Re: Thirwall's Law and Z system (fwd)

Thu, 6 Feb 1997 08:03:29 -0500 (EST)
A. Gunder Frank (

This is interesting and ...
but it seems to me that the objective should be not to try to combine
views or theorires or models per se, but to analyze/make policy for
THE REAL WORLD, using any combination of any and all
theoretical/anaytical tools we got or can fashion.

To that end, my personal inclination is to learn by doing.
gunder frank
On Thu, 6 Feb 1997, Bruce R. McFarling wrote:

> Date: Thu, 06 Feb 1997 15:47:29 +1100
> From: "Bruce R. McFarling" <>
> Subject: Re: Thirwall's Law and Z system (fwd)
> And now a skeptical rejoinder.
> Virtually,
> Bruce R. McFarling, Newcastle, NSW
> ____________________________________________________
> Date: Tue, 04 Feb 1997 10:36:58 -0500 (EST)
> From: "Gregoire de Nowell (ci-devant)" <>
> To:
> Subject: Kohlerian world synthesis
> Message-ID: <>
> I think it is very *interesting* to try to synthesize the
> two views (Keynes and World systems)but it is not really
> possible to do so.
> The preconditions for Wallerstein's world system is
> 1) a multinational state system
> 2) a non-incorporated non-capitalist periphery
> The multinational state system allows capital to threaten
> to remove itself elsewhere. This is used to coerce the state
> (where it is not a willing accomplice) into anti-labor
> policies which increase the possibilities for surplus
> extraction.
> The reason the threat of abandonmnet "works" is that
> conditions are objectively worse in other countries--in
> particular, in those countries where pre- or non-capitalist
> peasant production provides a labor force that works for
> wages BELOW the minimum necessary to survive. This labor
> force can do this because it draws in part upon the
> resrouces of the non-incorporated sector (i.e. working
> a plot of land, Mom and the kids produce enough food
> for survival; Dad's (or, vice versa, Mom's) scant
> wages provide money income to puchase goods made in
> the market--bare necessities.
> In the absence of the periphery, and the threat of
> capital disinvestment, Wallerstein posits that an alliance
> of state and labor would increase its rate of extraction
> of surplus from capital. At which point the "system"
> would not longer be possible (i.e. private ownership).
> Wallerstein thus "solves" the problem of "why no revolution/
> socialism" in the 19th century by positing a dynamic state/
> economic system which can, at least for a time, function
> by differentiating labor on a global scale and partially
> (not fully) contain upward pushes on wages in the "core".
> In this way the "system" maintains itself in a state
> of dynamic disequilibrium and enters an accumulation crisis
> whenever the push to expansion slows down.
> By contrast, the Keynesian system is based on the
> interconntions gbetween the marginal propensity to consume
> and the income effects that follow from investment/non-investment.
> So long as state action can be used to balance deficiencies
> in demand, there is no crisis. We can posit an "expansive"
> or "imperialist" tendency as a result of the need to maintain
> employment in the capital goods sector (especially) but also
> in the consumer sector. Nonetheless this is not *necessary*
> to the Keynesian model. In fact, Keynes originally
> articulated a "closed system." This would be *impossible*
> under the Wallerstein assumptions (& he is, along with
> Arrighi, in my belief the best of the crowd; though the
> school as a whole is interesting). In Keynesian terms
> "the rate of extraction of surplus" is not a problem as
> such; everyone is assumed to be trying to sell something
> for a profit. The accumulation problem arises when
> aggregate income falls, and it is certainly implicit--
> and even explicit--in the Keynesian model that a rise
> in income of people at the *bottom* of society, those with
> the highest marginal propensity to consume--would have
> *beneficial* effects--their MPC being the highest, their
> rise in income would have the greatest boost effects on
> aggregate demand, which would spur investment, which is
> the salvation of "capital." By contrast, Wallerstein's
> system is in *crisis* so soon as wages begin to rise
> at the bottom of the world economy. It threatens the
> surplus which is the sine qua non of privately directed
> investment.
> So ytou can't reconcile the two systems by throwing in
> a world aggregate demand function. They have diametrically
> opposed underlying assumptions. Abouyt the best I can dop
> for you is to point out that *both* analytic approaches
> can be used to support an improvement in the condition of
> the poor. But under Wallersteinian assumptions improvement
> s on a purely local scale (various nations or parts thereof)
> does not change the system. It merely shifts the accumulation
> of surplus from one country to another.
> About the only other way to reconcile the two approaches is
> to say that Keynsian aggregate demand approaches are
> "the politics of capitalism" (I should say the
> *progressive* politics of capitalism) which has explanatory
> power in the short and maybe medium term while the world
> system functions best in the long-term (as an explanation
> of systemn dynamics). To use a medical analogy: Keynesianism
> is about broken legs and cuts and wounds. Systems theory is
> about ageing. The level of approach is relevant. If you
> go to the ER with a broken leg you don'twwant a lecture
> about your cholesterol levels and heart attack risk thirty
> years hence. And it is not at all clear that the
> micro-cellular processes behind ageing have anything to do
> with your broken leg.
> And you would probably never go to a research cell biologist
> on ageing and ask for a prognostication on your recovery
> time from an accident. Nor would you ask such a person
> about your chances of performing well in the Olympics. And
> that is also why MWS people are the wrong ones to ask about
> your stock portfolio. To the extent that they offer opinions,
> they are outside their domain of expertise, and any truth
> content is purely coincidental.
> So to conclude the "Z" variable doesn't work. It is much
> better to approach both Keynesianism and MWS as alternative
> interpretive constructs and let it go at that. Current
> conditions are so brutally regressive (in the United States
> and elsewhere) that it is sufficient for today's purposes
> to be what engineers call "directionally correct" (favor
> wage protection, social security, human rights, etc.) without
> having to choose the "right" or "wrong" mega-construct which
> is, in any case, and only in the best of circumstances, a
> partially accurate way of trying to understand an infinitely
> complex system.
> greg nowell
> wallerstein
> modern world system
> keynesianism
> prediction