CHAPTER 4
ECONOMIC DETERMINISM AND EXPLOITATION: THE STRUCTURALIST PERSPECTIVE
Overview:
The global financial crisis highlights not only the failures of free market capitalism but also the political
clout of the economic elite, who receive bailouts while ordinary taxpayers struggle. Many other issues contain a
component of economic power, class conflict, and exploitation. Millions of people the world over feel oppressed and
continue to protest against free-trade organizations, U.S. imperialism, and financial elites. They feel excluded from
economic progress and believe that their share of the economic pie is too small. Likewise, they tend to reject the
legitimacy of the global capitalist elite who represent a social and political force that cannot be overlooked or easily
changed.
Structuralism has its roots in the ideas of Karl Marx but today encompasses a much broader group of
scholars and activists. While most structuralists do not share the commitment to a socialist system as envisioned by
some Marxists, they do believe that the current global capitalist system is unfair and exploitative and can be changed
into something that distributes rewards in a more just manner.
Karl Marx remains one of the most imposing figures in the history of political economy. With the collapse
of communism in the Soviet Union and Eastern Europe, it is tempting to conclude that “Marx is dead” and to move
on to other, easier pursuits. However, ideas that originated with Marx remain very much alive today. Theories that
incorporate notions of class struggle, exploitation, imperialism, and technical change, to name just a few, remain
important tools of IPE analysis.
The structuralist perspective has no single method of analysis or unified set of policy recommendations.
Rather, it is the site of an active, exciting debate that about historical events, the nature of national capitalist systems
as well as the global capitalist structure.
This chapter explores a number of theories, ideas, and concepts whose roots are located in Marxist and
Leninist thought. The general heading Structuralism accounts for some of the more recent theories and concepts that
incorporate a number of Marx’s and Lenin’s ideas. The “structure” in structuralism is the global capitalist system,
which acts as an underlying order that is the driving force in society. It shapes society’s economic, political, and
social institutions and imposes constraints on what is possible.
Modern structuralists often ask questions that others tend to overlook or downplay. Indeed, there are many
problems in IPE that cannot be understood or completely appreciated without considering Marx’s viewpoint and the
more recent structuralist perspectives derived from his thought. Since capitalism was primarily a national
phenomenon in Marx’s time, he focused most of his analysis on national economies and how the class structure
resulted in exploitation, conflict, and crisis within nation-states.
V.I. Lenin expanded Marx’s study to account explicitly for imperialism, manifest in the dominant and
exploitative relationship of industrial countries with their colonial possessions. Analysis continues with the work in
dependency theory, modern world systems theory, and various theories of imperialism and neoimperialism. For
many structuralists, globalization and globalism are synonymous with neoimperialism.
Finally, we survey briefly some of the ideas of Noam Chomsky. We then incorporate a discussion of the
structuralist perspective on the post-2007 financial crisis and conclude with a discussion of the significance of
structuralism and Marxism today.
Learning Objectives:
• To understand why structuralists believe that the economic structure of society conditions outcomes and how it
relates to Marx and Lenin.
• To explain what Marx believed was capitalism’s role in history.
• To define the bourgeoisie and the proletariat and explain their relationship to one another in Marx’s analysis of
capitalism.
• To explain Marx’s theory of capitalist class struggle.
• To identify and explain Marx’s three laws of capitalism and how they combine to create the crisis of capitalism.
• To explain V.I. Lenin’s theory of capitalist imperialism and how it relates to Marx’s theory of class struggle and
the crisis of capitalism.
• To explain dependency theorists’ argument that capitalism “under-develops” less developed countries (LDCs).
• To define modern world systems theory and explain how it analyzes relations among the core, the semi-
periphery, and the periphery.
• To explain Noam Chomsky’s idea of manufactured consent.
• To outline different views on capitalism and the processes of rationalization and globalization.
• To explain and discuss the concepts of neocolonialism, neoimperialism, and empire building, which regained
popularity among a number of George W. Bush administration officials and other experts.
• To explain the relevance and importance of structuralism today, especially as it relates to the current global
financial crisis.
Chapter Outline:
INTRODUCTION
a) Structuralism is the general name given to the viewpoint that the structure of IPE conditions its outcomes.
Structuralism includes the ideas of Marx and Lenin in addition to contemporary thinkers in this analytical
framework.
b) Structuralists believe that the current global capitalist system is unfair and exploitative and can be changed
into something that distributes rewards in a more just manner.
c) The theses of this chapter are:
1. Structuralism provides the tools to conduct a scientific analysis of existing capitalist arrangements as
well the grounds for a moral critique of the inequality and exploitation that capitalism produces within
and between countries;
2. Structuralism allows us to view IPE from the perspective of those in developing nations;
3. Structuralism raises issues about human freedom and the application of reason in shaping national and
global institutions;
4. Finally, structuralism views capitalism and other modes of production as driven by conflict and crisis
and subject to change. What exists now is a system and set of structures that emerged at a particular
time and may one day be replaced by a new and different system of political economy.
FEUDALISM, COMMUNISM, SOCIALISM—MARX’S THEORY OF HISTORY
a) Marx understood history as a dynamic process, where capitalism evolved to overcome feudalism, but
would in turn be overcome by socialism and eventually communism. He called this process historical
materialism.
b) Marx is considered a technological determinist because he believes that changes in technology determine
changes in the social system.
c) History evolves from one system of political economy, or “mode of production,” to another through a
dialectical process in which opposing economic forces and counterforces lead to crisis, revolution, and the
next stage of history.
d) For Marx, agents of change are human beings organized into conflicting social classes. Because class
relations change more slowly than technological development, social change is impeded, fostering conflict
between the classes who in a capitalist society gradually produce a face-off between the bourgeoisie and
proletariat.
e) The law of the falling rate of profit holds that as individual capitalists seek greater market share, they will
invest in labor saving production techniques. This reduces the rate of profit because surplus value can only
be created by human labor.
f) The law of disproportionality holds that capitalism is prone to instability in part because workers cannot
afford to buy what they make.
g) The law of the concentration (or accumulation of capital) holds that over time, wealth becomes increasingly
concentrated, further diminishing the purchasing power of the proletariat (and thus exacerbating the effects
of the law of disproportionality), and makes the gross inequality of capitalism more evident.
h) As the force of competition creates greater unevenness, capitalism becomes even more unstable and the
proletariat becomes even more alienated from their work.
i) Capitalism contains the seeds of its own demise.
j) Capitalism is a necessary stage of history that replaces feudalism and leads to another stage of history. It
transforms the world by breaking down feudalism. In so doing, it creates the social and economic
foundations for the eventual transition to a “higher” level of social development.
k) Most neo-Marxists and structuralists still accept the notion of exploitation, although it has been separated
from the labor theory of value. However, they no longer accept the claim that capitalism will someday
destroy itself.
l) Many believe that Marx’s mathematical analysis that produced this prediction was simply erroneous.
Socialism may be a possible future, but it would have to be a political choice, not something imposed on
society by Marx’s deterministic laws of historical epochs.
SOME SPECIFIC CONTRIBUTIONS OF MARX TO STRUCTURALISM
a) Marxist scholars interpret Marx in many different ways. Four Marxist ideas are central to contemporary
structuralist analyses of the international political economy: the definition of class, class conflict and the
exploitation of workers, capitalist control over the state, and ideological manipulation.
b) The definition of class: Class is determined by ownership, or lack thereof, of capital, which is an asset that
can be mixed with labor to form a commodity to be profitably sold. Marxists regard the original
distribution of assets as unjust and often immoral, noting that historically a small number of people
confiscated large amounts of land and other resources by means of violence and coercion.
c) Class conflict and the exploitation of workers: Capitalism creates an environment in which the elite hold
the capital and the workers are dependent upon them in order to earn a living. Unemployment helps keep
wages artificially low, leading to exploitation of the working class by the elites. This exploitation gives the
workers an interest in changing the social system.
d) Capitalist control over the state: The greater financial resources of the capitalist class translate into
influence over the political system. Because workers need to organize in greater numbers to influence
policy decisions, laws and regulations often favor capitalists.
e) Ideological Manipulation: Capitalists seek to provide legitimacy to their belief system, fostering an
environment in which those who have fewer resources believe that they should have fewer resources and
thus do not protest the system. Due to their financial resources, capitalists are able to disseminate their
message more effectively than workers, generating a false consciousness among the working class.
According to Marxists, capitalists not only exploit workers but also manipulate their beliefs so that they
become ignorant of, or apathetic about, their own exploitation.
Box: Noam Chomsky and the Power of Ideology
a) Noam Chomsky is viewed by many as the leading structuralist of our time. A professor of linguistics at
M.I.T., his ideas have even influenced philosophy and computer science.
b) Much of Chomsky’s work has been an indictment of militaristic foreign policy and pro-corporate
capitalism. Chomsky has actively supported the Occupy Wall Street movement.
c) One theme of Chomsky’s is the use of language as an instrument of domination under liberal, capitalist
regimes.
d) Another is that the creation and marketing of ideas is similar to the production of ordinary commodities.
The consent of the proletariat to their own exploitation must be “manufactured” by powerful interests in
society including the state and the corporate media. The result is a “propaganda” campaign to sell these
exploitative ideas.
e) The threat of foreign enemies draws attention away from internal, class-based conflicts. The wars in Iraq,
Afghanistan, and (Islamic) terrorism in general have been the enemies that warrant more propaganda.
f) A familiar theme is that almost nothing has changed under the Obama administration except that Iran has
replaced Iraq as the target of propaganda.
LENIN AND INTERNATIONAL CAPITALISM
a) V. I. Lenin (1870–1924) is best known for his role in the Russian Revolution of 1917 and the founding of
the Soviet Union. Contrary to Marxist principles turned Marx on his head, placing politics over economics
when he argued that Russia had gone through its capitalist stage of history and was ready for a second,
socialist revolution.
b) Lenin is also known for his views on imperialism based on Marx’s theories of class struggle, conflict, and
exploitation.
c) Lenin believed imperialism to be the “highest stage of capitalism,” allowing entire nations to exploit their
colonies.
d) Imperialism results from the concentration of capital (monopolies) that increase to the point that capitalists
can no longer find sufficient markets and investment opportunities in industrial regions of the world.
e) To prevent capitalism from imploding, Lenin and others argued that imperialism is therefore necessary as
an outlet for surplus finance and allowed capitalism to survive.
f) Rich capitalist nations can sustain their profit rates while keeping the poorer nations underdeveloped, deep
in debt, and dependent on the rich nations for manufactured goods, jobs, and financial resources.
g) Before and after World War I, cutthroat competition among capitalist nations contributed to international
tensions and conflict. Elites in poorer nations competed for capital and investment, generating more
production monopolies.
h) In these regions and countries, communist revolutionaries and leaders, like Mao Zedong in China, Ho Chi
Minh in Vietnam, and Fidel Castro in Cuba, organized anticolonialism and anti-imperialism campaigns and
fought “wars of national liberation” against capitalist imperial powers.
i) In theory, the relationship between capital-abundant nations and capital-scarce nations should be one of
interdependence because each needs the other for maximum growth. But for many structuralists, the result
in practice is dependence, exploitation, and uneven development.
IMPERIALISM AND GLOBAL WORLD ORDERS
a) This section explores a number of structuralist theories critical of imperialism and different world orders.
Dependency Theory
a) Dependency theory focuses on the relationships between core and peripheral countries, highlighting the
constraints put on the latter by the former.
b) There are three eras of dependency in modern history: colonial dependence in the eighteenth and nineteenth
centuries, financial-industrial dependence in the nineteenth and early twentieth centuries, and dependency
today based on multinational corporations.
c) Andre Gunder Frank made popular the idea that because LDCs remain dependent on industrial nations (or
MNCs), they are systematically underdeveloped, i.e., they remain in their underdeveloped state rather than
acquiring the capital and technology and also give them economic independence.
d) Many dependency theorists have been more aggressive about reforming the international economy. Some
called for a “new international economic order” (NIEO) after OPEC raised the price of oil in 1973. Others
envision reform through any number of strategies related to MNC investment, foreign aid, or efforts to
equalize income levels and power throughout the global political economy.
Modern World Systems Theory
a) Modern world systems theory, made popular by Immanuel Wallerstein, views capitalism as a world
system that determines political and social relations.
b) The capital-rich industrial core dominates the Modern World System, exploiting the resource-
abundant periphery.
c) The semi-periphery exists between the Core, which exploits it, and the Periphery, which it exploits.
The core interacts with the semiperiphery and periphery through the global structure of capitalism,
exploiting these regions and also transforming them. The semiperiphery serves more of a political
than an economic role; it is both exploited and exploiter, diffusing opposition of the periphery to the
core region.
d) Modern world systems theory extends some of Marx’s and Lenin’s analysis of class relations within
a nation to analysis of class relations among nations or groups in the world.
e) Wallerstein also blends elements of realism with structuralism. As a mercantilist would, he accepts
the notion that the world is politically arranged in an anarchical manner—that is, there is no single
sovereign political authority to govern interstate relations. However, much like a Marxist-Leninist,
he proposes that power politics and social differences are also conditioned by the capitalist structure
of the world economy.
f) Some critics fault Wallerstein for his overly deterministic argument that nation-states are not free to choose
their courses of action or policies.
Neoimperialism, Neocolonialism, and Empire-Building Redux
a) Neoimperialism is a more subtle approach to classical imperialism, in which states no longer need to
occupy other countries in order to exploit them. When the Vietnam War ended in 1975, many believed that
the “naked” version of classical imperialism was over. U.S. hegemony declined as U.S. economic growth
slowed and the U.S. dollar weakened when the Bretton Woods system formally collapsed in 1971 (see
Chapter 7). The 1973 OPEC oil crisis exposed the U.S. and other core countries’ dependence on foreign oil.
The U.S. public opposed military intervention in developing nations outside the U.S. “sphere of influence”
in Europe, Japan, and Latin America.
b) The works of Harry Magdoff (1913–2006) provide a good example of the older, orthodox version of
Marxist-Leninist ideas related to U.S. imperialism.
c) In the 1980s, as part of the Reagan Doctrine, the United States renewed its efforts to support pro-Western
authoritarian regimes in Central America in order to contain communism. President George H. W. Bush
intervened in the Persian Gulf to protect U.S. oil interests.
d) The fall of the USSR in 1991 ushered in a new age of neoimperialism in which industrialized nations
promoted globalization and economic liberal policies through institutions such as the World Bank and the
IMF. Many structuralists argue that these policies were simply another way to exploit the periphery.
e) President Clinton promoted economic liberal policy objectives with selective military intervention abroad.
His campaign of “engagement and enlargement” mixed hard and soft power to explicitly draw other
countries into the global capitalist economy while expanding the scope of democracy.
f) After 9/11, many experts urged the George W. Bush administration to maintain U.S. hegemony, even to the
point of consciously promoting a new American empire. Meanwhile, many hegemonic policies adopted by
the United States over the last decade have led to more violence and inequality.
g) Going beyond the militarism of the Bush administration, Obama has escalated the use of drones to conduct
extra-legal assassinations—even the illegal assassinations of U.S citizens.
h) Structuralism recognizes that militarism and empire-building are endemic to the American polity because
the political structure operates on behalf of those with wealth and power.
EQUALITY OR AUSTERITY? POLITICAL-ECONOMIC LESSONS FROM THE GREAT RECESSION
a) From a structuralist perspective, the recent crisis was an inevitable consequence of the increasing power of
the capitalist class over the last forty years. Despite an assortment of “bad behaviors” by bankers and
elected officials along with fraud perpetrated by many on Wall Street during the “boom,” many
structuralists see the financial crisis and economic stagnation as the result of laissez-faire economic policies
and not as an unfortunate consequence of a healthy system distorted by a few bad guys.
b) Many structuralists point to the massive increase in inequality within the United States, leading to a greater
exploitation of the working classes by the rich. Overall, the degree of indebtedness grew for the middle
class, leading the ratio of total debt to total assets to increase from 20.6 to 24.3 percent between 1998 and
2007.
c) Throughout the crisis, many were left owing more than their houses were worth.
d) On a global level, industrialized nations’ investments in developing nations contributed to the growing glut
of capital along with debt in the European Union and many developing nations, further hardening the
dependence of peripheral nations upon them.
e) The standard neoliberal response to economic crisis is known as “austerity.” Austerity measures are
changes to government policies so that spending is shifted away from social and welfare programs in order
to find money to pay foreign and domestic creditors.
f) One response to austerity measures has been the various “occupy” movements that began in Canada but
gained the most fame on Wall Street.
CONCLUSION: STRUCTURALISM IN PERSPECTIVE
a) Marxism is still relevant in the post-communist era. Structuralists argue that one cannot understand the
international political economy without recognizing the conflict over the income derived from the division
of the economic output into profits and wages.
b) Structuralists reject the economic liberal belief in the benefits of free trade and deregulated markets,
asserting instead that the inequalities in power between capitalists and workers, along with the rich and
poor countries, results in exploitation, inequality, and poverty.
c) The structuralist version of globalization calls for greater unity among workers throughout the world and
international trade and investment arrangements that no longer exploit the vulnerable developing nations.
Key Terms:
• Structuralism
• Historical materialism
• Dialectical process
• Bourgeoisie
• Proletariat
• False consciousness
• Dependency Theory
• Modern world system (MWS)
• Core
• Periphery
• Semi-periphery
• Neoimperialism
• Austerity measures
Teaching Tips:
• We call this perspective “structuralism” because it is the broadest name we could think of —a big tent that
includes Marx, Lenin, Wallerstein, and many others who share a somewhat similar understanding of political
economy. We recognize that this is a problem for some experts and instructors who would prefer to call this
perspective Marxism, Marx– Leninism, or just the “Radical” perspective.
• One potential problem that we see in using the term structuralism is the chance that students might confuse the
four structures of IPE with the structuralist perspective. Despite the similarity in language, we have found that
students are able to distinguish between these ideas quite well. You might mention this difference, however, to
avoid confusion.
• It is useful to spend a little time indicating the difference between the structuralist perspective and the economic
liberal and mercantilist perspectives presented in the earlier chapters. In some respects, mercantilism and
economic liberalism are direct opposites, which make them somewhat easier to handle. In contrast,
structuralism is a completely different point of view. Point this out to students. Whereas economic liberalism
and mercantilism see the world as largely made up of states and markets, structuralism focuses on the ways that
states and markets together (in the form of capitalism) create classes, both within and among nations.
• As noted in the text, this chapter leaves out many of the ideas of Marx and Lenin, focusing only on the notions
that are really critical to an understanding of IPE. It is hard for a person who knows all about the labor theory of
value, for example, but it is probably necessary, given the introductory level of the text. When presenting
material about Marx and Lenin (as with economic liberalism and mercantilism), consider which ideas are most
important and necessary and focus on them.
Sample Essay-Discussion Questions:
1. Compare and contrast structuralism with mercantilism and liberalism in the following areas:
a. the dominant actors
b. political versus economic motivation behind actor behavior
c. the role of the state in the economy
2. How did the views of Marx and Lenin shape structuralism in general? Be specific and give examples from the
reading.
3. Lenin argued that capitalism was able to delay its crisis through international expansion. Explain what Lenin
meant by imperialism. What structures of IPE form the basis for this global exploitation?
4. How does neoimperialism differ from the classical or Leninist version of imperialism? What brought about the
increasing use of this term? (What changed from Lenin’s time until today in terms of how we think about
exploitation and the domination of states and societies of people?)
5. Outline the essential characteristics of Dependency theory and the Modern World Systems theory. Discuss
some examples of how the concepts would account for policy situations in the world today, depending on the
instructor’s background and intellectual interests.
6. Outline some of the views structuralists have about globalization. Why do they tend to be so critical of it? What
ideas or explanations associated with globalization do they best represent and which ideas do they overlook or
not account for?
7. Pick a policy issue related to globalization and have students study the issue from a structuralist perspective.
What contributions to our understanding of the issue does structuralism provide that the other three perspectives
do not?
8. Finally, look over the materials in Chapters 2, 7, and 8 about the financial crisis. How do structuralists add to
our understanding of this problem? Give examples from the reading or from other accounts of the financial
crisis.
Sample Examination Questions:
1. The basic idea behind structuralism is that
d) wealth is necessary for power.
2. Marx believed in a theory called historical materialism. In this theory, capitalism:
a) arose out of socialism in order to overcome communism.
b) arose out of feudalism in order to overcome feudalism.*
c) is based on the exploitation of the bourgeoisie by the proletariat.
d) shares its surplus fairly through the laws of supply and demand.
3. The process by which inherently unstable opposing economic forces and counterforces lead to crisis, revolution,
and to the next stage of history is called
4. Which one of the following refers to the privately owned assets used to produce the commodities in an
d) private property
5. Which of the following is NOT one of Marx’s Laws of Capitalism?
a) the law of the falling rate of profit
6. Ideological manipulation occurs when
d) politicians convince voters that they support populist proposals.
7. Lenin believed that capitalism was able to postpone its crisis by:
a) government policy that increased the rate of profit.
8. The Modern World System theory looks at capitalism as:
a) the conflict between the proletariat and the bourgeoisie.
d) Class is nonexistent; all capital is communally owned.
10. How does neoimperialism differ from classical imperialism?
a) International organizations create laws and policies for member nations.
11. According to dependency theory, why do LDCs remain underdeveloped?
a) They are dependent on food aid to keep their population alive.
12. After the financial crisis of 2007, structuralists recommended:
a) more free-market economic policies.
13. Structuralists tend to view free market globalization as
a) a new epoch of history.
14. According to many structuralists, which of the following is not one of the outcomes of the global financial
d) Many state officials promoting austerity policies to decrease debt and promote recovery.
15. Which recent U.S. president is most associated with a purposeful effort to promote a U.S. empire?
a) Barack Obama