This is a supporting idea question. The phrase is used in the final paragraph.The author says the world capitalist system "has less and less relevance when applied to the variety of economies at work in the world."
So the phrase must apply to a system that does not have a lot of variety.Choice C matches this description.
Choices A and B are not supported by the passage. The Marxist scholars have failed to account for transitional economies, not the system itself, so choice D is a clever trap answer.
Choice E quotes the wrong part of the passage and is not supported by the passage.