Investigating the Degree of Structure in the World-Economy Using Concepts from Entropy Theory

Investigating the Degree of Structure in the World-Economy Using Concepts From Entropy Theory

Salvatore J. Babones,
The University of Sydney
Address: Room 131
A26 - R.C. Mills
The University of Sydney
NSW 2006 Australia
Email: [e-mail]
Investigating the Degree of Structure in the World-Economy Using Concepts From Entropy Theory

ABSTRACT: The social and geographical structure of rewards in the modern world-economy has been incredibly stable over time. According to data from Maddison (2010), the 188-year correlation of national income levels for the 8 major world regions is a remarkable r = 0.956. There has been virtually no change in relative incomes for at least two centuries. This contradicts both standard neoclassical growth models and standard world-system models. The extraordinary stability of the structure of the world-economy cries out for more explicit modeling of structure. This paper outlines a new approach to understanding the degree of structure in the world-economy based on entropy theory. Entropy models can be used to differentiate between regular equivalence and structural equivalence in hierarchical economic relationships as well as between random social change and indicators of purposeful social progress. Applied examples illustrate a variety of entropy-based models and provide a proof of concept for the approach.

If the 1970s classics of dependency theory and world-systems analysis stand up well today, it is surely in part due to the fact that the structure of the world-economy is substantially the same today as it was in the 1970s. One might go out on a limb and make the same claim about Marx and the 1870s. In fact, if we are to believe Wallerstein (1974), the origins of the contemporary world-economy can be traced to the sixteenth century; if we are to believe Frank and Gills (1993), virtually to the beginning of time. Focusing for now on the knowable, it is clear that basic world-economic structures like

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