Chapter 6 The Modern World System as a Capitalist World Economy Origins are in the 16th century World Economy large geographic zone within which there is a division of labor and hence significant internal exchange of basic or essential goods as well as glows of capital and labor Not bounded by a unitary political structure instead there are many political units inside the world economy World economies contain many cultures and groups practicing many religions speaking many languages differing in their everyday patterns Despite this geoculture which is common cultural patterns do emerge Neither political nor culture homogeneity is to be expected or found in a world economy What unifies the structure most is the division of labor that is constituted within it Capitalism the existence of persons or firms producing for sale in the market with the intention of obtaining a profit but this is only capitalism when the system gives priority to the endless accumulation of capital World economy and a capitalist system go together Capitalism provides the division of labor A capitalist world economy is a collection of many institutions the combination of which accounts for its processes and all of which are intertwined with each other The basic institutions are the market firms that compete in the markers the multiple states households and status groups identities Markets both a concrete local structure in which individuals or firms sell and buy goods and a virtual institution across space where the same kind of exchange occurs In principle in a capitalist world economy the virtual market exists win the world economy as a whole but in real life there are often boundaries The totally free market functions as an ideology a myth and a constraining influence but never as a day to day reality Sellers always prefer a monopoly a complete control of a certain product that is in demand and that would give them the ability to fluctuate the prices as they wished so that they could make the optimum profit Patents can help create quasi monopolies but so can state restrictions on imports and exports as well as state subsidies and tax benefits There are two in built anti monopolistic features in a capitalist world one producer s monopolistic advantage is another producer s loss The losers will of course struggle politically to remove the advantages of the winners Or they will do that by persuading other states to defy the world market monopoly by using their state power to sustain competitive producers Both methods are used Quasi monopolies exhaust themselves
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