International Financial Relations As Part of the World-System

Abstract

The article develops a structural perspective on international financial relations since about 1800 by placing them into the larger framework of cycles and trends of the world-system. Starting with the observation that global debt crises have always occurred during troughs of Kondratieff cycles and have always originated in the periphery, a body of hypotheses linking long cycles and international financial relations is formulated. These hypotheses discuss reasons for the increase of financial flows into the periphery dulring the later phases of a cycle, the promotion and reproduction of underdevelopment through these flows, and consequences of this fact for rising instability in international financial relations. The second basic observation analyzed concerns the fact that international financial relations did not break down in the early 1980s, although their fragility seems to have reached similar levels as in the 1930s (when financial relations did collapse). This suggests that the international financial system is also subject to a trend toward greater institutionalization in the sense that subsystems characterized by cooperative forms of self-organization have emerged whereas, originally, the international financial system lacked social forms of self-organization. These new subsystems (mainly those of multilateral reschedulings and of development finance) were capable of reacting to external fluctuations and, hence, increased the system's resilience with regard to a global crisis. The trend toward greater institutionalization of international relations is described and explained by a general process toward organic solidarity on an international level and by hegemonic cycles of the world-system.