Capitalist world-economy

Definition

The capitalist world-economy is a global economic system characterized by private property, market competition, and the pursuit of profit across national boundaries. This concept emphasizes the interconnectedness of economies around the world, where economic activities are not confined to individual nations but are part of a larger, integrated system. The capitalist world-economy shapes social structures, influences political dynamics, and leads to inequalities between nations and regions.

5 Must Know Facts For Your Next Test

1. The capitalist world-economy emerged in the 16th century with the rise of European colonialism and global trade networks.
2. It is driven by the relentless pursuit of profit, which leads to competition among states and corporations on a global scale.
3. Inequality is a hallmark of the capitalist world-economy, where wealth and power are concentrated in core countries at the expense of peripheral nations.
4. The capitalist world-economy is characterized by cyclical crises, which can result from overproduction, underconsumption, or financial instability.
5. Globalization has intensified the dynamics of the capitalist world-economy, leading to increased economic interdependence among nations.

Review Questions

• How does the capitalist world-economy influence the relationships between core, periphery, and semi-periphery countries?
  • The capitalist world-economy creates a hierarchy among nations, where core countries dominate economically and politically. They exploit peripheral countries for resources and labor, leading to significant disparities in wealth and development. Semi-periphery countries occupy an intermediate position, often trying to elevate their status by adopting practices from core nations while also facing exploitation. This dynamic shapes international relations and economic policies across different regions.
• Evaluate the role of globalization in shaping the capitalist world-economy and its implications for global inequality.
  • Globalization has played a crucial role in expanding the capitalist world-economy by facilitating trade, investment, and cultural exchanges across borders. While it has led to economic growth in some regions, it has also exacerbated global inequality as wealth becomes concentrated in core countries. Peripheral nations often struggle to compete on equal footing, leading to increased dependency and vulnerability within this global economic framework. The widening gap between rich and poor nations highlights the challenges posed by globalization.
• Assess the potential future trajectories of the capitalist world-economy considering current trends such as economic nationalism and environmental sustainability.
  • The future of the capitalist world-economy may be shaped by rising economic nationalism as countries seek to protect their domestic industries and reduce reliance on global supply chains. Additionally, growing concerns about environmental sustainability could challenge traditional profit-driven models, pushing for more ethical practices that prioritize ecological health. These trends may lead to significant transformations in how global trade operates, potentially reducing inequality and fostering a more equitable economic system while addressing pressing environmental issues.

Related terms

Core Countries: Nations with advanced economies that dominate trade and investment in the capitalist world-economy, often benefiting from their position at the center of economic activities.

Periphery Countries: Nations with less developed economies that are often exploited for resources and labor by core countries, resulting in economic dependency.

Semi-periphery Countries: Nations that fall in between core and periphery countries, exhibiting characteristics of both and often serving as a buffer or bridge in the capitalist world-economy.