Wallerstein (in this first volume of an incredibly dense, multivolume work) takes as his unit of analysis not particular states but a "world-system," an economic system that is "larger than any juridically-defined political unit" and view "the basic linkage between the parts of the system [as] economic" (15). This volume is about the emergence of the new, capitalist world system from feudal roots.
In Chapter 1, "The Medieval Prelude," Wallerstein, following RH Hinton, describes a "general crisis of feudalism" that is "the culmination of 1000 years of development, the decisive crisis of a system." The nature of the crisis was that they arrived at "the inherent limitations of the reward system of feudal social organization... for if the optimal degree of productivity had been passed in a system and the economic squeeze was leading to a generalized seignior-peasant class war, as well as ruinous fights within the seignorial classes, then the only solution that would expand the economic pie to be shared, a solution which required, given the technology of the time, an expansion of the land area and population base to exploit. This is what in fact took place in the fifteenth and sixteenth centuries" (20).
"It was precisely the immense pressures of this conjuncture [the crisis of feudalism, a conjuncture between secular trends, an immediate cyclical crisis, and climatological decline] that made possible the enormity of the social change. For what Europe was to develop and sustain now was a new form of surplus appropriation, a capitalist world-economy. ... It will be the argument of this book that three things were essential to the establishment of such a capitalist world-economy: [1] an expansion of the geographical size of the world in question, [2] the development of variegated methods of labor control for different products and different zones of the world-economy, and [3] the creation of relatively strong state machineries in what would become the core-states of this capitalist world-economy" (29).
Ch 2, "The New European Division of Labor" sketches Based on wages and the availability of land, England and Holland entered the 16th century with a slight advantage in industrial production and commercial shipping, whereas Eastern Europe had more available land and lower wages. "the slight differential already established in production specialties meant that profit maximization was achieved, or at least thought to be achieved, by doing more extensively and more efficiently what one already did best" (79). "The agricultural specialization of the core encouraged the monetization of rural work relationships, as the work was more skilled and as landowners wished to rid themselves of the burden of surplus agricultural workers. Wage labor and and money rents became the means of labor control. In this system, a stratum of independent small-scale farmers could emerge and indeed grow strong both on their agricultural products and on their links to new handicraft industries" (82).
Ch3, "The Absolute Monarchy and Statism" details the formation of states as an element within the world-system. Absolutism and centralization was especially vital in the core state, as it "created the stability that permitted this large-scale shift of personnel and occupation without at the same time, at least at this point in time, undoing the basic hierarchical division of status and reward" (110). Critically, it was the collapse of Habsburg/French empire that made the further entrenchment of this division of labor possible. "Conflict within the world-system, this weakening of Spanish world dominance, made it possible for the bourgeoisie of the United Provinces to maneuver to maximize its interests" (138). In the aftermath of the destruction of Habsburg dominance (from 1559) the world-system was restructured. "The new system was to be the one that has predominated ever since, a capitalist world-economy whose core-states were to be intertwined in a state of constant economic and military tension, competing for the privilege of exploiting (and weakening the state machineries of) peripheral areas, and permitting certain entities to play a specialized, intermediary role as semiperipheral powers" (131).
These were the conditions that allowed the capitalist world system to emerge, and provided the opportunity for specialization and the creation of strong core states that actively promoted the interests of the budding bourgeoisie. "This is particularly the case in the advantaged areas of the world-economy - what we have called the core-states. In such states, the creation of a strong state machinery coupled with a national culture, a phenomenon often referred to as integration, serves both as a mechanism to protect disparities that have arisen within the world-system, and as an ideological mask and justification for the maintenance of these disparities" (231).
Volume 2 will turn to the consolidation and entrenchment of this world system in the age of mercantilism, 1600-1750.