He presents Dependency Theory as a precursor of World-System Theory. Wallerstein was not the first person to look at global development and find it relevant that some parts of the world were exploiting the others; dependency theorists got there first.
One scholarly disagreement he traces is whether Latin America was "feudal" before development. Andre Gunder Frank said no, because European mercantilists brought capitalism to Latin America as they exploited the heck out of it. A worthy rebuttal came from Ernesto Laclau:
"It was obvious, observed Laclau, that mercantile exploitation used as its instrument the coercive labor relations and tributary obligations corresponding to the feudal mode of production. This was not a trivial point, since it greatly affected the explanation of Latin America's historic underdevelopment. In Laclau's scheme, underdevelopment derived not only from Europe's channeling of the colonies' economic surpluses from satellite to metropolis [periphery to core] but also from its "fixing the relations of production in an archaic mould of extra-economic coercion, which retarded any process of social differentiation and diminished the size of their internal markets."" p. 839
Stern expands the point out, including Laclau's assertion that an entire economic system could be capitalist but it could have different modes of production within it, including a feudal one. Furthermore, this feudal mode of production in Latin America means that the region was fated to underdevelopment even if Europe hadn't been appropriating all of their surpluses. Last, "material progress in twentieth-century Latin America did indeed require the break-up of the feudal socioeconomic structures that dominated many backward regions."
Then Stern puts his history hat on. Yes, it seems like Latin America is "'in but not of' the capitalist economy" but to a historian, "posing the choice as one between a "feudal" or "capitalist" economy may itself misconstrue the nature of the problem" (p. 839). He provides a description of the economy in colonial Latin America and then concludes on pp. 840-841 that "the colonial Latin American economy, though part of a European economic system in transition to capitalism, followed principles of economic evolution qualitatively distinct from those associated with a capitalist mode of production."
Stern follows with more discussion of why either label is not accurate. One point worth noting is that the regime that extorted labor from indigenous people (such as those forced to work in the mine at Potosi) and enslaved people from Africa in Latin America and the Caribbean is different from Europe's feudal system and also different from Old World slavery, so equating this with feudalism "obscures both the intensity of mercantile exploitation inherent in the colonial system and the degree to which this very intensity led to labor relations, subsistence and market patterns, and technological developments with structure and dynamics qualitatively distinct from those of pre-capitalist Europe" (p. 841).
Stern's term for being forced to choose between "feudalism" and "capitalism" is "a conceptual trap" (p. 842) since it's truly neither. He therefore agrees with Wallerstein that Laclau did not entirely get it right. He outlines four different positions that came about in Latin American scholarship prior to Wallerstein.
- Capitalism and feudalism are not the only modes of production. What existed in Latin America deserves its own category, like "colonial" or "colonial slavery."
- Latin America had "feudalism" but with particular features scholars in this camp defined, "stressing the historical context that joined colonial feudalism to international and local mercantile ventures" (p. 843)
- "To search for a dominant mode of production in colonial Latin America is misleading because the cornerstone of the colonial economy was precisely the dominance of commercial capitalism over production" (p. 843). This view "explore[s] the ways commercial capital organized and exploited various relations of production, none of which served as a basis for a fully constituted mode of production in Latin America."
- A minority view is that colonial Latin America was "capitalist" - although the scholars in this camp "went beyond the terms staked out in the initial Frank-Laclau exchange" (p. 844).
Stern asks readers to consider Wallerstein in light of this debate that had already gone on for years by the time he published The Modern World-System in 1974. Wallerstein got a "surprisingly faint" response (p. 845) on his historiography of Latin America, and Stern contends that that is because he was, essentially, late to the game. Those debates had already been had. Additionally, "the idea of Latin America's historic dependence and manipulation by an external capitalist force, so much a part of life in Latin America, so current in the intellectual environment of the 1960s and 1970s, no longer constituted a revelation" (p. 845).
Going on, he says that "it would be a mistake to avoid a serious evaluation of Wallerstein's work from the angle of Latin American history" (p. 846). Stern commends Wallerstein on an excellent understanding of European history and a "systematic and forceful" argument on why the world-system as a whole must be analyzed together. He believes Wallerstein adds to the Frank-Laclau debate: he says "capitalism is best understood not as the replacement of coercive labor relations by free wage labor but rather as the rise of optimal combinations of free and coercive labor relations beneficial to the capitalist system as a whole" (p. 846).
Contrasting European medieval serfs with colonial Latin America, he believes its not accurate to equate European feudalism with the system in Latin America. He calls the latter "coerced cash-crop labor." He says that Latin America was capitalist, but redefines capitalism such that the core has free labor and skilled work and the periphery has coerced labor and less skilled work. (Also, there's sharecropping in the semi-periphery.)
Stern then pivots from the history of debate over "was Latin America capitalist?" to analyzing whether Wallerstein was correct based on Latin American history. He propose considering two case studies: silver mines and sugar plantations. In a fascinating and detailed explanation of labor relations in the silver mines in Potosi, he concludes that Wallerstein got it wrong. Labor relations were a mix of coerced labor, sharecropping, and wage labor. He adds:
In explanatory terms, the world-system framework also fares poorly. To explain the rise of share arrangements in terms of their utility to the world-system, or to American capitalists adapting to the international market, would miss the point entirely. The twisting of wage and forced labor in the direction of share relations greatly disturbed colonial entrepreneurs and officials, and it bolstered an Indian market of production, consumption, and speculation that developed a life of its own, one not easily molded by the preference of the colonial state, American cities, or the European world-system." - p. 855Expanding to include other silver mines in Latin America, Stern says it would be wrong to entirely dismiss Wallerstein, as there was a colonial surplus going to enrich Europe. However, he identifies three different "motors" driving the economic system in Latin America: the world-system, "popular strategies of resistance and survival within the periphery," and "the rise in America of regional and inter-regional markets and elites whose "logic" and interests did not always coincide with those of the world-system" (pp. 857-858). Therefore, he calls Wallerstein's analysis "one-dimensional and misleading" (p. 858).
Moving on to sugar, he grants that sugar better fits the model outlined by Wallerstein. But, he asks, why African slave labor dominated in sugar production. Initially, "colonizers actually tried out several labor strategies" to produce sugar (p. 859). In Brazil, the Portuguese first "experimented seriously with five labor strategies," four of which used Indian labor (p. 861). To sum up his longer analysis, Indians died and rebelled to much. Still, the full transition to African slave labor took a century. Again, he finds that Wallerstein's world-system theory does not fully explain labor on sugar plantations in Brazil and the Caribbean. He concludes that arguments based on macro forces ignore the local elements that ultimately led to the labor systems used to produce sugar. He adds that he is not claiming that the world-system is irrelevant here: "An explanation that ignores the world-system is as limited and reductionist as one derived from the world-system" (p. 863).
It appears that the overriding argument in this piece is two-fold. First, the world-system did impact labor relations and the economic system in Latin America and the Caribbean but was not its sole determinant; and second, while the powerful international forces of the world-system played a role in determining the labor system in Latin America and the Caribbean, local forces (local elites, and popular resistance) also played roles.