The modern world-system originated around 1500. In parts of western Europe, a long-term crisis of feudalism gave way to technological innovation and the rise of market institutions. Advances in production and incentives for long-distance trade stimulated Europeans to reach other parts of the globe. Superior military strength and means of transportation enabled them to establish economic ties with other regions that favored the accumulation of wealth in the European core. During the "long sixteenth century," Europeans thus established an occupational and geographic division of labor in which capital-intensive production was reserved for core countries while peripheral areas provided low-skill labor and raw materials. The unequal relationship between European core and non-European periphery inevitably generated unequal development. Some regions in the "semiperiphery" moderated this inequality by serving as a buffer. States also played a crucial role in maintaining the hierarchical structure, since they helped to direct profits to monopoly producers in the core and protected the overall capitalist economy (e.g., by enforcing property rights and guarding trade routes). At any one time, a particular state could have hegemonic influence as the technological and military leader, but no single state could dominate the system: it is a world economy in which states are bound to compete. While the Europeans started with only small advantages, they exploited these to reshape the world in their capitalist image. The world as a whole is now devoted to endless accumulation and profit-seeking on the basis of exchange in a market that treats goods and labor alike as commodities.
In the twentieth century, the world-system reached its geographic limit with the extension of capitalist markets and the state system to all regions. It also witnessed the rise of the United States as a hegemonic power-one that has seen its relative economic and political strength diminished since the last years of the Cold War. Newly independent states and communist regimes challenged core control throughout the century, and some formerly peripheral countries improved their economic status, but none of this shook the premises of a system that in fact was becoming more economically polarized. The nineteenth-century ideology of reform-oriented liberalism, which held out the hope of equal individual rights and economic advancement for all within states, became dominant in the twentieth but lost influence after 1968. Such twentieth-century developments set the stage for what Wallerstein calls a period of transition. New crises of contraction can no longer be solved by exploiting new markets; economic decline will stimulate struggle in the core; challenges to core dominance will gather strength in the absence of a strong hegemonic power and a globally accepted ideology; polarization will push the system to the breaking point. While this chaotic transition may not produce a more equal and democratic world, it does spell the end of capitalist globalization.