Chapter 1 Overview
These lectures seek to assess what happened in the world system
between 1945 and 1990 in order to make proximate projections of what the period
1990-2025 will be like.
In the period of 1945-1990 cannot be understood without
understanding the institutions that developed in this time period.
These institutions continue to organize people’s activities since
the end of WWII
There are six main independent variables that have formed the
world system we now live in.
The first, is the interstate system that developed from the 1500’s
on.
The interstate system over the last 500 years established the
framework in which wars were fought.
More importantly the interstate system created the framework that
shaped the workings of the free market system
Interstate relations governed the linkages to profitability.
The process of accumulating capital on a world scale required the
continual development of the world’s forces of production.
The historical development of the capitalist world economy has
entailed the establishment of commodity chains of production extending
backwards from the organizing and industrial centers.
The requirement of unevenness, low wage areas—high wage areas, has
been important to the continuing formation of the world labor force.
Thus, production has moved from high wage societies to low wage
societies.
Therefore the world labor force is also important as the
interstate system in which this activity is guided and takes place.
The realities of interstate conflicts, combined with world wide
competition for profits,
Combined with the constant attempts to mould the world labor force
Combined with the increasing global inequality
This has all ended up with a very tumultuous world system of
violence and wars.
States have been getting steadily stronger for the last 500 years
as has the ability of the state to ensure internal order.
The state has combined nationalism with scientism/universalism are
the main elements of the geoculture of the modern world system.
The world system is a historical system.
A historical system is both historical and systemic….That is to
say that it has structures that define it as a system. At the same time the system is evolving
second by second.
That is to say the system is historical and has a history.
When we look at the period 1945-1990 we immediately notice a few
things about it.
It starts out as an incredible period of economic expansion, which
then slows down.
It starts out as the period of unquestioned US global hegemony and
then this hegemony begins its decline in a relative sense.
Periods of global economic expansion are referred to as
Kondratieff cycles.
These cycles typically last 45-60 years and are characterized by
an A phase and a B phase.
The A phase is a period of economic expansion such as the period
of 1945-90
The B phase is a period of economic contraction if not depression.
Hegemonic cycles such as the US enjoys are typically much longer
phases than Kondratieff cycles.
It is the nature of the capitalist world economy that hegemonic
states make efforts to prolong their power while undermining the very elements
that created their hegemony in the first place leading to a relative decline.
Previously the UK began its decline in the 1870’s while the US and
Germany began their long competition that led to two world wars with the US
becoming the hegemonic power by 1945.
CHP. 2 The Interstate System 1945-1967/73
After 1945, the US was the world’s number one military power; the
only power to have nuclear weapons and the US took the lead in establishing a
new interstate system.
This was the period of the Cold War and it was the fact that the
US had a monopoly on strategic nuclear weapons that gave it its predominance.
A second key element was the fact that all the major industrial
economies other than the US had either been destroyed or massively damaged due
to the war.
The third crucial event at the war’s end was the wave of revolt
sweeping through the colonial world.
The largest colonial areas were in Asia and Africa.
The demands for self-rule and independence by the colonized
peoples were both an opportunity and a dilemma for the US.
The US would finally be in a position to break down the colonial
trading blocs in Europe and Japan’s territorial empires through an Open Door
Trading policy.
The Europeans were strongly opposed to this and the US had to be
careful in dismantling these colonial areas.
The US wished to avoid a revolutionary process of decolonization
that could pose a threat to US plans to maintain the Third World within the
core-periphery structure of the capitalist world economy.
As the hegemonic power the US faced the challenge of
reconstructing the unity of the capitalist world market based on
multilateralism—the absence of barriers to the transfer of goods and capital
across national borders.
Ironically, it was the very supremacy of the US in world
production and trade that posed the greatest threat to the reconstruction of
the world capitalist economy as all the markets of the world had been destroyed
by the war.
US leaders feared that economic collapse or disorder would
increase Communist gains in Western Europe elections and reorient trade away
from the US and towards the USSR.
The US sought to establish multilateral economic integration and
intra-capitalist cooperation under US leadership.
The US did this by reconstructing Japan and West Germany as the
workshops of Asia and Europe and reintegrating them with their peripheral
zones.
In essence, Japan and Germany were the central props of a
favorable balance of power…this would lead to a revival of industrialism and a
renewed expansion of the capitalist world economy.
The Bretton Woods agreements were instrumental in setting this
system up.
The USSR for its part feared the influence of the Marshall Plan
and feared that eventually these US designed plans would integrate Eastern
Europe with the West.
By the late 1940’s the USSR consolidated its control of Eastern Europe,
while the US found the beginnings of a solution to both the balance of power
and balance of payments problems for Europe and Asia.
This would be accomplished through the Truman Doctrine and later
with the establishment of NATO. Threat
against this new American system by the USSR would be countered with dollars
and force.
The Korean War is also an important event.
US military expenditures increased 300% during the period setting
off the Korean War Boom.
Furthermore, the boom increased the prices of primary commodities
by 150%, allowing Europe and Japan to earn dollars from their trade with their
peripheries.
The Korean War was instrumental in the construction of US hegemony
on a global scale, as it was the first postwar act of containment.
Document NSC 48 was the key to all this as it extended Truman’s
Containment Doctrine to the Far East.
US aid to the French in 1950 and beyond into the Vietnam War was a
direct result of NSC 48. The goal was
to shore up the Pacific Rim lands.
The Cold War structure permitted the use of Cold War anticommunism
against labor movements in the US, Japan and Europe.
The US also aimed to check Third World radicalism even as it
sought to break up the old colonial empires.
The US creation of the UN helped it to reform the old colonial system.
The UN was a promise to the peoples of the periphery that they too
could enjoy political independence, progress and equality in the same manner as
the core states.
For the first time in global history the UN was the concrete institutionalization
of the idea of world government on a multilateral basis.
The Cold War itself developed in the context of the stirring of
nationalist forces as the movement for decolonization was accelerated.
The Bandung Conference of 1955 was the birth of the non-aligned
movement or NAM.
The US opposed both nationalist and revolutionary threats to its
Open Door policy. National movements in
the Third World were tolerated so long as they did not go to far and threaten
US plans for multilateral economic integration.
By 1960, nearly 20 countries in Black Africa had won independence
and the wave of decolonization was moving ahead at full speed.
Both the US and the USSR sought to win the allegiance of these new
states.
During the whole period Cold War competition was on the rise and
the US promoted nation-building and economic development as the alternative to
the communist road.
Over and over the US would support decolonization only to turn
around and with the help of the CIA ensure that the new states were
pro-American.
Africa, Asia, Latin America and the Middle East were now the zones
experiencing turbulence while Europe and Japan got back on their feet.
In the 1950’s US military and economic aid had mostly gone to
European countries. By the 1960’s most
US aid went to pro-US Third World regimes.
By the late 1960’s the US would crush revolutionary movements that
threatened its Open Door policy…an example of this was the Vietnam War.
The Vietnam War in addition exacerbated the US balance of payments,
starting in 1968.
In the late 1960’s the US had a $10 billion dollar trade surplus
of exports over imports, by 1971 it had completely reversed with the US showing
a $10 billion dollar trade gap of imports over exports.
The printing of dollars by the US to pay for the war led to
inflation and led other countries to cash their dollars in for US gold, thus
provoking another crisis and the US went off the gold standard by 1971.
From 1967/73 to 1990:
Changes in the Interstate System.
The period after the Tet Offensive saw dramatic changes in both
the world economy and the interstate system.
US hegemony declined in a relative sense and the global economy
contracted.
By the late 1960’s the Tet Offensive and the growing independence
and competitiveness all began to underscore the limits to US power.
The 1969 Nixon Doctrine ended the US always being on the front
line of containment that was first put into practice during the Korean War.
The Nixon Doctrine was important because it put semi-peripheral
states such as Brazil, Israel, and South Africa on the front line in the fight
against communism.
The early 1970’s also witness the growing power of Third World oil
producers and resulting boom in Petrodollars.
This boom in dollars was lent by the US via western banks to
industrializing countries throughout the world.
The 1970’s and the 1980’s saw a demand for worldwide
militarization including the drive for military self-sufficiency, especially in
the Third World.
The little dragons of East Asia launched their heavy chemical and
industry programme to achieve self-sufficiency in military items due to the US
opening with China.
Overall, Third World states vastly increased their military
spending after 1970.
In the 1960’s Third World states, on average spent $4 billion per
year. But by the 1980’s they were
spending an average of $40 billion per year.
Along with the progression of worldwide militarization was an
increase in the growth of the UN network, with UN Peacekeeping missions
increasing from 1956 up through the present.
With the work of formal decolonization largely complete by the
1970’s the Third World stepped up its demands in the UN and other forums for
political-economic reform in the world system.
There was much social unrest throughout the world of the
1970’s. But it was the success of the
Iranian revolution in 1979 that led to the gradual abandonment of the Nixon
Doctrine.
By the 1980’s, with the
Soviet invasion of Afghanistan the US went forward with plans for a renewed
cold war.
The US in the 1980’s attempted to move away from relying on sub
imperial powers and instead increased expenditure to over $3 trillion dollars
in order to confront the USSR and contain revolution in the Third World.
Many of the changes in the world during the 1980’s were directly
associated with the US deficit economy that financed the unprecedented military
build up of the 1980’s.
The US was attempting to revive its hegemony through military
spending and all this did was exacerbate US economic decline.
During the 1980’s the US economy grew more slowly than those of
its major trading partners.
In addition, the US began to compete with poor countries on world
financial markets to fund its deficit financed military, regressive tax cuts,
corporate debt and other related problems.
Throughout the 1980’s as US arms were its number one export
regional arms races and Third World conflicts boomed.
Between 1981 and 1988 the US sold $342 billion dollars worth of
arms with 69% of that going to the Middle East.
Third World military powers emerged.
But by the end of the 1980’s the Soviet system had completely
collapsed due to economic mismanagement and cold war spending.
The US Soviet order that had organized interstate relations in
Europe after 1945 was over.
No other order has been substituted in its place.
Thus, by 1989 the principles on which US had organized an
international system were no longer applicable to the world.
Unlike Reagan’s unilateralism, Bush found it necessary to revive
multilateralist alliance diplomacy based on the UN Security council. The Gulf War Coalition evidenced this.
With the bi-polar world gone new threats have emerged such as
fundamentalist terror groups carrying out acts of mass destruction.
US Documents call for a US military large enough to fight two
Gulf-like wars simultaneously. The US
spent $1.25 trillion dollars between 1995 and 2000 to fight this scenario and
build up the military and this is already on top of our current $4 trillion
deficit.
Rather than pursuing leadership in world security and arms control
through diplomacy the US is set on maintaining its hegemony though military
force or the threat of military force.
But such a unilateral stance can only accelerate continued economic decline.
The world production system in the period 1945-90 possessed five
characteristics.
One, the overall productive capacity of the world economy expanded
with an unprecedented increase in world production.
Two, the world economy was significantly further integrated after
1945 by a vast increase in the movement of goods, services, capital, people and
information.
Three, the first half of this period, 1945-1967/73, seemed to be
one of invincible US economic power represented by the technological advantage
and institutional firmness of US business.
However, in the period 1967/73-2000, the US share of world
production declined noticeably as Europe and Asia caught up with the US.
Four, the postwar framework regulating global trade and finance
was continuously Liberalized.
This was accomplished through GATT, the EC, NAFTA, and the WTO.
State regulation over private financial flows among the core
countries were lifted in the 1960’s and the 1970’s and controls over foreign
exchange were lifted in the 1980’s.
Five there was a substantial expansion in the role played by the
state.
The key feature in this period of 1945-2000 is the transformation
of large businesses into transnational corporations (TNC).
1967/73 marks a turning point of the Kondratieff cycle.
TNCs were the principal agent that brought about world economic
transformation.
Production in the world economy expanded at a much faster rate in
the second half of the twentieth century.
While global GDP doubled in the period of 1913 to 1950, in the
period of 1950-1987 GDP increased 4.6 times.
The standard of living improved between 1950 and 1973, but then
declined after due to a slowdown in the growth of the global economy.
The expansion of productive activities in the world system was
accompanied by further integration.
The expanded flow of goods and services, capital and people and
information resulted in complicated interactions within states and between
them.
For example a household in the US may participate in a pension
fund which purchases Finnish government bonds which in turn makes it possible
for Finnish households to purchase commodities manufactured by Indonesian women
working under a US distribution system.
Petrodollars in the 1970’s and 1980’s led to the US Banks lending
to peripheral countries leading to further integration of the world economy.
FDI or Foreign direct investment allows the TNC to set up an
affiliate or subsidiary in foreign countries and extending the scope of
business beyond national boundries.
This expansion of the cross-border flow of goods, services and
capital has been greater than the growth of productive activities.
Trade led world integration in the 1950’s.
FDI led world integration in the 1960’s.
International bank lending boomed in the 1970’s
International security flows became the fastest growing mode in
the 1980’s.
As the integration of the world economy through international
trade slowed down after 1967/73….cross border capital movements such as FDI,
international lending, and international portfolio investment.
The integration of the world economy in terms of people and
information also steadily increased in the 1967/73-2000 period.
In particular, migration from the periphery to the core increased
in the period of 1967-1990. As
development policies of the period 1945-67 failed in poor nations, inequality
increased between countries driving Third World peoples to core countries.
Finally, there emerges a tripolar regional structure of the
so-called Triad of North America, Europe and East Asia that accounted for over
65% of the world GDP in 1987,
50% of all world trade in 1989 and 100% of world financial flows..
The transormation of the world economy in the second half of the
20th century have been caused by the expansion of activities which
are increasingly transnational due to the growth of the TNC.
Beginning in the 1960’s the term multinational corporation MNC was
used to describe corporations that operated production facilities in a number
of countries.
As the MNC evolved they gained relative autonomy from state regulation
by operating facilities in a number of countries. These autonomous MNCs were then called TNCs.
In 1980 the number of TNCs was estimated to be 10,000 companies
that owned 90,000 foreign affiliates.
In the 1990’s there were at least 35,000 TNCs controlling 170,000
foreign affiliates.
This expansion of subsidiary networks was fueled by the increase
in FDI in the period 1967/73-1990’s.
These TNCs dominate world production today.
In the 1970’s and the 1980’s East Asia boomed in manufacturing and
spread its production facilities through a multi-layered subcontracting system.
In the 1960’s East Asia manufactured only 10% of the world
production. But this increased to over
45% by 1988.
Increasingly high technology and R&D took place in the core countries
up to the 1980’s, but then it began to shift to developing countries due to
lower wage costs and increased profitability.
THE SERVICE SECTOR
As the US lost its supremacy in production and trade in the 1970’s
the service sector became the principal area of US TNC operation.
The service sector is banking, finance, business services,
transportation and telecommunications.
In spite of the predictions in the 1970’s that TNCs would be
taking over the world economy, the growth of top industrial TNCs has slowed down considerably.
US HEGEMONY AND THE WORLD ECONOMY
The transformation of the world economy did not take place in an
environment free of government regulation and intervention.
It was the state policies themselves in the core countries that
negotiated this liberalization of the global economy.
The liberalization of the movement of goods, services and capital
has been the pillar of the postwar economic order.
Initially liberalization by the US was to set up an order
favorable to US interests and profits.
The biggest shift of all was the termination of the fixed exchange
rate for national currency and money.
The movement towards a floating exchange rate was a consequence of
US decline, but it also led to further liberalization.
The new system was had the relative price of national currencies
was determined by the overall economic standing of a given country in the world
economy.
No single state after the 1970’s could any longer unilaterally
direct international economic policy.
The structure of the
1945-73 period was based on steady economic expansion in the core zones
realized by higher wages paid to select workers and management in the core
states.
Under this structre the periphery contributed raw materials for
the growing markets in the core countries.
Successful expansion in the 1950’s and 1960’s resulted in rising
costs of production.
In 1973 with the rise of oil prices and petrodollars the world
experienced stagflation.
WORLD LABOR FORCE
The process of industrialization of the world economy after 1945
involved two elements.
First, modern industry increasingly became centered in the
periphery.
Second, the center of capital accumulation was narrowly located in
the US between 1945-73.
But after 1973 capital accumulation was also occurring in Japan
and Western Europe.
In terms of labor, jobs and careers were increasingly not life
long, but episodic or part-life time.
Since 1945 there has been an increase in the numbers of children
working in the labor force.
The numbers of global workers that were under the age of 15
increased to nearly 40% by the 1980’s.
From the mid-1940’s though the 1950’s the number of women
increased steadily throughout the world.
Both the feminization of labor and part-time female workers
increased in the US in the 1960’s, in Europe and Japan in the 1970’s.
WORLD HUMAN WELFARE
The expansion of welfare on a world scale was central feature of
the Cold War.
The US as the hegemonic power was committed to this expansion of
welfare at home and in Europe, Japan and the Third World.
There has been a long term trend within in the modern world system
since the 1800’s of increasing the state’s role in ensuring increased human
welfare.
This is commonly known as the building of the welfare state.
The high water mark of the welfare state in the core and
peripheral countries was 1973.
The belief in the welfare state declined after that
The US was the only state in the core countries where the ideals
of the welfare state were not universal.
The provision of food subsidies to the poor through the Federal
Food Stamp program was primarily adopted in order to keep agricultural prices
high and reduce food surpluses that
lowered the price of farm goods.
All governments of the core zone throughout this period subsidized
health institutions.
In the period 1945-73, the bulk of the population in the core zone
enjoyed security of income, food, housing, employment, and health care.
Since 1945 education also expanded improving access and compelling
more students to stay at school.
School enrolment expanded throughout the world and at all levels
of education.
In fact by the 1960’s school enrolment doubled from what it had
been before WWII.
Since the 1800’s education has been considered an avenue for
individuals to rise through the social ranks.
It also implied the crystallization and legitimation of the
ranking and class system.
The most fundamental issue in welfare is of course food.
The distribution of food has been consistently has been a major
issue since 1945.
Right before WWII grain producing states had stocks of unsellable
surpluses that resulted from increased technology, production and the
Depression.
This problem of overproduction was most evident in the US and
Canada.
WWII brought only temporary relief to this problem of over
supply. Immediately following the war
some further solution was needed.
In the 1940’s and 1950’s because of government subsidy had
developed a huge reserve of grain.
Japan and Europe had absorbed as much grain as possible, but there was
still and over supply.
America tried to find new markets for its grain.
One practice that developed was using grain to fatten cattle and
grow chicken for consumption.
The US, by the 1950’s had become the primary source of animal feed
production.
Food was exported from the US to the newly developing countries in
the form of food aid in the Food for Peace Program and other US Aid packages.
The overall picture in the period 1945-73 was one of progress in
terms of giving people security of income, housing, food, and medical care and
education.
In the periphery though progress was mixed. Due to better medical care people were
living longer, infant mortality had been lessened leading to large growths of
population in the Third World.
Between the 1960’s and the 1970’s social spending as a proportion
of national product rose in the core countries. In part this was due to the need to keep people happy and secure
in order to avoid a social context in which communism could occur.
Between 1968 and 1973 the goal of core welfare programs was to
contain protests by the middle class and poor.
The enormous economic expansion of the A-phase had made possible
an increase in welfare expenditures.
The economic contraction of the B-phase led to fiscal crises of
the states after 1973 and a decline in state welfare subsidy.
THE SOCIAL COHESION OF THE STATES
The unprecedented economic expansion of the world economy of this
period of 1945-73 also led to a strengthening of state structure throughout the
world.
Around the world the states had emerged from the disorders of
1914-45 enormously strengthened.
And the states moved into spheres that had once been private and
not public.
These welfare state tendencies had a continous history of
development from the Factory Acts in the UK in the 1840’s, Napoleon III’s
social state, to Bismarck’s policies in Germany.
The most pronounced cause of the welfare state though was the
turbulent period of 1914-29, which included a world war and a Great Depression
where the state was forced to intervene in peoples lives like never before, or
face ruin.
THE GLOBAL PICTURE, 1945-90
There are three conclusions that one can draw from this overview.
The first is that in the period of 1945-1967/73, world economy experience tremendous
expansion is what is termed the “A” phase of a Kondratieff cycle.
The second conclusion is that the US had reached its hegemonic
peak sometime between 1967-73 and then began a relative decline in the 1970’s
and 1980s.
The third conclusion is more complicated and suggests that the
world economy had entered a “B” phase in the period of 1970-2002. This was a period of slowing growth and
economic stagnation and contraction.
The period of 1967-73 is critical due to two events. One, the OPEC oil price rise of 1973 and the
second was the trouble with US currency and going off the gold standard.
Political events also impacted this period. For example the world wide youth revolution
in 1968-73, the Tet Offensive in Vietnam, US Soviet détente, the US seeking
China as an ally in the early 1970’s, and the underming of the US Imperial
presidency due to Watergate.
The year 1945 can be taken to mark the beginning of a classical
Kondratieff A phase.
By 1945 the destruction of the Eurasian land mass was quite
extensive due to WWII
There were widespread scarcity of food, clothing, transportation
and shelter in Europe and Asia.
The US played the central role as the generator and promoter of
the worldwide economic expansion after 1945.
The 1950’s and 1960’s saw ever greater production in the world
system as a whole.
The massive expansion of world industrial production required a
massive expansion of raw materials in the peripheral, Third World countries.
Data clearly shows that there was prosperity, and increase in the
standard of living and lifetime full employment up to about 1967 to 1973
period.
After 1973 worldwide profit margins for corporations began a
steady decline.
The 1970’s and 1980’s were marked by an overall slowdown in
production, at the same time world population was booming which led to growing
inequality in the Third World.
The decline in the rates of profit in the production sector had
three important consequences.
One, it led to an urgent search for ways to reduce the cost of
production.
Two, it led to a shift of investment from production to investment
in financial sphere in order to bolster profits.
Three, it led to increased military expenditures or military
Keynsianism in both the core countries and the Third World.
The workforce in the core countries saw a continual decline in the
value of real wages after 1973.
After 1973 the downturn in the world economy was accompanied by a
serious downturn in food production in the periphery.
The resulting hunger all over the Third World led to a tremendous
rural to urban migration as people all over the world looked for higher wages
and a better standard of living in cities.
In 1945 the US was the only major industrial power to have emerged
from the war not only unscathed, but enormously strengthened in terms of
productive capacity and efficiency.
The USSR did not have anything near the productive capacity of the
US.
In the periphery the period was marked by relative prosperity and
the expansion of investment in infrastructure,
education and health.
Finally, in this period of great expansion of the world economy
under US hegemony the US did extremely well in both its economy and its social
unity.
There were few labor conflicts due to a steadily rising real wage
for workers.
And there was a significant rise in the standard of living of
skilled workers, the lower middle class who began to enjoy home and car
ownership.
But by 1967/73 US hegemony began to unravel.
The first sign of difficulty was the emergence of a new difficulty
in the early 1960’s ….the emergence of the Eurodollars.
These were US dollars that were physically located in Europe and
not subject to US financial controls.
By the end of the 1960’s this weakening of US financial leverage
was compounded by the decline of US gold supplies due to the fact that
Europeans were cashing in their dollars for gold.
In addition due to the need to fund the Vietnam war the US printed
money which led to currency devaluation and inflation throughout the 1970’s.
The ending of the Fixed rate of gold in US dollars would relieve
the pressure on the US gold supply, but it also led to the loss of US financial control over world
financial markets.
In 1973 when President Nixon proclaimed “Let Asians fight Asians”
he ad admitted the limits of direct US military intervention in the world
system.
After 1973, the US would rely on Third World allies to fight wars
for the US.
This policy was accompanied by a great export of arms to the Third
World so these countries could defend themselves if necessary.
The proliferation of weapons of mass destruction boomed in the
1980’s despite US objections.
By the 1980’s nuclear, chemical and biological weapons spread to
peripheral nations.
Meanwhile the protests of 1968 served as a protest everywhere
against US hegemony in the world system.
The protests also targeted the USSR as well.
The Gulf War crisis of 1990-91 illustrated the declining strength
of US hegemony in two ways.
First, was the fact that the crisis was deliberately provoked by
Iraq whose government resisted any attempt to forestall the conflict.
Second, it was clear that the US could win this conflict only on
two conditions.
It needed the collaboration of the UN and secondly it needed to
form a coalition of cost paying countries who would contribute to the costs of
the war.
In cultural terms the 1970’s and the 1980’s saw an assault on the
claims of scientistic science…..that science was a flawed system and even the
history of thought was flawed too.
In other words, science, the Newtonian system and the ideals of
the enlightenment no longer made sense by the late 20th century.
THE GLOBAL POSSIBILITIES, 1990-2025
There are two historical possibilities for this period.
One, the world system will continue to function as it always has
for the last 500 year though it will be necessary to constantly adjust the
system.
And two, that the world system of the last 500 years will slowly
decline leading to a period of systemic chaos.
The outcome of which would be uncertain.
There may possibly be a crash of prices that will clear the deck
of businesses and corporations that are not efficient and are unprofitable.
There may also be an acute increase in social unrest in the forms
of terrorism, crime, protests and conflict.
It is now commonplace that due to the relative decline of US
economic strength the world system has become triadic or a triad. This means there are three major areas that
comprise the world system: North
America/US (NAFTA), Japan and east Asia (APEC), and the EC.
And that none of the three will easily outdistance the other.
Still in the 21st century the US remains the largest
military power in the world as we spend more on our military than all the top ten militaries combined.
Furthermore, it is quite clear that nuclear weapons are no longer
out of reach of developing countries.
What seems very possible is that we shall enter into a vicious cycle of low investment, leading to an increased sense of exclusion, leading to social unrest, leading to these countries becoming unsafe for investment and then therefore to still further exclusion.
As terrorism and extremism occur it will all the more necessary
for core countries to mobilize mass support because of the increased
destructiveness of weapons and the
availability of arms on the world market.
As the B phase progressed between 1973 and 2025 and economies
contract in the world system there will be government cutbacks.
What this means is very simple.
For the first time in 200 years governments are seeking to cutback
everywhere on social services.
In addition not only are the middle classes in the core in peril,
but also the middle classes in the periphery.
The continuing decline in world welfare and above all diminished
expectations of the middle class constitutes a major blow to the social unity
of states.
Thus faith in the state leads to social problems as do rising, but
unmet expectations of the middle and lower classes.
As this dissolution deepens there is a need for increased police
order in the core countries themselves, in the periphery and between the core
and the periphery.
If police order declines then so too do investments and
production.
The final arena is the stability of our religious
institutions. It was once thought that
science would become the new religion, but due to the crisis existing in
science today religion has not only survived the 20th
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