SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM An

SELF-REGULATION OF
THE WORLD ECONOMIC SYSTEM
An Enactive Perspective
Antonio Luis Hidalgo-Capitán, PhD
University of Huelva
Spain
To my wife Ana Patricia
and my children Irazú and Braulio.
Table of Contents
1.- Introduction
7
2.- The distinction of the world economic system
13
3.- Autopoiesis, organization, and the structure of the world economic system
17
4.- The structural coupling of the world economic system with its ambience
21
5.- The genesis of the world economic system
27
6.- Self-regulation and the ontogeny of the world economic system
31
7.- The regulating agents of the world economic system
35
8.- The regulating institutions of the world economic system
41
9.- The subsystems of the world economic system
45
10.- The evolution of the world economic system
49
11.- Conclusions
55
12.- References
57
5
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
1.- Introduction1
For more than two decades, International Political Economy has been
trying to explain the phenomenon of economic globalization by means of a
combination of political and economic variables. This topic has become the
centre of analysis in the field of study. Given that the term 'economic
globalization' may be expressed as the 'process of emergence of a world
economy', our attention focuses on the question: What is the world economy?
Answering this question necessarily moves us to participate in debates
occurring between different currents of thought in the fields of International
Relations and International Political Economy.
The first of these debates is one occurring within representationism,
between neo-realists, and neo-liberals, and even neo-Marxists, about the
degree of autonomy of nation-states in the regulation of the world economy.
We believe that since the development of the Theory of Complex
Interdependence (Keohane and Nye, 1972; 1977) and the Theory of Diffuse
Power (Strange, 1988; 1996), the predominant role of nation-states in
explaining trans-border economic relationships has disappeared. Meanwhile
new approaches have arisen which consider the relevance of different agents
(trans-national and sub-national, public and private, individual and collective).
Therefore, we understand, in eclectic way, nation-states are not the only
agents which participate in the regulation of the world economy, although the
capacity for influence of some of them clearly has enormous importance.
The second of these debates is between representationists and
constructivists, with sharply opposed epistemological positions over whether
the world economy is a reality given for the observer (representationism) or
constructed by the observer (constructivism). We have assumed a position
1
The author thanks the comments of professors Marcelo Arnold (University of Chile), Ángel
Martínez-González-Tablas (Complutensian University of Madrid), Gabriel Pérez-Alcalá (University
Fernando III), Moisés Hidalgo-Moratal (University of Alicante), and Clara García-Fernández-Muro
(University of Huelva), assisting in the rough draft of this essay, with additional thanks to Olga
Mínguez-Moreno (University of Huelva) and Joseph D. Candora for the revision of the translation.
7
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
halfway between representationism and constructivism, also known as the
enactive approach. This approach is based on the idea that phenomena
occur in front of an observer, who constructs interpretations of reality from
them (Varela, Thompson and Rosch, 1991: 202).2
As a result of our positioning in the first debate, we must accept transnationality, or that trans-border economic relationships are not merely
international economic relationships (i.e. among nations), but also world (or
global) economic relationships (i.e. among agents from all over the world).
The difference is not irrelevant, because it allows us to speak about transborder and intra-border relationships as a whole – the world economy – and
not as the sum of parts (the national economies in analyses within traditional
International Political Economy). And if we consider the world economy as a
whole, it is very useful to apply systemic analysis, allowing us to reformulate
the question in a different way: 'What is the world economic system?'
The application of systemic analysis to the study of the world economy
is not new; it is enough to recall the works of Wallerstein (1974; 1979; 1980;
1989) on the world-system and the world-economy. In fact, the Neo-Marxist
school of International Political Economy has used and continues to use
systemic analysis (e.g. Martínez-González-Tablas, 2000).
Nevertheless, new systemic approaches to the study of the world
economy are possible; such is the case of the biological variant of
Autopoiesis Theory, which has its origin in the works of Maturana and Varela
(1973 and 1985), who studied the self-organization of living systems. This
theory has become one of the most suggestive and innovative theories of
2
Some authors from the fields of International Relations and International Political Economy
(Smith, 2001; Woods, 2001) denominate 'representationist' theories as 'rationalist' or 'positivists'
theories, and 'constructivists' theories as 'reflectivists', 'post-rationalist', 'post-positivists', 'postmodern', 'radicals', 'alternatives' or, simply, 'new' theories; they also usually refer to the 'enactive
approach' as 'socio-constructivist approach' or 'social constructivism'; we have preferred to use the
expressions 'representationism', 'constructivism' and 'enactive approach' used by some
epistemologists (Maturana and Varela, 1985; Varela, Thompson and Rosch, 1991). We can find
the antecedents of the enactive approach in the phenomenological structuralism of Merleau-Ponty
(1942; 1945).
8
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
recent decades in the fields of Biology, Psychology and Epistemology, where
it has generated important developments. In the Social Sciences, the
biological variant of the theory has been less developed (Maturana, 1985;
Maturana and Varela, 1985 [1990]: 154--74), unlike the sociological variant
led by Luhmann (1984), who articulates his approach around the notion of
communication as the key element of self-organization in social systems.
We believe that the biological variant of Autopoiesis Theory is the most
useful systemic approach in studying the behaviour of the world economy as
a living system that self-organizes in an independent way. This will be our
main theoretical frame of reference.
But Autopoiesis Theory cannot alone explain the behaviour of the world
economy, because the theory was developed with first- and second-order
living systems (cells and organisms, respectively) in mind, presenting only a
few considerations about third-order living systems (i.e. social systems).
In our opinion, these considerations, including those of Maturana (1985)
and of Maturana and Varela (1985 [1991]: 154--74), are insufficient to
completely explain the behaviour of the world economy. We therefore need to
incorporate some elements from other analyses: e.g. the contributions of
Morin (1973) on bio-anthropology; of Perroux (1981) on the agent; of
Foucault (1978; 1980; 1982) on power; of North (1990) and Hodgson (1993)
on institutions; and of Waddington (1957; 1969) on evolutionary trajectories;
among others.
On the other hand, the adoption of an enactive perspective forces to us
to reformulate our question so that it contemplates the world economic
system neither as an objective reality nor as a constructed reality, but as an
enacted3 reality. Our question would then become: 'What is the world
economic system for us as observers?'
3
The term 'enaction' is a neologism derived from the verb 'to enact'; we can consider this verb as
synonymous with the expressions 'to bring forth' or 'to cause to emerge'; therefore 'to enact' means
'to cause to emerge' and 'enaction' means 'action which causes to emerge'.
9
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
In this essay we are seeking a 'scientific answer' to this question, and
we understand by scientific answer a 'proposal of mechanisms (concrete or
conceptual
systems)
whose
functioning
(working)
generates
every
phenomenon that is involved in the question' (Maturana, 1985 [1995]: 4).4 We
propose to respond to our question 'What is the world economic system for
us as observers?’ by means of the formulation of an explanatory theory of
world economy behaviour using key elements of the biological variant of
Autopoiesis Theory and from different approaches of Political Economy, in
general, and of Global Political Economy, in particular; that is to say, we shall
set out 'the formulation of a theory of the self-regulation5 of the world
economy'.
The utility of this theory, as it corresponds to an enactive perspective,
will depend on the meaning evoked in the mind of each reader. For those
readers close to radical representationism, this essay may be a sterile
exercise of reflection on the part of its author, whose proposals cannot easily
be falsified. For those readers close to radical constructivism, the reflection
on the identity of the world economic system may not be deep enough in this
essay, which assumes as given certain values and behaviours of the agents.
We, as readers of our own essays, find in this document the eclectic
integration of some of the most suggestive expositions of different thought
currents
referring
to
the
world
economy
–
representationism
and
constructivism. We do not consider that this document contributes toward
building a bridge between the moderate representationists and the moderate
constructivists, such as some authors (Wendt, 1999) have tried to make;
rather we have tried to sit on the fence that separates them, and observe the
best of both worlds. On the other hand, we also believe that our theory has
the virtue of explaining, in a simpler way than others, the various aspects
4
Most quotations come from the Spanish version of these texts, which the author of the article has
attempted to translate into English; it is likely that these quotations differ from the English version
when the original version is not in English.
5
The term 'self-regulation' is used here as a synonymous with 'self-organization'.
10
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
involved in the concept of 'world economy', it has a great potential for
dissemination and teaching, and it suggests a new research program yet to
be developed.
11
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
2.- The distinction of the world economic system
From the perspective of an observer, reality happens as perceived
phenomena; phenomena that are neither completely objective nor completely
subjective, because they receive sense via the subjective perception of the
observer, who cannot have a perception if there is not real phenomenon to
perceive. In other words, the observer enacts, or brings forth, a world of
perceptions, which is the only possible approach to reality; a reality neither
objective nor constructed, but enacted (Varela, Thompson and Rosch, 1991
[1992]: 168, 174--8, 202--4, 238--40).
We shall enact a world economic system from a series of phenomena
of an economic nature, but we must first lay the foundations of our analysis,
and we will do so by evoking the human being.
A human being is a living organism (equipped with a nervous system)
comprised of other indivisible living organisms (i.e. cells). Therefore, a cell
would be a first-order living entity; a human being, comprised of cells, would
be a second-order living entity; and a society, comprised of human beings,
would be a third-order living entity, as would also be the case for a colony of
honeybees, themselves comprised of cells.
Focusing on human beings, it can be observed that multiple
interrelationships,
called
social
relationships,
occur.
Those
social
relationships of an economic character would be economic relationships; that
is to say, the relationships of production, distribution, interchange, and
consumption occurring among human beings. The set of these relationships
constitutes the dominion of economic relationships, which would be a specific
type of phenomenological dominion, understood as the 'dominion of
interactions specified by the properties of the interacting units' (Maturana,
1975 [1996]: 231).
In this dominion of the economic relationships among human beings, as
observers we can make a distinction; that is to say, we can 'indicate a unit
doing an operation that defines its limits and that separates it from its
13
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
background' (Maturana, 1975 [1996]: 243). This operation will allow us to
identify a unit comprised of human beings who maintain economic
relationships.
But in order to distinguish such a unit, we need to have an idea of the
type of organization, or 'relations among the components that define [it]'
(Maturana, 1975 [1996]: 229); this idea comes from our experience as
observers. Therefore, our perception is guided by our perceptive experience,
as corresponding to an enactive perspective.
In our opinion, and according to our experience, the type of organization
of the economic relationships that should guide our perception is the capitalist
organization.
Therefore
we
will
only
perceive
capitalist
economic
relationships; that is, relationships based on the market, where people freely
exchange productive goods and services as well as factors (labour, capital,
and land, the former inseparable from the workers and the latter two
protected by private property rights).
If we observe capitalist economic relationships, we can perceive that
human beings (whether close together or far apart) engage in a series of
interrelationships of production, distribution, interchange and consumption, all
based on the market. These relationships occur almost all around the planet,
and only certain isolated and primitive indigenous communities and countries
of relatively autarkic real socialism, where the economic relationships are of a
different nature, remain at the margin of general activity.
Therefore, in the dominion of the economic relationships, we can
distinguish an 'almost worldwide' organization comprised of human beings
who maintain capitalist relationships, with the exception of a few noncapitalist minority groups. This organization we will denominate as an almost
worldwide capitalist economic system or, in brief, the world economic system.
But for an entity to be considered a system, several conditions must be
met. According to the classic definition, a system is a 'set of elements
14
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
standing in interrelations' (Bertalanffy, 1968: 55) that can be considered as a
single organization.
The world economic system is precisely such a system if it is a set of
human beings with capitalist economic interrelationships that can be
considered collectively as a unit. As observers, we have thus enacted through
distinction the world economic system.
15
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
3.- Autopoiesis, organization, and the structure of the world economic
system
The world economic system, as a social system, is a third-order system
comprised of human beings (second-order living systems), themselves
comprised of cells (first-order living systems). This economic system is
furthermore a living system, because it is able to produce in an independent
way its own components (human beings) and the economic interrelations
among them. That is to say, it is a living system because it is 'an autopoietic
system that exists in physical space' (Maturana, 1975 [1996]: 232),6
understanding by autopoietic system:
'a dynamic system defined as a unit by the relations that constitute it as a
network of production processes of the components that: a) participate
continuously by their interactions in the generation and accomplishment
of the network of production processes of components that produce
them; and b) constitute this network of processes of production of
components as a unit in the space where they (components) exist
making their boundaries' (Maturana, 1975 [1996]: 232).
However, in the case of world economic system, as a social system,
autopoiesis derives from the aggregation of human beings and is not the
distinctive characteristic of the system. Therefore:
'although there is no doubt that social systems are third-order autopoietic
systems due to the single fact that they are systems comprised of
organisms, what defines them as social systems is not the autopoiesis of
their components, but... the manner of relation among the organisms that
comprise them' (Maturana, 1994: 19).
The autopoiesis of a system (its capacity as a social system to produce
in
an
independent
way
its
own
components
and
the
economic
interrelationships among them) is not the characteristic that allows us to
6
The term 'autopoietic', deriving from the neologism 'autopoiesis', was coined by Maturana and
Varela (1973) and is comprised of two Greek expressions, 'auto' (by itself) and 'poiesis' (to make);
therefore, we conclude that 'autopoiesis' means 'the capacity to produce oneself'.
17
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
distinguish the world economic system, but rather its organization, here its
capitalist organization. Nevertheless, the fact remains that the world
economic system, as social system, is autopoietic, and although this
characteristic is not distinctive of this kind of system, it allows us to attribute to
the system every implicit connotation in autopoiesis, such as operational
closure, autonomy, self-regulation (self-organization), spontaneity, ontogeny,
evolution, etc.
Interactions among human beings inside the world economic system
are as much individual as collective in nature. Therefore the interactive
elements of the world economic system will be individuals as well as families,
companies, productive sectors, cities, regions, countries, regional blocks, and
so on. On the other hand, the economic interrelationships among these
elements adopt the form of flows of merchandise, services, capital,
currencies, labour, people, energy, information, etc.
Before continuing, we should formulate explanations regarding the
concepts of system, organization, and structure. We have already seen that
we can define the term 'system' as a 'set of elements standing in
interrelations' (Bertalanffy, 1968: 55), with the term 'organization' referring to
the 'relations among the components that define a system as a unit'
(Maturana, 1975 [1996]: 229). On the other hand, the term 'structure' refers to
'the real components and real relations which those components must satisfy
in their participation in the constitution of a given unit' (Maturana, 1975 [1996]:
230). Therefore:
'The organization of a composite system constitutes itself as a unit and
determines its properties as such, specifying a dominion in which it can
interact (and be treated) as a non-analysable whole. The structure of a
composite system determines the space in which it exists and it can be
altered, but not its properties as a unit.... Therefore, two composite units
18
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
separated in space can have the same organization, but different
structures' (Maturana, 1975 [1996]: 230).7
Therefore, the fact of its capitalist organization defines the world
economic system as a system, giving sense to the system and allowing us to
distinguish it. Whereas the fact of their real elements (individual and
collective) are distributed almost worldwide, and the real interrelationships
among them exist in near-total geographic scope, we may perceive the
present capitalist economic system, in particular, as a world economic
system, because the space occupied by this system is, for all practical
purposes, global.
7
'Element', in Bertalanffy’s expression, must be understood as equal to 'component' in Maturana’s
expression.
19
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
4.- The structural coupling of the world economic system with its
ambience
In line with previous remarks on the operation of distinction of the world
economic system, we implicitly drew a boundary limiting this system. When
we included within the world economic system every human being who
maintains capitalist economic relationships, as well as these relationships
themselves, we excluded a set of human beings who have no capitalist
economic relationships and their relationships; the latter human beings and
their relationships occupy a physical space that we denominated as their
environment.
The physical space that we observed in this distinction, denominated as
medium or ambience, we can divide into niche, or the physical space that the
system occupies, and environment, or the physical space that the system
does not occupy (Whitaker, 1998 [2003]: 'environment'). From this
perspective, the niche of the world economic system would be nearly the
entire planet, including the environment (that physical space where capitalist
relationships among human beings do not occur).
The environment of the world economic system constitutes the physical
space which human beings do not inhabit (deserts, polar zones, oceans...) or
where human beings live but maintain no capitalist economic relationships, as
is the case with certain primitive indigenous communities (of the Amazon,
Central Africa...) as well as residual countries engaged in autarkic real
socialism (North Korea and Cuba).
As with every living system, the world economic system is a physically
open system and 'the observer can see it interchanging elements with its
environment' (Maturana, 1975 [1996]: 235), but it has operational closure.
This concept refers to the changes that take place in a system as a
consequence of their own behaviour and which are determined by their
structure. Therefore, they are not determined from outside the system.
However, changes in the ambience (environment and/or niche) can cause
21
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
('trigger') changes in the system so that ambience and system are coupled.
Conversely, changes in the system can cause changes in the ambience so
that both are coupled, although changes in the system will always come
structurally determined (Maturana, 1985 [1995]: 5).
Changes in the world economic system which couple it to its ambience
are structural changes, while the coupling between this system and its
ambience is known as a structural coupling. Most of the structural changes
derived from structural coupling allow the world economic system to maintain
its capitalist identity. Nevertheless, when a structural change, triggered by the
ambience and structurally determined, does not permit a system to maintain
its identity, the system disappears. That is, it ceases to exist as a system,
although its elements may yet endure.
'The history of the structural changes without loss of identity in... [an
autopoietic system] is the ontogeny. The coupling of the changing
structure of... [an autopoietic system] to the changing structure of the
medium in which it exists, is the ontogenic adaptation.... if structural
coupling of... [the system] and the medium is not carried out, the
autopoietic system disintegrates' (Maturana, 1985 [1996]: 237, emphasis
is ours).
In one part of the ambience, namely the environment, operations of
distinction can also be made to identify economic systems without capitalist
organization. Thus, if we observe this environment, and we do so perceptibly
guided by forms of organization such as primitive communism or real
socialism, we can distinguish diverse economic systems: local communitarian
economic systems and national socialist economic systems. 8
8
Nowadays it is not easy to distinguish national socialist economic systems, since most of the few
that remain have already undertaken a transition towards capitalism. The cases of China, with the
evolution of its mercantile-socialism, and of Vietnam and Laos, with their liberating reforms, are
evident examples of this transition, as is (to a lesser extent) Cuba, with its policy of attracting
foreign investments and promoting international tourism. Only North Korea seems to resist to the
transition towards capitalism. In our opinion, at this moment, we can only distinguish two socialist
economic systems: North Korea and Cuba.
22
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
Relations between the world economic system and local communitarian
economic systems are scarce, due to the inherent physical isolation of these
systems. That is to say, the ontogenic adaptation between both is not very
significant. Nevertheless, if these relations become intense, the contact will
trigger changes in local communitarian economic systems that often lead to a
loss of identity of these systems, their disintegration as systems, and the
absorption of their elements into the world economic system ('phagocytosis').
This is what happened historically when human beings of different
national
capitalist
economic
systems
began
to
maintain
economic
relationships with members of isolated primitive communities (local
communitarian economic systems). The contact between individuals of such
different systems, usually promoted by individuals within certain national
capitalist economic systems for economic reasons (such as hunting, mining,
farming, commerce...), ended up generating serious problems inside these
previously isolated communities (anomy, alcoholism...). Such problems have
often led to their disappearance as communities and their integration into the
national capitalism economic system with which they had maintained contact.
Something similar has happened in the ontogenic adaptation of the
national socialist economic systems; increased relations with the world
economic system have tended to cause a loss of identity (e.g. the effects of
tourism in Cuba). In the future such cases will likely be phagocyted by the
world economic system, disintegrating themselves as systems (as happened
with the national socialist economic systems of Central and Eastern Europe).
Since the world economic system will 'phagocyte' all the economic
systems of its environment, the environment will itself be reduced while the
niche grows to fit the medium, except for unoccupied zones, and every
economic relationship among human beings will be capitalist and thus
internal to the world economic system.
23
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
But external relations of the world economic system are not confined
exclusively to its environment.9 Capitalist economic relationships among
human beings take place in a certain niche that is not empty, but which is full
of matter and energy independent of that which composes the system.
In the niche and in the environment (i.e. in the medium or ambience), a
set of natural phenomena takes place: physical, chemical and biological
interactions, or processes, among material and energy elements. These
interactions constitute the dominion of natural phenomena. If we observe
these processes, we can distinguish in the physical space of the planet a
planetary ecological system or world ecosystem; a system maintaining a set
of relations with the world economic system as well as with other economic
systems of its environment. These relations of ontogenic coupling between
the different economic systems and the world ecosystem are denominated
anthropical-natural interactions.
Focusing on the anthropical-natural interactions between the world
economic system and the world ecosystem, it can be observed that many
economic activities are the result of the structural coupling between both
systems (agriculture, cattle farming, fishing, forestry, mining, energy
production and water supply, but also industry and construction and large
portion of services).
The exploitation of natural and environmental resources, and their
transformation into goods (with economic value), and residual waste (without
value); and activities geared toward environmental protection (recycling,
waste management, decontamination, production of technologies that pollute
less and use resources more efficiently...); or certain environmental
catastrophes of anthropical origin (fires, chemical agent spills, nuclear
radiation...) can all trigger changes, structurally determined, in the world
ecosystem. Conversely, climatic alterations (droughts, floods, cold or heat
9
We could also study the interrelations occurring between the world economic system and other
systems distinguishable in other sub-dominions of the social phenomena dominion that are distinct
from the economic phenomena dominion. However, this is not the object of the present essay.
24
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
spells...), telluric activity (earthquakes, volcanic eruptions...), and the
extinction, mutation, and appearance and proliferation of new species (virus,
bacteria, insects, seaweeds...) in the world ecosystem will also trigger
changes, determined structurally, in the world economic system.
Therefore, the world economic system and the world ecosystem show
an ontogenic adaptation, so that the structural changes that take place in
each of these systems, although structurally determined, are caused by the
anthropical-natural interactions between them (although not exclusively). We
must consider that anthropical-natural interactions between the planetary
ecosystem and other economic systems exist, and that anthropical-natural
interactions between these other economic systems and the world economic
system also exist, and that they both generate ontogenic adaptations. Thus
the ontogeny, as the history of the structural changes of a system, is not
exclusively a consequence of structural coupling but also a consequence of
the internal dynamics of the system itself.
25
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
5.- The genesis of the world economic system
If we observe the recent history of capitalist economic relationships
among
human beings, we can appreciate how, step by step, these
relationships have been extending beyond the borders of national capitalist
economic systems (systems with different structures but with identical
organization), ultimately reaching a point where it is difficult to distinguish
some systems from others. The borders of these systems have been diluted
while a new border has appeared, allowing us to distinguish an almostworldwide capitalist economic system (world economic system) from its
environment.
Economic relationships that reach beyond borders of national economic
systems are nothing new; they have existed ever since the origin of these
systems. But something has changed in recent years, especially since the
mid-1970s: the intensity of these relationships. The process of generation of
the world economic system via the massive extension of capitalist economic
relationships among human beings and beyond the borders of national
capitalist economic systems since the mid-1970s we denominate as
economic globalization or globalization of the economy.10
For observers able to distinguish at present a world economic system,
as is our case, the globalization of the economy (as genesis of this system)
has already finished; but for observers yet unable to distinguish this system
(although they may perceive alterations in the borders of national capitalist
economic systems) globalization is still taking place. Therefore, from our
perspective, the present intensification in capitalist economic relationships
among human beings within the world economic system is simply the
development of this system.
However, the borders of the world economic system do not seem to be
fixed; quite the opposite. The loss of identity of the national socialist economic
10
In fact, the phenomenon is the globalization of the capitalist economic relationships among
human beings, and not the globalization of economy.
27
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
systems of Eastern Europe, and their later disintegration, allowed territorial
expansion of the world economic system while this system was emerging. If
the same thing happens to the surviving national socialist economic systems,
the world economic system will continue its territorial expansion. We could
say the same with respect to local communitarian economic systems.
The most important characteristic of globalization is its spontaneity;
once 'the sufficient conditions occurred ... it happened in an inevitable way'
(Maturana and Varela, 1991: 43). This spontaneity assumes that the world
economic system has no necessary purpose (i.e. the system may not have
an underlying plan that becomes evident with its behaviour over time). We
believe that the world economic system has not arisen for a purpose, but
spontaneously, and there is no teleological determinism in its rise. Therefore,
the attribution of purpose to this process belongs entirely to 'the reflective
dominion of the observer, as the commentaries he or she makes when he or
she is comparing and explaining his or her distinctions and experiences at
different moments from his or her observing' (Maturana, 1994: 29).
Nevertheless, the apparent determinism of the spontaneity is only a
posteriori determinism; if we know the complete sequence of events that
ended with the emergence of the phenomenon, here globalization, we can
conclude that the phenomenon was spontaneous. A priori, we can only affirm
the determination of a phenomenon if the same conditions allowing the
previous emergence of this phenomenon re-occurred exactly: an impossibility
due to the irreversibility of time. We derive here that the only valid concept of
time is historic time (or irreversible time), which is that interval where 'the
content of a moment depends on the content of every previous moment'
(Granger, 1955: 157).
Like purpose, chance does not exist in phenomenological dominions.
Chance belongs entirely to the reflective dominion of the observer, because
every phenomenon has its causes without which said phenomenon could not
take place. The observer calls random every phenomenon whose sequence
28
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
of previous events is not known, and chance has therefore become
determinism, since the observer has more knowledge of the sequence.
Considering this, we can affirm that globalization of the economy took
place when suitable conditions occurred. Those conditions, known a
posteriori, would be linked with the triumph of Neo-Liberalism as the dominant
ideology, allowing trade and financial opening of the national capitalist
economic systems, as well as a technological revolution based on information
and communications technologies, which have permitted the maintenance of
economic relationships without space-time simultaneity by transferring activity
to a virtual dimension.
The disintegration of national socialist economic systems occurred
simultaneously with the globalization process, permitting the territorial
expansion of an emergent world economic system. Nevertheless, the
disintegration itself cannot be considered a cause of this emergence.
Neither was the triumph of Neo-Liberalism, nor the technological
revolution, enough to bring about globalization; it was essential that human
beings, both individually and collectively, decided to increase their transborder economic relationships. Ultimately, it was the collective will of the
human beings who composed the national capitalist economic systems that
caused the triumph of Neo-Liberalism, the technological revolution, and the
increase in trans-border economic relationships.
Therefore, we have an 'uncaused cause' (Hodgson, 1993: 219) in the
will,11 the root cause of every social phenomenon linked with the fact that
human beings have a nervous system, a conduct, a capacity to know, a
capacity to modify their conduct, and a capacity to learn.
11
From a phenomenological perspective, the individual will is the result of a series of complex
neuronal processes, unknown by the observer but biologically determined. However, in the
economic phenomena dominion the individual will appears to the observer as an indeterminate
behaviour of the human being. The collective will would be the result of a communication process
among human beings, each with a will that is biologically determined and independent.
29
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
'The human, purposeful agent... can change goals, and furthermore this
may happen without any stimulus from outside.... The capacity to change
both behaviour and goals without external stimulus means that humans
have a will, and that some of our choices are real ones' (Hodgson, 1993:
219).
Summarizing, from our perspective as observers, we can say that
globalization, as a process of the spontaneous appearance of a world
economic system, has been the result of a combination of innumerable
individual and collective decisions, made by countless human beings
belonging to different national capitalist economic systems, from which the
massive extension of trans-border capitalist economic relations has been
derived.
30
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
6.- Self-regulation and the ontogeny of the world economic system
Self-regulation of the world economic system consists of permanent
neutralization of the disturbances that shake this system, coming either from
without (the world ecosystem or other non-capitalist economic systems), or
from within (human beings).
The latter internal disturbances and the regulation of the system lead us
to the concept of agent. We can define an agent as:
'an organization or an individuality, which lives in society and makes
decisions, that is to say, that combines its instrumental-variables with its
objective-variables according to its information and its potentiality and
resorting to the memory to elaborate its project' (Perroux, 1981 [1984]:
81).
Therefore, an agent would be a human being, or a group of human
beings, with social relationships and the capacity to make decisions. It is
useful here to differentiate between an individual agent (a human being) and
a collective agent12 (a group of human beings: family, company, association,
government, political party, union, supranational organism...).
The world economic system, as a social system, is composed of agents
who are responsible for internal disturbances and the regulation of the
system. Therefore, the world economic system is regulated from within by the
agents who compose it through their capacity to make decisions. Selfregulation of the world economic system is thus based on the uncaused
cause, the will of agents; the self-regulation of the world economic system is,
a priori, indeterminate.
However, this indeterminacy is only partial, because we can observe
certain regularities in the decisions of different agents. Following the principle
of partial indeterminacy, 'it is not the case that at a certain moment literally
12
North (1990: 5) denominates collective agents as 'organizations or organisms', understood as
'groups of individuals bound together by some common purpose to achieve objectives'.
31
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
anything may happen next – rather that several different things could happen
and one of them will' (Thorp, 1980: 68).
The regularity of the decisions of different agents rests in the fact that
they live in society and present cultural behaviours,13 which are understood
as 'the behavioural configurations that are acquired ontogenically [by human
beings] in the communicative dynamics of a social medium, and that remain
stable through generations' (Maturana and Varela, 1985 [1990]: 170). In other
words, decisions of agents are conditioned by the culture in which they are
immersed; from the perspective of the observer, actions of agents will be
determined partially by their culture and undetermined partially by their will.
Thus can the behaviour of agents be said to have deliberate aspects (choices
or decisions) and non-deliberate aspects (habits).
Based on decisions of agents, it might be assumed that agents can act
in various possible ways, and they can even change their objectives without
need of external stimuli, because decisions are real and the will of the agents
is inherent within them. Nevertheless, agents have powers of imagination and
creativity limited by their own experience and the habits of thought of the
culture to which they belong. Therefore, real indeterminacy, as a
consequence of the will, is restricted by culture, and the set of decision
possibilities for agents is limited (Hodgson, 1993: 222--4).
We denominate institutions those 'settled habits of thought common to
the generality of men' (Veblen, 1919: 239). We will now define 'world
economic institutions' as those norms and behaviour guidelines commonly
accepted by agents in the world economic system. These institutions are the
result of previous decisions made by the agents, and they constitute a priori
decisions – as opposed to the ipso facto decisions made in the face of a
dilemma. From this perspective, institutions represent limitations for the
agents.
13
Cultural behaviours, transmitted across generations, had their origin in prior decisions;
transmission and acceptance of cultural behaviours are consequences, again, of decisions. In the
last instance, the cultural behaviours are the fruit of the will.
32
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
'Institutions are the rules of the game in a society or, more formally, the
humanly devised constraints that shape human interaction…. Institutions
reduce uncertainty by providing a structure to everyday life.... institutions
define and limit the set of choices of individuals.... both formal constraints
– such as rules that human beings devise – and informal constraints –
such as conventions and codes of behaviour' (North, 1990: 3--4).
But not every decision made by agents comprising the world economic
system, nor every institution of the system, has regulation of the system as its
purpose. Reasons generating the different decisions from the agents, and
those generated by present institutions in the world economic system, are of
very different nature and only some of the innumerable decisions and
institutions are focused on system regulation. Those that do can be called
regulating decisions and regulating institutions; and the agents who make
regulating decisions would be regulating agents.
Regulating institutions and regulating agents constitute self-regulation
mechanisms of the world economic system; the former would be the
automatic self-regulation mechanisms14 of the system and the latter would be
the deliberate self-regulation mechanisms of the system. The behaviour of
these mechanisms is responsible for the structural stability and the history of
structural changes of this system, allowing it to adapt to changes in its
ambience, or to other internal changes, without losing its capitalist identity.
That is to say, the self-regulation of the world economic system is responsible
for its ontogeny.
However, as we have already affirmed, decisions of the regulating
agents are conditioned by the culture in which they are immersed; in
particular, a specific expression of the culture is what conditions those
decisions, constituting the ideology. By ideology we understand 'a set of
ideas and values concerning the political order whose function is to guide
14
It is 'automatic' because the decision comes prior to the event over which the decision must be
made (a priori), and it works as a rule, eliminating the possibility of an ipso facto decision.
33
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
collective behaviour' (Bobbio and Matteucci, 1976 [1982]: 'ideología').
Therefore, the ideology of the regulating agents of the world economic
system would be a coherent set of ideas and values concerning the
regulation of this system, and whose function is to guide the behaviours
(decisions and habits) of the agents.
The ideology, as a specific expression of a certain culture, composes
the 'cultural code', which works like a 'genetic code' of the system (Morin,
1973 [2000]: 237--238), and which constitutes the ideological code of the
world economic system.
At present, the dominant ideology among the regulating agents is NeoLiberalism,15 which came to replace Keynesianism, which had prevailed in
national capitalist economic systems between World War II and the systemic
crisis of 1970s. Neo-Liberalism, as ideological code of the world economic
system, inspires not only most of the decisions of the regulating agents, but
also most of the present-day regulating institutions. As long as no ideological
change occurs to mutate this ideological code, it will continue to inspire
institutions and regulating decisions. Therefore, present self-regulation of the
world economic system is based on the Neo-Liberal ideological code (i.e.
Neo-Liberalism).
As long as the regulating decisions inspired by Neo-Liberalism or NeoLiberal regulating institutions are able to generate structural changes in the
world economic system, allowing it to adapt to inner changes, and those
produced by its ambience, and thereby maintaining its identity, NeoLiberalism will continue as the ideological code of this system. Nevertheless,
if and when those self-regulation mechanisms fail, there will be either an
ideological change in the regulating agents of the world economic system, or
this system will lose its capitalist identity, disintegrating the system as such.
15
We can define Neo-Liberalism as that ideology which has as basis minimal intervention by the
State and maximum freedom for the agents that participate in economic activity.
34
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
7.- The regulating agents of the world economic system
The regulation of the world economic system by different agents
constitutes a power exercise, 'a set of actions upon other actions' (Foucault,
1982: 15), because power is not 'an institution, a structure, or a certain force
with which certain people are endowed; it is the name given to a complex
strategic relation in a given society' (Foucault, 1978: 93); and it is 'a more-orless organized, hierarchical, co-coordinated cluster of relations' (Foucault,
1980: 198). Thus no one has exclusive power to regulate the world economic
system; it is a diffuse power (Strange, 1988; 1996) exerted by innumerable
agents, who will be more powerful if their actions (deliberate or nondeliberate) are able to condition the actions of other agents, obtaining a
regulation of the world economic system that remains close to their interests.
In an initial approach, we can identify two types of regulating agents:
direct ones, whose deliberate actions condition the regulating actions of a
majority of agents; and indirect ones, whose deliberate actions condition the
actions of the direct regulating agents. Thus, the deliberate actions of an
indirect regulating agent will condition the deliberate actions of a direct
regulating agent, whose actions will further condition the regulating actions of
most other agents, including that indirect regulating agent whose deliberate
actions initially conditioned the deliberate actions of the direct regulating
agent before him. The exercise of power can be said to have not only a
reticular and diffuse character, but also a recursive16 one.
In a second approach, we can classify all the regulating agents into five
broad groups: individual regulating agents, sub-national regulating agents,
national regulating agents, trans-national regulating agents, and supranational regulating agents. In most cases, the capacity for regulation by these
agents is indirect, and it is based on the capacity to condition the actions of a
few direct regulating agents (e.g. the governments of the great economic
powers, the G-8, the United Nations System, etc.).
16
Something is 'recursive' if it is defined in terms of itself.
35
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
We can subdivide individual regulating agents into two groups: citizens
and opinion leaders. On the one hand, particular citizens who are worried
about the behaviour of the world economic system, and who bear it in mind
while voting or while participating in public demonstrations of a political
nature, are regulating agents. The power exercise of each individual citizen is
scarcely relevant to the regulation of the world economic system, but a
coordination of individual decisions by citizens can become very relevant, for
example by altering the composition of a government via elections, or by
popular revolution, or by seeding terror through violent action.
On the other hand, opinion leaders can condition the regulating actions
of other agents simply by expressing opinions in the mass-media, protected
by their authority or by their capacity for persuasion. Among these we could
emphasize: governors and ex-governors of great economic powers; leaders
and ex-leaders of supra-national organizations; leaders and ex-leaders of
trans-national organizations of varying type; religious, guerrilla and terrorist
leaders; successful businesspeople; artists, sports figures and intellectuals of
international prestige; etc.
Sub-national regulating agents are those collective agents whose
members belong to a particular sphere which is inferior to the national (i.e.
local or regional). These would include governments, political parties,
enterprise associations, unions, non-governmental organizations, terrorist
organizations, think tanks, etc., of a sub-national territorial scope. Their
capacity to influence the regulation of the world economic system depends,
fundamentally, on their capacity to act deliberately upon the deliberate
actions of the governments of the nations they compose, and on the capacity
of those governments to act upon most of the regulating actions of the
system.
National regulating agents are those collective agents whose members
belong to a single, unified national territorial sphere. In this sense, national
governments are agents which have a greater ability to act deliberately upon
36
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
the regulating actions of most agents, so long as they are direct regulating
agents (governments of great world economic powers) or able to condition
the actions of such. Other national regulating agents (political parties,
enterprise associations, unions, non-governmental organizations, terrorist
organizations, think tanks, etc.) try to condition, through deliberate actions,
the deliberate actions of the national governments or other direct regulating
agents.
Trans-national regulating agents are those collective agents whose
members belong to different national scopes without representing the
collective will of the agents of those scopes. International federations of
political
parties,
unions
and
enterprise
associations;
trans-national
companies; trans-national non-governmental organizations; international
federations of alternative social movements; terrorist networks; trans-national
think tanks; and other trans-national organizations such as the Trilateral
Commission, the World Economic Forum, and the World Social Forum, can
all be emphasized in this field. These agents try to condition, through their
deliberate actions, the deliberate actions of direct regulating agents.
Supra-national regulating agents are those collective agents whose
members belong to territorial scopes of different nations while representing
the collective will of the agents of those territorial scopes; that is to say,
international organisms in which the governments of different nations
participate. Here we can distinguish four sub-groups: universal international
organisms (every organism pertaining to the United Nations System);
international organisms of regional integration (EU, MERCOSUR, CAN,
CAIS, CARICOM, ASEAN...); sectorial international organisms (OPEC,
OECD, the Arab League, NATO...); and a special international organism, the
G-8 (or Group of the Eight, composed of rich countries including the United
States, Canada, the United Kingdom, France, Germany, Italy, Russia, and
Japan, as well as a representative of the European Union, and whose chief
executives meet informally).
37
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
The most characteristic aspect of the regulation of the world economic
system, as opposed to national economic systems, is the absence of a main
regulating agent such as a world government might be. The world economic
system has no 'brain' as such; the diffuse, reticular and recursive character of
power exercise is more clearly perceived, and regulation of the system is the
result of more or less coordinated interaction among innumerable agents.
Nevertheless, though we cannot speak of a world government, we can point
to two supra-national regulating organisms which very much resemble world
government. These are the G-8 and the United Nations System.
On the one hand, the G-8 is what we might denominate a world
pseudo-government (or false world government), an agent whose deliberate
actions are effective and similar to those of a world government, though
lacking in the form and legitimacy of a world government. It is an exclusive
club of great economic powers, deciding upon the regulation of the world
economic system, considering their own interests but not necessarily those of
all the agents who belong to the system. Because the G-8 gathers together
the governments of the great world economic powers, its decisions are
tantamount to deliberate regulatory actions within the national purviews of
those governments, as well as being actions upon the deliberate actions of
other national governments, and on the organisms of the United Nations
System, effectively forcing regulatory compliance. In this way, G-8 decisions
condition the actions of many other regulating agents of the world economic
system.
On the other hand, the United Nations System constitutes what we
might call a world proto-government (or embryo of world government),
integrated by specialized organisms, connected organs, and diverse
programs (World Bank, IMF, WTO, ILO, WHO, FAO, UNIDO, WTO,17
UNCTAD, DUNP, UNEP, UNICEF...) which function much like sectorial
ministries. United Nations has a certain legitimacy to represent (albeit in a
17
The first WTO is World Trade Organization and the second WTO is World Tourism Organization.
38
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
defective way) the collective will of a majority of the governments of the world,
themselves representing the collective will of the agents within each nation.
This legitimacy allows deliberate actions by United Nations to condition the
actions of many other regulating agents of the world economic system.
However, the effectiveness of these deliberate regulating actions will depend
on an absence of conflict with decisions made by the G-8.
As previously stated, the Neo-Liberal ideological code inspires most
deliberate actions or decisions made by regulating agents of world economic
system, because agent actions are determined by the culture in which they
are immersed (i.e. by the cultural code to which the ideological code
belongs). However, since the deliberate actions of these agents are also
made partially indeterminate by their will, many do not correspond to the NeoLiberal ideological code. If an agent acts systematically at the margin of this
code, that agent can be considered an 'individual deviation [that] introduces
new behaviour patterns, which can extend toward becoming a custom'
(Morin, 1973 [2000]: 199--200). In fact, alternative social movements of
varying scope and the World Social Forum presently constitute the most
important deviations attempting to introduce into the regulation of the world
economic system behaviours derived from a different ideological code. We
can denominate such as an alternative ideological code.
39
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
8.- The regulating institutions of the world economic system
The regulating institutions of the world economic system (norms and
behaviour guidelines that are accepted by most individuals or groups that
operate in the world economy) also derive from the ideological code of the
system, and most have a Neo-Liberal character.
Some of them, called established norms (formal limitations), are the
result of prior deliberate actions made by the regulating agents of the system.
By indicating appropriate behaviour for agents facing a dilemma, and based
on the values of the ideological code, these norms limit the decision capacity
of the agents and simplify their process of decision making.
In other cases, institutions, which act as behaviour guidelines (informal
limitations), are not the result of prior decisions; rather, they represent nondeliberate behaviour by the agents (at least with respect to the regulation of
the world economic system), usually an automatic behaviour or habit, also
derived from the values of the ideological code, which has been considered
appropriate and internalized unquestioningly by the agents.
We can identify innumerable examples of world regulating institutions;
most relevant are the free determination of currency exchange rates in
currency markets, the free circulation of capital among national economic
systems, the free circulation of merchandise and services among national
economic systems, the free circulation of workers among national economic
systems, and business freedom (freedom to install in any national economic
system and freedom to contract productive factors, inputs, and products). In
most cases, these institutions are no more than the transfer to a worldwide
scope of institutions already existing in the scope of the national capitalist
economic systems, once these institutions have assumed Neo-Liberalism as
their ideological code.
The free determination of currency exchange rates in currency markets
is a behaviour guideline assumed to be most effective by most of the
monetary authorities of the various national economic systems. From this
41
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
perspective, most main agents believe that the world economic system works
better with floating exchange rates, and that the exchange rate is an indicator
of the behaviour of the national economic system to which it applies.
Therefore, most agents are against intervention into these markets by
monetary authorities, who therefore scarcely intervene in currency markets,
except on rare occasions, such as with the maintenance of the fixed
exchange rate of the Argentine peso with the dollar in the 1990s, or
interventions in favour of the euro and yen at the beginning of the present
decade. From this perspective, this institution is basic to the existence of free
circulation of capital, because it guarantees an international exchange
mechanism that is agile and sensitive to the behaviour of the national
economic systems, for example, in orienting short-term investment decisions.
The free circulation of capital among national economic systems is,
unlike the previous institution, a norm found in the legislations of the various
national economic systems. Since the beginning of the 1990s, these systems
have been modifying their legislative frames to allow the entry and exit of
capital, both long- and short-term. From this perspective, we can surmise that
the world economic system works better if capital can operate in those
markets offering better investment opportunities. Therefore, such norms allow
the expansion past national borders of financial intermediation between
savers and investors.
The free circulation of merchandise and services among national
economic systems is another institution adopting the status of norm. It can be
found in multilateral commercial agreements (like GATT, GATS, or TRIPS); in
Free Trade Agreements (like NAFTA or ALCA, currently under negotiation); in
regional integration agreements (like EU, MERCOSUR, or CAN); and in the
trade legislations of different countries. Based on the theory of comparative
advantage, free trade might be said to act in favour of the efficiency of the
world economic system, because it allows the productive specialization of
42
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
different territories, whether or not they are national economic systems,
bringing about an increase in world production and in global welfare.
The free circulation of workers among national economic systems is a
very particular institution. While the legislations of most national economic
systems fight against it through dissuasive measures, this institution is
without doubt a behavioural guideline accepted by most agents belonging to
underdeveloped national economic systems, as well as by some agents
belonging to developed national economic systems (as for example in the
case of companies requiring immigrants as a cheap labour force). Every one
of these agents considers that the displacement of workers (from national
economic systems where excess labour supply exists, to national economic
systems where labour demand is excessive) contributes toward increasing
world production as much as the standard of living of immigrant workers and
their families.
Business freedom is a complex institution, itself composed of other
institutions such as the freedom to establish productive activities in any
national economic system, or the freedom to contract capital (as in nonintervened national financial markets), or workers (as in flexible national
labour markets), or goods and services, like inputs or consumption products
(as in non-intervened national product markets). From this perspective, it can
be considered that for the world economic system to work properly, it is
essential that companies be able to locate their production, totally or partially,
in those territories where unit costs are lowest and where they can rely upon
free markets for their products, their inputs, and their productive factors.
Hence they may obtain greater production at a lower cost, with positive
effects on business profits and world consumption prices.
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SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
9.- The subsystems of the world economic system
Distinguishing a world economic system in the domain of economic
phenomena does not preclude the distinction of other inner economic
systems by means of specific criteria. In fact, taking as our criterion a specific
form of regulation (national laws), we can clearly distinguish national
economic systems (or national economic subsystems) within the world
economic system. But the former are not autonomous, and while they have a
capacity to self-regulate, it is confined to smaller aspects and does not
significantly affect the maintenance of structural stability for the world
economic system. The vital aspects of economic behaviour are currently
regulated beyond national borders, the world economic system being the only
self-regulated and autonomous system. As a consequence, every territorial
economic system of less-than-global dimension is regulated, at least partly,
by the self-regulation mechanisms of the world economic system, which exist,
in great part, outside of said territory. Therefore, these systems will be
regulated from outside; that is to say, they are allonomous systems18
(Whitaker, 1998 [2003]: 'allonomy' and 'autonomy'). However, because an
allonomous territorial economic system is a part of the autonomous world
economic system, the former participates in the self-regulation mechanisms
of the latter; and the greater the degree of participation in the self-regulation
mechanisms of the world economic system, the smaller its allonomy. For
example, the degree of allonomy of the national economic system of the
United States is sensibly inferior to that of the national economic system of
Trinidad and Tobago.
Alongside the national systems, regional economic subsystems
(regional blocks) are the most important subsystems that we can distinguish
inside the world economic system. In fact, among observers who do not yet
distinguish an autonomous world economic system, many consider that the
18
This term derives form the expression 'allonomy' meaning 'controllable from outside', as opposed
to 'autonomy' (Whitaker, 1998 [2003]: 'allonomy').
45
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
transference of self-regulation capacity has taken place between national and
regional economic systems, which they can distinguish, either as an early
step toward conformation with a world economic system, or as a measure
taken against the tendency to conform.
Regional economic subsystems are subdivisions of the world economic
system by virtue of the regional intensity of trade, financial, and migratory
flows. If we identify the regional territories with greater economic dynamism
(centres), we can observe that they behave like centres of gravity in a
constellation toward nearby territories (peripheries) with which they keep
intense relations (Prebisch, 1949). Flows from the centres toward the
peripheries usually include flows of capital (varied foreign investments and
remittances by emigrants) and flows of products of high added value (goods
and services with high technological content); flows from the peripheries
toward the centres generally include flows of capital (repatriation of profits
and withdrawal of foreign investments), flows of products of low added value
(raw materials and products with low technological content), and flows of
workers (immigrants).
With these criteria it is possible distinguish regional subsystems
regardless of the existence of ongoing integration processes; however, and
due to globalization, the distinction between these subsystems is not
particularly easy to perceive, because borders are no longer clear.
With greater clarity we can distinguish what might be called the
American subsystem, with its centre in the United States and Canada and its
periphery in Latin America and the Caribbean. With relative clarity, we also
distinguish a Euro-Mediterranean-African subsystem, with its centre in the
European Union and the EFTA and its periphery in the countries of Central
and Eastern Europe (not within the European Union), as well as in countries
of the Magreb and Middle East and in Sub-Saharan Africa. With still less
clarity, we can also distinguish a Pacific-Asian subsystem, with its centre in
Japan, Australia, and New Zealand and a very heterogeneous periphery
46
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
comprised by Mongolia, China, Taiwan, South Korea, the countries of
ASEAN, the Indian subcontinent, and some islands of the Pacific.19
However, by employing sectorial criteria in the process of distinguishing
allonomous subsystems (as the economic relationships taking place in the
productive process, or in markets of products or factors, both capital and
labour), instead of territorial criteria, we may distinguish four allonomous
sectorial economic subsystems as parts of the world economic system: the
world productive subsystem, the world trade subsystem, the world monetaryfinancial subsystem, and the world labour subsystem.
These subsystems would each have their own mechanisms of
regulation, being sectorial divisions of the self-regulation mechanisms of the
world economic system; and we denominate as regimes these mechanisms
of regulation for each sectorial subsystem. This concept also can be defined
as 'principles, norms, rules and decision making procedures, around which
actor expectations emerge in a given area of the international relations'
(Krasner, 1982: 186).20 Thus, considering the sectorial divisions of the world
economic system into subsystems, the regimes would be: the world
productive regime, the world commercial regime, the world monetary-financial
regime, and the world labour regime.
Some of these self-regulation mechanisms would be automatic
(sectorial regulating institutions), whereas others would be deliberate
(sectorial regulating agents). Among the mechanisms of deliberate selfregulation in the different sectorial subsystems we could include, for example:
UNIDO, FAO, and WTO (productive subsystem); WTO21 and UNCTAD (trade
19
If and when North Korea and Cuba pass toward Capitalism, they will become parts of the
Pacific-Asian subsystem and the American subsystem, respectively.
20
This definition of 'regimes' includes the sectorial regulating institutions and the ideological
principles, but does not include the sectorial regulating agents. We include sectorial regulating
institutions and agents, but exclude the ideological principles.
21
. The first WTO is World Tourism Organization and the second WTO is World Trade
Organization.
47
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
subsystem); IMF and World Bank Group (monetary-financial subsystem); and
the ILO (labour subsystem).
48
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
10.- The evolution of the world economic system
The world economic system, in spite of maintaining a certain structural
stability, cannot remain invariable, but will instead evolve in time through a
chreod,22 understanding by chreod a relatively stable trajectory of the
development of a system (Waddington, 1957). Thus, although 'environmental
influences may operate in such a way as to tend to push the system off the
trajectory... the canalization of chreod... will tend to bring the system back on
to the normal path again' (Waddington, 1969: 366).
In other words, the multiple disturbances that permanently shake the
world economic system are continually neutralized by the behaviour of its
self-regulation mechanisms, guaranteeing the structural stability of the
system. The majority of disturbances are neutralized by the regulating
institutions, whereas others specifically require the decisions of regulating
agents.
These self-regulation mechanisms limit the drift of the system in its
evolution and contribute to the conformation of chreod. And because the
mechanisms are the result of the development of the Neo-Liberal ideological
code of the world economic system, the chreod by which this system evolves
will be an ideological chreod (the Neo-Liberal chreod). As long as the
aforementioned mechanisms act correctly, the evolution of the world
economic system will be guided by Neo-Liberalism.
Nevertheless, when a disturbance cannot be neutralized by the selfregulation mechanisms of the world economic system, and in order to avoid a
situation of deep structural instability, particular agents could make decisions
to generate small structural changes, allowing the system better adaptation to
the new situation. These changes would guarantee a new structural stability,
coherent both with the capitalist organization of the system and with its NeoLiberal ideological code. We can denominate such changes as minor
22
The term 'chreod' was coined by Waddington (1957) from the Greek expressions 'chre' (destiny
or necessity) and 'hodos' (path or way).
49
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
structural changes, as opposed to major structural changes, which are the
result of changes in the ideological code.
'The cultural code… [and the ideological code as its component] can be
modified... under the effect of certain events... arising directly from the
phenomenal experience of society. Such events can have their origin in
modifications of the natural ecosystem that have repercussions on social
practice, provoking new customs, new rules, and, more likely, new
techniques and new myths. They can also have origin in contacts with
neighbouring societies, through which a culture can integrate techniques,
consumption products, ideas, etc., coming from a foreign culture. Finally,
they can arise from the life of the society itself, where the individual
deviation introduces new patterns of behaviour which can extend until
they become custom, or where a new invention is finally integrated in its
cultural capital' (Morin, 1973 [2000]: 199--200).
A change in the ideological code, or ideological mutation, necessarily
implies a chreodic jump, an abrupt change of evolutionary trajectory, the
displacement of the system from one chreod to another. This is so because
the development of the new ideological code will generate new regulating
institutions and new regulating decisions, as well as new regulating agents.
But this ideological mutation will not occur easily, and it likely only when
the world economic system is facing a catastrophe, a situation of extreme
instability, where points of evolutionary bifurcation exist, as can only happen
when a system is in the midst of structural crisis; understanding by crisis:23
'an increase of the disorder and the uncertainty in a system... caused
by... the blockage of organizing devices, especially those of regulating
character... determining, on the one hand, rigid coercions, and on the
other hand, the unfreezing of potentialities that were inhibited until then'
(Morin, 1973 [2000]: 165).
23
Boyer (1987 [1992]: 67--85) made a typology of the crises of an economic system that included
the structural crises.
50
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
Until now, the world economic system has suffered no such structural
crisis, although such a crisis might occur at any time; we cannot say a priori
whether a crisis will or will not be structural until it has almost completely
developed. Nevertheless, if a combination of disturbances arise that could not
be neutralized by the self-regulation mechanisms of the system (due to a
mutual incompatibility between the recovery of the structural stability of the
system and the institutional frame and ideological reference of the agent
decisions), we can consider this situation a structural crisis.
Here, various agents, unblocking their inhibited potential, would rush to
break with the institutions, to commence with survival strategies and to build
new self-regulation mechanisms of the world economic system, according to
ideological values considered more suitable to the new situation. The new
ideological code, the new institutions, and the new decisions of most agents
of the world economic system will be different depending on what agents
obtained that their actions conditioned a majority of the actions of other
agents. We dominate this fact as ideological mutation, which is consequence
of chreodic jump.
Therefore, at any time, certain combinations of disturbances, whether
from within the world economic system itself, or the economic systems of its
environment, or the world ecosystem, could trigger an ideological mutation,
always safeguarding the capitalist organization that identifies it, though
meanwhile altering its structure. That is to say, the world economic system
could cease being Neo-Liberal while remaining capitalist.
'In policy terms, although the existence of chreodic-type developments
implies that small, marginal adjustments towards a more optimal path of
development are generally ineffective, it does leave open the possibility
of the planned transition from one chreodic path to another. Indeed, such
a transition may be necessary if the chreodic path is approaching a
"catastrophe"' (Hodgson, 1993: 259).
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SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
A good example of ideological mutation can be found it in the
immediate antecedents of the appearance of the world economic system.
When the crises of the 1970s--1980s took place (the crisis of the goldexchange standard, the energy crisis, the crisis of Fordism, the debt crisis,
the crisis of the Welfare State, etc.) the deliberate and automatic selfregulation mechanisms of the different national capitalist economic systems
failed, and they were not able to guarantee structural stability for a period of
time. Until an ideological mutation took place, and the existing ideological
code was replaced by a new one, the self-regulation mechanisms could not
recover their operative capacity. The aforementioned ideological mutation of
national capitalist economic systems amounted to the substitution of
Keynesianism for Neo-Liberalism as the dominant ideological code,
effectively making a chreodic jump from a Keynesian evolutionary trajectory
to a Neo-Liberal one. Thus, since the mid-1980s, Neo-Liberal self-regulation
of the national capitalist economic systems has once again guaranteed the
structural stability of such, allowing integration into the world economic
system.
A number of changes resulted from the above shift. Changes in the
institutional frameworks of the national capitalist economic systems were
related to the disappearance of certain institutions (for example, the goldexchange standard, or the necessity of administrative authorization for the
circulation of capital among national economic systems), as well as to the
appearance of new institutions (like the free fluctuation of exchange rates in
currency markets, or the free circulation of capital among national economic
systems). In addition, new regulating agents appeared (the WTO, the G-8,
and the World Economic Forum) while others altered direction (e.g. the
change of functions of the IMF).24
24
The new institutions and the new regulating agents are already linked to the regulation of the
world economic system, because the development of the institutional frame was simultaneous to
the globalization process. Other regulating agents which do not share the Neo-Liberal ideological
52
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
Thus, the national capitalist economic systems were able to survive the
structural crisis of the 1970s-1980s by a jumping of chreod; that is, they were
able to keep their identity thanks to an ideological mutation resulting in the
world economic system. Nevertheless, most national socialist economic
systems were not able to survive this structural crisis and were extinguished,
losing their socialist identity and being 'phagocyted' by the rising world
economic system.
So, in summary, the world economic system can undergo an a priori
unpredictable structural crisis at any time; consequently either an ideological
mutation would arise allowing it to keep its capitalist identity25 and to evolve
by a new chreod, or the system would be disintegrated by the loss of its
capitalist identity, occasioning a different world economic system or a group
of equally different territorial economic systems.
Furthermore, 'a feasible transition can be instigated either at early stage
of development of a chreodic path, close to the point of bifurcation, or even
later with a sufficiently large investment in resources' (Hodgson, 1993: 259).
That is to say, it is possible that certain agents acting under a different
ideology from the dominant (Neo-Liberal) one could try to force a chreodic
jump when the world economic system is not yet facing a catastrophe. But
unless the world economic system had already undergone a chreodic jump a
short time before (which is not the case), the agents would need to mount an
enormous effort, making such an action highly improbable. Therefore, the
best strategy for such diverted agents who insist on causing a chreodic jump
would be to prepare for that moment at which system is close to catastrophe,
when they might be able to offer an ideological alternative permitting a new
chreodic development in which the world economic system could recover
structural stability while maintaining its capitalist identity.
code also arose as 'deviations', such as the World Social Forum or alternative social movements,
also inadequately denominated anti-globalization movements.
25
Why could this not occur by means of a substitution of the Neo-Liberal ideological code for an
alternative ideological code constituted by the values defended by the World Social Forum?
53
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
11.- Conclusions
At this point, it may be said that we have offered a scientific answer to
the question 'What is the world economic system for us as observers?',
developing a proposal of mechanisms whose functioning generates every
phenomenon involved in that question.
Summarizing, the world economic system is a social system:
a) which arose spontaneously, when the conditions for it occurred, as a final
consequence of the will of the human beings who compose the system;
b) which has the capacity to self-regulate, thanks to the existence of
institutions and continuous decisions by innumerable agents who have a
specific ideology, Neo-Liberalism, as reference; and
c) the evolution of which depends on the capacity of these self-regulation
mechanisms to neutralize disturbances, whether from outside or from
within, while never losing the capitalist identity of the system (although
ideological changes are sometimes necessary).
55
SELF-REGULATION OF THE WORLD ECONOMIC SYSTEM
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