Does Capitalism Have a Future?

Ways of reestablishing social order in the midst of extreme conflict might include those reminiscent of fascism, but also the possibility of a much broader democracy.

Does Capitalism Have a Future?

By Immanuel Wallerstein, Randall Collins, Michael Mann, Georgi Derluguian and Craig Calhoun.

Coming decades will deliver surprising shocks and huge challenges. Some of them will look new and some quite old. Many will bring unprecedented political dilemmas and difficult choices. This may well begin to happen soon and will certainly shape the adult lives of those who are young at present.

But that, we contend, is not necessarily or only bad. Opportunities to do things differently from past generations will also be arising in the decades ahead. In this book we explore and debate, on the basis of our sociological knowledge of world history, what those challenges and opportunities will most likely be. At bottom, most troubling is that with the end of the Cold War almost three decades ago it has become unfashionabIe, even embarrassing, to discuss possible world futures and especially the prospects of capitalism.

Our quintet gathered to write this unusual book because something big looms on the horizon: a structural crisis much bigger than the recent Great Recession, which might in retrospect seem only a prologue to a period of deeper troubles and transformations.

Immanuel Wallerstein explains the rationale for predicting the breakdown of the capitalist system. Over the next three or four decades capitalists of the world, overcrowding the global markets and hard pressed on all sides by the social and ecological costs of doing business, may find it simply impossible to make their usual investment decisions. In the last five centuries capitalism has been the cosmopolitan and explicitly hierarchical world-market economy where the elite operators, favorably located at its geographical core, were in a position to reap large and reasonably secure profits. But, Wallerstein argues, this historical situation, however dynamic, will ultimately reach its systemic limitations, as do all historical systems. In this hypothesis, capitalism would end in the frustration of capitalists themselves.

Randall Collins focuses on a more specific mechanism challenging the future of capitalism: the political and social repercussions of as many as two-thirds of the educated middle classes, both in the West and globally, becoming structurally unemployed because their jobs are displaced by new information technology. Economic commentators recently discovered the downsizing of the middle class, but they tend to leave the matter with a vague call for policy solutions. Collins systematically considers the five escapes that in the past have saved capitalism from the social costs of its drive for technological innovation. None of the known escapes appears strong enough to compensate for the technological displacement of service and administrative jobs.

Nineteenth and twentieth century capitalism mechanized manual labor but compensated with the growth of middle class positions. Now the twenty-first century trajectory of high-tech is to push the middle class into redundancy. This leads us to another hypothesis: Might capitalism end because it loses its political and social cushion of the middle class?

Craig Calhoun argues to the contrary that a reformed capitalism might be saved. Calhoun elaborates on the point, recognized by all of us, that capitalism is not merely a market economy, but a political economy. Its institutional framework is shaped by political choice. Structural contradictions may be inherent in the operation of complex markets but it is in the realms of politics that they may be remedied, or left to go unchecked to destruction.

Put differently:

Either a sufficiently enlightened faction of capitalists will face their systemic costs and responsibilities, or they will continue to behave as careless free riders, which they have been able to do since the waning of liberal/left challenges a generation ago. Just how radical will be the shift from contemporary capitalism to a revamped future system is an open question.

A centralized socialist economy is one possibility, but Chinese style state capitalism may be even more likely. Markets can exist in the future even while specifically capitalist modes of property and finance have declined. Capitalism may survive but lose some of its ability to drive global economic integration.

Michael Mann favors a social democratic solution for the problems of capitalism, but he also highlights even deeper problems that arise from the multicausal sources of power. Besides capitalism, these include politics, military geopolitics, ideology, and the multiplicity of world regions. Such complexity, in Mann’s view, renders the future of capitalism unpredictable. The overriding threat, which is entirely predictable, is the ecological crisis that will grow throughout the twenty-first century.

This could likely spill over into struggles over water and food, and result in pollution and massive population migrations, thus raising the prospect of totalitarian reactions and even warfare using nuclear weapons. Mann connects this to the central concern of this book: the future of capitalism. In Mann’s analysis, the crisis of climate change is so hard to stop because it derives from all of today’s dominant institutions gone global, capitalism as unbridled pursuit of profit, autonomous nation-states insisting on their sovereignty, and individual consumer rights legitimating both modern states and markets. Solving the ecological crisis thus will have to involve a major change in the institutional conditions of today’s life.

All these are structural projections akin to “stress tests” in civil engineering or, as we have all now heard, in banking. None of us bases our prognoses of capitalism in terms of condemnation or praise. We have our own moral and political convictions. But as historical sociologists, we recognize that the fortunes of human societies, at least in the last ten thousand years beyond the elementary level of hunter-gatherer bands, have not turned on how much good or evil they produced. Our debate is not whether capitalism is better or worse than any hitherto existing society. The question is: Does it have a future?

This question echoes an old prediction. The expectation of capitalism’s collapse was central to the official ideology of the Soviet Union that itself collapsed. Yet does this fact ensure the prospects of capitalism? Georgi Derluguian shows the actual place of the Soviet experiment in the larger picture of world geopolitics, which in the end caused its self-destruction. He also explains how China avoided the collapse of communism while becoming the latest miracle of capitalist growth. Communism was not a viable alternative to capitalism. Yet the way in which the Soviet bloc suddenly ended after 1989 in broad mobilizations from below and blinding panic among the elites may suggest something important about the political future of capitalism.

Doomsday scenarios are not what this book is about. Unlike business and security experts projecting short-run futures by changing the variables in existing set-ups, we consider specific scenarios futile. Events are too contingent and unpredictable because they turn on multiple human wills and shifting circumstances. Only the deeper structural dynamics are roughly calculable. Two of us, the same Collins and Wallerstein who now see no escape for capitalism, already in the 1970s predicted the end of Soviet communism. But nobody could predict either the date or the fact that it would be the former members of the Central Committee irrationally tearing apart their erstwhile industrial and superpower positions. This outcome was unpredictable because it did not have to happen that way.

We find hope against doom exactly in the degree to which our future is politically underdetermined. Systemic crisis loosens and shatters the structural constraints that are themselves the inheritance of past dilemmas and the institutional decisions of prior generations. Business as usual becomes untenable and divergent pathways emerge at such historical junctures. Capitalism, along with its creative destruction of older technologies and forms of production, has also been a source of inequality and environmental degradation.

Deep capitalist crisis may be an opportunity to reorganize the planetary affairs of humanity in a way that promotes more social justice and a more livable planet.

Our big contention is that historical systems can have more or less destructive ways of going extinct while morphing into something else. The history of human societies has passed through bursts of revolution, moments of expansive development, and painfully long periods of stagnation or even involution. However unwanted by anybody, the latter remains among the possible outcomes of global crisis in the future. The political and economic structures of present-day capitalism could simply lose their dynamism in the face of rising costs and social pressures. Structurally, this could lead to the world’s fragmentation into defensive, internally oppressive, and xenophobic blocs.

Some might see it as the clash of civilizations, others as the realization of an Orwellian “1984” anti-utopia enforced by the newest technologies of electronic surveillance.

Ways of reestablishing social order in the midst of extreme conflict might include those reminiscent of fascism, but also the possibility of a much broader democracy. It is what we wanted to stress above all in this book.

In recent decades the prevalent opinion in politics and mainstream social sciences has been that no major structural change is even worth thinking about. Neoclassical economics bases its models on the assumption of a fundamentally unchanging social universe. When crises happen, policy adjustments and technological innovation always bring renewals of capitalism. This is, however, only an empirical generalization. Capitalism’s existence as a system for 500 years does not prove that it will last forever. The cultural-philosophical critics of various postmodernist persuasions who emerged as a countermovement in the 1980s, when the utopian hopes of 1968 had receded into frustration and Soviet communism was visibly in crisis, came to share the same assumption of capitalism’s permanence, although not without a big dose of existential despair. Consequently, the cultural postmodernists left themselves with a dislocation of the will to look structural realities in the face. We will return in our concluding chapter to a more detailed discussion of the present world situation, including its intellectual climate.

We have deliberately written this book in a more accessible style because we intended to open our arguments to wider discussion. The elaboration of our arguments, with all the footnotes, can be found in the monographs that we have written individually. The area where we have done much of our professional research is usually called worldsystems analysis or macrohistorical sociology. Macrohistorical sociologists study the origins of capitalism and modern society, as well as the dynamics of ancient empires and civilizations. Seeing social patterns in the longer run, they find that human history moves through multiple contradictions and conflicts, crystallizing over long periods in impermanent configurations of intersecting structures. This is where we had sufficient agreement to author collectively the first and the last chapters bracketing this book. But we also have our particular theories and areas of expertise, and the resulting opinions are reflected in the individual chapters. This short book is not a manifesto sung in one voice. It is a debate of equals arguing on the basis of our knowledge about the past and present of human societies. It is therefore an invitation to ask seriously and openly what could be the next big turn in world history.

In the end, are we prophesying some kind of socialism? The reasoned answer, rather than a futile polemic deriving from ideological faith, must have two parts. First, it is not prophecy because we insist on abiding by the rules of scientific analysis. Here this means showing with reasonable exactness why things may change and how we get from one historical situation to another. Will the end destination be socialism? Our lines of reasoning extend into the middle-range future of the next several decades.

Randall Collins asks: what could possibly avert the looming destitution of middle classes whose roles in for-profit market organization become technologically redundant? It could take the form of a socialist reorganization of production and distribution, that is, a political economy in a conscious and collectively coordinated manner designed to make the majority of people relevant.

It is thus the structural extension of the problems of advanced capitalism that render socialism the most likely candidate for replacing capitalism.

But the lessons of 20th century experience with communist and social democratic states are not forgotten. Socialism had its own problems, mainly from an organizational hypercentralization that provided ample opportunities for political despotism, and the loss of economic dynamism over time. Even if the crisis of capitalism is solved along socialist lines, the problems of socialism will come back into the center of attention. Venturing even further into the long-term future, Collins suggests that socialism itself will not last forever, and the world will oscillate between various forms of capitalism and socialism as each founders on its own shortcomings.

In differently optimistic projections, Craig Calhoun and Michael Mann see the possibility of an alliance of national states uniting in the face of ecological and nuclear disasters. This, they argue, can ensure the continued vitality of capitalism in a more benign social democratic version of globalization. Whatever might come after capitalism, Georgi Derluguian argues that it would never resemble the communist pattern.

Fortunately, the historical conditions for the Sovietstyle “fortress socialism” are gone, along with the geopolitical and ideological confrontations of the last century. Immanuel Wallerstein, however, considers it intrinsically impossible to tell what might be replacing capitalism. The alternatives are either a noncapitalist system that would nonetheless continue the hierarchical and polarizing features of capitalism, or a relatively democratic and a relatively egalitarian system. Possibly several world-systems will emerge from the transition. Calhoun also argues that more loosely coupled systems may develop to deal with disruptions from external threats as well as the internal risks of capitalism. This runs against the widely shared assumption that the world has become irreversibly global. Yet, once again, what theory supports this ideological contention?

The twentieth century thinkers and political leaders of all persuasions proved to be wrong in their ideological conviction that there was a single road to the future, as passionate advocates of capitalism, communism, and fascism argued and attempted to impose. None of us subscribes to the utopian view that human will can make anything possible. Yet it is demonstrable that our societies can be put together in a certain variety of ways. The result significantly depends on the political visions and wills that prevail in the wake of major crises that produce history’s founding moments. Such moments in the past often meant political collapses and revolutions. All five of us, however, strongly doubt that the past revolutions occurring within separate states and often with considerable violence anticipate the future politics of capitalist crisis at the global level. This realization gives us hope that things can be done better in the future.

Capitalism is not a physical location like royal palace or financial district to be seized by a revolutionary crowd or confronted through an idealistic demonstration. Nor is it merely a set of “sound” policies to be adopted and corrected, as prescribed in the business editorials. it is an old ideological illusion of many liberals and Marxists that capitalism simply equals wage labor in a market economy. Such was the basic belief of the twentieth century, on all sides. We are now dealing with its damaging consequences.

Markets and wage labor had existed long before capitalism, and social coordination through markets will almost surely outlive capitalism.

Capitalism, we contend, is only a particular historical configuration of markets and state structures where private economic gain by almost any means is the paramount goal and measure of success. A different and more satisfying organization of markets and human society may yet become possible.

Grounds for this claim are in this book and our many prior writings. But for the moment, let us offer a short historical fable. Humans have dreamt about flying since ancient times, at least as long as they dreamt about social justice. For several millennia this was fantasy. Then arrived the age of hot air balloons and dirigibles. For about a century people experimented with these devices. The results, as we know, were mixed or downright disastrous. But now there existed engineers, scientists, and the social structure which supported and stimulated their inventiveness. The breakthrough eventually arrived with new kinds of engines and aluminum wings. We can all fly now. The majority are usually stuck in the cramped budget seats, while only the daring can experience the exhilaration of autonomous flight piloting small airplanes or paragliders. Human flight also brought the horrors of aerial bombardment and hovering drones. Technology proposes but humans dispose.

Old dreams may come true although this can also impose on us difficult new choices. Yet optimism is a necessary historical condition for mobilizing emotional energies in a world facing the choice of structurally divergent opportunities. Breakthroughs become possible when enough support and public attention go into thinking and arguing about alternative designs.

Chapter 1


My analysis is based on two premises: The first is that capitalism is a system, and that all systems have lives; they are never eternal. The second is that to say that capitalism is a system is to say that it has operated by a specific set of rules during what I believe to be its approximately 500 years of existence, and I shall try to state these rules briefly.

Systems have lives. llya Prigogine expressed this succinctly: “We have an age, our civilization has an age, our universe has an age…. ” This means, it seems to me, that all systems from the infinitesimally small to the largest that we know (the universe), including the mid-size historical social systems, should be analyzed as consisting of three qualitatively different moments: the moment of coming into existence; their functioning during their “normal” life (the longest moment); the moment of going out of existence (the structural crisis). In this analysis of the existing situation of the modern world-system, the explanation of its coming into existence is not our subject. But the two other moments of life, the rules of capitalism’s functioning during “normal” life, and the modality of its going out of existence, are the central issues before us.

What we are arguing is that, once we have understood what the rules have been that have allowed the modern world-system to operate as a capitalist system, we will understand why it is currently in the terminal stage of structural crisis. We can then suggest how this terminal stage has been operating and is likely to continue to operate for the next 20-40 years.

What are the identifying characteristics, the sine qua non, of capitalism as a system, the modern world-system? Many analysts focus on a single institution that they consider crucial: There is wage labor. Or there is production for exchange and/or for profit. Or there is a class struggle between entrepreneurs/capitalists/bourgeoisie and wageworkers/propertyless proletarians. Or there is a “free” market. None of these definitions of defining characteristics holds much water in my opinion.

The reasons are simple. There has been some wage labor across the world for thousands of years, not only in the modern world. Furthermore, there exists much labor that is not wage labor in the modern world-system.

There has been some production for profit across the world for thousands of years. But it has never before been the dominant reality of some historical system. The “free market” is indeed a mantra of the modern world-system, but the markets in the modern world-system have never been free of government regulation or political considerations, nor could they have been.

There is indeed a class struggle in the modern world-system, but the bourgeois proletarian description of the contending classes is far too narrowly framed.

In my view, for a historical system to be considered a capitalist system, the dominant or deciding characteristic must be the persistent search for the endless accumulation of capital, the accumulation of capital in order to accumulate more capital. And for this characteristic to prevail, there must be mechanisms that penalize any actors who seek to operate on the basis of other values or other objectives, such that these nonconforming actors are sooner or later eliminated from the scene, or at least severely hampered in their ability to accumulate significant amounts of capital. All the many institutions of the modern world-system operate to promote, or at least are constrained by the pressure to promote, the endless accumulation of capital.

The priority of accumulating capital in order to accumulate still more capital seems to me a thoroughly irrational objective. To say that it is irrational, in my appreciation of material or substantive rationality is not to say that it cannot work in the sense of being able to sustain a historical system, at least for a considerable length of time (Weber’s formal rationality). The modern world-system has lasted some 500 years, and in terms of its guiding principle of the endless accumulation of capital it has been extremely successful. However, as we shall argue, the period of its ability to continue to operate on this basis has now come to an end.


How has capitalism worked in practice? All systems fluctuate. That is, the machinery of the system constantly deviates from its point of equilibrium. The example of this with which most people are very familiar is the physiology of the human body. We breathe in and then out. We need to breathe in and out. But there are mechanisms within the human body, and within the modern world-system, to bring the operation of the system back to equilibrium, a moving equilibrium to be sure, but an equilibrium. What we think of as the moment of the “normal” operation of a system is the period during which the pressure to return to equilibrium is greater than any pressure to move away from equilibrium.

There are many such mechanisms in the modern world-system. The two most important, most important in the sense that they are most determinant of the historical development of the system, are what I shall call Kondratieff cycles and hegemonic cycles. Here is how each operates.

First, the Kondratieff cycles:

In order to accumulate significant amounts of capital, producers require a quasi-monopoly. Only if they have a quasi-monopoly can they sell their products at prices far above the costs of production. In truly competitive systems with a fully free flow of the factors of production, any intelligent buyer can find sellers who will sell the products for the profit of a penny, or even below the cost of production. There can be no real profit in a perfectly competitive system. Real profit requires limits on the free market, that is, a quasi-monopoly.

However, quasi-monopolies can only be established under two conditions: (1) The product is an innovation for which there exists (or can be induced to exist) a reasonably large number of willing buyers; and (2) One or more powerful states are willing to use state power to prevent (or at least limit) the entry of other producers into the market. In short, quasi-monopolies can only exist if the market is not “free” from state involvement.



Does Capitalism Have a Future?

by Immanuel Wallerstein, Randall Collins, Michael Mann, Georgi Derluguian and Craig Calhoun

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