World Economy

Difficulties in Defining the Term

Before elaborating further on the nature of world economy, it is worth noting a few serious difficulties in defining the term. First, as it is often invoked, the term includes only the formal economy. Such a restricted conceptualization misses the so-called informal economy—all of the work and objects that get exchanged that, although often monetized, operate under the radar of state authorities and therefore are not counted in official depictions or measurements of the national economy. Also missing from most accounts of the world economy are the massive amounts of labor, resources, and money connected with the world's three largest illicit international trading markets: those in drugs, arms, and art and artifacts. Less technically and more politically and conceptually, the labor of those who are unpaid also is hardly ever counted as part of the economy at any scale. Household labor, child care, communal production, subsistence farming, and other livelihood strategies often fall outside of the market and thus outside of the economy as it is framed. This is despite the fact that these are very significant and productive activities, even though they often are not directly incomegenerating ones.

A second major difficulty associated with the world economy pertains to the way in which the economy often is treated as if it were a separate and distinct sphere of human activity, often called the market, operating according to its own rules. This is particularly a problem when the world economy is taken as globalizing of its own accord. Such accounts of the world economy tend to naturalize it, that is, make it seem like something natural instead of something that humans are creating and recreating, however haphazardly, every day. They can also make it difficult to think of alternative arrangements. How can we hope for and work for different sorts of economic arrangements if we accept that the way in which the world economy functions is the outcome of some extrasocial dynamics beyond human control?

These conceptual difficulties with the world economy do not make the term worthless. Indeed, perhaps the most amazing transformations of the earth have occurred over the past five centuries or so as something we call a world economy, more or less organized as capitalism, has been created. The term world economy conveys a sense of a dynamic and highly uneven set of activities and relations in which people and places are embedded differentially, although we should bear in mind that it is not comprehensive and that it can be used as a naturalizing description. Although some people and some places appear to be much more embedded in the world economy than are others, few are outside of it completely.

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