Final answer:
A capitalist system requires a world-economy to exist, according to Immanuel Wallerstein's world systems approach. Several components are necessary for a successful capitalist world-economy, including economic freedom, competition, voluntary exchange, consumption, entrepreneurs, and government.
Step-by-step explanation:
Capitalism and a world-economy:
The statement that a capitalist system cannot exist within any framework except that of a world-economy is in line with Immanuel Wallerstein's world systems approach. According to Wallerstein, the global economy is a complex system with a hierarchy of nations, where core nations dominate as capitalist countries. This suggests that capitalism operates on a global scale and requires a world-economy to thrive.
Components required for a capitalist world-economy:
To be successful, a capitalist world-economy requires several components:
- Economic freedom: Individuals must have the freedom to own and control the factors of production, such as land, labor, and capital.
- Competition: A competitive market allows for the interaction of buyers and sellers, driving innovation and efficiency.
- Voluntary exchange: The ability to freely exchange goods and services based on mutual agreement and consent is fundamental to capitalism.
- Consumption: The demand and consumption by individuals play a crucial role in determining the production and continued existence of products in the market.
- Entrepreneurs: Individuals who take risks and organize resources to create new ventures and businesses are essential for the capitalist system to flourish.
- Government: Although capitalism emphasizes limited government intervention, some form of government is necessary to enforce laws, protect property rights, and regulate the market.
These components are interrelated and work together to create a capitalist world-economy.