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[Beijing Forum 2016] Immanuel Wallerstein: The End of Capitalism

NOV . 14 2016
Peking University, Nov. 14, 2016: “We are living in the midst of a structural crisis of our historical system…It is a kind of crisis that comes only once every 500 years or so”, said Immanuel Wallerstein at Beijing Forum on Friday. He shared his insights of the world history, at the same time provided an explanation of this “500 years” crisis, or specifically, a 500 years crisis of capitalism.

Capitalism has covered a considerable part of our world, and it has been by far extremely successful. In Wallerstein’s view, the defining characteristic of capitalism is “the endless accumulation of capital in order to accumulate more capital”. This system is supported by two elements: the Kondratieff cycle and the hegemonic cycle.
The Kondratieff cycle is the process in which producers make profit. In perfect competition, it is hard for the sellers to make significant profit for the reason that numerous sellers will compete with each other to bring the price down. Obtaining significant profit requires a certain degree of monopoly, in which there are some “leading” products. This is the situation of a Kondratieff cycle.
The hegemonic cycle, on the other hand, provides the order that capitalism needs. When there is a hegemonic power, it imposes on the world the rules it sets, and maintains a relative stability. It seeks to assure the smooth functioning of capitalism and maximize the flow of accumulated capital to its citizens.
These two cycles, however, as it is pointed out by Wallerstein, won’t last forever and are self-liquidating.
The Kondratieff cycle will end, because new producers will sooner or later manage to enter the “leading” product market and carve up the profits. Cost of production will also go up, making the endless accumulation of capital impossible.
The hegemonic cycle will also end, because using the military power to maintain order is costly and other countries will rise up to challenge the dictates of the hegemonic power.
The inevitable demise of these two cycles brings the end of capitalism.
If capitalism will die, where will the world go? What will replace capitalism? The answer is “inherently unpredictable” according to professor Wallerstein. We want to take the path that best upholds our intellectual, moral and political values. But since the outcome is unpredictable, we might also make a wrong choice. He made a thought-provoking remark at the end of his speech:
“We have at the very best a 50-50 chance of getting the kind of world system we prefer, but this is as much a reason for optimism as it is for pessimism.”

Reported by: Li Yike
Edited by: Zhang Jiang