Business as Usual: The Roots of the Global Financial Meltdown

Chapter 2: Dynamics of (Unresolved) Global Crisis

Dynamics of (Unresolved) Global Crisis 69 Since about 2007, politicians, pundits, and economists have all been talking about a global crisis, with considerable disagreement about the nature of this crisis and the measures that should be taken to resolve it. Memories are short, but actually, there was a quite similar discussion in the 1970s. In 1982, I published a book, jointly with Samir Amin, Giovanni Arrighi, and Andre Gunder Frank, entitled Dynamics of Global Crisis. This was not its original title. We had proposed the title Crisis, What Crisis? The US publisher did not like that title, but we used it in the French translation. The book consisted of a joint introduction and conclusion and a separate essay by each of us on the topic. We opened the book with our observation that “throughout the 1970s, ‘crisis’ had become an increasingly familiar theme: first in obscure discussions among intellectuals, then in the popular press, and finally in political debates in many countries.”1 We noted that there were many different definitions of the so-called crisis as well as different explanations of its origin. What seemed to be central in most analyses was that there had been two significant increases in the world price of oil—in 1973 and in 1979—each triggered by a decision of the Organization of the Petroleum Exporting Countries (OPEC). There were hysterical fears among some people in the United States that Libya could “buy” up the country’s major property. Chapter 2 Dynamics of (Unresolved) Global Crisis Immanuel Wallerstein 70 Wallerstein By the 1980s, the term crisis seemed to disappear from world discourse , to be replaced by another buzz word, one with a much more optimistic gloss—globalization. The origins of globalization were a matter of much debate, as was how recently it had begun. It was generally presented as something very new, transformatory, and inevitable. In the famous words of then prime minister Margaret Thatcher of Great Britain, people had no choice, or TINA—there is no alternative. Globalization was generally presented not only as inevitable but as something that promised wonderful benefits for everyone, at least in some middle run. It was only beginning in 2008 that the tone turned dour again, and the word crisis resurfaced, this time more sharply than in the 1970s, but just as loosely. So the question “Crisis, what crisis?” seems again very relevant. In my view, globalization (if it is defined as relatively open frontiers and relatively free flows of commodities and capital) is nothing new but rather is a cyclical phenomenon within a wider historical system that I think of as the modern world-system, one that is a capitalist worldeconomy . In my view, this world-system has existed since the sixteenth century, first in only part of the world but eventually expanding to encompass the entire globe. It is within this world-system that entrepreneurs operate and states juggle to strengthen their relative positions. Something did indeed happen to this world-system in the late 1960s–early 1970s, but not what the proponents of the concept of globalization suggested. Rather, it was both the moment of normal cyclical shifts in the functioning of the world-system and also the moment of the beginning of its structural crisis as a system. These are two different things, and if we are to understand what has been occurring, we must spell out the details of each. I start by analyzing what I think of as normal cyclical shifts and then turn to what I think of as the structural crisis of the system. The “Normal” Cyclical Downturns There have been two extremely important cyclical phenomena during the whole history of the modern world system. One has to do with the long waves of global expansion and global stagnation of the world economy. Dynamics of (Unresolved) Global Crisis 71 We sometimes call them Kondratieff waves, after the work of a Russian economist who wrote about them, although he was not the first. The other has to do with the rise and decline of what are called hegemonic powers of the world system—that is, those countries that are able, at least for a relatively short period, to lay down and enforce the basic operating rules of the interstate system. The period 1967–73 was the moment when both the hegemonic cycle and the overall economic cycle each began its downturn.The period 1945 to circa 1970...