History 1005 quiz 1

14. What kind of system does hegemony espouse?

(Answered in 13) A single hegemonic power, however, has a built-in incentive to force other nations to abandon their national capitalism and economic controls and to accept a world of free trade, free capital flows, and free currency convertibility.

15. What kind does Balance of Power espouse?

(answered in 13) The balance of power attempts to use the alignment of forces and, if necessary, war, to prevent any one power from achieving such preponderance that it could impose economic internationalism on autarkic-minded nations.

4. Describe the dynamics of the "Long Depression" of the 1890s

All the industrialized "core" (first world) countries were trapped in this economic slump during this time. Overinvestment in production systems too small-scale to be efficient combined with selling in limited, protected national markets resulted in a steadily declining rate of profit. Efforts to raise profits by cutting labor costs were met with vehement class conflicts, upheavals, and violence.

10. What are the contradictions of the nation state within the capitalism? What alternatively contradictory role does the nation-state play under capitalism?

Although the nation-state has dealt its hand in promoting capitalism, it has impeded it as well. National biases have caused the creation of farm subsidies, military spending, protective tariffs, navigation laws, capital controls, and restricted currency convertibility, all of which have become serious obstacles to capitalism being a purely economic system. Because of them, capitalism cannot realize its maximum efficiency and profitability. Capitalism is meant to be a pure economic system on an international scale yet nation-states have their own territorial and therefore political biases.

7. Why has Capitalism become a system? And what is that system?

Capitalism has always functioned most profitably and efficiently when its universe of options has been sufficiently large and fluid for capital goods, services, and people to move from one place to another even if that place be distant or foreign. Capitalism's tendency towards international fluidity eventually produced a configuration that could properly be described as a system, a combination of parts forming a complex, unitary whole.

2. What are Capitalism's inherent tendencies and under what circumstances does it best thrive?

Capitalism has been an inherently expansionistic type of economy which thrives best under long-distance trade by large capitalists with political connections and economic reserves. Capitalism also has a tendency towards international fluidity. The goal is to accumulate capital, enlarge market shares and maximize profits.

11. According to McCormick, why does hegemony exist? (be specific. Note his discussion on the contradictions of the nation state under capitalism)

Hegemony historically has operated to soften the contradiction between the internationalist imperatives of capitalism and the nationalist biases of political nation-states.

12. What is hegemony? Upon what constants or sources of power is it erected?

In the context of the world-system, hegemony means that one nation possesses such unrivaled supremacy, such predominant influence in economic power, military might, and political-ideological leadership, that no other power, or combination of powers, can prevail against it. Economic supremacy is the indispensable base of hegemony. Any hegemonic power must, simultaneously, contain the dominant financial center, possess a clear comparative advantage in a wide range of high-tech, high-profit industries, and function commercially as both the world's major exporter and its major importer. It needs to have clear military superiority and ideological hegemony as well. It must be able to exert its political will over the rest of the system and command deference to its principles and policies.

16. What is the goal and purpose of each?

It's trivial as to why balance of power exists: in order to maintain an equal share of power among nation-states. Hegemony is a bit more complicated. It wants to create institutions and ground rules that foster the internationalization of capital. It finds it inherently advantageous to use its political power as ideologue of the world-system to preach the universal virtues of freedom of the seas, free trade, open door policies, comparative advantage, and a specialized division of labor. It finds it necessary to use its military power as a global policeman to protect the international system against external antagonists, internal rebellions, and internecine differences: to be judge, jury, and executioner.

5. How is this connected to McCormick's theory of capitalism's re-current crises of over production?

McCormick stated that overproduction involves high rates of production and low costs of it. However, when capitalists attempted to lower the cost of production by cutting wage bills in the 1890s, they were met with powerful rebellions and strong resistance. Furthermore, the rate of production increased, but, whereas traditionally the resolution would be to globally expand, the markets at this time were limited to nation-state boundaries and therefore didn't practice expansion on a global scale.

3. What is overproduction? Why does it happen? And how does it get resolved?

Overproduction is, essentially, producing more supply than there is demand for it. Historically, it has resulted from the contradictory instincts of entrepreneurs to keep production high in order to enlarge market shares and, at the same times, keeping wage bills low in order to reduce the costs of production. Throughout the course of capitalism, overproduction has been resolved when global expansion of new markets for goods and capital has helped restore demand to the level of supply, raised the rate of production, and replaced economic depression with economic boom. In short, new economic frontiers were created.

1. According to McCormick's theory, what have societies looked like since the late 15th Century? How have they been organized?

Societies have been divided into three distinct types of environments: the capitalist world-system, the external world (empires), or the mini systems of subsistence communities. The capitalist world-system has expanded at the expense of the other two and, according to McCormick, it made the world seem almost as one world rather than three separate ones.

6. How would this crisis normally be resolved? Clue: think about what McCormick says are the basic features and tendencies of capitalism. Why did Britain fail to resolve the crisis and push toward a more economically integrated world?

The crisis would normally have been resolved by a hegemony reinstating balance, though Britain had issues of its own. Challenged by the power of a newly unified Germany, weakened by a half-century of playing the world's policeman, and debilitated by lowered productivity and declining commercial competitiveness, Britain no longer had the will or power to enforce its internationalist, hegemonic ways.

9. In his section on Hegemony what does McCormick say about the nation-state in relation to capitalism?

The nation-state has both fostered and inhibited the capitalist world economy. On one hand, nation-states have often provided crucial stimulation of economic growth and development through banking, taxation, credit, and internal improvement policies. On the other hand, nation-states have often interfered with the fluidity and mobility of capital, goods, and labor across national boundaries. This nationalist bias is caused in part by nation-states being, by definition, wedded to specific territories and committed to the defense and sustenance of their citizens.

8. How does McCormick characterize the "World System" and its constants? What are the three constants and what are their functions?

There are three constants about the world-system. First, there are always implicit geographical boundaries within that system, and they essentially defined by the spatial limits of the world market economy at any given time. Second, there is always a center or pole to the system, a dominant city that acts as the coordinating point and clearing house of international capital - there is always a central metropolis. Finally, the system consists of three successive zones, each with its own unique function within the international division of labor. Core countries (first world) own most of the high-tech, high-profit enterprises. The semi periphery (second world) performs intermediate functions of transport, local capital mobilization, and less complex/profitable forms of manufacturing. The periphery (third world) specializes in primary production of agricultural commodities and raw materials.

13. What is the relationship between Hegemony and Balance of Power?

They've been on opposing sides of the contradiction between full-on capitalism and national biases. The balance of power attempts to use the alignment of forces and, if necessary, war, to prevent any one power from achieving such preponderance that it could impose economic internationalism on autarkic-minded nations. A single hegemonic power, however, has a built-in incentive to force other nations to abandon their national capitalism and economic controls and to accept a world of free trade, free capital flows, and free currency convertibility.

17. When has Hegemony triumphed and why?

Twice in history has hegemony triumphed over balance of power. Great Britain functioned as hegemonic center between roughly 1815 and 1870, and the United States did so between roughly 1945 and 1970.Note that the time periods occur prior to and after the world wars. In each instance, world war was crucial to the formation of hegemony. It radically redistributed power and wealth in ironic fashion, denying hegemony to a European continental power while bestowing postwar supremacy on its balance of power adversary, the United States.