to learn from past experiences and the world leaders to act unitary and concomitantly as the present financial-economic crisis manifested itself all over the world.

Presently, capitalism is the main way or social life type spread all over the world and including 79.1% of the 6.8 billion people population of the planet (in 2010). Out of the 223 known states, 218 are organized on capitalist basis while only 5 are communist. We underline that in 1989, the disappearance of the communist states from Europe did not mean the disappearance of communism in the world. On the contrary, about 21% of the world population live in communist societies: in China--1.335 billion inhabitants, Cuba--11.2 million inhabitants, Vietnam--85.7 inhabitants, North Korea--24.1 million inhabitants as it (United Nations World Population Prospects, 2008)

The capitalist system, through the 218 states populated by 5.336 billion people really represents a world system, the drastic change of which is practically and historically impossible, as it still disposes of an evolution potential high enough to make it resists. However, it is also true that capitalist countries greatly weakened during the global crisis, fact that was noticed in the case of communist societies (except for China) that had undergone a prolonged social-economic crisis before being affected by the world crisis.

The economic role of China played at international level is interesting and remarkable as it is a communist country, has a state-party, a social order based on the rules and values of the communist way of living, but, at the same time, a prosperous economy that competes with the strongest world economies. Also known as 'one country, two systems', China represents a unique case study, as here the political factor (of communist orientation) paradoxically cohabitates with the economic factor (the economic life underwent a major correction for many years getting more and more free and organized on capitalist basis). Moreover, China became much stronger during the first years of the world crisis, while the USA borrowed money from the strong Asian state and the Chinese banks took the first positions in the international tops, in front of the American banks. This situation obviously makes us wonder if the present world order is the same, namely the USA in front of the top and China experiencing an upward trend or if the humankind future is capitalism or communism (Morisson, 2013).

Until the disappearance of the communist block from Europe in 1989, there was a real 'iron curtain' between the communist and the capitalist worlds and we experienced an intense 'cold war' between the two types of social systems, a war that ended with the political, ideological, and economic 'insolvency' of communism within our continent. In the last two decades barriers disappeared as well as the political-ideological polemics between the promoters of the two types of social systems. The fact the communist order still resists in different places on the globe and the Chinese economy became a viable competitor for other important economies (mainly due to the capitalization of its own labour force that is very cheap and numerous) does not mean that this is the historical trend of the world or that it should become humanity future. For the moment, the communist society did not generate general wealth or essential freedom for human beings and it is still known for the lack of will in terms of ensuring individual's fundamental rights that are frequently violated and discredited. Moreover, the poor living standards of most of the population characterizes all communist societies and, consequently, this is not the future a person eager for freedom and a prosperous, civilized life might aim at.

The contemporary world is a diverse, contradictory and turbulent world that seeks for a way without suffering, pain or failure. For the moment, the economic crisis, the wars from Iraq and Afghanistan, the natural catastrophes, the riots from the Arabian world, and the nuclear disaster from Fukushima, in north-eastern Japan, show us there are no reasons of tranquillity and certitude on the Earth. In this historical context, we naturally wonder how humankind will evolve until the end of this century. The appeal to the sociologic paradigm of analysis force us establish a number of relevant indicators able to reflect concrete life and social activity of the world community, on the basis of which there could be made certain simulations, descriptions, and scientific forecasts. A synthetic answer, something like 'the world will live better', 'the world will be the same' or 'the world will live worse', is impossible to be rendered in professional terms. Not even the best futurologist would dare to answer to such tricky questions.

Certain data regarding the evolution of humankind are constant, while others are permanently changing. On a short term, the aleatory factors, hazard might prevail in the future behaviour of humankind. A huge nuclear catastrophe for example might be fatal for the human species in the same way a meteorite might generate the end of life on the Earth. Nobody could ever count exactly the global effect of a major natural hazard. Moreover, we do not know all the possible natural factors that may act upon human beings.

Consequently, present forecasts related to humankind future rely on certain facts and social phenomena occurred in the past that might also occur in the future with a certain frequency. But, with regard to the influences or conditionings originating in the natural, cosmic space, they could rise our interest only on a short term.

In order to decipher and anticipate the humankind evolution until the end of the 21st century, it is necessary to take into account the following factors and indicators the life of each society depend on and that might be considered indicators of sociologic analysis:

1. The demographic factor or population, without which humankind could not exist. As we have already mentioned, there are 6.8 billion people on the globe and, in case the present reproduction rhythm will prevail, then, according to UNO estimations, the world population will count about 14 billion people in a century. Obviously, the most important increase will occur in the areas where birth rate is higher, namely in underdeveloped societies, the Asian and African ones, where the level of living is very low and poverty and contagious diseases affect most of the people. Certain experts estimate that, presently, 1.7 to 2 billion people live in poverty and their number will continue increase, so that, in a hundred years, one of three people on the earth will live in poverty.

The life expectancy will continue to be high in developed counties (which presently exceeds 80 years old). The last demographic rapport of the European Commission emphasizes the average life expectancy increased with 2-3 months per year at the level of the 27 member states of the European Union. The data rendered in the rapport show that the Romanians live eight years less than the French, but the age is comparable with that of the Bulgarians and the Hungarians, which are our neighbours.

People's quasi-general desire of living in cities, as well as the present birth rate will bring to a gradual increase of the number of megalopolises all over the world. At the same time, the number of settlements will also increase and they will be not only more numerous but also bigger, forcing the architects to design more vertical constructions if we want not to invade completely the natural environment without which life is not possible.

A population of about 14 billion people needs not only living space, but also food (an issue that might be solved through the capitalization of the marine and oceanic environment at a large scale), education, means of transportation, etc. We estimate that the expansion tendency of the main religions in the world will maintain--we refer to the Christian and Muslim religions, which might become dominant during this century.

When population is numerous, there occurs not only an increase of the population's density on square meter, but also of the density of social connections, namely of the interhuman and intergroup reports, which, unavoidably, will be based not only on cooperation, but also on opposition, rejection, conflict (especially when it comes to take control over food and energy resources);

2. Natural resources and environment conditions. The need of food and fresh water is a planetary issue even now, but this need will have to be satisfied for a potential double population. In a far future, the improvement of sea water desalinization technology and equipments might solve one of the compulsory demands of humankind. For the moment, the studied sponsored by the World Bank inform us that water sources exhaust at a higher rate than their recovery capacity all over the planet. Consequently, it is possible that about 130 million inhabitants from China and 175 million people from India, who live almost exclusively on cereals and water, will no longer rely on drinking water, as consumption exceeds the natural recovery capacity of the aquifers.

The food problem recently forced Robert Zoellick, the president of the World Bank, draw our attention (by mid April 2011) that, during this year, humanity might confront itself with a large-proportion food crisis due to the political and social instability occurring in the Middle East and North Africa that will bring to a rapid increase of oil products price and, implicitly, of the main food products (the production and transportation of which surely supposes a certain consumption of fuel). Consequently, in the first trimester of 2011, there was already registered an increase of prices compared to 2010, 74% for maize, 69% for wheat, 36% for soya, 30% for veal, only rice registering a decrease of 2%. In the last 12 months, food global price increased with 36%.

Moreover, climate change and intensive exploitation made the soil poorer in the areas that used to be known as cereal granaries of the world. Thus, it is considered that about one third of the terrain used in agriculture loses its fertility and becomes totally unusable for crops. Numerous countries will depend on imports, such as Saudi Arabia, which used to produce wheat, but, according to certain experts' opinion, this will cease starting with 2012.

Robert Zoellick declared that the world is 'a step before total crisis' due to the increase of food prices, which made 44 million people within the world live in extreme poverty conditions. 'Everything started with a financial crisis, followed by an economic crisis and, in the next months, there will surely occur a job crisis because the slowing down of the economic growth will generate unemployment, which will stress even more the food and fuel crisis', stated Robert Zoellick, quoted by BBC.

In its essence, contemporary society is built upon an exacerbated individualism, economic competition, and progress of top technique. Such vectors of present civilization may raise people on short term, but, at the same time, they represent a merciful trap on long term. Individualism nourishes egoism in family life and economic competition at the working place up to the limit of the estrangement from our own human condition. All economic activities and politics of the organizations that promote them aim at our irremediably becoming one with the working place so that to ensure secure profits and uncountable winnings. A fulfilled desire (profit, wealth) gives birth to another desire (acquire more), which means the life of the person involved in capitalist economy is exclusively dedicated to perfecting the means necessary for earning even more money. This race tends to become endless and presents numerous risks: failure, envy, worry for income protection, sickness, etc.

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Gabriela Ilie, Assistant Professor, PhD, University of Craiova, Faculty of Law and Social Sciences, e-mail: iliegabriela80@gmail.com