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World Systems Theory – Definition, Examples, Critiques

World Systems Theory – Definition, Examples, Critiques

Chris Drew (PhD)

Dr. Chris Drew is the founder of the Helpful Professor. He holds a PhD in education and has published over 20 articles in scholarly journals. He is the former editor of the Journal of Learning Development in Higher Education. [Image Descriptor: Photo of Chris]

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world systems theory definition

The world systems theory states that the world exists as a single socio-economic system made up of a core, periphery, and semi-periphery. In this system, “surplus value” is transferred from the periphery to the core.

To better understand the world systems theory, it is helpful to begin with its components. These are three areas of the world:

  • Core Areas – A small set of technologically advanced and industrialized capitalist nations/regions characterized by higher incomes, large tax bases, and high standards of living. In the 21st century, the developed countries that form the G-7 group, along with China can be considered the core of the world-system.
  • Periphery Areas – Poor countries that primarily subsist by exporting primary products such as agricultural produce and natural resources to the core countries. The periphery is characterized by a small tax base, low incomes, and low levels of human development index. In the 21st century, much of sub-Saharan African, parts of Latin America and Central Asia can be considered the periphery.
  • Semi-Periphery Areas – These countries act as the periphery to core countries, and as a core to the countries on the periphery. Typically, such countries are regional powers with moderate levels of development indices and growing capitalist economies.   In the 21st century, countries such as India, Brazil, Turkey, Mexico, Israel, Nigeria etc. can be considered the semi-periphery of the world-system.


Definition of World Systems Theory

Below is the classic definition of the world system by Wallerstein (1974):

  • A world system is a “multicultural territorial division of labor in which the production and exchange of basic goods and raw materials is necessary for the everyday life of its inhabitants.”

Coccia (2019) defines the world systems theory as:

  • “World-systems theory is a socioeconomic and political approach that explains the economic development and dynamics of capitalistic world economy analyzing the mechanisms of international market trade, economic division of labor between core and periphery regions, and interests of capitalist class in markets.”

world systems theory

Origins of the Theory

The world systems theory was proposed by the American sociologist Immanuel Wallerstein in the 1970s as an alternative to the then popular modernization hypothesis , which Wallerstein criticized on three grounds:

  • It was built using only the nation-state as the unit of analysis.
  • It proposed that there existed only one path to development for all states – the one followed by the developed countries. It was believed that the poor countries of today are simply primitive versions of the rich countries, and if they were to follow the same trajectory as that of the rich countries, would eventually become developed too.
  • It did not take into account transnational structures such as large business corporations that influence the development of states.

Wallerstein believed that the modernization theory, and other such models were the product of nineteenth century ways of thinking that believed in compartmentalizing knowledge. Which meant that such an approach could only look at the problems of development and underdevelopment through the lens of either developmental economics or political science.

What Wallersein proposed instead was a unified system approach that did not limit itself to any one subject or approach for analyzing global issues but combined the spheres of society, economy, and politics.

Examples of World Systems Theory

1. The Knowledge Economy

‘Knowledge economy’ is a term used to describe economies marked by a high level of technical and scientific innovation in which employment demands high levels of technical and scientific knowledge.

Such an economy stands in contrast to primary economies based on agriculture or resource extraction, and manufacturing economies that are based on skilled or unskilled manual labor.

Jobs in a knowledge economy tend to be weighted towards the finance, technology, and services sector.

In the present world-system, the developed countries have a predominant position in the knowledge economy, with almost all leading technology and financial sector corporations located in developed countries or the core of the world-system such as the US, Canada, the UK etc.

The markets for knowledge economy products often tend to be in the peripheral or semi-peripheral countries. For instance, companies such as Facebook and WhatsApp have most of their users in countries such as India, Brazil, Indonesia, Mexico, Bangladesh, etc.

This global knowledge economy is not solely based on classification by nation-states alone, for within the peripheral and semi-peripheral countries there exist regions that are integrated within the global capitalist system.

For instance, cities such as Bangalore and Mumbai in India are recognized as global hubs of Information Technology (IT) and finance, even though they are located within a semi-peripheral country.

Thus, rather than there existing a simple dichotomy of core and periphery countries, the application of the world-systems theory to the knowledge economy reveals a far more complex and interconnected world-system.

2. The Politics of Climate Change and Carbon Emissions

The politics of climate change are characterized by an unequal exchange. The core countries have historically extracted more of the earth’s natural resources including fossil fuels that contribute to global warming and have used more of the earth’s capacity to act as a heat sink.

For example, we now know that the USA’s CO2 emissions are greater than that of all of the African continent combined, or that India has one of the lowest per capita levels of CO2 emissions in the world at 1/19th those of Canada.

The world-systems theory tells us that countries or regions that form the core of the world-system have higher CO2 emissions and must consequently have a greater share in the responsibility to combat climate change as compared to countries or regions that fall in the periphery.

3. Hidden Hunger and the Packaged Food Industry

Hidden hunger is a form of malnutrition in which populations suffer from deficiency of micronutrients and vitamins, even though there may not appear to be any evident starvation.

Hidden hunger mostly results from consumption of empty calories found in packaged food and sweetened beverages.

While the global packaged food giants concentrated in the “core” countries, their products find big markets in the “periphery” countries.

It has been documented that 18 of the 20 most severely affected countries by hidden hunger are in sub-Saharan Africa, while the remaining two are in the South Asian nations of India and Afghanistan (Muthayya et al.,2013).

1. It Explains Internal Inequalities

Since the world systems theory does not take the nation-state as the primary unit of analysis, it helps explain internal inequalities within nation-states better than other development theories such as the modernization theory or the dependency theory .

For instance, India, a country in the semi-periphery of the world system is home to more than 200 million people living in poverty as defined by the World Economic Forum, while at the same time having the third highest number of billionaires in the world (177), after only the US and China.

Application of the world systems theory helps us understand that there are several regions within the peripheral and semi-peripheral countries that are deeply integrated with the global capitalist structure. The regional hubs within nations serve as the core to the peripheries located within the same countries.

This demonstrates a much more complex and nuanced model of global inequalities than simple classifications of first world and third world countries or developed, developing, and underdeveloped countries that other models provide.

Exploitation of a periphery by a core does not happen at the level of nation-states alone; a core within a country can also exploit a periphery within the same country leading to sharp regional inequalities.

2. Human-centric Rather than System-centric

The world systems theory conceptualizes the entire world as one unified system rather than made of different systems and structures. In the words of Frank & Gills (1993) it allows us to see ‘a common river and unity of history in a single world system [that is] multicultural in origin and expression’.

3. Cross-domain Applicability

The world systems theory can be applied to a number of fields including gender studies, ethnic and racial discrimnaiton studies, political geography, international relations to name a few.

For instance, a gender studies analysis of the world system reveals the manner in which women’s labor is exploited within a capitalist system controlled by men. Nash (1988), in an analysis of the Iranian carpet making industry has shown how carpet making households led by men were located in a periphery relative to the core regions of the developed world to which these carpets were exported. Within the household however, much of the carpet-weaving work was carried out by women while the men controlled the finances, replicating the core-periphery relationship, this time within the household, and with a highly gendered aspect to it.

Criticisms of World Systems Theory

1. Insufficient Grounding in Empirical Data

Because of its wide scope, empirically grounded studies justifying the hypotheses of the world systems theory are still emerging. The theory has been critiqued for presenting too many broad generalizations and not presenting a falsifiable hypothesis.

2. Overemphasizing the Role of Globalization and Capitalism

The world systems theory, in putting forward the notion of a unified world connected by networks of global capital, makes two assumptions that do not always hold true – one of globalization and the other of the inevitability of capitalism.

For instance, Balkilic (2018) has shown how local dynamics in the coffee plantations of the Caribbean developed independently of any global influences. Similarly, several countries such as Bhutan still remain outside the purview of the global capitalist system.

3. Ignores Socio-cultural Causes of Underdevelopment

Even though the world systems theory claims to be a unified approach combining the spheres of economy, politics, and society, it ends up relying too heavily on economic causes of underdevelopment while ignoring others such as culture, religion, tradition, etc.

For instance, the Indian caste system does not have any economic basis, being grounded in scriptural and traditional origins. Yet, it is widely acknowledged to be a system that kept millions oppressed and deprived. (Fuller 1973).

In fact one of the reasons Marxist theories failed to find much support in India was their insistence upon class as the primary system of oppression , when in fact, caste played an equally important, if not greater role, in India’s underdevelopment.

Not to be Confused With…

The dependency theory.

The dependency theory is a theory in economics that is a predecessor and an immediate influence on the world systems theory. The theory took birth in 1949 from the work of the Argentinian economist Raul Prebisch.

It directly critiqued the postulate of the modernization theory which stated that the underdeveloped countries of today are just a primitive version of the developed countries, and provided enough stimulus in the form of investment and technology transfer, can be put on the path to development.

Prebisch challenged this hypothesis by claiming that such investments and infusion of capital into underdeveloped countries only serve to further their dependence on foreign capital.

Prebisch was the first to use the terms core and periphery to describe this relationship – a terminology that Wallerstein later built upon for his own world systems theory. Prebisch was particularly interested in the curious case of Argentina, that, beginning the 20th century as one of the richest countries in the world on account of its strong agrarian exports, failed to keep pace with other rich countries of Europe and North America, eventually sliding into a seemingly interminable cycle of economic stagnation and political crisis.

However the world systems theory differs from the dependency theory in that it rejects Presbisch’s formulation of nation-states as the primary unit of analysis. As Wallterstein explained, core and periphery can exist within the same country too.

Wallerstein also devised a three-tiered model comprising a core, semi-periphery, and a periphery as opposed to Prebisch’s binary division. Finally, Wallterstein intended his formulation to be an interdisciplinary approach to understanding the world, whereas Presbisch’s work was a theory in macroeconomics.

Balkiliç, O. (2018). Historicizing world system theory: Labor, sugar, and coffee in Caribbean and in Chiapas . Gaziantep University Journal of Social Sciences . 17 (4), 1298–1310.

Coccia M. (2019) Comparative World-Systems Theories. in Farazmand A. (eds) Global Encyclopedia of Public Administration, Public Policy, and Governance . New York: Springer.

Frank, A.G. & Gills, B.K. (1993) The World System: Five Hundred Years or Five Thousand? London: Routledge.

Fuller, C. (1973). Caste and class, or the anthropology of underdevelopment. Cambridge Anthropology, 1 (1), 1-9.

Muthayya, S., Rah, J. H., Sugimoto, J. D., Roos, F. F., Kraemer, K., & Black, R. E. (2013). The global hidden hunger indices and maps: An advocacy tool for action. PloS one , 8 (6), e67860.

Nash, J. (1988). Cultural parameters of sexism and racism in the international division of labor.  Racism, Sexism, and the World-System, Studies in the Political Economy of the World System , 11-38.

Labor. in Smith, J., Collins, J. Hopkins, T. & Muhammad,  A. (eds.) Racism, sexism, and the World-System . (pp. 11-38). Greenwood Press.

Wallerstein, I. (1974). The Rise and future demise of the world capitalist system: Concepts for comparative analysis. Comparative Studies in Society and History, 16 (4), 387-415.


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world economic system essay

Wallerstein�s World-Systems Theory

By Frank W. Elwell

Marx�s legacy in social theory does not lie in his predictions of future utopias but rather in his analyses of the workings and contradictions of capitalism. Within contemporary sociology this tradition is very much alive in world-systems analysis, a perspective developed by Immanuel Wallerstein in the 1970s. According to Wallerstein, the modern nation state exists within a broad economic, political, and legal framework which he calls a �world-system.� Just as individual behavior cannot be understood without reference the sociocultural system in which they are members, individual societies or nation states cannot be understood without reference to the world-system in which they are embedded.

Modern nation states are all part of the world-system of capitalism, and it is this world-system that Wallerstein seeks to understand. Wallerstein believes that there are only three basic types of social systems.

The Modern World-System


World empires


The first he terms as �mini-systems,� these are the small, homogenous societies studied by anthropologists. Hunting and gathering, pastoral, and simple horticultural societies are relatively self-contained economic units, producing all goods and services within the sociocultural system itself. The second type of social system   is a �world-empire.� This system has an economy that is based on the extraction of surplus goods and services from outlying districts. Much of this tribute goes to pay for the administrators who extract it   and for the military to ensure continued domination, the rest goes to the political rulers at the head of the empire. The third type of social system, according to Wallerstein, is the world-economies. Unlike world-empires, the world-economies have no unified political system; nor is its dominance based on military power alone. However, like a world-empire, a world-economy is based on the extraction of surplus from outlying districts to those who rule at the center.

From the start, Wallerstein argues, capitalism has had a division of labor that encompassed several nation states. The capitalist world-system began in Europe in about 1500 and under the spur of the accumulation of capital, expanded over the next few centuries to cover the entire globe. In the process of this expansion the capitalist world system has absorbed small mini-systems, world-empires, as well as competing world-economies. The capitalist world-economy was created by establishing long-distance trade in goods and linking production processes worldwide, all of which allowed the significant accumulation of capital in Europe. But these economic relationships were not created in a vacuum. The modern nation state was created in Europe along with capitalism to serve and to protect the interests of the capitalists. What was in the interest of early European capitalists was the establishment of a world-economy based on an extremely unequal division of labor between European states and the rest of the system. Also in the interest of early European capitalists was the establishment of strong European states that had the political and military power to enforce this inequality.

For Wallerstein, the capitalist world-economy is a mechanism of surplus appropriation that is both subtle and efficient. It relies upon the creation of surplus through constantly expanding productivity.   It extracts this surplus for the benefit of the elite through the creation of profit. The capitalist world-system is based on a two-fold division of labor in which different classes and status groups are given differential access to resources within nation states; and the different nation states are given differential access to goods and services on the world market. Both types of markets, those within and those between nation states, are very much distorted by power.

Core & Periphery

Wallerstein divides the capitalist world-economy into three areas:

peripheral areas.  


Core states

The peripheral areas are the least developed; they are exploited by the core for their cheap labor, raw materials, and agricultural production. The semi-peripheral areas are somewhat intermediate, being both exploited by the core and take some role in the exploitation of the peripheral areas. In the recent past they have been expanding their manufacturing activities particularly in products that core nations no longer find very profitable. The core states are in geographically advantaged areas of the world�Europe and North America.

These core states promote capital accumulation internally through tax policy, government purchasing, sponsorship of research and development, financing infrastructural development (such as sewers, roads, airports�all privately constructed but publically financed), and maintaining social order to minimize class struggle. Core states also promote capital accumulation in the world-economy itself. These states have the political, economic, and military power to enforce unequal rates of exchange between the core and the periphery. It is this power that allows core states to dump unsafe goods in peripheral nations, pay lower prices for raw materials than would be possible in a free market, exploit the periphery for cheap labor, dump in their environment, abuse their consumers and workforce, erect trade barriers and quotas, and establish and enforce patents. It is the economic, political, and military power of the core that allows significant capital to be accumulated into the hands of the few, the capitalist world-system that produces and maintains the gross economic and political inequalities within and between nations.

World-Systems Map

As with capitalism within nation states, this unequal power between nation states is not uncontested. It is the subject of struggle. There are internal contradictions that with the passage of time cause political and economic instability and social unrest. Eventually, according to Wallerstein, a world-wide economic crisis will be reached and the capitalist world-system will collapse, opening the way for revolutionary change. The coming crisis of capitalism, as predicted by Wallerstein�s world-systems theory, will be the topic of the next short-paper.

For a more extensive discussion of Wallerstein's theories refer to Macro Social Theory by Frank W. Elwell.  Also see Sociocultural Systems: Principles of Structure and Change to learn how his insights contribute to a more complete understanding of modern societies.

world economic system essay


Elwell, F. W. 2006. Macrosociology: Four Modern Theorists. Boulder: Paradigm Publishers.

Elwell, F. W. 2009. Macrosociology: The Study of Sociocultural Systems . Lewiston: Edwin Mellen Press.

Elwell, F. W. 2013. Sociocultural Systems: Principles of Structure and Change. Alberta: Athabasca University Press.

Wallerstein, Immanuel. 1974. The Modern World-System: Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century . New York: Academic Press.

Wallerstein, Immanuel. 1980. The Modern World-System II: Mercantilism and the Consolidation of the European World-Economy, 1600-1750. New York: Academic Press.

Wallerstein, Immanuel. 1989. The Modern World-System III: The Second Era of Great Expansion of the Capitalist World-Economy, 1730-1840. New York: Academic Press.

Wallerstein, Immanuel. 1998. Utopistics:   Or, Historical Choices of the Twenty-first Century . New York: W.W. Norton & Company, Inc.

Wallerstein, Immanuel. 1999. The End of the World as We Know It. Minnesota: The University of Minnesota Press.

Wallerstein, Immanuel. 2000. The Essential Wallerstein . New York: The New Press.

Wallerstein, Immanuel. 2003. The Decline of American Power . New York: The New Press.

To reference Wallerstein's World-Systems Theory you should use the following format:

Elwell, Frank W. 2013. "Wallerstein's World-Systems Theory," Retrieved August 31, 2013 [use actual date]

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World-Systems Theory

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The world-systems theory is a fundamental unit of analysis for social evolution. Also known as world-systems analysis or the world-systems perspective, it is a multidisciplinary, macroscale approach to world history and social change. It takes up a more inclusive unit of analysis, the “world system,” which reflects a particular understanding of history and a set of questions people pose related to it. Although its intellectual origins lie on classical sociology, Marxian revolutionary theory, geopolitical strategizing, and theories of social evolution, it emerged only in the 1970s in explicit form. The most prominent figure behind the world-systems theory is the late Immanuel Wallerstein (1930–2019).


World-systems theory or core-periphery theory is a fundamental unit of analysis for social evolution. Also known as world-systems analysis or the world-systems perspective, it is a multidisciplinary, macroscale approach to world history and social change. In contrast...

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Wallerstein, I. (1974). The modern world-system: Capitalist agriculture and the origins of the European world-economy in the sixteenth century . New York: Academic.

Wallerstein, I. (2000). The essential Wallerstein . New York: The New Press.

Wallerstein, I. (2004). World-systems analysis: An introduction . Durham: Duke University Press.

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Literary Theory and Criticism

Home › World Systems Theory

World Systems Theory

By NASRULLAH MAMBROL on January 12, 2018 • ( 1 )

A theory of the operation of the world economic, social and political system, formulated by Immanuel Wallerstein (1974a; 1974b). The chief assertion of this theory is that the capitalist system has been the world economic system since the sixteenth century and that one cannot talk about economies in terms of the nation-state, nor of ‘society’ in the abstract, nor of ‘stages’ of development, because each society is affected by, indeed is a part of, the capitalist world economy.

It was only with the emergence of the modern world economy in sixteenth-century Europe that we saw the full development and economic predominance of market trade. This was the system called capitalism. Capitalism and world economy (that is, a single division of labour, but multiple polities and cultures) are obverse sides of the same coin.One does not cause the other. (Wallerstein 1974b: 391)

World system theory emerged as a refutation of modernization theory, which tended to (a) concentrate on the nation-state, (b) assume that all countries follow a similar path of growth, (c) disregard transnational structures and (d) base explanations on ahistorical ideal types. The proposition of one world capitalist system in operation since the sixteenth century radically affects how we view not only world economics but also national politics, class, ethnicity and international relations in general. For instance, the theory rejects the concept of a ‘society’ as a unit of analysis in favour of two systems of production: ‘mini-systems’ that are localized and of short duration, and the world system itself (Wallerstein 1976).


A demonstration of how this theory works can be seen in its approach to the feudal-like economies of Latin America. One traditional Marxist view of economic development sees all economies as passing through a series of stages, so it would regard these economies as existing at a pre-bourgeois, pre-industrialized stage of development. But world system theory holds that these economies are already a part of the capitalist world system.They are not an earlier stage of a transition to industrialization, but are undeveloped because they are ‘peripheral, raw-material producing’ areas, on the margins of, and exploited by, the industrialized world and hence in a state of dependency. Such societies may, or may not, develop an industrial base. But whether they do or not depends upon how well they resist dominant states and appropriate the capitalist world system (or, as Wallerstein would contend,purely as a result of structural changes in the system) rather than any inevitable process of development.Industrialization can thus be seen as, above all, a political phenomenon.

The world system is primarily a political system, rather than one determined by ‘neutral’ economic factors, and in this sense overlaps theories of neo-colonialism and decolonization. The capitalist world system emerged at the same time as the modern European imperial dominance of the world. This had two major consequences: the establishment of the world as a spatio-temporal site of imperial power, and the perpetuation of the imperial binarism between colonizing and colonized countries. Although Wallerstein does not develop the link between the capitalist world system and imperialism (since he regards individual world empires as subsidiary to the capitalist world system), it is clear that the world system is intimately tied up with European expansion and that the history of colonization has a great deal of bearing upon which countries are industrialized today, and which are maintained as resource-producing areas.


Clearly, although Wallerstein sees the capitalist world system as one that overrides any other world system,such as imperialism,the imperial expansion of Europe,its cultural and political,as well as economic dominance, in short the emergence of modernity itself, are inextricable from the rise and dominance of a world economic system. Dominant core states may change, but the structure of the world system, and the dynamics of capital accumulation on which it rests,remain in place.The theory does not explain, nor is it interested in, human subjectivity, the politics of colonization, the continued dominance of certain discursive forms of imperial rhetoric, nor the particular and abiding material consequences of colonialism in individual societies. It offers no place for individual political agency, nor is it concerned with the local dynamics of cultural change, nor even with the operation of ‘societies’, all these things being subsidiary to the broad structural forces of the world system.

 Wallerstein  addressed the relationship of culture to the world system, contending that culture, both as that which creates distinctions within groups (‘Culture’), and that which distinguishes between groups such as nations (‘cultures’), are actually ‘the consequence of the historical development of [the world] system and reflect its guiding logic’ (1991: 32). Both forms of culture serve to mystify people about the world system and thus keep it in place. In this scheme of things, even ‘anti-systemic’movements are a product of the world system.


Further reading: Wallerstein, I. (1974a) The Modern World System: Capitalist Agriculture and the Origin of the European World-Economy in the Sixteenth Century, New York: Academic Press. Wallerstein, I. (1974b) ‘The Rise and Future Demise of the World Capitalist System: Concepts for Comparative Analysis’, Comparative Studies in Society and History (16) 3: 387–415. Wallerstein, I. (1976) ‘A World-System Perspective on the Social Sciences’, British Journal of Sociology (27) 3: 343–352. Wallerstein, I. (1980) The Capitalist World Economy, Cambridge: Cambridge University Press. Wallerstein, I. (1991) Geopolitics and Geoculture: Essays on the Changing World System, Cambridge: Cambridge University Press.

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Tags: Does Capitalism Have a Future? , European Universalism: The Rhetoric of Power , Historical Capitalism with Capitalist Civilization , Immanuel Wallerstein , Literary Criticism , Literary Theory , Postcolonialism , Sociology , The Decline of American Power: The U.S. in a Chaotic World , The End of the World As We Know It: Social Science for the Twenty-First Century , The Modern World-System , The World-System and Africa , World-Systems Analysis: An Introduction

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BUS101: Introduction to Business

world economic system essay

Understanding Economic Systems

Read this explanation of the United States economy. American workers are considered some of the most productive in the world. Productivity is the final output after you have considered the hours worked. Productivity in this country has grown because technology has lowered the cost of producing goods and services.

How Business and Economics Work

Global economic systems.

Businesses and other organizations operate according to the economic systems of their home countries. Today the world's major economic systems fall into two broad categories: free market, or capitalism; and planned economies, which include communism and socialism. However, in reality many countries use a mixed market system that incorporates elements from more than one economic system.

The major differentiator among economic systems is whether the government or individuals decide:

  • How to allocate limited resources – the factors of production – to individuals and organizations to best satisfy unlimited societal needs
  • What goods and services to produce and in what quantities
  • How and by whom these goods and services are produced
  • How to distribute goods and services to consumers

Managers must understand and adapt to the economic system or systems in which they operate. Companies that do business internationally may discover that they must make changes in production and selling methods to accommodate the economic system of other countries. Table 1.1 summarizes key factors of the world's economic systems.

The Basic Economic Systems of the World
Capitalism Communism Socialism Mixed Economy
Businesses are privately owned with minimal government ownership or interference. Government owns all or most enterprises. Basic industries such as railroads and utilities are owned by government. Very high taxation as government redistributes income from successful private businesses and entrepreneurs. Private ownership of land and businesses but government control of some enterprises. The private sector is typically large
Complete freedom of trade. No or little government control. Complete government control of markets. Some markets are controlled, and some are free. Significant central-government planning. State enterprises are managed by bureaucrats. These enterprises are rarely profitable. Some markets, such as nuclear energy and the post office, are controlled or highly regulated.
Strong incentive to work and innovate because profits are retained by owners. No incentive to work hard or produce quality products. Private-sector incentives are the same as capitalism, and public-sector incentives are the same as in a planned economy. Private-sector incentives are the same as capitalism. Limited incentives in the public sector.
Each enterprise is managed by owners or professional managers with little government interference. Centralized management by the government bureaucracy. Little or no flexibility in decision-making at the factory level. Significant government planning and regulation. Bureaucrats run government enterprises. Private-sector management similar to capitalism. Public sector similar to socialism.
Continued steady growth. No growth and perhaps disappearance. Stable with probable slight growth. Continued growth.
United States Cuba, North Korea Finland, India, Israel Great Britain, France, Sweden, Canada

In recent years, more countries have shifted toward free-market economic systems and away from planned economies. Sometimes, as was the case of the former East Germany, the transition to capitalism was painful but fairly quick. In other countries, such as Russia, the movement has been characterized by false starts and backsliding. Capitalism, also known as the private enterprise system , is based on competition in the marketplace and private ownership of the factors of production (resources). In a competitive economic system, a large number of people and businesses buy and sell products freely in the marketplace. In pure capitalism, all the factors of production are owned privately, and the government does not try to set prices or coordinate economic activity.

A capitalist system guarantees certain economic rights: the right to own property, the right to make a profit, the right to make free choices, and the right to compete. The right to own property is central to capitalism. The main incentive in this system is profit, which encourages entrepreneurship. Profit is also necessary for producing goods and services, building manufacturing plants, paying dividends and taxes, and creating jobs. The freedom to choose whether to become an entrepreneur or to work for someone else means that people have the right to decide what they want to do on the basis of their own drive, interest, and training. The government does not create job quotas for each industry or give people tests to determine what they will do.

Competition is good for both businesses and consumers in a capitalist system. It leads to better and more diverse products, keeps prices stable, and increases the efficiency of producers. Companies try to produce their goods and services at the lowest possible cost and sell them at the highest possible price. But when profits are high, more businesses enter the market to seek a share of those profits. The resulting competition among companies tends to lower prices. Companies must then find new ways of operating more efficiently if they are to keep making a profit – and stay in business.

McDonalds storefront in China named McCafe

Exhibit 1.5 McDonald's China Since joining the World Trade Organization in 2001, China has continued to embrace tenets of capitalism and grow its economy. China is the world's largest producer of mobile phones, PCs, and tablets, and the country's over one billion people constitute a gargantuan market. The explosion of McDonald's and KFC franchises epitomizes the success of American-style capitalism in China, and Beijing's bid to host the 2022 Winter Olympics is a symbol of economic openness. This McCafe is an example of changing Western products to suit Chinese tastes. This is an example of changing Western products to suit Chinese tastes. Do you think China's capitalistic trend can continue to thrive under the ruling Chinese Communist Party that opposes workers' rights, free speech, and democracy?

The complete opposite of capitalism is communism . In a communist economic system, the government owns virtually all resources and controls all markets. Economic decision-making is centralized: the government, rather than the competitive forces in the marketplace, decides what will be produced, where it will be produced, how much will be produced, where the raw materials and supplies will come from, who will get the output, and what the prices will be. This form of centralized economic system offers little if any choice to a country's citizens. Early in the 20th century, countries that chose communism, such as the former Soviet Union and China, believed that it would raise their standard of living. In practice, however, the tight controls over most aspects of people's lives, such as what careers they can choose, where they can work, and what they can buy, led to lower productivity. Workers had no reasons to work harder or produce quality goods, because there were no rewards for excellence. Errors in planning and resource allocation led to shortages of even basic items.

These factors were among the reasons for the 1991 collapse of the Soviet Union into multiple independent nations. Recent reforms in Russia, China, and most of the eastern European nations have moved these economies toward more capitalistic, market-oriented systems. North Korea and Cuba are the best remaining examples of communist economic systems. Time will tell whether Cuba takes small steps toward a market economy now that the United States reestablished diplomatic relations with the island country a few years ago.

Socialism is an economic system in which the basic industries are owned by the government or by the private sector under strong government control. A socialist state controls critical, large-scale industries such as transportation, communications, and utilities. Smaller businesses and those considered less critical, such as retail, may be privately owned. To varying degrees, the state also determines the goals of businesses, the prices and selection of goods, and the rights of workers. Socialist countries typically provide their citizens with a higher level of services, such as health care and unemployment benefits, than do most capitalist countries. As a result, taxes and unemployment may also be higher in socialist countries. For example, in 2017, the top individual tax rate in France was 45 percent, compared to 39.6 percent in the United States. With both countries electing new presidents in 2017, tax cuts were a campaign promise that both President Macron and President Trump took on as part of their overall economic agendas.

Many countries, including the United Kingdom, Denmark, India, and Israel, have socialist systems, but the systems vary from country to country. In Denmark, for example, most businesses are privately owned and operated, but two-thirds of the population is sustained by the state through government welfare programs.

Mixed Economic Systems

Pure capitalism and communism are extremes; real-world economies fall somewhere between the two. The U.S. economy leans toward pure capitalism, but it uses government policies to promote economic stability and growth. Also, through policies and laws, the government transfers money to the poor, the unemployed, and the elderly or disabled. American capitalism has produced some very powerful organizations in the form of large corporations, such as General Motors and Microsoft. To protect smaller firms and entrepreneurs, the government has passed legislation that requires that the giants compete fairly against weaker competitors.

Canada, Sweden, and the UK, among others, are also called mixed economies ; that is, they use more than one economic system. Sometimes, the government is basically socialist and owns basic industries. In Canada, for example, the government owns the communications, transportation, and utilities industries, as well as some of the natural-resource industries. It also provides health care to its citizens. But most other activity is carried on by private enterprise, as in a capitalist system. In 2016, UK citizens voted for Britain to leave the European Union, a move that will take two or more years to finalize. It is too early to tell what impact the Brexit decision will have on the UK economy and other economies around the world.

The few factors of production owned by the government in a mixed economy include some public lands, the postal service, and some water resources. But the government is extensively involved in the economic system through taxing, spending, and welfare activities. The economy is also mixed in the sense that the country tries to achieve many social goals – income redistribution and retirement pensions, for example – that may not be attempted in purely capitalist systems.

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The power of economics to explain and shape the world

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Nobel Prize-winning economist Esther Duflo sympathizes with students who have no interest in her field. She was such a student herself — until an undergraduate research post gave her the chance to learn first-hand that economists address many of the major issues facing human and planetary well-being. “Most people have a wrong view of what economics is. They just see economists on television discussing what’s going to happen to the stock market,” says Duflo, the Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics. “But what people do in the field is very broad. Economists grapple with the real world and with the complexity that goes with it.”

That’s why this year Duflo has teamed up with Professor Abhijit Banerjee to offer 14.009 (Economics and Society’s Greatest Problems), a first-year discovery subject — a class type designed to give undergraduates a low-pressure, high-impact way to explore a field. In this case, they are exploring the range of issues that economists engage with every day: the economic dimensions of climate change, international trade, racism, justice, education, poverty, health care, social preferences, and economic growth are just a few of the topics the class covers. “We think it’s pretty important that the first exposure to economics is via issues,” Duflo says. “If you first get exposed to economics via models, these models necessarily have to be very simplified, and then students get the idea that economics is a simplistic view of the world that can’t explain much.” Arguably, Duflo and Banerjee have been disproving that view throughout their careers. In 2003, the pair founded MIT’s Abdul Latif Jameel Poverty Action Lab, a leading antipoverty research network that provides scientific evidence on what methods actually work to alleviate poverty — which enables governments and nongovernmental organizations to implement truly effective programs and social policies. And, in 2019 they won the Nobel Prize in economics (together with Michael Kremer of the University of Chicago) for their innovative work applying laboratory-style randomized, controlled trials to research a wide range of topics implicated in global poverty. “Super cool”

First-year Jean Billa, one of the students in 14.009, says, “Economics isn’t just about how money flows, but about how people react to certain events. That was an interesting discovery for me.”

It’s also precisely the lesson Banerjee and Duflo hoped students would take away from 14.009, a class that centers on weekly in-person discussions of the professors’ recorded lectures — many of which align with chapters in Banerjee and Duflo’s book “Good Economics for Hard Times” (Public Affairs, 2019). Classes typically start with a poll in which the roughly 100 enrolled students can register their views on that week’s topic. Then, students get to discuss the issue, says senior Dina Atia, teaching assistant for the class. Noting that she finds it “super cool” that Nobelists are teaching MIT’s first-year students, Atia points out that both Duflo and Banerjee have also made themselves available to chat with students after class. “They’re definitely extending themselves,” she says. “We want the students to get excited about economics so they want to know more,” says Banerjee, the Ford Foundation International Professor of Economics, “because this is a field that can help us address some of the biggest problems society faces.”   Using natural experiments to test theories

Early in the term, for example, the topic was migration. In the lecture, Duflo points out that migration policies are often impacted by the fear that unskilled migrants will overwhelm a region, taking jobs from residents and demanding social services. Yet, migrant flows in normal years represent just 3 percent of the world population. “There is no flood. There is no vast movement of migrants,” she says. Duflo then explains that economists were able to learn a lot about migration thanks to a “natural experiment,” the Mariel boat lift. This 1980 event brought roughly 125,000 unskilled Cubans to Florida over a matter a months, enabling economists to study the impacts of a sudden wave of migration. Duflo says a look at real wages before and after the migration showed no significant impacts. “It was interesting to see that most theories about immigrants were not justified,” Billa says. “That was a real-life situation, and the results showed that even a massive wave of immigration didn’t change work in the city [Miami].”

Question assumptions, find the facts in data Since this is a broad survey course, there is always more to unpack. The goal, faculty say, is simply to help students understand the power of economics to explain and shape the world. “We are going so fast from topic to topic, I don’t expect them to retain all the information,” Duflo says. Instead, students are expected to gain an appreciation for a way of thinking. “Economics is about questioning everything — questioning assumptions you don’t even know are assumptions and being sophisticated about looking at data to uncover the facts.” To add impact, Duflo says she and Banerjee tie lessons to current events and dive more deeply into a few economic studies. One class, for example, focused on the unequal burden the Covid-19 pandemic has placed on different demographic groups and referenced research by Harvard University professor Marcella Alsan, who won a MacArthur Fellowship this fall for her work studying the impact of racism on health disparities.

Duflo also revealed that at the beginning of the pandemic, she suspected that mistrust of the health-care system could prevent Black Americans from taking certain measures to protect themselves from the virus. What she discovered when she researched the topic, however, was that political considerations outweighed racial influences as a predictor of behavior. “The lesson for you is, it’s good to question your assumptions,” she told the class. “Students should ideally understand, by the end of class, why it’s important to ask questions and what they can teach us about the effectiveness of policy and economic theory,” Banerjee says. “We want people to discover the range of economics and to understand how economists look at problems.”

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Prof. Esther Duflo will present her research on poverty reduction and her “proposal for a global minimum tax on billionaires and increased corporate levies to G-20 finance chiefs,” reports Andrew Rosati for Bloomberg. “The plan calls for redistributing the revenues to low- and middle-income nations to compensate for lives lost due to a warming planet,” writes Rosati. “It also adds to growing calls to raise taxes on the world’s wealthiest to help its most needy.”

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The world

A jungle where only the law of the strongest holds? A mosaic of compatible cultures? A lonely planet undergoing a climate change that leaderships are ignoring? A volcano just before a global democratic revolution? Surely, an interesting place to observe, interpret, understand, manage, and change.





Look at how evolved the perception of economic, political, environmental global risks over the years in the full list of all WEF reports.


Essay: (October 2014)

(82%) and (40% in non-absent relationships), (of two types: 24% and 22% respectively), whereas is just the 6% of non-absent relationships.

have been working on climate change assessment on three fields: the assessment of the scientific evidence of the threat, the evaluation of impact and the mitigation strategy. Here you are the summary results of their evidence-based, consensus-based reports, which have been the reason for the Nobel Prize 2008 to be given to IPCC.



released on 2 February 2007

Mitigation of Climate Change:


This text, approved in August 2015, will be debated and finally approved at the General Assembly. It contains humankind goals for 2030 in all countries: 17 Sustainable Development Goals and 169 targets demonstrate the scale and ambition of this new universal Agenda. They seek to build on the Millennium Development Goals and complete what these did not achieve. They seek to realize the human rights of all and to achieve gender equality and the empowerment of all women and girls. They are integrated and indivisible and balance the three dimensions of sustainable
development: the economic, social and environmental.

The full text of the GEO-5 Summary for policymakers by the United Nations Environment Programme.

Under the title: "Resilient People, Resilient Planet: A future worth choosing", more than 50 recommendations are motivated with analyses and reflections.



Responding to the findings of the Fourth Assessment Report of the Intergovernmental Panel on Climate Change that , and that in reducing emissions significantly constrains opportunities to achieve lower stabilization levels and

Recognizing that to achieve the ultimate objective of the Convention and emphasizing the urgency to address climate change as indicated in the Fourth Assessment Report of the Intergovernmental Panel on Climate Change,

The Conference of the Parties decides to launch a comprehensive process to enable the full, effective and sustained implementation of the Convention through long-term cooperative action, now, up to and beyond 2012.



dollars into economies that need it, and direct dividends in the form of carbon credits to the investing countries or companies. As of June 2006, more than 1,000 projects were in the CDM pipeline, including a large number of renewable projects.





The insurance and re-insurance industry has key data to evalutate the costs of climate change. SwissRe, a major re-assurance firm, has been monitoring climate change for years.







from the





components ( , , and net ) for 136 countries and 42 years. Excellent for international comparisons, long-term growth enquiries and business cycle analysis, since it provides real values at constant prices comparable over time and countries.






– This scenario depicts a globally connected society that focuses on global trade and economic liberalization and takes a reactive approach to ecosystem problems but that also takes strong steps to reduce and inequality and to invest in public goods such as infrastructure and education. Economic growth in this scenario is the highest of the four scenarios, while it is assumed to have the lowest population in 2050.
– This scenario represents a regionalized and fragmented world, concerned with security and protection, emphasizing primarily regional markets, paying little attention to public goods, and taking a reactive approach to ecosystem problems. Economic growth rates are the lowest of the scenarios (particularly low in developing countries) and decrease with time, while population growth is the highest.
– In this scenario, regional watershed-scale ecosystems are the focus of political and economic activity. Local institutions are strengthened and local ecosystem management strategies are common; societies develop a strongly proactive approach to the management of
ecosystems. Economic growth rates are somewhat low initially but increase with time, and population in 2050 is nearly as high as in Order from Strength.
– This scenario depicts a globally connected world relying strongly on environmentally sound technology, using highly managed, often engineered, ecosystems to
deliver ecosystem services, and taking a proactive approach to the management of ecosystems in an effort to avoid problems. Economic growth is relatively high and accelerates, while population in 2050 is in the mid-range of the scenarios.

No scenario represents business as usual, although all begin from current conditions and trends.

[6.6 MB]


City Mayors examines and illustrate how city mayors, and others who govern metropolitan areas, develop solutions to long-standing urban problems such as housing, transport, education and , but also how they meet the latest environmental, technological, and security challenges which affect the well-being of their citizens.


Beyond intractability of political, ethnical and economic conflicts.


In order to achieve the Millennium Development Goals, substantial additional external funding needs to be mobilized. Estimates differ, but a ‘ballpark’ figure is an
annual increase of US$50 billion. This could be achieved by a doubling of official development assistance (ODA). Welcome steps have been made in that direction, but
this takes time, and time is of the essence. For this reason alone, it is necessary to consider new sources.

In the paper the authors consider seven new sources:
• Global environmental taxes (carbon-use tax);
• Tax on currency flows (the ‘Tobin tax’);
• Creation of new Special Drawing Rights (SDRs);
• International Finance Facility (IFF);
• Increased private donations for development;
• Global lottery and global premium bond; and
• Increased remittances from emigrants.


in 144 countries - Price elasticities and income elasticities of classes (food and non-food) - Food share on household budget


Absolute figures, shares in world trade, rankings.


levels and trends in all countries of the world: and in the general population, the youth, the women

[1200 KB]





[1000 KB]



is presented in one sheet. Is price stability a common feature of the world economies? Is hyperinflation a disease that hurts some groups of countries more than others? Discover the answers to these and many other macroeconomics questions just analysing the real data.



of where the paper appeared first.

", according to which any good has the same price worldwide, after taken into account . Comparing with , you get the real purchasing power of people in food terms.





- Trade flows over time


as well as a complete (health, indicators,...)



The Worldwatch Institute provides compelling, accessible, and fact-based analysis of critical global issues, with a special attention to the environment.

Its flagship publication is this report, whose edition of 2003 can be downloade for free from the following page:




A collection of world change trends in economy, society, cultures.






Minutes of conversation at the phone between couple of countries (193 available nations) from 1983 to 1995.

. Long-term time-series from 1983 to 1999. This data set allows for comparison of across countries for the same job, over time, underlining the differences between skilled and unskilled works.


Direct link to Groningen Growth and Development Centre and The Conference Board, Total Economy Database, February 2004, at, where you'll find a lot of useful industry and macro data.



states that IMF/World Bank structural adjustments continually lowers the wages of weak nations and thus exponentially increases the transfer of their wealth to the imperial-centers-of-capital. Instead of increasing the wages of the poorly-paid to the level of the well-paid, the wages of the well-paid are being lowered to the level of the low-paid.

Four primary rules and 15 subsidiary rules of Democratic Cooperative Capitalism are presented as alternatives for quickly developing the world and alleviating .




comparative study about different technological progress by .


alleviation, women’s rights and universal access to reproductive health.






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Globalization and the World Economy Essay (Critical Writing)

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The current trends in the global economy development can be viewed as the foundation for considering the further political and financial changes on both the statewide and the global levels. Particularly, the fact that China, after years of being a manufacturing area, has developed enough to boost its economy and enter the global environment as a production leader deserves to be mentioned.

Therefore, it is desirable that global companies should consider expanding and redesigning their current supply chains so that room for partnerships with the identified companies could be created. Moreover, the competition issue deserves to be brought up as one of the scourges of the contemporary economic environment. Therefore, in the context of the present-day business environment, the emphasis must lie on developing a competitive advantage (CA) that would make an organization stand out as entrepreneurship among a range of similar companies.

While the focus on quality can be deemed an essential component of developing CA, it cannot be interpreted as a standalone tool that will propel a firm to the top of the economy. Instead, one must stress the significance of branding and create innovative approaches to addressing particular problems.

The significance of industrial upgrading, which has recently become especially important in the context of the global economy, can be viewed as the extension of the technological breakthrough that has been occurring over the past few decades. On a more basic level, the importance of networking in the online environment can be tracked even in everyday conversations. For instance, participation in sharing content via networks such as Facebook or Twitter can be deemed as a part and parcel of identifying, processing, and distributing information. Therefore, the application of the corresponding tools for managing both the internal and external processes of companies is crucial to their existence.

However, the expansion of the global network and the supply chains conflicts with the phenomenon of global income inequality. Although defining the subject matter is an admittedly complicated task, the fact that there is a significant gap in the average annual incomes of different social tiers is indisputable. At this point, the problem of low-income countries should be brought up. Specifically, the dilemma known as the development trap needs to be brought up.

Throwing a state several decades, if not centuries, back in its development, it blocks people from exploring their opportunities as it creates a unique socio-cultural environment, in which progress is barely possible. Therefore, it is imperative to make sure that awareness could be raised and that learning opportunities could be available to all those concerned. For these purposes, the issue of e-learning as the tool for distanced education must be mentioned.

Operating in the environment of the global economy is a challenging task. Moreover, some states cannot explore their options due to economic, political, legal, financial, sociocultural, environmental, and other restrictions. Thus, networking should be viewed as a tool for removing boundaries and helping people across the world join the global community to share knowledge, experience, and skills.

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IvyPanda. (2020, October 19). Globalization and the World Economy.

"Globalization and the World Economy." IvyPanda , 19 Oct. 2020,

IvyPanda . (2020) 'Globalization and the World Economy'. 19 October.

IvyPanda . 2020. "Globalization and the World Economy." October 19, 2020.

1. IvyPanda . "Globalization and the World Economy." October 19, 2020.


IvyPanda . "Globalization and the World Economy." October 19, 2020.

  • The exponential growth of solar power will change the world

An energy-rich future is within reach

The sun at dawn rising over a solar panel

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I t is 70 years since AT&T ’s Bell Labs unveiled a new technology for turning sunlight into power. The phone company hoped it could replace the batteries that run equipment in out-of-the-way places. It also realised that powering devices with light alone showed how science could make the future seem wonderful; hence a press event at which sunshine kept a toy Ferris wheel spinning round and round.

Today solar power is long past the toy phase. Panels now occupy an area around half that of Wales, and this year they will provide the world with about 6% of its electricity—which is almost three times as much electrical energy as America consumed back in 1954. Yet this historic growth is only the second-most-remarkable thing about the rise of solar power. The most remarkable is that it is nowhere near over.

To call solar power’s rise exponential is not hyperbole, but a statement of fact. Installed solar capacity doubles roughly every three years, and so grows ten-fold each decade. Such sustained growth is seldom seen in anything that matters. That makes it hard for people to get their heads round what is going on. When it was a tenth of its current size ten years ago, solar power was still seen as marginal even by experts who knew how fast it had grown. The next ten-fold increase will be equivalent to multiplying the world’s entire fleet of nuclear reactors by eight in less than the time it typically takes to build just a single one of them.

Solar cells will in all likelihood be the single biggest source of electrical power on the planet by the mid 2030s. By the 2040s they may be the largest source not just of electricity but of all energy. On current trends, the all-in cost of the electricity they produce promises to be less than half as expensive as the cheapest available today. This will not stop climate change, but could slow it a lot faster. Much of the world—including Africa , where 600m people still cannot light their homes—will begin to feel energy-rich. That feeling will be a new and transformational one for humankind.

To grasp that this is not some environmentalist fever dream, consider solar economics. As the cumulative production of a manufactured good increases, costs go down. As costs go down, demand goes up. As demand goes up, production increases—and costs go down further. This cannot go on for ever; production, demand or both always become constrained. In earlier energy transitions—from wood to coal, coal to oil or oil to gas—the efficiency of extraction grew, but it was eventually offset by the cost of finding ever more fuel.

As our essay this week explains, solar power faces no such constraint. The resources needed to produce solar cells and plant them on solar farms are silicon-rich sand, sunny places and human ingenuity, all three of which are abundant. Making cells also takes energy, but solar power is fast making that abundant, too. As for demand, it is both huge and elastic—if you make electricity cheaper, people will find uses for it. The result is that, in contrast to earlier energy sources, solar power has routinely become cheaper and will continue to do so.

Other constraints do exist. Given people’s proclivity for living outside daylight hours, solar power needs to be complemented with storage and supplemented by other technologies. Heavy industry and aviation and freight have been hard to electrify. Fortunately, these problems may be solved as batteries and fuels created by electrolysis gradually become cheaper.

Another worry is that the vast majority of the world’s solar panels, and almost all the purified silicon from which they are made, come from China. Its solar industry is highly competitive, heavily subsidised and is outstripping current demand—quite an achievement given all the solar capacity China is installing within its own borders. This means that Chinese capacity is big enough to keep the expansion going for years to come, even if some of the companies involved go to the wall and some investment dries up.

In the long run, a world in which more energy is generated without the oil and gas that come from unstable or unfriendly parts of the world will be more dependable. Still, although the Chinese Communist Party cannot rig the price of sunlight as OPEC tries to rig that of oil, the fact that a vital industry resides in a single hostile country is worrying.

It is a concern that America feels keenly, which is why it has put tariffs on Chinese solar equipment. However, because almost all the demand for solar panels still lies in the future, the rest of the world will have plenty of scope to get into the market. America’s adoption of solar energy could be frustrated by a pro-fossil-fuel Trump presidency, but only temporarily and painfully. It could equally be enhanced if America released pent up demand, by making it easier to install panels on homes and to join the grid—the country has a terawatt of new solar capacity waiting to be connected. Carbon prices would help, just as they did in the switch from coal to gas in the European Union.

The aim should be for the virtuous circle of solar-power production to turn as fast as possible. That is because it offers the prize of cheaper energy. The benefits start with a boost to productivity. Anything that people use energy for today will cost less—and that includes pretty much everything. Then come the things cheap energy will make possible. People who could never afford to will start lighting their houses or driving a car. Cheap energy can purify water, and even desalinate it. It can drive the hungry machinery of artificial intelligence. It can make billions of homes and offices more bearable in summers that will, for decades to come, be getting hotter.

But it is the things that nobody has yet thought of that will be most consequential. In its radical abundance, cheaper energy will free the imagination, setting tiny Ferris wheels of the mind spinning with excitement and new possibilities.

This week marks the summer solstice in the northern hemisphere. The Sun rising to its highest point in the sky will in decades to come shine down on a world where nobody need go without the blessings of electricity and where the access to energy invigorates all those it touches. ■

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This article appeared in the Leaders section of the print edition under the headline “The solar age”

Leaders June 22nd 2024

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Biden, Trump supporters both say the U.S. economic system unfairly favors powerful interests

Supporters of Joe Biden and Donald Trump differ on many political values, from views of immigration and gender identity to opinions about the government’s role and social safety net programs .

Pew Research Center conducted this study to understand voters’ views related to economic issues in the context of the 2024 election. For this analysis, we surveyed 8,709 adults, including 7,166 registered voters, from April 8 to April 14, 2024.

Everyone who took part in this survey is a member of the Center’s American Trends Panel (ATP), an online survey panel that is recruited through national, random sampling of residential addresses. This way nearly all U.S. adults have a chance of selection. The survey is weighted to be representative of the U.S. adult population by gender, race, ethnicity, partisan affiliation, education and other categories. Read more about the ATP’s methodology .

Here are the questions used for this analysis , along with responses, and the survey methodology .

Charts showing that both Biden and Trump supporters criticize the U.S. economic system, corporations.

But Trump and Biden supporters share a fair amount of common ground when it comes to criticisms of the U.S. economic system.

According to a Pew Research Center survey of 8,709 adults – including 7,166 registered voters – conducted April 8-14, 2024:

  • 85% of registered voters who support Biden say that the economic system unfairly favors powerful interests, while just 14% say the system is generally fair to most Americans.
  • 62% of registered voters who support Trump say the economic system unfairly favors powerful interests, while 37% say the system is generally fair.
  • Overwhelming majorities of Biden supporters also say major corporations have too much power (84%) and most make too much profit (82%).
  • About two-thirds of Trump supporters (65%) say corporations have too much power. They’re about evenly split in their evaluation of business profits: 48% say business corporations make too much profit, and 51% say their profits are fair.

Views about the economic system differ by age and income

There are substantial age and income differences among Trump supporters on whether the economic system unfairly favors powerful interests. These differences are more modest among Biden supporters.

A dot plot showing that Trump supporters differ by age, income in views of the economic system.

Among Trump supporters

  • 71% of Trump supporters ages 18 to 49 say the system unfairly favors powerful interests. A smaller majority (56%) of Trump supporters 50 and older say the same.
  • Majorities of Trump supporters with lower (70%) and middle incomes (65%) also say the economic system unfairly favors powerful interests. Upper-income Trump supporters are more divided: 44% say the system unfairly favors powerful interests and 55% say the system is generally fair to most Americans.

Among Biden supporters

Biden supporters overwhelmingly say the economic system unfairly favors powerful interests. More than eight-in-ten across all age and income groups say this.

Little recent change in views of the economic system

Since 2019, clear majorities of Americans have said that the U.S. economic system unfairly favors powerful interests. But the share saying this today is slightly higher than it was from 2019 to 2021. About three-quarters of all U.S. adults (74%) now say the system unfairly favors powerful interests, compared with 71% in 2021.

Among Democrats and Democratic-leaning independents, views are essentially unchanged over this period, with 85% now saying the system unfairly favors powerful interests. However, Republicans and Republican leaners are now more likely to say the system unfairly favors powerful interests than they were a few years ago: 62% say this today, compared with 52% in 2019.

Line charts showing that most Republicans say the U.S. economic system unfairly favors powerful interests, a contrast from a few years ago.

Note: Here are the questions used for this analysis , along with responses, and the survey methodology .

  • Economic Systems
  • Government Spending & the Deficit

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Ted Van Green is a research analyst focusing on U.S. politics and policy at Pew Research Center .

Economic ratings are poor – and getting worse – in most countries surveyed

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ABOUT PEW RESEARCH CENTER  Pew Research Center is a nonpartisan fact tank that informs the public about the issues, attitudes and trends shaping the world. It conducts public opinion polling, demographic research, media content analysis and other empirical social science research. Pew Research Center does not take policy positions. It is a subsidiary of  The Pew Charitable Trusts .

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‘It’s All Happening Again.’ The Supply Chain Is Under Strain.

As Houthi rebels intensify strikes on vessels headed for the Suez Canal, global shipping prices are soaring, raising fears of product shortages and delays.

  • Share full article

A cargo ship in the ocean carrying shipping containers.

By Peter S. Goodman

Peter Goodman has reported extensively on the global supply chain since the early months of the Covid-19 pandemic.

Stephanie Loomis had hoped that the chaos besieging the global supply chain was subsiding. The floating traffic jams off ports . The multiplying costs of moving freight . The resulting shortages of goods . All of this had seemed like an unpleasant memory confined to the Covid-19 pandemic.

No such luck.

As head of ocean freight for the Americas at Rhenus Logistics, a company based in Germany, Ms. Loomis spends her days negotiating with international shipping carriers on behalf of clients moving products and parts around the globe. Over the last few months, she has watched cargo prices soar as a series of disturbances have roiled the seas.

Late last year, Houthi rebels in Yemen began firing on ships entering the Red Sea en route to the Suez Canal , a vital artery for vessels moving between Asia, Europe and the East Coast of the United States. That prompted ships to avoid the waterway, instead moving the long way around Africa, lengthening their journeys by as much as two weeks.

Then, a severe drought in Central America dropped water levels in the Panama Canal , forcing authorities to limit the number of ships passing through that crucial conduit for international trade.

In recent weeks, dockworkers have threatened to strike on the East and Gulf Coasts of the United States, while longshore workers at German ports have halted shifts in pursuit of better pay. Rail workers in Canada are poised to walk off the job, imperiling cargo moving across North America and threatening backups at major ports like Vancouver, British Columbia.

The intensifying upheaval in shipping is prompting carriers to lift rates while raising the specter of waterborne gridlock that could again threaten retailers with product shortages during the make-or-break holiday shopping season. The disruption could also exacerbate inflation, a source of economic anxiety animating the American presidential election.

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