World-systems theory explains how rich and poor countries are connected to each other, kind of like a giant economic food chain. Just as a food chain has producers and consumers, the world economy has different countries playing different roles.
Imagine the global economy as a three-layer cake. At the top, you have the wealthy “core” countries like the United States, Japan, and most of Western Europe. These countries make complex products like phones, cars, and computers. They have strong governments, good education systems, and their workers generally earn higher wages.
In the middle layer are the “semi-peripheral” countries, like Brazil, Mexico, or Thailand. These countries do some manufacturing, but usually of simpler products or parts that go into more complex items. They might make car parts that get shipped to core countries for final assembly. Workers in these countries typically earn less than those in core countries.
At the bottom are the “peripheral” countries, which include many nations in Africa and parts of Asia. These countries mainly provide raw materials like oil, minerals, and agricultural products. They usually get paid very little for these resources compared to what core countries earn from turning them into finished products. Most people in peripheral countries earn very low wages.
The theory says this system keeps poor countries poor while making rich countries richer. Here’s how: A peripheral country might sell raw cotton to a semi-peripheral country for $1. That country turns it into fabric and sells it to a core country for $5. The core country makes expensive clothes from the fabric and sells them for $50. The core country ends up with the most profit, while the peripheral country gets very little.
According to this theory, it’s very hard for countries to move up to a better position because the whole system depends on having countries at each level. It’s like a game of musical chairs where some players are forced to remain standing.
This system didn’t happen by accident. It developed over hundreds of years, starting with European colonization in the 1500s. As European countries took control of other regions, they set up trade networks that benefited themselves while making other areas dependent on them.
Understanding this theory helps explain why some countries stay rich while others remain poor, even though they work just as hard. It’s not just about individual effort – it’s about how the whole global system is set up.
Many people use this theory to argue that we need to change how international trade works to give poorer countries a better chance at development. Others say the theory oversimplifies things and that countries can improve their position through good policies and education.
Whether you agree with all parts of the theory or not, it gives us useful tools for thinking about why global inequality exists and what might be done about it.
A Deeper Look into Capitalism and World-Systems Theory
World-systems theory shows how capitalism creates and maintains global inequality through exploitation and class struggle on an international scale. Like Marx’s analysis of class within countries, this theory reveals how wealthy nations extract wealth from poorer ones.
Think of the global economy as a pyramid of exploitation, with each layer feeding profits upward.
At the top sit the “core” countries – the capitalist centers like the United States, Japan, and Western Europe. These countries don’t just happen to be wealthy – they actively extract wealth from other nations through unequal trade and labor exploitation.
Let’s look at Apple: They make about $1,000 profit on each iPhone 15 Pro Max that sells for $1,199. But the Chinese workers assembling these phones at Foxconn make just $4.20 per hour. The real value is created by workers, but the profits go to shareholders in core countries.
Some defenders of capitalism argue this system helps develop poorer countries. But let’s look at the numbers:
- Apple’s market value: $3 trillion
- Foxconn worker yearly salary: $8,400
- iPhone assembly worker bonus during peak season: $880
- Apple CEO Tim Cook’s 2023 compensation: $99 million
In the middle layer are the “semi-peripheral” countries, like Mexico, Brazil, and China. These countries have some industry but remain dependent on and controlled by core country corporations.
Take Mexico’s auto parts industry. Mexican workers make $3.50 per hour producing parts that enable huge profits for American car companies. The north extracts wealth from the south through:
- Debt dependency
- Patent controls
- Corporate ownership of production
- Financial system dominance
The bottom layer consists of “peripheral” countries, which face the harshest exploitation. Consider the Democratic Republic of Congo, where miners extract cobalt for smartphone batteries in dangerous conditions for $2-3 per day.
This is modern colonialism in action:
- Congo’s cobalt powers the tech industry
- 70% of world cobalt supply comes from Congo
- Average mining company profit margin: 45%
- Average miner daily wage: $2.50
- Deaths from mining accidents in 2021: 72
The capitalist argument that this “creates jobs” ignores how these countries are deliberately kept poor and dependent. Their resources and labor are systematically undervalued to generate profits for core country corporations.
Breaking it down in class terms:
- Core country capitalists own the means of production globally
- Semi-peripheral countries provide cheaper labor while their local elites get a small share of profits
- Peripheral country workers face the most extreme exploitation
This explains why “development” under capitalism is a myth. The system requires poor countries to stay poor – they provide:
- Cheap labor
- Raw materials
- Markets for finished goods
- Places to dump environmental costs
Some proposed socialist solutions include:
- Worker ownership of industry in peripheral countries
- Cancellation of predatory international debts
- Technology transfer without patent restrictions
- Fair trade based on labor value, not market power
- International worker solidarity and organizing
South Korea is often cited as proof the system works. But its development required:
- Strong state control of capital
- Protection of domestic industry
- Heavy U.S. investment during Cold War
- Brutal repression of workers
This model can’t be replicated widely because core countries actively prevent it through:
- IMF/World Bank conditions
- Trade agreement restrictions
- Military intervention
- Support for compliant local elites
Understanding this system as a form of class struggle helps explain why reforms within capitalism can’t solve global inequality. The extraction of wealth from poor countries is not a bug – it’s a feature.
Real change requires:
- International worker organizing
- Anti-imperialist solidarity
- Socialist planning of production
- Democratic control of resources
- Abolition of the profit system
The world-systems keep billions in poverty not from lack of resources or technology, but because exploitation of the global south is essential to capitalist profit-making in the north. Only by understanding and confronting this can we build a more just economic system.