Hegemonic Relations between centers and peripheries in world-systems theory have always had a territorial basis --the centers were geographic and presupposed dominant, semi- peripheral and peripheral zones within the geographic boundaries set by the flows of goods, information and military or political power.  Today's global political economy may be entering a new phase or cycle in which power is distributed functionally in ways that cut across geographic zones. Hegemony and accumulation of wealth will occur in a non-territorial way -- global organizations that are secretive and fluid will, I think, manipulate power behind the scenes, peripheralizing the open structures of governance at all levels and locations.

Instead of such conventional polarities as those of center/periphery, or West/East (West/Rest) or North/South, we will see a new kind of world power distribution more aptly characterized as Front and Back.  The metaphor comes from theater on the premise that spotlights illuminate the front stage for all to see the drama, but the actors take their cues and reflect the lights that are controlled from back stage by unseen figures.  In Japanese traditional theater, men in black actually move on stage, invisibly, to set the stage and manage the action by the colorfully lit players. Cinematically, the front is only a silver screen on which celebrated actors play their roles, but the decisive controls are behind the cameras, in the hands of playwrights, producers and managers who remain invisible.

European feudalism offers another analogy because it split power between local and more visible lords, knights, and castles, while the Church, traders and priests manipulated power behind the scenes from their fortified burgs.  I used the feudal metaphor to characterize the emerging split between the back and the front as neo-feudal. However, I have since learned that this word has already been used in other contexts for different purposes.  To avoid confusion, I shall use meta-prismatic as a synonym, assuming it can be a more precise though less transparent as a metaphor.

Some years ago I created the "prismatic model" (Riggs, 1964) over to help explain the paradoxes found in societies torn between domestic traditions and external influences. The metaphor of a prism links the white light of self-contained subsistence societies with the spectrum of colors that symbolizes complex industrialized societies.  In the prism both co-exist in mutually contradictory ways.  One result is a high degree of formalism by which I refer to contrasts between public and formal support for imported norms and practices (the "front") by contrast with informal adherence to long-establish though contradictory social standards and mores (the "back").

In the emerging world system, as I visualize it, real power in Back will be widely diffused territorially in unlikely places, depending for its effectiveness on secrecy. By contrast, the Front, also dispersed globally, will bask in the glare of publicity and celebrity status.  Accountable elites must follow rules that make them vulnerable to domination by irresponsibles who can flout the rules with impunity.  Both Front and Back are global and affluent, but their their wealth and power will not equitably distributed. The Front will remain most visibly in the old centers of power, while the Back will float subvisibly in obscured cays and palaces: as different as Paris and Monte Carlo

Territorial distinctions will remain, but they will be subordinated to functionally allocated structures of power that disdain territorial boundaries.  Increasingly, the irresponsible elites of the world will float among their "homes" in spas and islands, spots where comforts abound, taxes are low, and regulations are minimal.  By contrast, the accountable elites of the once "great" powers, will be starved of resources and victimized by their institutional straitjackets.  To support these off-beat propositions, let us first consider the implications of price indeterminacy.

Price Indeterminacy.  Formal economics normalizes price determinacy as a basis for equalizing supply and demand on the premise that rationality governs the choices made by the producers and consumers of any commodity.  In the real world, however, political and social forces distort supply and demand leading to price indeterminacy, i.e. to quite "irrational" fluctuations in both the costs of production and market forces, thereby affecting both supply and demand in perplexing and erratic ways.  Forty years ago, I learned from a survey of interest rates paid by Thai villagers for personal loans that many borrowers paid no interest, some paid usurers exhorbitant charges, and others paid comfortably moderate rates of interest.  In defiance of the "law of supply and demand," in this village -- as in virtually all peasant villages -- there was no stable price for money.

Seeking an explanation, I found that persons on good terms with affluent relatives could secure interest free loans. Others without such connections but with respectable credit records, could become members of a government-subsidized credit union that enabled them to borrow money for something like 10%.  Unfortunately, those without these advantages were sometimes compelled, in desperation, to rely on money lenders who, understandably, had to charge about 100% in order to cover their high risks and collection costs.

Although the apparently irrational indeterminacy of the interest rates paid by village borrowers may strike one as unreasonable, I found that socio-political context makes formally "irrational" conduct appear quite reasonable.  As I looked around in Thailand, I found that price indeterminacy was ubiquitous: in many contexts those with influence and power secured preferential rates for foreign exchange, freight charges, consumer goods, housing and transportation; those without these advantages were compelled to pay higher rates. Similar fluctuations occurred at both individual and collective levels: what customers paid in a street bazaar varied both with their bargaining skills and the nature of their relationships with sellers; low prices paid by privileged members in a government-subsidized post exchange contrasted with the high prices tributary (plantation) canteens charged their unfortunate victims: for details see Riggs, 1964, Administration in Developing Countries.

The contrast between the high prices charged to victims of a tributary canteen and the low prices available to members of a subsidized canteen will increasingly prevail, at a global level.  Citizens of the developed industrialized democracies will be victims of the former, and the latter will benefit corporations able to take advantage of a new kind of subvisible industrial estate to be found, increasingly, in poor (prismatic) societies of the "third world."  Before discussing this emergent phenomenon, however, I need to pave the way by referring to the prismatic phenomena I discovered after returning from Thailand to the United Strates.

To my surprise, I learned that price indeterminacy also prevails in an industrialized, free market society. For example, to attact tourists able to plan ahead for vacation trips, airlines give preferential rates because they think it is better to subsidize seats than to let them go empty.  By contrat, whereas business travelers, seeking last-minute reservations, become the unwilling victims of a tributary canteen. Insiders with clout often secure hotel rooms at better rates than naive outsiders, pitting the beneficiaries of a subsidized canteen against victims of a tributary canteen.  Familiar old-timers are given preferential rates at neighborhood stores where strangers are penalized -- one can easily find many other examples.

Political pressures often directly spawn such inequalities.  The American Congress, for example, rewards campaign contributors by enabling hospital suppliers to charge more for Medicare funded goods than ordinary citizens must pay at a corner drug store, yet they may also subsidize the prices patients pay for drugs in an HMO pharmacy. The armed forces regularly pay exhorbitant prices for toilet seats, hammers or clothes that ordinary customers can buy at a neighborhood store for much less.  The supply-demand rationality of formal economics can be more of a myth than a reality in even the most economically advanced country -- it is, I think, now predictably exceptional throughout the world.

Global Implications.  The rice indeterminacy we have seen at the village or one-country level will increasingly occur, I think, at the global level, seriously distotring the political-economy of the world system.  Increasingly, global terms of trade will be reshaped by price indeterminacy in new and lamentable ways.

Remember, first, that unregulated capitalism leads to monopoly and high prices after an intervening stage of "monopolistic competition" in which price wars generate uneconomically low prices -- in prismatic terms, this involves a transition through subsidized to tributary prises. Within states, viewed as a "closed economy," governments could sometimes regulate markets so as to maintain competition between suppliers and prevent monopolies. However, in a global economy subject to market forces without effective global governance, a new kind of cut-throat competition will increasingly enable low-cost producers in new states to undermine and destroy producers in the higher-cost homelands of industrialization.  Monopolistic competition now flourishes as a global, not just a local, phenomenon, and it has already created subsidized canteens for privileged corporations in competition with the penalized firms living under responsible democratic controls.

Until recently, producers in weak states found that the lack of basic infrastructures, political instability, pervasive corruption and lawlessness seriously hampered their operations, raising the costs of production to uncompetitive levels.  They were, in effect, victims of a tributary canteen.  Now, however, they have turned the tables and a new form of organization created by a new type of industrial estate (or "park") offers them a subsidized canteen.  They are now able to produce at lower costs than their counterparts in strong states because they are not compelled to pay for the environmental safeguards, higher wages and taxes, and social welfare benefits that have become institutionalized in the industrial democracies.

As a result, the traditional cleavages between hegemonic and peripheral states (between "West" and "East," or between "North" and South") are undergoing a radical transformation into what I think of as a Front/Back dichotomy.  The more industrialized countries that used to monopolize mass-production technologies and offered infrastructures that enabled them to dominate world markets will increasingly surrender to powerful producers in poor countries with weak governments.  These "prismatic" societies are playing host to industrial estates able to create their own privately controlled infrastructures and use corrupt means to flout any laws that they find objectionable.

The explanation for this surprising development can be found in the emergence of an intervening type of politico-economic structure able to mediate between weak states and ubiquitous multi-national corporations.  It takes the form of a new kind of industrial estate that has begun to flourish in countries whose regimes are unwilling or unable to enforce the international standards that raise the costs of mass production -- often enough they formally adopt such standards but cannot implement them, leading to the most important prismatic symptom, a high level of formalism, saying one thing but doing another. By exploiting the weaknesses of their host countries, these industrial parks can enrich their owners and also the client corporations that benefit from their services.  Simultaneously, they can undermine the productivity and market share of competitors in the traditional homelands of the industrial revolution.

These industrial estates operate subvisibly thereby concealing a form of price indeterminacy that obscures their activities from public view. I use the unfamiliar word, "subvisible," which dictionaries define as a property of anything that cannot be seen by the naked eye --metaphorically, it extends to operations that defy exposure by the mass media or enquiring scholars.  Subvisible industrial parks already exist and support what will, I think, become a globe-encircling threat to the hegemony of today's industrialized countries.  However, power will not shift, as in the past, from one geographic zone to another. Instead, it will slip behind the scenes to cartels (syndicates) operating in a global environment that conceals their operations.

We are all aware of illegal gangs or "mafias" whose secret activities put illegal drugs, prostitution, and gambling within the reach of ordinary citizens.  Like the new industrial estates, all these subvisible activities thrive in the weak and corrupt states that have sprouted on the ashes of the collapsed modern empires.  Their activities facilitate not only widespread access to forbidden goods but increasingly they will also make low-priced industrial products available throughout the world.  Although many benefits of industrialism will go to elites living in very poor countries, poverty among the masses will surely increase. Moreover, an increasingly negative balance of trade will afflict rich countries because producers in the poorest countries can now manufacture goods at a much lower cost. They will sell them in affluent countries where the ability to manufacture goods at competitive prices will decline.

Subsidized Canteens.  The environment generated by the new states cannot provide infrastructures that would permit industrial production to flourish, nor can they protect the environment and assure adequate wages and safe conditions for their workers.  In the past, we viewed these countries as good sources of raw materials and handcrafted objects, and increasingly also as potential markets for the manufactures of the industrialized countries.  However, we did not see them as real competitors -- that has now changed in a radical and unexpected way.

Against their will or, perhaps better, against the interests of their peoples, these states are now unwittingly subsidizing canteens that enable parasitic corporations to exploit their weaknesses.  What was formerly an obstacle to industrial production has become an asset. No doubt some of the competition from poor countries does arise because they are able to provide favorable environments for industrial production.  Increasingly, however, the cheap products that will flood the world will be produced in subvisible industrial estates (essentially self-sufficient enclaves) that flourish precisely because host governments are too weak to enforce laws and provide infrastructure.

They will flourish like mangroves in a swamp, as fortified "islands" where the preconditions for cheap production can be created and maintained without having to pay the costs of development -- in fact, host countries will be exploited parasitically and experience growing poverty and environmental decay.  Perversely, however, some elites and government officials will profiteer from these activities, but spend much if not most of their ill-gotten wealth in other countries, preferably in luxury havens where they can most easily avoid taxes, hire low-cost servants, and enjoy many perquisites, including instantaneously global communications.  Like laundromats, these tax havens also lack power but enable their patrons to launder money and move smoothly from the back to the front of the evolving world stage --the metaphor is mixed, but the scene is frightening.

The links between hegemonic power, industrial production, and effective democracy will, I think, increasingly dissolve. Hegemony in the world system will no longer belong to any country or region. Instead, a global network (cartel) of subvisible industrial estates will exercise power behind the scenes where capital can float freely and managers can easily move between their many "homes" in different countries, well protected by a screen of back stage anonymity. Meanwhile, on the front stage, the mass media will continue to focus the world's attention on the states, personalities, and events we already know so well.  The new power-holders will help to finance the facade events that distract attention from the more sordid realities.

The "surplus value" generated behind the scenes by semivisible industrialization will not alleviate poverty or raise living standards in the poor countries that host these industrial estates -- rather, the wealth they accumulate will vanish through the laundromats where dirty money can be cleansed, enabling the "sanitized" beneficiaries to mingle unobtrusively with the world's elites.  Increasingly, the distinction between "Front" and "Back" will replace the East/West and North/South dichotomies.  Perhaps this is not inevitable, but to avoid this scenario, we must peer behind the scenes to learn where, increasingly, the real centers of power and action are likely to emerge.

This is not just fantasizing -- let me offer some concrete evidence. Jeffrey Winters (on the basis of field research) has described what he calls "zonal capitalism" in Indonesia and other Southeast Asian countries.  He outlines the transformed structure of a "second generation zone" in the design of industrial parks or estates -- these are enclaves in a third world country like Indonesia which maximize opportunities for investors to accumulate profits in the production of manufactures (from shoes, fabrics and garments to cars, furniture and electronics) for which demand on a global level is escalating. Concurrently, costs are reduced by minimizing social, environmental and political accountability under the shield of bureaucratic payoffs. During the period from 1989 to 1994, the number of subvisible estates in Indonesia escalated from scarcely half-dozen to almost 100 -- at the same time, their investments shifted almost completely from public to private capital.  The trends apparent during this 5-year period seem destined to continue in Indonesia, and parallels in neighboring countries, as well as in widely scattered parts of the third world, appear likely to mushroom, with implications that stagger the imagination.

"Second Generation" Strategems.  By contrast with "first generation" estates which were planned conventionally to collocate industries and workers while locating managers in "suburbia", the "second generation" inverts this scene.  They mimic ancient cities in which elites clustered about the central palaces, assigning serfs to the extramural boondocks. These new generation estates, as subvisible as any ancient "forbidden city," are self-contained zones, surrounded by formidable walls, that can be entered only through a single controlled gateway that insulates them from their surroundings and heightens the ability of estate owners and managers to provide optimal conditions for investors seeking facilities that will maximize their profits.

Instead of relying on the state to protect property rights and provide infrastructure in exchange for their tax payments, these subvisible estates create their own infrastructures at much lower cost, bypassing state services and avoiding taxation.  As a result, the political and administrative development of host states is hampered, and their capacity to serve their own populations is also reduced. This reverses the trends of modernity as they evolved during the last two or three centuries in the industrialized democracies, and as "modernizers" expected them to develop in the new states formed on the ruins of the collapsed industrial empires.

Actually, this is "underdevelopment" with a new twist -- instead of just supplying raw materials and exporting their ancient wealth, many of the new states will become hosts to parasitic industrial establishments that feed off their poverty, reinforce their backwardness, and pollute their environments.  If subvisible industrial estates (second generation model) mushroom throughout the world, as I think they will, highly negative global consequences will undermine and invalidate many of the proudest achievements of modernity.

Two fundamental parameters need to be taken into account -- the internal and the external environment of these parks. They deeply affect what will go on inside them as well as outside.  In order to understand this result, we need to remember that the dynamics of modernity rests on the ability of modern states to link three explosive trends: industrialization, democratization, and nation-building.  Not only does each need the other, but without them, each of these forces can be highly destructive. The essential property of the post modern (not post-modern) world that I visualize disengages the essential strands of this integrating rope: stringing themselves out as separate fibers, they will conflict with each other and generate a new form of global breakdown that could be identified as "meta-prismatic," a term I shall discuss below after commenting on the internal and external environments.

The Internal Design.   The core parameter in this disturbing vision can be found in the design of these new industrial parks.  In order to provide an insulated safe haven for capital investment and productive enterprise, they are self-contained in several vital respects, and deliberately permeable in others.  The most conspicuous of the internal features arises from the physical propinquity of central services and management.  All personnel responsible for directing and supervising the plants located in an estate are offered attractive housing, a golf course, swimming pools, and other clubby facilities.  Office space for the management and marketing of a wide variety of industrial activities is provided, together with central power sources, water treatment facilities, shopping services and links to a global information network. Perhaps equally important, industrial activities are not clustered by type, as they were in earlier models, but they are intermingled so that workers engaged in similar operations find themselves widely separated from each other.  As a result, neighboring workers are engaged in quite unrelated activities and share few common bonds that might facilitate unionization.

By contrast, no housing for workers is provided, as had been the case in the first generation of industrial estates. Instead, shuttle buses carry workers to and from transport nodes where public transportation is available to take them to their widely dispersed home sites.  Entrance is closely guarded to make sure that only employees can enter the compound and outsiders likely to promote trade unionism, political activism, unwanted publicity, or academic scrutiny are strictly excluded. Environmental safeguards and tax payments are minimized. Although global information via the INTERNET and more conventional means is freely available, it is screened (censored) to make sure that authorized personnel use it for approved purposes only.  Perhaps most importantly, the capital required to finance development is provided externally by investors who not only recognize the profitability of these low-cost industrial activities, but they can sanction management by withdrawing funds if their expected profits fail to accumulate.  Any conscientious estate manager/owners tempted to be responsible "citizens" would soon find their clients slipping away.

The External Context.  The most important and specific external parameter involves the host state and society where these subvisible industrial parks are located.  Initially, as the Indonesian case reveals, a high level of state ownership and control might have assured co-dependency such that estate policies and practices could benefit both the state and its citizens.  In Indonesia, the radical privatization of operations during a short two-year period (1989-91), turned control over estate functions to private capital, much if not most of which was foreign.  No doubt, host governments in a viable democracy might be expected to retain effective control over the practices followed inside an industrial estate, thereby protecting the interests of their citizens. However, in an autocratically run state, with a powerful bureaucracy, especially one dominated by military officers, the political dynamics are reversed -- the state can be victimized by predator estates.

In any poor country lacking the civic culture that might link citizen-based non-governmental organizations with the state, bureaucrats acquire the power and authority to deal directly with those whom they govern, including the power to grant permits for activities permitted by government, or to ban forbidden practices.  When, such officials (typically underpaid and demoralized) find that it is in their interest to support or ignore activities that violate public policies, they are easily tempted to sacrifice the general interest to their personal advantage. Without speculating about the specifics of how this is done, let me only say that my own experiences in Thailand, the Philippines and several other "third world" countries suggests that powerful interests, such as those involved in the management of an industrial estate, can assuredly find ways to secure the cooperation of key officials and prevent interference by those who might wish to monitor or regulate their activities.  Moreover, since the internal design of these estates and their gatekeeping functions can be so managed as to minimize the amount of information the government and the general public gets about their activities (and profits).

The term "industrial estate" is too neutral to give an adequate impression of the politico-economic strength and potential of these estates.  Winters characterizes them as "second generation," but perhaps a more descriptive term would help us recognize them and understand their impact: I shall use "subvisible," a word I have used above several times.  An indicator of the presence of subvisible industrial parks (or SIPs, as we might call them) is their capacity to insulate itself from critical attention by the outside world. By preventing the entry of journalists and researchers and even, I suspect, government officials or inspectors, a wall of silence not only protects SIPs from pressure by neighboring communities and host states, but it also shields them from the pressures world public opinion and international organizations can exercise.

The requirement that industrial workers commute on a daily basis hampers and may well prevent them from organizing trade unions or political movements to protect their own interests.  In effect, having a docile and poorly paid labor force can be assured.  I do not assume that plant owners are evil men who wish to exploit their workers, but I do consider that the capacity of industrialists to produce goods substantially exceeds the existing world market for them.  Moreover, since multi-national corporations are engaged in a highly competitive struggle, price competition is keen.  The greatest profits will, therefore, accrue to those who can produce at the lowest cost -- with wage rates a major factor.

In the long-run, industrialists who raise their employees' wages will thereby expand the size of the market for their products.  This might motivate them to offer higher wages except for the fact the marginal increase in the market for its products that any company could attribute to higher wages paid its own employees is surely trivial by comparison with the increased costs it would have to absorb. Consequently, the only mechanisms that will lead corporations to increase wages must either be the pressure exerted by organized workers or the politically motivated requirements of government that impose minimum wage laws.  Such forces operate in the more industrialized democracies, leading to higher prices.  However, they scarcely affect third world countries where subvisible industrial parks (SIPs) are able to nullify any wage standards their host governments might impose.  The new design features of an SIP are calculated to prevent the establishment of labor unions. Moreover, the political weakness of unorganized industrial workers in any country means the prospects for effective governmental controls to raise wages is almost nil.

Although weak state typically would like to tax SIPs and may even prescribe high rates, their own weakness hampers their efforts. Corrupt tax collectors would rather enrich themselves by accepting pay offs that are much lower than what the laws require.  Inadequate revenues deny prismatic states the resources needed to provide basic services, to reduce income inequities and cope with deep poverty, or to enforce the rule of law, itself a costly process.  No doubt SIPs will avoid countries where anarchic turbulence and civil strife make all industrial activities too precarious, but there are still plenty of places which, like Goldilock's mama bear, have the "just right" situation between the extremes of order and disorder.

Finally, a potential restraint on the owner/managers of SIPs could be their own clients, the companies that operate plants in their estates. My impression from Winters' oral presentation, however, is that they, also, are given no opportunity to organize or help manage a SIP. In fact, therefore, SIP management is hierarchical and authoritarian throughout -- this leaves them free to deal with their external environment as they think best with minimal constraints apart from their own self-interest.  No doubt the capacity of mobile capitalists to vacate their plots in an SIP when they feel frustrated enough provides an incentive for estate managers to accommodate the corporate owners -- but that will only make them more ruthless in their willingness to exploit workers, the environment, and their host states.

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The full text of this paper is available on my Web Site

1. Links on this Page provide access to the text of this paper, under the heading given above,

2. Because this paper offers some new concepts and terms, readers may wish to look at a companion paper called "Coming to Terms with Social Science," also prepared for the Seoul IPSA Congress. It looks at the need for new concepts generated by a world in transition and discussed a technology now available for sharing and developing these concepts through a global mechanism made possible by the World Wide Web -- go to my COCTA paper, Coming to Terms

3. An example of the use of this mechanism can be found in another paper, Turmoil among Nations, also available on the Riggs Page. A set of interlinked concept records are attached for illustrative purposes.

4. Several essays that explain the onomantic approach for introducing new concepts, by contrast with traditional terminological and lexicographic paradigms

Questions and requests for a copy of the paper (on paper) may be sent to the author by: e-mail

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