Phenomenal World

November 25th, 2019

Phenomenal World

Political Sun

UPWARD ACCOMODATION

The history of public housing provision

In recent decades, policy approaches to housing provision have focused on increasing the incomes of subsidy recipients and, due to declining federal investment, promoting tenant mobility both between subsidized housing units and out of the public housing system altogether. But the discourse on housing seems to be shifting. Rather than promoting ever increasing incomes, recent proposals aim instead to control housing costs—both through increasing public housing stock and pegging rent to inflation.

In a 2012 paper, Lawrence J. Vale and Yonah Freemark offer a history of public housing in the United States. Their narrative considers how changing approaches to housing provision reveal changes in the government's definition of “deserving” welfare recipients.

From the paper:

"Public housing is too often conceptualized as a single failed program that tragically concentrated deeply impoverished single-parent minority households in ill-designed and publicly mismanaged slums. Such a viewpoint does little justice to the evolution and contingencies that motivated the growth and directions of the multiphased and multifaceted history of federally supported public housing and public-private housing. Taking a longer view, the concentrated poverty welfare phase of public housing may actually be seen as an aberration, a relatively brief interlude between about 1960 and 1990. This phase, we argue, was out of step with the larger pattern of policy preferences for housing the poor, both before and since.

Seen this way, American public housing consists of a 25-year series of efforts to accommodate the upwardly mobile working class between 1935 and 1960, a 30-year consolidation of the poorest into welfare housing between 1960 and the mid 1980s, coupled by efforts to introduce direct private-sector involvement in public housing and other programs; and a series of programs and policies since the mid 1980s to return more of public housing to a less-poor constituency, while furthering growth in other kinds of both deep and shallow subsidy programs through mixed-finance projects and tax-code intervention. After 75 years of experimentation, much of the rest of public housing operations has become completely privatized. In many cities, housing authorities are regularly turning over their conventional housing stock to private managers and often own nothing more than the land beneath their redevelopment endeavors. In this context, even the basic definitional reason for calling some housing 'public housing' now comes into question."

Link to the article.

  • From November of last year, Jack Y. Favilukis, Pierre Mabille, and Stijn Van Nieuwerburgh find that "Housing affordability policies create large net welfare gains." Link. See also J. W. Mason's recent public testimony on rent control, which offers an overview of empirical findings and concludes that "there is no evidence that rent regulations reduce the overall supply of housing." Link.
  • A report by Peter Gowan and Ryan Cooper at 3P compares housing policy in US metropolitan areas with those of Vienna, Helsinki, and Stockholm. Link. At the Urban Institute, Emily Peiffer discusses the history of housing policy in New York City. Link.
  • "Housing Affordability in the U.S.: Trends by Geography, Tenure, and Household Income." By Andrew Dumont at the Federal Reserve. Link.
  • Data for Progress maps the diversity of America's public housing communities, accounting for rates of unemployment, poverty, and population density. Link. Another map looks at flood risk, police stops, and segregation in NYCHA buildings. Link.
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November 18th, 2019

The Banquet

ADVANCE MECHANISM

The role of the state in economic development

Major accounts of the role of the state in economic development have held that the state is essential for ensuring private property rights—that democratic checks and balances encourage investment and therefore economic growth. Other schools of development stress the importance of promoting economies of scale and export oriented production. In these, the state takes on a far more active role in planning and coordinating investment.

In a remarkably comprehensive 2016 paper, PRANAB BARDHAN brings together disparate literatures to develop a more nuanced understanding of the state's role in economic development:

"Beyond being a 'nightwatchman' of property rights and markets, the state often needs to be a guide, coordinator, stimulator, and a catalytic agent for economic activities in situations where, for various historical and structural reasons, the development process has been atrophied and the path forward is darkened by all kinds of missing information and incomplete markets.

In general, different types of governance mechanisms are appropriate for different tasks. The state can provide leadership to stimulate individuals to interact cooperatively in situations where noncooperative interactions are inefficient. But the state officials may have neither the information nor the motivation to carry out this role. They may be inept or corrupt or simply truant, and the political accountability mechanisms are often much too weak to discipline them. We thus need a whole variety and intermixture of institutional arrangements to cope with the strengths and weaknesses of different coordination mechanisms, and the nature of optimal intermixture changes in the development process."

Link to the essay.

  • Acemoglu, Johnson, and Robinson's 2001 paper "The Colonial Origins of Comparative Development." Link. And Acemoglu, García-Jimeno, and Robinson's 2015 "State Capacity and Economic Development: A Network Approach." Link.
  • James Scott's 1999 Seeing Like a State examines failures of large-scale state development projects. Link.
  • In a paper from 1983, Bardhan draws on econometric evidence from cross-sectional data in rural India to challenge researchers in development economics to rethink the relationship between active labor markets and economic growth: "Contrary to its common characterization as a feudal relic and a symptom of economic stagnation tied-labor may actually be strengthened by capitalist agricultural development." Link.
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November 12th, 2019

Hanging Scheme

TEN BILLION HOURS

Administrative burden and welfare politics

In addition to lagging behind many European economies in the breadth, amount, and quality of welfare provision, the United States also exhibits relatively low rates of take-up among the benefits it does make available. Non-take-up rates can be accounted for—at least in part—by the various bureaucratic barriers that welfare recipients face; multiple qualitative studies have documented the humiliating and arduous nature of applying for benefits. Even in the case of the ostensibly less-burdensome Earned Income Tax Credit, a large share of the transfer is captured by tax preparers.

In their 2019 book, Administrative Burden, Pamela Herd and Donald Moynihan argue that these difficulties are not incidental. Through a close inspection of the administrative design of a series of domestic welfare policies (including the Affordable Care Act, SNAP, and Social Security) they demonstrate that difficulty accessing benefits is a core, and intentional, feature of America's welfare state.

From the book's introduction:

"Burdens matter. They affect whether people will be able to exercise fundamental rights of citizenship, such as voting; they affect whether people can access benefits that can improve quality of life, such as health insurance. Burdens can alter the effectiveness of public programs. Ultimately, administrative burdens are the fine print in the social contract between citizens and their government.

Administrative burdens are the product of political choices. In many cases, political actors see burdens as a policy tool to achieve ideological goals. Such choices are demonstrated by the maintenance of burdens even when changing circumstances call for governments to minimize them: The failure of the American administrative state to adapt Depression-era burdens on immigrants from Europe is one example of how not acting is itself a choice. Once the war began, Congress and the State Department increased restrictions under the justification that immigrants posed a security threat. In 1943, the new State Department visa application was four feet long."

Link to the book, and link to a January interview with the authors on the New Books Network.

  • Via a review of Herd and Moynihan's book: the Information Collection Budget report from the OMB, which estimates that "the public spent an estimated 9.78 billion hours on federal paperwork in 2015, a net increase of 350 million burden hours from 2014." Link.
  • Francis Fox Piven and Richard Cloward made a powerful case for non-take-up rates as a central clarifying element of the American welfare system: their 1971 book, Regulating the Poor, advocated mass enrollment in welfare programs to reveal the inadequacy of the benefits system. Link to the book, link to seminal 1966 essay that first proposed the "Cloward-Piven Strategy."
  • "This article explores the relationship between revolution and the bureaucratization of tax administration in early modern England and France." Edgar Kiser and Joshua Kane on the history of bureaucracy. Link. Tangentially related: a "history of file-keeping and bureaucratic paperwork in Maoist China" by Jian Ming Chris Chang. Link.
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October 28th, 2019

Radius

RELATIVE DUTIES

The origins of American tax policy

Tax reform is at the forefront of contemporary policy debate. US citizens pay taxes at lower rates than their European counterparts, and a growing number of researchers agree that progressive taxes on wealth and income have the potential to rectify inequality. The historically less progressive nature of American tax policy is commonly explained as a product of the colonies' early opposition to "taxation without representation," as well as the large population of immigrants, the absence of traditional aristocracy, and the ubiquity of "country party republican" ideology which characterized the country's formation.

In an essay accompanying the publication of her 2006 book, historian ROBIN EINHORN introduces a new factor into the debate: the impact of domestic politics around slavery on early American state-building. From the piece:

"Americans are right to think that our anti-tax and anti-government attitudes have deep historical roots. Our mistake is to dig for them in Boston. We should be digging in Virginia and South Carolina rather than in Massachusetts or Pennsylvania, because the origins of these attitudes have more to do with the history of American slavery than the history of American freedom. In 1776, Congress was talking about slavery because its members were framing a national government for the new nation—what would become the Articles of Confederation. Trying to figure out how to count the population to distribute tax burdens to the various states, the members inevitably faced the problem of whether to count the population of enslaved African Americans. Since slaves were 4% of the population in the North and 37% of the population in the South, this decision would have a huge impact on the tax burdens of the white taxpayers of the northern and southern states.

Slaveholders developed three solutions to this general problem. First, they tried to guarantee that they dominated the legislative process by manipulating the representation rules. Second, they demanded weak governments that would make few of the decisions that provoked discussions of slavery. Third, they insisted on constraining the tax power through constitutional limitations on its use. Yet the real slaveholder victory lay in a fourth strategy—persuading the nonslaveholding majorities that the weak government and constitutionally restrained tax power actually were in the interests of the nonslaveholders themselves. Slaveholders persuaded many of their contemporaries that expansions of slavery are expansions of 'liberty,' constitutional limitations on democratic self-government are defenses of 'equal rights,' and the power of slaveholding elites is the power of the 'common man.' In the topsy-turvy political world we have inherited from the age of slavery, the power of the majority to decide how to tax became the power of an alien 'government' to oppress 'the people.'"

Link to the essay, and link to a 2000 academic article by Einhorn which presents the argument in greater historical detail.

  • "The growth in cash transactions was critical to the evolution of the modern income tax. Because the market's cash nexus permitted more and more individuals to derive a greater portion of their income and wealth from the sale of their labor services, lawmakers were able to more easily measure and tap the growing tax base. Consequently, the national tax structure began to shift away from a reliance on indirect levies, namely import duties and excise taxes on alcohol and tobacco, toward more direct and graduated taxes on income and wealth transfers." Ajay Mehrotra looks at the economic developments behind the passage of the 16th Amendment in 1913. Link.
  • In a new paper, Lucy Barnes links tax progressivity to the strength of capital-labor coalitions in European countries prior to World War I. Link.
  • A 2017 paper by Raymond Fisman, Keith Gladstone, Ilyana Kuziemko, and Suresh Naidu offers the first ever evidence on the taxation preferences of US citizens, finding that Americans are more likely to support taxes on wealth than on savings. Link. See also this 2016 paper by Naidu, Felipe González, and Guillermo Marshall on the role of slave property rights in promoting early American economic development. Link.
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October 21st, 2019

Sunset Red and Gold-- The Gondolier

DESCRIBED FUTURES

Automation fears and realities

Of the many justifications for introducing a universal basic income, automation is among the most popular. Over the past years, a slew of reports and endless media coverage has raised the specter of mass "technological unemployment"—a possible future that has been taken up by basic income proponents across the political spectrum. It was even a point of argument in this week's Democratic presidential debate.

In the first of a two-part series, historian AARON BENANAV (whose work on the history of unemployment categories we shared in a previous letter) critiques and situates the automation debates within long-term global trends. Framed as a response to what Benanav terms the "automation theorists," who maintain a sense of inevitability about the robot takeover, the paper pursues alternate explanations: declining labor demand, global deindustrialization, and manufacturing overcapacity.

From the paper:

“Automation turns out to be a constant feature of the history of capitalism. By contrast, the discourse around automation, which extrapolates from instances of technological change to a broader social theory, is not constant; it periodically recurs in modern history.

The return of automation discourse is a symptom of our era, as it was in times past: it arises when the global economy’s failure to create enough jobs causes people to question its fundamental viability. The breakdown of this market mechanism today is more extreme than at any time in the past. This is because a greater share of the world’s population than ever before depends on selling its labour or the simple products of its labour to survive, in the context of weakening global economic growth.”

Link to the paper, and link to an ungated version on the author's website.

  • David Autor's 2016 paper "Paradox of Abundance" examines the problem of its title: "technological changes threatens social welfare not because it intensifies scarcity but because it augments abundance." Link.
  • A previous newsletter highlights a paper by legal scholar Brishen Rogers, which critiques automation fears in the US context by pointing to labor law and the "fissuring" of the workforce as more consequential for stagnating wages and declining job security. Link. Along the same lines, but in the European context, Zachary Parolin's recent work for the OECD measures the effects of collective bargaining agreements on wages in automatable occupations. Link.
  • Three post-debate accounts of the issue: Paul Krugman in the Times; Matt Yglesias in Vox; and Jordan Weisman in Slate, featuring the following quote from David Autor: "If we talk about the economic trauma of the 2000s, that’s not primarily due to automation. Nobody can tell you what great invention happened in 1999 that wiped out 20 percent of manufacturing jobs."
  • For another broad view of macro trends and low-demand problems, see JW Mason's "Macroeconomic Lessons from the Past Decade." Link.
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October 15th, 2019

Machine

WEAK OUTCOMES

On the returns to for-profit colleges

As student debt grows and the labor market stagnates, a growing body of research seeks to answer questions about the worthiness of college. What characterizes the schools and populations for whom college is worth it? What does worthiness mean—financial, intellectual, for individuals, for society as a whole? A key way to examine these questions is to find evidence on the financial returns to college. Douglas Webber examines the question along lines of ability, major, and debt, and explores the question for marginal students; JFI’s Sidhya Balakrishnan and Barry Cynamon looked at the way that returns vary based on the type of financing (loans, IDR, ISAs).

A new paper from STEPHANIE CELLINI and NICHOLAS TURNER uses administrative data to examine the returns to public college vs. for-profit college certificate programs. The key finding is that “for-profit certificate students experience lower earnings and employment post-college than their public sector counterparts,” but the richness of the data allows for many more surprising conclusions as well: one is that for-profit college may actually have worse returns than no college whatsoever; another is that for-profits may have worse effects for women than for men. From the paper:

“Across the board, our results show that despite the much higher costs of attending a for-profit institution, the average for-profit certificate student experiences lower earnings effects relative to public sector students. For-profit colleges outperform public institutions in only one of the top ten for-profit fields—cosmetology. Further, students in online and chain for-profit institutions appear to fare worse than students in more traditional campus-based and independent institutions. Our institution-level regressions reveal that the weak performance of the for-profit sector is not limited to a few poor performing institutions, rather the majority of schools appear to have negligible average earnings effects.”

The full paper is available in the Journal of Human Resources here.

  • Scott Cunningham wrote a substantial tweet-thread summary, available here. “I’d include this paper when sorting through the human capital vs signaling debate. This is arguably pure credentialing… So why are the returns so bad if it’s also a credential? I’d be curious how proponents of the ‘education is only signaling’ hypothesis reacted to this study.” For more on that debate, see our previous JFI letter.
  • How can for-profit colleges be held accountable for poor returns to the educations that they provide? A 2016 report from Davids J Deming and Figlio explains the successes and failures of Obama’s Gainful Employment Act, and suggests the importance of financial “skin in the game” for all kinds of institutions. Link.
  • A new data explorer from the Urban Institute brings together an array of education data sets. Link.
  • Cellini and Turner’s piece examines certificate programs at for-profits. For more on certificate programs, see our March letter on the work of Di Xu and Madeline Trimble, and our May letter on the many non-Title-IV certificates, certifications, and credentials about which there is almost no data.
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October 7th, 2019

The Balloon

DIFFERENCE ENGINE

Labor and mechanized calculation

Breathless media coverage of machine learning tools and their applications often obscures the processes that allow them to function. Time and again, services billed or understood by users as automatic are revealed to rely on undervalued, deskilled human labor.

There is rich historical precedent for the presence of these "ghosts in the machine." In a 2017 lecture, Director Emirata of the Max Planck Institute for the History of Science LORRAINE DASTON examines the emergence of mechanical calculation, revealing a fascinating history of the interaction between new technologies and the methods of routinizing and dividing intellectual labor that emerges alongside them.

From the introduction:

"The intertwined histories of the division of labor and mechanical intelligence neither began nor ended with this famous three-act story from pins to computers via logarithms. Long before Prony thought of applying Adam Smith’s political economy to monumental calculation projects, astronomical observatories and nautical almanacs were confronted with mountains of computations that they accomplished by the ingenious organization of work and workers. What mechanization did change was the organization of Big Calculation: integrating humans and machines dictated different algorithms, different skills, different personnel, and above all different divisions of labor. These changes in turn shaped new forms of intelligence at the interface between humans and machines."

Link to the paper version of the lecture. (And stay tuned to the Phenomenal World for our upcoming interview with Daston.)

  • A 1994 paper by Daston entitled "Enlightenment Calculations" gives specific attention to the logarithmic tables of Gaspard de Prony, which sought to demonstrate the usefulness of the newly-invented metric system: "The tables marked an epoch in the history of calculation but also one in the history of intelligence and work." Link.
  • Matthew L. Jones, an historian at Columbia University, studies the history of calculation and computing. His 2016 book Reckoning with Matter: Calculating Machines, Innovation, and Thinking about Thinking from Pascal to Babbage traces the history of attempts to routinize, mechanize and apply the power of calculation. Link to the book, link to Lorraine Daston's review in Critical Inquiry.
  • Simon Schaffer's 1996 paper on the relationship between Charles Babbage's calculating engine and the contemporaneously emerging factory system. Link.
  • A syllabus prepared by Mary L. Gray and Siddharth Suri, authors of Ghost Work—a book about the "hidden" labor force behind many tech services—surveys the tech platform subcontracting labor market. Link.
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September 30th, 2019

Little Mephisto

VARIED NET

The politics of welfare in the 21st century

In his 1990 book, The Three Worlds of Welfare Capitalism (TWWC), sociologist Gosta Esping-Andersen identified three categories of European welfare regimes: liberal, conservative, and social democratic. In Esping-Andersen's account, these welfare regimes developed according to the sorts of coalitions formed by working people: social democratic regimes are based on associations between agricultural workers and industrial socialist organizations; conservative regimes emerged through an alliance between labor organizations and religious groups; liberal regimes are ones in which strong workers movements never managed to significantly structure bargaining institutions.

The dynamic and historical account of welfare state development which TWWC proposes continues to influence our understanding of how distributional conflicts can shape political institutions. However, Esping-Andersen's categories were based on full employment and high growth—a paradigm that no longer holds. In a lesser known but more recent book, the author attempts to adjust his model to postindustrial labor markets.

From the introduction:

"This book is an attempt to come to grips with the 'new political economy' that is emerging. One premise of my analyses is that 'postindustrial' transformation is institutionally path-dependent. This means that existing institutional arrangements heavily determine national trajectories. More concretely, the divergent kinds of welfare regimes that nations built over the post-war decades have a lasting and overpowering effect on which kind of adaptation strategies can and will be pursued. Hence, we see various kinds of postindustrial societies unfolding before our eyes.

Contemporary debate has been far too focused on the state. The real crisis lies in the interaction between the composite parts that, in unison, form contemporary welfare 'regimes': labour markets, the family, and, as a third partner, the welfare state. What most commentators see as a welfare state crisis, may in reality be a crisis of the broader institutional framework that has come to regulate our political economies. Our common tendency to regard postindustrial society as a largely convergent global process impairs our analytical faculties and our ability to understand the radical shifts in government and power which have taken place in recent decades."

Link to the publisher's page.

  • Esping-Anderson's analysis rests heavily on the Polanyian notions of decommodification and double movement. In a recent book chapter, sociologist Michael Burawoy elaborates on the persisting relevance of these concepts for understanding social movements in market societies. Link.
  • Philip Manow uses the historical framework developed in TWWC to explain the success of communist parties in Southern Europe: "Conflicts between the nation-state and the Catholic church in the mono-denominational countries of Europe’s south rendered a coalition between pious farmers and the anticlerical worker’s movement unthinkable, leading to the further radicalization of the left." Link.
  • "How can the social categories which are commonly called 'middle' class be situated within a conceptual framework built around a polarized concept of class? What does it mean to be in the 'middle' of a 'relation'?" In his 2000 textbook, Class Counts, the late Erik Olin Wright develops a theoretically rich account of class relations and their relevance for understanding historical change. Link.
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September 23rd, 2019

The One

FICTIONAL BARGAIN

The meaning and impact of the Coase Theorem

Recent years have seen a surge in scholarship that critically evaluates the origins and impact of the law and economics movement. Out of the many theoretical bedrocks of the movement, the Coase Theorem is one of the most significant. Stemming from Ronald Coase's 1960 paper "The Problem of Social Cost," the theorem itself was coined by George Stigler in his 1966 book The Theory of Price. (Click here for a very simple primer on the theorem as it is generally taught.)

A 1999 paper by STEVEN MEDEMA—an economist and historian who has written extensively on Coase and his legacy—looks at the role that the Coase theorem has played in the law and economics movement:

In spite of the often heavily ideological overtones of the Coase theorem debate, the theorem is simply a positive proposition, stating that under certain conditions a particular result will follow. Yet, the Coase theorem has been assailed from the left (as conservative dogma) and from the right (as liberal dogma); its moral, philosophical, and political underpinnings have been called into question; its logic, applicability, and empirical content have been both trashed and defended; it has been hailed as offering a new way to conceptualize law and legal culture and attacked as anathema to the traditional common law process. The present essay will attempt to explain how and why the Coase theorem quickly evolved from a debunking fiction to the basis of one of the most successful branches of applied economics in the last part of this century.

Link to the paper.

  • Ronald Coase's seminal paper "The Problem of Social Cost." Link. And an interview with Coase from 1997, in which he says: "I think the success of the Coase Theorem—because it’s discussed all over the place—is an interesting illustration of what’s wrong with economics. If you read 'The Problem of Social Cost,' it occupies perhaps four pages. It’s useful because you can show the type of contracts that would have to be made in order to have an efficient economic system. But then you have to introduce the obstacles to doing it. Then you see how the system actually works." Link.
  • A 1998 paper by Deirdre McCloskey examines the legacy of the theorem: "Something like a dozen people in the world understand that the 'Coase' theorem is not the Coase theorem. One of this select group is Ronald Coase himself, so I suspect we blessed few are right." Link.
  • A post by Steven Medema on VoxEU treats Coase's legacy and the distance between his own views and the school of thought which adopted the theorem bearing his name. Link. Another paper by Medema examines the Coase Theorem on its sixtieth anniversary. Link.
  • Robin Hahnel and Kristen Sheeran provide an "internal critique" of the theorem, arguing that even under optimal conditions—low transaction costs and well-defined property rights—it generates perverse incentives. Link.
  • A 2017 paper by Dina Waked—"Sense and Nonsense of the Economic Analysis of Tort Law"—situates the law and economics school (and its invocation of Coase) alongside earlier and more recent alternatives, including the early institutionalists. Link.
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September 16th, 2019

Live Airborne System

DIVIDED INTEGRATION

Immanuel Wallerstein's contributions to research in the social sciences

Two weeks ago today marked the passing of the great Immanual Wallerstein. His work has had resounding influence across fields: from literature, to legal theory, education, development studies, and international relations. Among his foremost contributions is the four volume Modern World System series, which recount the transformation of feudalism into global capitalism through progressive incorporation of new regions into the European capitalist core. Complementing this history was world-systems theory, an analytical approach which challenged the tendency of social science research to identify simplified and direct causal relationships.

Wallerstein argued that purely economic, historical, or political analyses of society exclude more factors than they incorporate, casting doubt on both their internal and external validity. From the introduction to World Systems Analysis:

The phenomena dealt with in these separate boxes are so closely intermeshed that each presumes the other, each affects the other, each is incomprehensible without taking into account the other boxes. The separate boxes of analysis are an obstacle, not an aid, to understanding the world. Structurally, the social reality within which we live has not been the multiple national states of which we are citizens but something larger, which we call a world-system. This world-system has had many institutions—states and the interstate system, productive firms, households, classes, identity groups of all sorts—which form a matrix which permits the system to operate but at the same time stimulates both the conflicts and the contradictions which permeate it.

The world-system is a social creation, with a history, whose origins need to be explained, whose ongoing mechanisms need to be delineated, and whose inevitable terminal crisis needs to be discerned. For this reason, it is important to look anew not only at how the world in which we live works but also at how we have come to think about this world.

Link to the book's first pages.

  • "My intellectual development led me to historicize social movements, not only to better understand how they came to do the things they did, but also in order to better formulate the political options that were truly available in the present." On his website, Wallerstein reflects on the questions and contradictions that informed his life's work. Link.
  • "The Modern World-System is a theoretically ambitious work that deserves to be critically analyzed as such." Theda Skocpol's sympathetic scrutiny of the weaknesses in Wallerstein's major work, from the 1977 Review of American Sociology. Link.
  • Wallerstein's account of feudal breakdown, which stressed external factors like increased trade, countered that of historians like Robert Brenner, who focused instead on internal factors like peasant revolts. Robert A. Denemark and Kenneth P. Thomas give an overview of the debate. Link.
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