Dynamic Systems Theory Research Paper

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I. Introduction

II. Multiple Approaches

A. Historical, Political Economic Systems Theory

B. World Systems Theory

C. Actor-Oriented, Dynamic Systems Theories

III. Summing Up

IV. Capitalist Systems: Toward a New Synthesis

A. Defining Cultural and Structural Properties

B. Core Mechanisms and the Logic of Capitalist Functioning

C. The Future of Globalizing Capitalism

V. Conclusion


In sociology, there is no single systems theory. There are several theories, some diverging substantially from one another, for instance, in the degree to which human agency, creativity, and entrepreneurship are assumed to play a role in system formation and re-formation; the extent to which conflict and struggle are taken into account; the extent to which power and stratification are part and parcel of the theory; and the extent to which structural change and transformation—and more generally, historical developments—are taken into account and explained. What the various systems theories have in common is a concern with the complex and varied interconnectedness and interdependencies of social life. Multiple structures, their interrelationships, and their historical development hold center stage. Systems are also more than the sum of their parts. Attention is focused on the different parts and levels of a system and their interrelationships, for instance, between institutions, collective and individual agents, and interaction processes in multilevel complexes.

This research paper provides a brief overview and assessment of those sociological systems theories that focus on the dynamics and transformation of social systems with particular attention to capitalist systems. Drawing on these systems approaches, it provides a synthesis of theorizing about capitalism and points for future research. The paper also suggests the value and place in sociological theory of dynamic systems theories.

Multiple Approaches

Three established dynamic system theoretic approaches can be identified that develop a socioeconomic approach to analyzing capitalist systems and their evolution: the Marxian systems approach, the world systems approach, and the actor-oriented dynamic systems approach (inspired by Walter Buckley’s work but also incorporating Marxian and Weberian elements). These three systems approaches are methodologically holistic (Gindoff and Ritzer 1994) but with varying degrees of attention to human agency and microprocesses.

Historical, Political Economic Systems Theory

The historical approach of Marx ([1867] 1967, 1973a, 1973b; see Mandel 1993) and van Parijs (1993), among others, conceives of all societies as evolving in a series of stages. Each stage is characterized by a particular structure, a certain mode of production, as well as other structures, the “superstructure” of politics, ideology, and culture derived from and dependent on the economic base or structure of production. Human beings generate these structures through their own actions but not always under the conditions of their own choosing or in the ways they intend. Marx and Marxists focused their theoretical and empirical research on capitalist systems and their emergence and transformation.

Because of contradictions between structures— between, for instance, the “forces of production” (among other things, new knowledge, techniques, and scientific developments that contribute to generating such forces) and the “relations of production” (e.g., the private ownership of the means of production or systems of management and control)—the capitalist system undergoes crises, leading eventually to transformation. Also, modern capitalism accomplishes the production of larger and larger quantities of goods, but such effective abundance is threatened by insufficient demand from consumers (wage earners). Producers are faced with declining profits, some or many going bankrupt. This leads to consolidation and sets the stage for future, often more encompassing, crises.

According to Marx, advances in technology and knowledge, increasing the size of production units, contribute to changes in the mode of production and hence redistribute power among classes over time. And the changing power distributions cause changes in political and cultural institutions—that is, the superstructure. Those with growing power under emerging conditions increase their influence over institutional conditions.

Systems of Production: An Expansive Production System

Capitalists pursue profits. Profits gained are reinvested, expanding productive facilities, productive output, and profits. In other words, this is a system that generates profits and leads to economic expansion. And in the Marxist scheme, profitability and expansion are based on the exploitation of workers.

Social Reproduction

Material goods essential for continued production are reproduced. The production processes also reproduce class relations, capitalists, and workers. And these social groups through their structured interactions and productive activities also reproduce the economy. The dominant social class maintains and reproduces the state as its instrument, which upholds the property system, contracts, and banks, among other major institutions. That is, the state contributes to the maintenance and reproduction of the capitalist system with its structures of class domination, distribution of gains (surplus value) unequally between capitalists and workers, and the accumulation of capital.

The expansion of productive capacity is accompanied by the replacement of workers by labor-saving technologies. This combined with the reduction of wages to an absolute minimum (that is, a level of subsistence) would, in the Marxian conception, reduce demand for production. A crisis of overproduction would result. Such a crisis drives some capitalists into bankruptcy. There is consolidation— a tendency to oligopoly and monopoly, a development that occurred over and over again, particularly for many manufacturing sectors as well as for banking and some commercial sectors. According to Marx, crises would deepen and eventually lead to a revolution, whereby capitalism would be replaced by socialism.

The critique of Marxist theory has been diverse, sustained, and of varying quality (Collins 1988). The theory (or family of theories) has been relatively weak and inconsistent in conceptualizing and taking into account human agency as well as fully developing relevant theories of institutions and cultural formations. There was a persistent failure, even among many of those who made use of Marxian theorizing much later (for instance, after World War II), to overlook or neglect the role of the state and democratization in regulating and stabilizing capitalism—for instance, in addressing overproduction, unemployment, and other recurrent problems of capitalism. Also, the development of systematic and practical economic knowledge facilitated regulation of the economy and dealing with some of its (many) instabilities and failures (see later). Marx’s prediction of the demise and eventual overthrow of capitalism has definitely not been realized, even partly, thus far. Many capitalist systems proved themselves robust, particularly in countries that developed democracy, and state agencies were willing and able to regulate and stabilize capitalist development.

In spite of its limitations, Marxist theorizing continues to inspire and develop. For instance, (1) there has emerged within neo-Marxist research a more complex view of politics and the state as agent (with greater autonomy and readiness to pursue its own interests, which might diverge from those of the capitalists [Burawoy and Skocpol 1982; Burawoy and Wright 2001; O’Connor 1973; Poulantzas 1978; Przeworski 1985; Wright, Levine, and Sober 1992, among others] playing a key role in the regulation and stabilization of capitalism; (2) greater attention has been paid to human agency, individual and collective, especially the variety of different agents and (3) to ideational and cultural factors and the production of knowledge and normative orders (Anderson 1976; Burawoy and Skocpol 1982; Lockwood 1964; van Parijs 1993; Wright et al. 1992); and (4) world systems theory (WST) places the evolution of capitalist systems in a global and comparative perspective, addressing matters of imperialism and economic dependency among nations (see below). In sum, recent developments in neo-Marxist theorizing (which rejects simplistic materialism) have overcome some of the earlier deficiencies. It continues to have much to contribute to sociology and the other social sciences in spite of the general demise of interest and engagement in Marxian theorizing.

World Systems Theory

Drawing selectively on Marxist theory, WST (Bergesen 1983; Chase-Dunn 1997; Chase-Dunn and Grimes 1995; Chase-Dunn and Hall 1993; Hopkins and Wallerstein 1982; Wallerstein 1974, 2004) has focused on dependency among nations and imperialism and put the evolution of capitalist systems in a global and comparative perspective. It shared the Marxian historical perspective paying close attention to economics but shifted the focus from a single state to a global world economic system linked by economic trade. However, greater attention was paid to market and trade expansion than to modes of production.

Concretely, the theory conceptualizes the ways in which competing states are linked together into a global system in the context of an interlinked economic (trading) system and the way they have an impact on one another, engage in unequal exchange, and are differentiated as core (rich, developed, and powerful) and periphery (poor, underdeveloped, and relatively weak). The former dominates the latter, yet the functioning of each part affects the other’s internal structure. Wealth and other gains take place in the core; peripheral areas are systematically underdeveloped. Core states compete and may engage in wars that are economically motivated. This leads to rising military and governmental expenditures, which in turn generates taxation pressures and, ultimately, domestic resistance; however, booty and resources gained through conquest might bring in sufficient resources and reinforce capabilities to pacify domestic populations and establish stabilizing institutional arrangements (Collins 1988:96).

Core economies have military power because they have the greater material resources. Their labor is free and well paid. There is high demand as well as intensive consumption. The core is characterized by substantial profitability, high wage levels, and high-skill economies producing diverse and advanced goods and services. In the core, profitability is achieved without brutal exploitation of labor. The periphery is characterized by low profitability, low wages, and the production of less advanced goods and services. Labor tends to be more extremely exploited.

From around 1450, the world empire model (as found, e.g., in the Chinese, Ottoman, or Spanish empires) was replaced by the world economy model (these are ideal types) (Collins 1988). The latter system corresponds to global or world capitalism. It is a historically established system defined by the priority of an endless accumulation of capital. Systems of exchange based on center-periphery differentiation in the global trading system result in unequal exchange (differential gains of surplus value). There is oligopolistic production (with high profits, high wages, multiple benefits, and positive developments) in the center as opposed to competitive production (low profits, low wages, negative developments) in the periphery— therefore, expansion in the center, stagnation and blockage in the periphery. In a word, center-periphery is relational.

1. WST is a functionalist theory that assumes but fails to prove that capitalism is largely dysfunctional. Developed countries (DCs) and less-developed countries (LDCs) are viewed as homogeneous classes of the same world system, whereas there are major differences among DCs and among LDCs in that they have different sociocultural and political contexts and their socioeconomic development logics and functional potentialities differ (see later).

2. Like Marxism, WST has been relatively weak and inconsistent in conceptualizing and taking into account human agency as well as theorizing and developing relevant institutional and cultural theories. In the “longue duree,” there is relatively little agency according to Wallerstein (2004). As opposed to the “industrial proletariat” or “political man” or “rational actor,” WST “lacks a central actor” (p. 21). For WST, actors are “not primordial atomic elements, but part of a systemic mix out of which they emerged and upon which they act . . . their freedom is constrained by their biographics and the social prisons of which they are a part” (p. 21).

3. There is a neglect of social relationships associated with modes of production and technological developments and an overemphasis on unequal exchange and circulation.

4. Mechanisms of exploitation are not clear, and conclusions about such matters appear ad hoc and arbitrary. The criticism of Chirot and Hall (1982) still applies:

World-system theory’s transposition of Marx to an international plane has been accompanied by an assertation that, on the whole, economically peripheralized people are being continuously immiserized. That is why a world revolution against the “bourgeois” is expected. Wallerstein believes that capitalist economic growth is a zero-sum game. Countries that develop do so at the expense of others that lose. Since only a few grow, most decline. The widening gap in per capita GNP between rich and poor countries, then, is not an anomaly but a natural result of capitalist growth. Only socialism can change this. (P. 100)

5. There is an all too general (and relatively untheorized) treatment of cultural formations and institutions. In due course, there has been increasing attention to ideological and cultural factors—in contrast to WST’s early development, which was largely “materialistic.” The most recent formulation of WST, WST-II (Wallerstein 2004), concerns itself with the production and consumption of culture—for instance, knowledge production, science production, production of norms and cultural artifacts, policy processes, ethics and morality.

Actor-Oriented, Dynamic Systems Theories

Some of these theories are Buckley’s (1967, 1998) modern systems theory; Archer’s (1995) morphogenetic theory; Baumgartner, Burns, and DeVille’s theory of actor-system dynamics (ASD) (Baumgartner, Burns, and DeVille 1986; Burns, Baumgartner, and DeVille 1985); and Geyer and van der Zouwen’s (1978) sociocybernetics. This family of theories, inspired to a great extent by Buckley, is nonfunctionalist. Complex, dynamic social systems are analyzed in terms of stabilizing and destabilizing mechanisms. The structural and cultural properties of society are carried by, transmitted, and reformed through individual and collective actions and interactions. Structures such as institutions and cultural formations are temporally prior and relatively autonomous yet possessing causal powers, constraining and enabling people’s social actions and interactions. Agents through their interactions generate structural reproduction, elaboration, and transformation. So one is concerned not only with the identification and development of social structures but also with the specification of the concrete mechanisms—including feedback processes that entail both stabilizing, equilibrating features (morphostasis) and structure-elaborating or disorganizing and transforming features (morphogenesis). In such terms, institutional structures help to create and re-create themselves in an ongoing developmental process in which human agents in the context of sociocultural systems play constructive as well as transformative/ destructive roles. Such an approach enables one to identify and analyze the complex mechanisms of stable reproduction as well as of the transformation of structures and the genesis of new forms (morphostasis vs. morphogenesis). Active agents with their distinctive characteristics, motivations, and powers interact and contribute to the reproduction and transformation of structure: establishing and reforming structures such as institutions, sociotechnical systems, and physical and ecological structures, but always within given constraints and opportunities and not in precisely the ways the agents intend. Internal selection and structuring processes that reproduce, modify, or transform are based on power distributions among societal agents and populations of organizations as well as individuals. These theories (especially in the work of Archer and ASD) theorize institutions and sociocultural formations in their own right, identifying and explaining the real and variegated structures that have emerged historically and are elaborated and developed in ongoing social processes. ASD has drawn, in particular, on Weber and Marx (DeVille was personally acquainted with the Marxist Ernest Mandel in Belgium) but redefining key concepts in modern sociological terms (e.g., through institutional and cultural theorizing): concepts such as class, power, domination, exploitation, conflict and struggle, and unequal exchange and accumulation. Conceptual models of production, reproduction, and transformation as well as revolution have been elaborated. A part of the theoretical work has extended Marxist theory through theorizing about social agents (individuals and collective), institutions, and culture and their role in processes of reproduction and transformation. Some of the characteristic features of ASD are as follows:

  1. In addition to consideration of capital and capital accumulation (as one of the driving forces of the system), ASD pays particular attention to the accumulation of knowledge, skills, techniques, and technology (including organizational and managerial knowledge, techniques, and skills)—in a word, multiple processes of accumulation (Baumgartner 1978). There is also infrastructural accumulation as well as natural resource accumulation (and destruction). There is typically loss and destruction of key resources as well. And there is unequal access to and control over the resources or “wealth” of these accumulation processes, reflecting the power relations of modern society.
  2. Because capitalism is characterized by market failures and unexpected destabilization, systematic regulation and stabilization strategies are essential for the stability of modern capitalism (see later). There has been sustained development of more or less effective regulatory mechanisms and the partial stabilization of capitalist systems in developed parts of the world (classical Marxism exaggerated the power of capitalists to impose conditions on the nation-state benefiting them).
  3. Everyday, “nonrevolutionary” democratic politics has played a major role in the emergence of welfare and economic regulatory regimes and contributed to the “refutation” of the Marxian prediction of the demise of capitalism (or possibly, simply the postponement of its demise). The logic of democratic politics is often noneconomic in character, connected, for instance, with gaining and maintaining the loyalty of citizens, not only to ensure system functioning but also to predispose them to pay taxes, obey laws, and be prepared to make other sacrifices such as fighting in wars. In general, ASD emphasizes the complex, ironic nature of democratic politics (Burns and Kamali 2003). It has also identified a “new politics” (Burns 1999), in which nongovernmental organizations (NGOs) and experts play key roles, which establishes new forms of regulation based on enterprise concern about reputation and goodwill (e.g., inducing the adoption of business ethical codes, ethical audits, and related internal regulatory arrangements). These processes take place also on the global level (see later).
  4. Substantial attention has been paid to the politics and formation and re-formation of international economic institutions and development: on one level, the economic relationships between countries, on another level, that of international economic institutions dealing with markets, trade, banking, and technological development (Baumgartner, Burns, and DeVille 1975, 1986). There is also a long history of countries using political and military power to gain favorable trade conditions (England was a master at this in relation to countries such as Portugal, Egypt, India, and Kenya [under colonial rule], as well as other countries). ASD also examined the morphogenesis of international frameworks of trade, banking, setting of standards, institution building, and reform.

Summing Up

The convergent tendencies among the three approaches— particularly in incorporating and developing contemporary institutional and cultural analysis—are an important part of their further development. Of course, one might ask, why not simply concentrate on developing institutional and cultural theories and abandon dynamic systems theorizing as such? The immediate answer is that structures and structural mechanisms are more than institutional and cultural processes. In particular, the interplay of physical structures, sociocultural and institutional systems, and interaction orders cannot be properly conceptualized, described, and analyzed on the basis of purely institutional and cultural theorizing. Emergent as well as purely technical and “natural” system linkages must be accounted for and analyzed for theoretical as well as practical reasons.

For instance, among the major subtypes of interstructural problems are incompatibilities between structures of the social system, on the one hand, and structures in the environment, on the other—that is, a particular type of interstructural problem (see later). Social system structures and outputs/performances may not fit and be sustainable in the system’s environment (as in the Easter Island phenomenon, where the indigenous population developed institutional arrangements and practices that could not be sustained in the Easter Island physical environment; this led to an ecological and eventually social order collapse and the disappearance of most of the population). In general, complex feedback loops between societal orders and their environments generate under certain conditions forms of destabilizing and nonsustainable developments. Histories of the salination (and declining production) of agricultural land, desertification, deforestation, ozone depletion, and global warming, among other negative developments, point to the role of human communities in the destruction of their natural resource bases. This is part of the materiality of socioeconomic life, with which these theories of capitalism have been concerned.

As explained more fully later, the often-exaggerated critique of system theorizing in sociology has been unfortunate, since these theories have much to contribute to sociology and other social sciences not only on a purely theoretical level but also on the empirical level of describing and analyzing the complexity and dynamics of capitalist systems, including contemporary global capitalism.

Capitalist Systems: Toward a New Synthesis

Capitalism is triumphant in most parts of the world. The theories discussed in this research paper have addressed the complexity and dynamics of capitalism, predicting the longterm demise of classical capitalism, but for substantially different reasons. This section outlines a synthesis based on the contributions of the three approaches. It examines selected aspects of the functioning (and malfunctioning) of capitalist systems, their conditions for sustained growth and expansion, their persistent tendencies to instability and crisis, and the mechanisms that produce and reproduce economic inequalities and power within and among capitalist societies.

Systematic investigations of capitalism show that a complex of core institutions and cultural formations make up its structural and normative order. This order incites and legitimizes, among other things, acquisitiveness (greed), competition, accumulation of wealth and economic power, and substantial social inequality. Property rights enable, for instance, appropriation of gains and legitimize accumulation; they also reinforce incentives to pursue such gains and to use economic power and wealth (as well as other powers) to make further gains and to defend as well as develop capitalist institutions.

Capitalism is a powerful system not only for producing and distributing goods and services, wealth, and innovations in products and means of production but also for producing a spectrum of negative consequences: inequalities, exploitation, damages to third parties, social and psychological disruptions, depletions of natural resources, and environmental destruction, among others. Powerful agents (including capitalists and their managers) react to some of the consequences, judging them to be negative and trying in some instances to correct them or to limit their impact. Such countervailing actions—affecting the functioning and development of capitalism—become much more elaborate and vigorous in the context of democratic politics. A far greater range of agents can and do make demands for reform and regulation of capitalism. As a result, under conditions of democracy, there is a substantial politics of capitalism and capitalist developments. A variety of proposals for reform are introduced, and a spectrum of regulating systems is established and elaborated. In this way, some (but, of course, not all) of the negative consequences of capitalism, including class and other conflicts, are addressed (although not usually fully corrected). Because capitalist institutional arrangements and their core processes along with countervailing movements and systems of regulation are socially embedded, there emerge multiple capitalisms differentiated by their diverse forms of functioning, regulation, performance, and dynamics. Such a sociological conception of capitalism is spelled out in the following sections.

Defining Cultural and Structural Properties

Modern capitalism is a powerful engine of change, generating revolutionary powers and transforming the conditions of life: economic, technological, social, and environmental. Dynamic capitalism is characterized not only by its freedoms (or minimalist constraints) and its acquisitive spirit (the pursuit of economic interests and gains) but also by its capacity to accommodate and symbiosize with diverse interests and values, the opportunities it provides for “positive-sum games,” its effective forms of power and control, and its competitive mechanisms. A brief description of these characteristics is given below.

  1. Multiple freedoms: There is not only the decentralized freedom to trade and to initiate new products and forms of production or to commodify new goods and services and to penetrate new areas and establish markets but also the freedom to create and adapt new forms of extended cooperation and organization (e.g., joint stock company, joint ventures, and franchises) and the freedom to compete (which is otherwise highly constrained in many groups and communities). Also, under capitalism the constraints on the accumulation of wealth and power are minimalized, hence the substantial tendencies to monopoly or oligopoly in many areas of production and distribution.
  2. The acquisitive spirit and more: Substantial numbers of societal agents (individuals as well as collectives) are motivated and possess the resources to invest in new opportunities and projects, hoping to realize profits and to multiply their wealth (a form of generalized power). Capitalist institutional arrangements provide opportunities to pursue multiple interests that far exceed the mere interest to pursue wealth—for instance, the interest in sociability and cooperation with others (or in competition with others); in exercising power and control over others; in doing something useful, such as producing a valuable good or service or creating a new good or service; in trying out an idea or starting a project with others; in providing jobs and opportunities for others; or in generating wealth for good causes. That is, capitalist forms can accommodate an extraordinary range of material and ideal interests. And, indeed, the wealth generated by capitalism may support many values necessary or important to human existence, including family and community life, welfare, education, music, art, religious institutions, and spirituality. Nonetheless, the strongest value—which is built into its institutions, for instance, its accounting systems (see Note 14)—is money value; its power and control mechanisms are mainly directed at gaining and expanding monetary wealth and accumulation. But as emphasized below, there are other countervailing forces, concerns, and movements.
  3. Complex institutional arrangements: Modern capitalism consists of a complex of core social institutions for organizing production, exchange, and distribution. In particular, there are relatively free markets for raw materials such as land and energy, goods and services, capital, and labor. Property rights and contracts provide a systematic basis for knowing who owns what and who are creditors and debtors. They distinguish groups and populations in society in terms of differential control over economic resources and the means of production. Money has multiple functions—as a medium of exchange, as a standard or measure of value, and as the basis for initiating economic projects and enterprises and expanding productive capacity and economic power, that is, capital. Firms operate as decentralized systems of institutionalized domination over human and material resources, innovating, producing, distributing, and exchanging in the pursuit of profit and economic power (“the acquisitive principle”). Their bureaucratic and other forms of control are based largely on private property rights, which enable differential access to and control over resources. Superordinates (owners/managers) not only command their employees but also have the power to establish and reform relevant rules of action, to judge and to sanction, and to allocate resources. Systems are developed to mobilize and apply in a systematic way expert knowledge—scientific, technical, and practical knowledge as well as the organizational capability to produce and distribute. A type of essential knowledge system is accounting (the basis of strict calculation in economic rationalization), which focus on and quantify the essentials of costs, prices, and profits and enable calculability and the rational pursuit of profit and economic power.
  4. Power and control: Capitalism through enterprises, contracts, franchises, and other legal forms provides a high degree of control and regulatory potential. Substantial power can be exercised over human beings and resources in organizing and directing production. Knowledge and expertise can be mobilized to innovate in creating new technologies, techniques, and forms of cooperation and organization. The wealth generated by capitalist endeavors (as well as the knowledge and organizational capacities) is of interest to states and can be used to influence policy and politics as well as other domains of society (Baumgartner, Burns, and DeVille 1979). Through its generation of wealth and its freedom to innovate in technologies, techniques, and strategies, capitalism is capable of not only dramatically changing societal conditions but also circumventing or breaking out of many of the constraints imposed by regulative regimes such as those established by the national state (see later discussion). It is not only based on but also generates unequal power structures.
  5. Institutionalized competition: Competition, in which particular actors struggle more or less openly for power, is one of the major mechanisms driving social innovation and change in capitalist systems—but not, of course, according to a program, plan, or design. Weber (1951) generally stressed the importance of such “competitive processes” in social change, under conditions where there is no clear-cut domination structure. Thus, Europe as a system of interconnected states in competition with one another operated to drive the transformative process of rationalization. There was no unified empire, as, for example, in China. Weber (1951) argued, “Just as competition for markets compelled the rationalization of private enterprise, so competition for political power compelled the rationalization of state economy and economic policy in the Occident and in the China of the Warring States” (p. 61). According to Weber (1951:61), during the periods of the “Warring States,” “the very stratum of state prebendaries (or local honoratiores) who blocked administrative rationalization in the Empire became its most powerful promoters and change agents. In the private economy, cartellization weakens rational calculation, which is the soul of capitalism; among states, power monopoly prostrates rational management in administration, finance, and economic policy”. Weber suggested that in the Orient, it took military or religious revolutions to bring about transformations: to shatter the firm structure of prebendary interests, thus creating completely new power distributions and, in turn, new economic conditions. Rationalization concerned not only administration but also taxation and budgeting, as well as military and diplomatic areas. Attempts at internal innovation in China through reforms were wrecked time and time again by the opposition of officialdom. In sum, lack of competition tends to inhibit or restrain innovation and transformative processes.

Competitive processes may be constrained to varying degrees. Some social orders have elaborate institutionalized systems for regulating competition and resolving conflicts. Others have few such arrangements; or the arrangements collapse under the pressures of crisis or transformative conditions, when key actors or groups no longer adhere to or accept the arrangements.

Core Mechanisms and the Logic of Capitalist Functioning

Of interest for our purposes here are several of the core mechanisms underlying the functioning and dynamics of capitalism. A brief description of these is given below:

1. The complex of capitalist institutions organizes the processes of socioeconomic production, distribution, and exchange in particular ways, generating multiple socioeconomic outcomes and developments. The latter include not only diverse effects in the sphere of economic production and market exchange (“spin-offs”) but also unintended and unpredictable effects (“spillovers”) in other spheres, such as the social, environmental, and political. Thus, capitalism is not a purely economic undertaking but political and cultural as well. Some goods and services, profitability (or loss), capital accumulation (or its failure), knowledge, new techniques, class relations, interests, and political mobilization and struggle are not usually confined to one sphere or segment of society but spread their effects throughout society (and multiple societies).

The productive base of a modern, capitalist society rests on a complex of powers (“resources” or “wealths”) and the accumulation of these powers: capital in the form of money—that is, generalized power to acquire or control resources and to motivate action; physical or material capital (in the form of machinery, buildings, land, other natural resources); human capital or “resources” (knowledge, value structures and commitments, skills, health); regulatory and governance structures; infrastructures (transport systems, including roads, railroads, waterways, air transport); communication systems (telephone, radio, television, and the World Wide Web [WWW]); natural resources (water, air, energy, minerals, and ecosystems). When considering accumulation as well as reproduction or sustainability, this complex of powers must be the focus of analysis, not just capital in the form of money wealth.

2. Actors or classes of actors have different positions of power and control in the system based on their roles in the division of labor and on their differential possession of property and other control rights. The different social positions have qualitatively and quantitatively different linkages to, and claims over, the gains of multiple outcomes and developments (spin-offs and spillovers); they also have differential linkages and disclaimers with respect to costs or burdens and risks. Historically, the owners and managers of capitalist enterprises have been in a position on average to maintain profitability in spite of legal and normative pressures to maintain wages above subsistence levels and to incorporate the costs of externalities (e.g., addressing environmental damages). This fact and the “general interest” of many economic as well as noneconomic elites in the viability and sustained development of capitalism(s) constrain the pressures and tendencies to internalize the costs of externalities and to alter the profitability equation. Still, there is a secular trend, as pointed out earlier, to constrain and redirect capitalist functioning, especially in the context of democratic conditions (see later discussion).

3. Class and center-periphery differentiations: The capitalist institutional arrangements generate not only unequal acquisition but also sustained unequal accumulation of capabilities, resources, and social powers among different actors or classes of actors with their differentiated positions in relation to the processes and outcomes of production, distribution, and exchange. In general, the distribution of benefits and costs under capitalist institutional arrangements is unequal and tends to increase inequality over time. The more promising entrepreneurs, enterprises, sectors, expansive regions, and nations tend to gain access to and attract additional resources and investments; the stagnant, marginal agents and areas lose access to such resources. In the absence of effective regulation, extreme concentrations of economic power and wealth are generated, because power attracts and begets economic as well as other power(s) (knowledge, skills, techniques, managerial and governance capabilities, political mobilization opportunities).

The inequalities lead, in turn, to systematically differential capacities to take advantage of and shape productive opportunities as well as to avoid or overcome burdens and cost traps and vicious circles of stagnation and decline (see below). In general, power differences and uneven development capabilities tend to be reproduced and elaborated, other things being equal. A basic structure of inequality is maintained at the same time that there is some mobility of nations, sectors, enterprises, and groups upward as well as downward.

4. Unanticipated and unintended consequences in a complex system: ASD provided a systematic basis for identifying and explaining some of the unintended consequences of capitalism as a complex, dynamic system (such a notion was also articulated earlier in the work of Karl Marx, Friedrich Hayek, and Robert Merton, among others). Complex systems operate, in a certain sense, autonomously from human intentions and concrete actions—the effects produced cannot be inferred from the effects intended. Of particular interest are unintended consequences arising from hierarchies—a class of systemic properties—related to social power relations between individuals, groups, classes, and system parts—for example, domination relations between classes or between core sectors and peripheral sectors. Some unintended consequences lead to unexpected dynamic properties (e.g., when conflicts generated by power struggles lead to escalating conflicts); system functioning and development may be highly destabilizing and unpredictable—a situation that challenges the basic assumption of the “rational expectations” school in economics. ASD has contributed to making unintended consequences and related developments explicit, identifiable, and thus subject to analysis and the formulation of possible policy recommendations.

In sum, capitalism like any complex social system generates unanticipated and unintended spin-offs and spillovers, many of which cannot be known or predicted beforehand. This is due to bounded human knowledge or modeling capacity as well as limited regulatory capabilities with respect to such complex systems. Some unintended spin-offs and spillovers operate to destabilize or undermine capitalist effectiveness, institutional functioning, and legitimacy.

5. Capitalist crises: Historically, capitalist systems, in both their national and their international forms, have experienced a number of economic and political crises that destabilized them. Many diverse types of crises have occurred and continue to occur: Crises of overproduction— ameliorated to some extent by government fiscal and credit policies—is one type. Others are, for instance, deep socioeconomic depression or hyperinflation; powerful speculative runs on a currency; extreme exchange rate volatility; disruptive cycles of investment and disinvestment; shifts in market boundaries leading to local or regional depression; failure or inability of the state or the industry associations to protect or stabilize the conditions of key economic sectors; escalating capital-labor conflicts as well as other conflicts among industrial groups, between debtors and creditors, or between producers and consumers; major sociopolitical movements aimed at radically transforming capitalism or even eliminating it; other political crises due to ethnic, religious, or ideological conflicts that are difficult to address effectively within the existing political/administrative system; regulatory failures and crises in banking and finance; and government deficit growing in the context of rigidities (for instance, entitlements combined with political or socioeconomic power conditions that make it difficult for the state to increase taxes or government revenues). Many of these developments in a capitalist system, if uncontrolled or unregulated, would severely disrupt its functioning and threaten its sustainability.

6. Discontent and protest: Actors or groups of actors adversely affected by the operation or development of capitalism may under conditions such as a functioning democracy articulate their deprivations and disadvantages, for example, with reference to norms and values about “rights,” “distributive justice,” “fairness,” or even “efficiency and rationality.” Some mobilize to try to reform the institutional setup or at least certain (for them) undesirable features of it. Such activities usually bring them into conflict with those having an interest in, or a commitment to, the established institutional arrangements. Beginning in the nineteenth century, labor movements challenged and struggled to transform and even to replace capitalism. This resulted in the politics of capitalism and led to substantial regulation and welfare developments in a number of countries (“taming the capitalist dragon”) (Jaeger 1994). But there have been not only labor movements but also environmental, religious, and status groups mobilizing and pressuring for change. The idea of constructing and reconstructing the system has become an established organizing principle. A great variety of movements and pressure groups operate on all levels in opposition to some capitalist developments.

The general pattern is that capitalist concentration of power, uneven development, and negative spin-offs and spillovers tend to evoke discontent and antisystemic movements— or the threat of such movements—to constrain or regulate the negative features of capitalist functioning and development. While labor and other social movements are prominent examples of such social pressure, it is worth recalling that the farmer, small business, and consumer groups have also played a prominent role—and in some instances continue to play an influential role—in the opposition to tendencies toward massive concentration of wealth and economic power in capitalist development. Although they do not challenge the principles of private property rights, they oppose excessive power concentration and systems of credit, distribution, and government policy making that appear to favor economic domination. This has been particularly the case in societies with wellestablished democratic norms and institutions, a strong labor movement, as well as other social movements concerned with the struggle of particular status groups (ethnic, religious, gender, elderly, professions).

Such reactions (or even their potential) have led in numerous instances to the establishment of institutional arrangements to regulate the concentration and functioning of capitalist power. Regulation in practice has to a greater or lesser extent (at least in Organization for Economic Cooperation and Development [OECD] countries) constrained some misuses and abuses of economic power and some of its immediate economic, social, and environmental impacts; typically, however, it has not blocked or prevented the uneven accumulation of economic wealth and power and the capacity of powerful capitalist agents to shape future developments in technology, production, and distribution. This pattern continues on the global level (see later).

7. Regulatory development: The history of modern capitalism is characterized by innovative attempts to create and develop state as well as private regulatory mechanisms designed to counteract or overcome its failures and instabilities (some attempts were also aimed at replacing capitalism with another system, such as socialism or communism). In dealing with crises, many capitalist societies have shown a remarkable capacity to promote policy strategies and to design regulatory processes operating to reduce negative impacts and to maintain or reinforce capitalism’s stability and legitimacy. Public regulatory institutions and policies were established in as early as the 1800s to limit capitalist instability and substantial concentration and abuse of a economic power in the hands of relatively few. The imposition of public constraints is the result in some cases of enlightened self-interest and in other cases, the result of political movements and pressures. The constraints are observable in the form of financial and monetary controls, antitrust laws, labor legislation, land use regulation, regional development policies, pollution controls, and other environmental and social restrictions; these often entail substantial sanctions, including fines and prison sentences. Such measures have been designed, at least in part, to prevent or reduce the excessive negative consequences of capitalist functioning and development, in particular the extremes of inequality, the abuse and misuse of economic power, intense social conflicts, socioeconomic instability, and environmental destruction. In general, governments of most advanced countries (e.g., OECD countries) have more or less successfully regulated several (of course, not all) of the negative impacts of capitalist functioning. Elaborate regulatory frameworks are to a large extent state organized or sanctioned but with substantial private interest involvement.

This regulatory conception of capitalist development applies also to addressing social conflict. Class tensions and struggles as well as other conflicts (among producers, between producers and consumers, between creditor and debtor interests) are a persistent fact, arising from the institutionalized differences in power, the conflicting interests and commitments, and the uneven development of socioeconomic capabilities. For instance, enterprise power relations translate into major decisions of owners/managers with respect to, for instance, transforming or closing a workplace, determining the type and level of production and employment, introducing particular forms of technology and work organization, determining directly and indirectly the qualitative and quantitative aspects of the work environment, and allocating resources and profits. Workers (and their labor unions if they exist) may react in various ways to the subordination to capitalist power. Different forms of power struggle and conflict between owners/ managers and workers over the conditions and terms of employment have been characteristic features of capitalist relations of production. These conflictive tendencies take a variety of forms and are not easily suppressed under democratic conditions. Attempts are also made to establish and maintain a reasonable level of cooperation and productivity (for instance, with minimum levels of strikes, slowdowns, and other forms of labor-capital unrest) in the face of inherent conflict. The lengthy and continuing formulation of factory and workplace acts and labor market legislation is well known. Parallel to this has been the establishment and sanctioning of various arrangements to facilitate communication, negotiation, and conflict settlements between capital and labor.

Modern societies are characterized by substantial differences in values and lifestyles, endowments, powers, and wealth. How is social agreement—and social equilibrium— achieved, if at all, under conditions of conflicting perspectives and interests? Barring systematic coercion, found in many peripheral economies, there are several established institutional arrangements (Baumgartner, Buckley, and Burns 1975; Burns and Roszkowska, forthcoming). Conciliation, mediation, and arbitration and their normative and institutional prerequisites have been outstanding mechanisms for reducing the intensity and violence of societal conflict, including class conflict. Welfare systems are another major institutional arrangement to ensure widespread support and legitimacy for capitalist arrangements, in part by providing economic security in the face of capitalism’s tendency to generate insecurity. Where these routines of relationship are established, group conflict loses its sting and becomes an institutionalized pattern of social life (Dahrendorf 1959:20). But class conflict is not the only source of tension and potential destabilization of modern capitalism. Concerns with the environment, animal rights (e.g., the use of animals in testing of products), disruption of communities, impact on marginal or weak groups, and impact on poor regions of the world are other major areas of contention.

Effective regulation depends on the development of models for describing and assessing the state of the system, identifying problematic developments, choosing appropriate solutions, and evaluating the success of selected strategies (Burns and Carson 2005). One particular class of models essential to capitalism are accounting systems—that is, coherent sets of numerical data collected, organized, and used in the assessment and regulation of socioeconomic systems such as business firms, government agencies, and nations. This is a major aspect of systematic self-reflectivity. Accounting systems provide “limited” or bounded representations and reflectivity of socioeconomic systems such as business enterprises, government agencies, and nation-states. There are always “uncharted territories.” This is currently the case for values related to issues such as biodiversity, aesthetic aspects of landscape, tranquility, leisure (in the sense of free time) or their opposites. Historically, one can observe a dialectic relationship between the use of established accounting models, the emergence of new problems and issues, critical self-reflection and innovation, and the construction of new accounting approaches. One strand of this dialectic has been to construct new accounting approaches for increasingly more encompassing levels (Burns et al. 2002).

But, in general, regulatory mechanisms never encompass the entire social system; invariably, there will be gaps and unanticipated developments (Burns and DeVille 2003; see also Note 14). Not only can potential external factors (natural forces, “unexpected” disasters) disrupt capitalist system functioning and reproduction, but also internal (endogenous) factors and processes can generate systemic changes. Indeed, regulatory mechanisms themselves are often transformative in character—they change perceptions, modify practices, evoke new strategies, create new power relations, and so on. Most important, policies ultimately redistribute material power (wealth) as well as symbolic power among social actors with conflicting interests; they may contribute to the emergence of new value orientations, models, or strategies so that the overall stability of the system is undermined or threatened, contrary to intentions.

In sum, regulatory institutional arrangements address a variety of capitalist failures and instabilities, resolve or prevent major conflicts, and overcome substantial loss of confidence in, or opposition to, the capitalist system. A minimum level of acceptance, if not satisfaction (reinforced by ideology) with capitalism, has been accomplished in most OECD countries. Conditions of the laboring classes and the general population have improved on the national level in these countries as well as in some LDCs. On the other hand, in many LDCs (with relatively resource-poor, corrupt, and/or authoritarian regimes that ignore or neglect the diverse problems and externalities produced by capitalist functioning), capitalist agents are not subject to the same degree of regulation as in OECD countries.

8. Socioeconomic diversity and multiple capitalisms: The notion of a single, almost homogeneous global economy is a myth. The world economy is dominated by the triad of Europe, Japan, and the United States. Moreover, the capacities to exploit opportunities for gains and avoid burdens and losses are very unequally distributed. Given the substantial variation in institutional and cultural conditions, it is not surprising that a variety of different, but more or less effective and expansive, capitalist arrangements have been developed; there are also a variety of failed capitalisms. A corollary to this is that nations differ in their capacity and readiness to effectively regulate and stabilize capitalist functioning and development, explaining in part some of the differences in capitalist performance, for example, between DCs and LDCs, and also the variations within each of these categories (see later).

Thus, capitalism has taken significantly different forms in countries and regions such as Argentina, Austria, Brazil, Canada, Chile, England, France, Germany, Italy, Japan, South Korea, Russia, Sweden, Taiwan, and the United States. This variation is captured by the notion of the social embeddedness or contextualization of economic processes (Baugartner et al. 1986; Granovetter 1985; Hollingsworth and Boyer 1997). Production complexes and processes of capital accumulation tend to vary substantially: Socioeconomic accumulation is associated in some cases with the development of innovative production systems— for instance, through investment in R&D (research and development)—and the realization of new knowledge and techniques for improving production processes and products; in other instances, it is associated with petroleum extraction, as in the case of oil-rich countries like Saudi Arabia and Kuwait; and in still other instances, with international banking and finance (Switzerland, Luxembourg). Similarly, sources of disruption or blockage of production, market processes, and capital accumulation may differ substantially: in one case, civil war; in another case, runaway inflation; in yet another, a dictator overtaxing and constraining entrepreneurial activity; or various combinations of these (see later discussions).

A theory of multiple capitalisms derives from and compels attention to the sociocultural and political contexts of capitalist processes and evolution. Not only does such a conceptualization help us better understand the different development patterns of some DCs and LDCs, including those LDCs that manage some upward mobility (see below), but it also helps one to identify and understand some of the emerging differences between two obvious central “complexes,” the European Union (EU), on the one hand, and the United States, on the other. The emerging conception of a “social capitalism” in the EU is differentiated from the more “unfettered capitalism” in the United States, suggesting the different sociocultural and political contexts of capitalist development in the two areas: differences in the conception of regulation (more acceptable and expected in Europe, less so in the United States); welfare considered as central to modern society and as more or less compatible with capitalist development (the EU) versus welfare as a burden, possibly a necessary one but a constraint on effective capitalist expansion (the United States); the environment to be protected even at the expense of burdening capitalism (the EU) versus the notion of minimizing costs of environmental protection (the United States); technology development approached with caution in the EU versus more optimism and risk taking in the United States. There is often less difference in practice than is expressed in the rhetoric of public statements and postures.

9. Complexity, contradictions, and multiple sources of crisis: As a complex, dynamic system, capitalism is only partially understood, even with the most elaborate scientific models and modeling efforts and accomplishments. Two general classes of problem situations can make for instability and malperformance and lead potentially to systemic crisis (Burns and Carson 2005). The following is inspired in part by the work of Lockwood (1964) and Archer (1995).

  • Systemic imbalances (overproduction or insufficient demand, excessive money or credit expansion); instability (price or demand volatility, speculative fevers); malfunctioning processes and subsystems (regulatory failures, blockage or collapse of key transport and communication systems); vicious or destructive feedback processes
  • Social problems, intergroup conflicts and struggle, or disruptive opposition, especially under conditions where the instruments of conflict regulation and settlement are weak or inappropriate

Typically, problem situations become crises if they substantially and persistently disrupt the core processes essential for capitalist order: production and market activities, profit making, capital accumulation, and maintenance and reproduction of key institutions.

A common thread in the approach of dynamic systems theories has been the conceptualization and analysis of interstructural relations and the instabilities and problems to which they give rise. Multiple, incompatible structures cause performance failures, instability, and disorder at the same time that they are associated with social conflict and struggle between societal groups and classes. Several major areas of crisis relating to systemic and interstructural problem situations can be identified.

10. Disorder from systemic lags: One may speak of institutional lag between established institutions, on the one hand, and new relations of development, on the other hand. The emergent “forces” clash with institutional constraints. There are contradictions between established structures and emergent structures (such as new technologies and strategies, new forms of competition). For instance, knowledge and technical or technological developments lead to conditions exposing the limitations of existing institutions and regulatory machinery. There are costly negative developments or clashes with ideals or strong moral principles. Thus, in the area of contemporary information technologies, established legal regimes concerning intellectual property rights have proven inadequate, setting the stage for reform initiatives. Institutional incentives perversely block creative, fruitful developments or allow for extreme forms of unacceptable deviance. In the latter case, for instance, the introduction and development of the WWW resulted in many fruitful and important accomplishments but also enabled its exploitation for commercial pornography, racial music markets, and extremist political and racist homepages, among other problems. And such developments led to demands for increased and new regulation.

11. Multisegment disorder (e.g., contradictions between capitalist and democratic values and institutional arrangements): Through its unintended impact on other spheres of social life, capitalism generates disorder and dissatisfaction, which provoke movements of opposition and nonacceptance. That is, agents in its social and political context may turn against it. This is due to its many impacts, including negative ones on populations, communities, and the environment; it is systematically destabilizing and destructive. Hence, the importance of some form of monitoring and opportunities to voice and to point out problems and express discontent: a relatively free press, scientific professions, and public participation. Systemic counterparts to capitalist arrangements—such as democratic political structures in one form or another—are also essential to its effectiveness and sustainability.

But as indicated earlier, democracy itself is destabilizing for capitalism, especially when the consequences of capitalist expansion, technological development, and capitalist accumulation are not immediately clear, so that reactions may follow long after, when problem situations have reached a crisis state, and major demands and conflicts ensue. It is also important to bear in mind that the egalitarianism of democracy clashes with capitalism’s exclusiveness and concentration of wealth and the power to decide future developments.

12. Integrative disorder: There is a lack of social integration (sufficient organization, social cohesion, or solidarity) as a basis to regulate, stabilize, or solve critical problems associated with the complex systemic interdependencies of capitalism. The problem of the relationship between system interdependencies and social fragmentation is particularly acute at the global level today (although there are currently movements and institutional developments that point toward partial solutions, as discussed later). This can be understood as the lack of global governance and the fragmentation of states making up the context of global capitalism. Some (Burns and DeVille 2003, DeVille and Burns 2004; Martinelli 2005) see emerging norms, community formations, international government organizations, and NGOs developing a regulatory context (but one that is highly uneven and incomplete). But the problem of growing “system interconnectedness” typically develops faster than the establishment of forms of cultural and political integration for purposes of constraining and regulating global capitalism. Where future developments will lead remains, in the final analysis, to be seen.

A related problem is that of disorder from improper or perverse social integration with respect to system interdependencies (instead of a lack altogether of social integration for problem solving and regulation). Regulatory models and institutions are inappropriate and ineffective (possibly counterproductive), although they may have been appropriate and effective in the past. Regulatory regimes, which provided solutions earlier, often become problems and destabilizing factors in themselves. Regulatory institutions and policies ostensibly designed to limit or overcome particular destabilizing conditions of capitalism produce instead unintended consequences. This reflects incompatibilities between the regulatory system and capitalist development, arising from the fact that the regulatory system is designed to deal with relationships and processes of an earlier, somewhat different capitalist system. Invariably, the regulatory system is itself transformed.

The fact that regulatory apparatuses have never completely succeeded in preventing or controlling system instability and group conflict in capitalist societies is demonstrated by the occurrence of strikes, demonstrations, absenteeism, and complaints and symptoms of stress and “burnout” even in highly developed welfare societies such as those of the EU and North America (or, more generally, OECD countries). New types of problems and demands continue to emerge—for instance, problems regarding the quality of the work environment, participatory demands, and ecological considerations.

In general, the regulatory processes, while stabilizing the system temporarily to a greater or lesser extent, may create conditions for the emergence of new institutional problems and social conflicts and set the stage for intensified instability. For instance, in the area of money, what were conceived of as stabilizing measures—a single national currency and a central bank in the United States in the nineteenth century—themselves became new destabilizing factors, as when the Federal Reserve System (the central bank of the United States) contributed through its policies and regulatory arrangements to deepening and prolonging the Great Depression of 1929 and its aftermath (Burns and DeVille 2003).

13. Reflexive disorder: A fundamental contradiction in the capitalist system is the requirement of order and predictability in a system that produces disorder and unpredictability. This is a robust contradiction, as we argue briefly below. Capitalist owners/managers as well as regulators require stability and predictability to make decisions and govern their production activities in rational terms. At the same time, capitalist agents, regulators, and other groups generate instability and unpredictability through innovations in strategies, techniques, and technologies. They are driven to do this particularly under conditions of competition and conflict. Capitalist agents in competition with one another—or anticipating future competition— innovate. They bring about changes in products, production processes, and distribution. Some of these changes have unintended consequences.

Also, democratic conditions themselves enable opposition to capitalist development (or certain aspects of it) and potential destabilization of capitalist functioning and development. Competitors, societal groups, and state agents respond to some of the many externalities generated intentionally and unintentionally in the context of capitalist functioning (including the expansion of existing projects and the launching of new ones). In general, the multiple responses are typically uncoordinated. For instance, NGOs may demonstrate against and, in other ways, draw media attention to diverse capitalist externalities. Or a government—anticipating the demands of citizen groups or responding to pressures from such groups affected negatively by past, current, or anticipated capitalist development—may introduce new policies, instruments, and strategies of regulation. Even when there are attempts to avoid disruptions, changes in regulations have unintended, quite often disruptive, consequences in a complex system.

In sum, capitalist agents as well as regulators require stability and predictability to make rational decisions and govern their production activities at the same time that they and others (including the opponents to capitalism) generate instability, unpredictability, and disorder through their very actions and interactions. This systemic contradiction makes for unending crises.

The Future of Globalizing Capitalism

The failure of Marx’s prediction of the collapse of capitalism as a result of declining profits and the failure to sustain capital accumulation can be understood in terms of the robustness of the system, given proper regulatory conditions. This robustness was particularly characteristic of those systems where capitalism was apparently most ripe for revolution, namely, the advanced capitalist societies. One explanation of Marx’s failure (if we assume that there might be some truth in his claim) to predict correctly has been offered by WST—namely, the exploitation of peripheral producers by those in the center, enabling center countries to sustain high levels of profitability and capital accumulation. Another explanation (which does not exclude the first) is that the successful establishment and elaboration of regulatory regimes in most OECD countries and some LDCs have stabilized capitalist functioning to a greater or lesser extent and at the same time have mediated class and other conflicts. The package of regulatory measures ensured capital as well as other key accumulation and development processes.

The regulatory complex as well as substantial reallocation of resources can limit or correct the development of extreme inequality and uneven development capabilities among regions, sectors, and occupational groups. Part of the corrective adjustment has been the development of modern welfare state societies in the West. Unfortunately, such regulation is almost totally lacking at the international level. Nor do such regulative regimes exist in most Third World countries to the same extent as in DCs (such as the OECD countries). Many of the earlier problems of capitalist system instability and sociopolitical confrontation have reappeared in new forms. For instance, there has emerged a new global politics of capitalism, as illustrated in protests since around 2000 against the World Trade Organization in Seattle, Washington; the G8 meetings in Prague, the Czech Republic, and Genoa, Italy; the World Economic Forum meeting in Davos, Switzerland; as well as the EU meetings in Nice, France, and Gothenburg, Sweden. Such protests are directed to some extent against global capitalist institutional arrangements and practices; they generate uncertainties and the risk of disruption of, and constraint on, capital accumulation and development. This sets the stage for a growing global politics of capitalism and the articulation of demands for increased regulation and even major restructuration of its arrangements.

In any analysis of globalization as a major elaboration and restructuring of, among other things, capitalist arrangements, it is essential to differentiate between an elaboration of older patterns and the emergence of entirely new patterns, mentalities, and strategies. Globalization is scarcely a new phenomenon if by globalization is meant the systematic and rapid increase in trade or even in foreign direct investment. Some forms of globalization date far back, which WST deserves much credit for highlighting. Others are more recent—for instance, the highly developed globalization prior to World War I as a result of the development of railroads and steamships. What is largely new today are the transnational and oligopolistic arrangements in a wide spectrum of markets. Also important is the overall predominance of financial regulation of productive activities. The latter pattern results, in part, from the increased liberalization of capital flows and the speculative dynamics that characterize much of this flow. These two fundamental processes have contributed to a declining effectiveness of national policies and regulation and imply, according to some, the “end of economic or capitalist politics.” One would advise caution against such simple causality. While the world system has given capitalist agents opportunities to avoid national state regulation (which has been emphasized by WST), one can observe the emergence of several limited forms of international regulation (International Monetary Fund, WTO, standards organizations) and NGOs as effective pressure groups.

In other words, there is indeed an obvious question about the relevance and role of national democracy and state institutions as an effective vector for regulation and development of capitalism. Nevertheless, one finds new forms of collective organizations (e.g., many NGOs) that push for new policies and new forms of social organization. The “antiglobalization” movement will probably discover itself as not so much against globalization as against the hegemonic nature of capitalism as a system of social organization and power. Certainly, contemporary politics is no longer the usual “democratic representative processes” within a state framework (and its constitution) (Burns 1999). Politics has become a multitude of diversified, often decentralized modes of social organization and social action at local as well as more global levels, dealing with the praxis of social (including, of course, economic) life and attempting to invent alternative structures and strategies. To what extent there will emerge from the multiple experiments a coherent, more macrosocial model for capitalism remains to be seen. But there is no doubt that such evolution has already become sufficiently pronounced that it will sooner or later have major macrosocial and economic consequences.

In those national contexts with a well-functioning democracy, constraints have in the past been imposed on capitalist development (and forms of exploitation). Such a process may or may not emerge on the global level. But it is unlikely in the foreseeable future that regulation will be accomplished by a world state (a successor, e.g., to the United Nations); rather, one would expect intermediation through associations and networks of diverse actors: corporate interests and NGOs as stakeholders characterized by issue and situation specificity. Moreover, the ultimate constraints on capitalist development are arguably material limitations: pollution, resource depletion, and climate change, among others. In some cases, one or more key factors in the productive base are declining or threatened with substantial decline in the foreseeable future. Longterm sustainability will not be possible. Historically, such nonsustainability has occurred but was limited in scope— that is, more local in character. Currently, there are more encompassing erosions but also more attention, greater mobilization, and sustained pressures to bring about reform and restructuring. More recently, new pressures and conflicts are driving innovations and efficiencies in areas neglected by earlier capitalists and their managers, who largely concerned themselves with labor-saving and labor-controlling innovations. Now more attention is being given to innovations in energy use, pollution control, renewal of resources, recycling, hydrocarbon fuel replacement, and resource use generally. Whether this development is sufficient to realize the long-term sustainability of capitalist systems remains highly uncertain.


The discussion in this research paper draws attention to several of the instabilities of capitalism—both as an economic system per se and as a force generating sociopolitical instability and environmental deterioration. It argues that appropriate regulation is essential for stabilizing capitalist systems and facilitating their effective functioning. The effective regulation and functioning of capitalism require not only appropriate institutional arrangements but also social agents who have the competence and motivation to lead and realize in practice the institutional arrangements under varying circumstances and to effectively adapt and reform them in response to operational failures and environmental changes. Such regulation also depends on political authority to introduce and implement regulative frameworks.

Modern societies have developed and continue to develop revolutionary powers—driven to a great extent by dynamic capitalism—at the same time that they have bounded knowledge of these powers and their consequences. Unintended consequences abound: Social as well as ecological systems are disturbed, stressed, and transformed. But new social agents and movements form and react to these conditions, developing new strategies and critical models and providing fresh challenges and opportunities for institutional innovation and transformation. Consequently, modern capitalist societies—characterized by their core arrangements as well as the many and diverse opponents to some or many aspects of capitalist development— are involved not only in a global struggle but also in a largely uncontrolled experiment (or, more precisely, a multitude of experiments). The capacity to monitor and assess such experimentation remains strictly bounded. The current capacity to constrain and regulate global capitalism is also severely limited, as pointed out earlier. How, then, is the powerful class of global capitalists to be made responsible and accountable for their actions? What political forms and procedures might link the new politics suggested above to the global capitalist economy? These are important research and policy questions. Theories that investigate and analyze capitalism and its evolution in more holistic ways—such as the theories presented in this research paper— have an important role to play in explaining capitalist dynamics and in developing suitable policies.

The dynamic systems theories outlined in this research paper clearly point to sociologically important phenomena: the material conditions of social life, social class, stratification, the conditions that affect group mobilization and political power, conflict processes, and the reproduction and transformation of capitalist systems. They have also incorporated a number of key concepts of mainstream sociology in constructive and useful ways: for instance, institutional, cultural, and normative conceptualizations; networks and movements; diverse types of social relationships and roles; social systems in relation to one another and to the natural environment; reproductive and transformative loops; and sustainability issues. These approaches shift the focus from single-factor explanations of capitalist dynamics and development patterns to structural and interstructural considerations in the spirit of Max Weber (1976, 1981) (for another multifactor approach to the analysis of capitalism, see Hollingsworth and Boyer 1997).

The theories presented here perform an important function within sociology and among the social sciences and humanities: They contribute to a common language, conceptualization, and theoretical integration in the face of extreme fragmentation among the social sciences as well as within sociology itself. The latter suffers especially as a result of the institutionalized concentration on midlevel empirical and theoretical research—that is, “middle-range theorizing.” On a practical level, there remains the venerable challenge to establish and develop sociology and a social science complex that can readily and systematically put pieces of specialized knowledge together to address major contemporary problems, in particular, understanding and taming global capitalism.

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