Sociology 2: Class 14: World-System TheoryAnnouncementsReview: What is a Theory?Theories of GlobalizationWorld-System Theory (WST)Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Investment ConcentrationSlide 19Slide 20Slide 21Slide 22Slide 23Slide 24Slide 25Slide 26Slide 27Slide 28Slide 29Slide 30Slide 31Sociology 2:Class 14: World-System TheoryCopyright © 2008 by Evan SchoferDo not copy or distribute without permissionAnnouncements•Office Hours limited:•Today•May 29•Contact me about appointments…•Topic: Theories of globalization•Plus, continuing discussion of governance…Review: What is a Theory?•Definition #1: A specific claim or argument that leads to empirical predictions•Example: Economic law of “supply and demand”•Definition #2: General imageries about how the world works•Example: Marxist theory: not just a single prediction•This broader kind of “theory” is useful because it generates a rich description of the world–Offers directives to guide research–And produces many specific claims to be tested–But, it isn’t easy to prove “right” or “wrong”.Theories of Globalization•Some major views on the international system:•1. Modernization theory•2. World Systems Theory•And “dependency theory”, a common variant•3. “World Polity Theory”•Also called “neo-institutional theory”•4. Realism•5. Various responses to Realism•“Complex Interdependence”, others…World-System Theory (WST)•Background: Modernization theory•An evolutionary theory predicting how societies develop•See Chirot and Hall article on WST…–Argument: All societies naturally pass through certain stages of development•All societies start out as “traditional” hunter-gatherers•Then, they develop agriculture; towns & cities grow•Eventually, they become “modern” industrial societies–Movement from one stage to the next is driven by things like population growth & new technologies•Society becomes more complex; greater division of labor.World-System Theory (WST)•Modernization theory was based on analyses of European societies•It was assumed that non-European societies would have the same experience–Or modernize faster with aid & technology from the West•Problem: Non-western countries weren’t modernizing as predicted•Example: Argentina was as rich as many European countries in 1890… but hardly improved by 1960•Example: Many former colonies in Africa were stagnant, or becoming more impoverished over time.World-System Theory (WST)•World-System theory tried to explain the failure of many countries to develop•Scholars: Andre Gunder Frank; Immanuel Wallerstein•Claim: Underdeveloped/peripheral countries are not just like Europe, but at an earlier stage of development•They have a very different history: colonization•And, they must compete with highly developed countries–Europe was undeveloped and became developed•Other countries were undeveloped, and now trapped in a state of “underdevelopment”.World-System Theory (WST)•Argument: Europe was able to prosper by exploiting resources from other places•The great success of Europe and the failures in the non-West weren’t just a coincidence…•Europe became wealthy by maintaining economic & military dominance over other nations•Exploited nations will never “modernize” as long as they are oppressed by Western nations–Example: Latin America traded a lot with Europe… and remained underdeveloped•Whereas Japan avoided contact with Europe; did better…World-System Theory (WST)•World-System Theory: We need to study the entire global economy as a world system•We can’t understand the fate of a single country, without understanding how it fits into the overall system•Countries aren’t poor because of their own specific history or internal characteristics•Rather, they are poor because of their position relative to others in the global capitalist system.World-System Theory (WST)•Key concepts:•Core: the rich, developed countries •Also: west; metropolitan countries; developed world•Periphery: poor, dependent nations•Also: underdeveloped countries; satellites; dependencies•Semi-periphery: semi-industrialized countries•Dependency: The vulnerable state of being exploited by core countries•They depend on the core for trade, investment, loans, technology, etc. (related term: underdevelopment).World-System Theory (WST)•Classical economic theory (Ricardo) predicts that specialization & trade is beneficial for all•Countries that can produce high-tech goods most efficiently should concentrate on that•Countries that can produce bananas or coffee efficiently should concentrate on that•Specialization leads to a “win/win” situation… everyone is more efficient; countries become more wealthy•World-System theorists criticize this view…World-System Theory (WST)•Criticism #1: Specialization in low-tech production (e.g., bananas) may produce profits in the short term…•But, there is a cost: countries fail to develop industry and sophisticated technology that could lead to greater profits in the future–Argument: In the long run, countries would be better off developing high-tech industry, rather than just producing coffee…World-System Theory (WST)•Criticism #2: trade is asymmetrical•Rich countries don’t need coffee/bananas badly–And, they can buy them from many sources•But, poor countries critically depend on trade to get technology, machinery to develop their economies•Thus: Poor countries are dependent on rich ones•They need manufactured goods… and are forced to pay high prices•And, they must sell their raw materials and agricultural products very cheaply.World-System Theory (WST)•Economists argue that foreign investment is good for peripheral countries•World system theorists criticize this, too:•1. “Core” capitalist countries tend to extract profits from the periphery•This outweighs benefits of foreign investment•2. Foreign investment doesn’t really help a society industrialize–Foreigners build plantations and mines to extract resources–They build roads & ports to extract; not to benefit the country•In sum: They don’t build useful industrial infrastructure.World-System Theory (WST)•More key concepts:•Trade concentration: When a peripheral country trades with just a few core