Friday, November 3, 2017
"What about China?"
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Commentary No. 460, November 1, 2017
"What about China?"
Very often, when I write about the structural crisis of the modern world-system, and therefore of capitalism as an historical system, I receive objections saying that I have neglected the strength of Chinese economic growth and its ability to serve as an economic replacement for the clearly waning strength of the United States plus western Europe, the so-called North.
This is a perfectly reasonable argument, but one that misses the fundamental difficulties of the existing historical system. In addition, it paints a far rosier picture of China's realities than is justified by a closer look. Let me address this question then in two parts - one, the historical development of the world-system as a whole, and two, the empirical situation of China at the present time.
The analysis of what I call the structural crisis of the modern world-system is one that I have made many times, in these commentaries and in my other writings. It is nonetheless worth repeating in condensed form. This is all the more necessary in that even persons who say that they are very sympathetic to the concept of structural crisis nonetheless seem in practice resistant to accept the idea of a demise of capitalism, however strong the case.
There are a number of elements of the argument to put together. One is the assertion that all systems (whatever their scope and without exception) have lives and cannot be eternal. The explanation of this eventual demise of any system is that systems operate with both cyclical rhythms and secular trends.
Cyclical rhythms refer to the constant swings away from and back to moving equilibria, a perfectly normal reality. When however various phenomena expand according to their systemic rules and then contract, they do not return after contracting exactly to where they were before the upward cyclical shift. They return instead to a somewhat higher point. This is the result of resistance to the loss of gains achieved in the upward phase.
It follows that their curve over the long run is upward. This is what we mean by a secular trend. If one measures this activity on the abscissa, or y-axis of the graph, one sees that over time they approach an asymptote of 100 percent, which cannot be crossed. It seems that when important factors reach an earlier point of about 80% on the abscissa, they begin to waver erratically.
When cyclical curves arrive at this point, they cease utilizing the so-called normal means of resolving the constant strains in the functioning of the system and enter, therefore, into a structural crisis of the system.
A structural crisis is chaotic. This means that instead of the normal standard set of combinations or alliances that were previously used to maintain the stability of the system, they constantly shift these alliances in search of short-term gains. This only makes the situation worse. We notice here a paradox - the certainty of the end of the existing system and the intrinsic uncertainty of what will eventually replace it and create thereby a new system (or new systems) to stabilize realities.
During the longish period of structural crisis, we observe a bifurcation between two alternative modes of resolving the crisis - one by replacing it with a different system that somehow preserves the essential elements of the dying system and one that transforms it radically.
Concretely, in our present capitalist system, there are those who seek to found a non-capitalist system that nonetheless maintains capitalism's worst features: hierarchy, exploitation, and polarization. And there are those who wish to establish a system that is relatively democratic and egalitarian, a type of historical system that has never existed before. We are in the midst of this political battle.
Now, let us look at China's role in what is going on. In terms of the present system, China seems to be gaining much advantage. To argue that this means the continuing functioning of capitalism as a system is basically to (re)assert the invalid point that systems are eternal and that China is replacing the United States in the same way as the United States replaced Great Britain as the hegemonic power. Were this true, in another 20-30 years China (or perhaps northeast Asia) would be able to set its rules for the capitalist world-system.
But is this really happening? First of all, China's economic edge, while still greater than that of the North, has been declining significantly. And this decline may well amplify soon, as political resistance to China's attempts to control neighboring countries and entice (that is, buy) the support of faraway countries grows, which seems to be occurring.
Can China then depend on widening internal demand to maintain its global edge? There are two reasons why not. The present authorities worry that a widening middle stratum could jeopardize their political control and seek to limit it.
The second reason, more important, is that much of the internal demand is the result of reckless borrowing by regional banks, which are facing an inability to sustain their investments. If they collapse, even partially, this could end the entire economic edge of China.
In addition, there have been, and will continue to be, wild swings in geopolitical alliances. In a sense, the key zones are not in the North, but in areas such as Russia, India, Iran, Turkey, and southeastern Europe, all of them pursuing their own roles by a game of swiftly and repeatedly changing sides. The bottom line is that, though China plays a very big role in the short run, it is not as big a role as China would wish and that some in the rest of the world-system fear. It is not possible for China to stop the disintegration of the capitalist system. It can only try to secure its place in a future world-system.
by Immanuel Wallerstein