Following up on Capitalism: The Motive to Make a Profit, this week we’ll discuss World Systems Theory.which was developed by sociologist Immanuel Wallerstein in the 1970s as an alternative to the then popular modernization hypothesis, which he criticized.

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The world systems theory states that most nations are part of a worldwide interdependent economic and political system based on the unequal exchange in the division of labor and allocation of resources between core nations, semi-peripheral nations, and peripheral nations.

• Core Areas – small set of technologically advanced and industrialized capitalist nations/regions characterized by higher incomes, large tax bases, and high standards of living. In the 21st century, the developed countries that form the G-7 group, along with China can be considered the core of the world-system.
• Periphery Areas – “Poor” countries that primarily subsist by exporting primary products such as agricultural produce and natural resources to the core countries. The periphery is characterized by a small tax base, low incomes, and low levels of human development index. In the 21st century, much of sub-Saharan African, parts of Latin America and Central Asia can be considered the periphery.
• Semi-Periphery Areas – These countries act as the periphery to core countries, and as a core to the countries on the periphery. Typically, such countries are regional powers with moderate levels of development indices and growing capitalist economies.   In the 21st century, countries such as India, Brazil, Turkey, Mexico, Israel, Nigeria etc. can be considered the semi-periphery of the world-system.

India, a country in the semi-periphery of the world system is home to more than 1.4 billion people living in poverty, while at the same time having the third highest number of billionaires in the world (169), after only the US and China.

World-systems theory asks several key questions:

• How is the world system affected by changes in its components (e.g. nations, ethnic groups, social classes, etc.)?
• How does it affect its components?
• To what degree, if any, does the core need the periphery to be underdeveloped?
• What causes world systems to change?
• What system may replace capitalism?

World Systems Theory suggests that there is a world economic system in which some countries benefit while others are exploited. It can be useful in understanding world history and the core countries' motives for imperialization and other involvements like the U.S. aid following natural disasters in developing Central American countries or imposing regimes on other core states.

Wallerstein’s theory was aiming to replace modernization theory, which he criticized for three reasons:

• its focus on the nation state as the only unit of analysis
• its assumption that there is only a single path of evolutionary development for all countries
• its disregard of transnational structures that constrain local and national development.

The theory is criticized for relying too heavily on economic causes of underdevelopment while ignoring others such as culture, religion, tradition, etc.

World Systems Theory can be applied to a number of fields including gender studies, ethnic and racial discrimination studies, political geography, as well as international relations.

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