TableofContents(gen)

ContentsTheThreeHegemoniesofHistoricalCapitalism

BritishHegemonyandFree-TradeImperialismUSHegemonyandtheRiseoftheFreeEnterpriseSystem

2TheRiseofCapitalTheFirst(Genoese)SystemicCycleofAccumulationTheSecond(Dutch)SystemicCycleofAccumulation

3Industry,Empire,andtheEndlessAccumulationofCapitalTheThird(British)SystemicCycleofAccumulationTheDialecticofCapitalismandTerritorialism

4TheLongTwentiethCenturyTheDialecticofMarketandPlanTheFourth(US)SystemicCycleofAccumulationTheDynamicsofGlobalCrisis

Epilogue:CanCapitalismSurviveSuccess?ReferencesIndex

TheLongTwentiethCentury

TheLongTwentiethCentury

Money,Power,andtheOriginsofOurTimes

6

GIOVANNIARRIGHI

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VERSO

LondonoNewYork

FirstpublishedbyVerso1994ThiseditionpublishedbyVerso2010GiovanniArrighi1994,2010NewmaterialGiovanniArrighi2010Allrightsreserved

VersoUK:6MeardStreet,LondonW1FOEGUSA:20JayStreet,NewYork,NY11201VersoistheimprintofNewLeftBooksISBN-13:978-1-84467-304-9

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TypesetbyHewerTextUKLtd,EdinburghPrintedintheUSAbyMapleVail

ContentsListofFiguresPrefaceandAcknowledgementsIntroductionviixi

ITHETHREEHEGEMONIESOFHISTORICALCAPITALISM282837485975

Hegemony,Capitalism,andTerritorialism

TheOriginsoftheModernInterstateSystem

BritishHegemonyandFree-TradeImperialism

USHegemonyandtheRiseoftheFreeEnterpriseSystemTowardsaNewResearchAgenda

2THERISEOFCAPITAL868697111130148

TheAntecedentsofSystemicCyclesofAccumulationTheGenesisofHighFinance

TheFirst(Genoese)SystemicCycleofAccumulation

TheSecond(Dutch)SystemicCycleofAccumulationTheDialecticofStateandCapital

3INDUSTRYEMPIRE,ANDTHEENDLESSAccUMULATIoNOFCAPITAL163163179200219

TheThird(British)SystemicCycleofAccumulation

TheDialecticofCapitalismandTerritorialism

TheDialecticofCapitalismandTerritorialism(Continued)RepriseandPreview

viTHELONGTWENTIETHCENTURY

4THELONGTWENTIETHCENTURY247247277309

TheDialecticofMarketandPlanTheFourth(US)SystemicCycleofAccumulationTheDynamicsofGlobalCrisis

EPILOGUE336371

CANCAPITALISMSURVIVESUCCESS?POSTSCRIPTTOTHESECONDEDITION

ReferencesIndex387405

ListofFigures

2.32.4

2.53.13.23.33.43.53.63.73.83.9

MenschsMetamorphosisModel

TotalSilverCoinageinEngland,1273-1470

TrendsintheClothTrade:ShipmentsfromEnglandandProductionatYpres

MediterraneanRoutesofGenoaandVeniceintheMiddleages

TheGenoeseSpace-of-Flows,LateSixteenthand

EarlySeventeenthCenturies

VolumeofGrainShipmentsthroughtheSound,1562-1780BritishCapitalExports,1820-1915

TheSixteenth-centuryTradeExpansion

TheNineteenth-centuryTradeExpansion

LongCenturiesandSystemicCyclesofAccumulationIdeotypicalTrajectoryofMercantileExpansions

HicksModelofMercantileExpansions

BifurcationintheTrajectoryofMercantileExpansionsModelofLocalTurbulence

ModelofSystemicTurbulence

3.10MetamorphosisModelofSystemicCyclesofAccumulation

4.14.24.3

4.4E.1E.2E.3

E.4R1

USTradeBalanceandCurrentAccount,1896-1956

USGoldReservesandShort-termLiabilities,1950-72OutflowofForeignDirectInvestmentsofDevelopedMarketEconomyCountriesDistributedbyGeographicalRegionsofOrigin,1950-83

Long-termInterestRatesintheUnitedStates,1965-84TheRiseofEastAsiainComparativePerspectiveIncomeGapsversusIndustrializationGaps

RateofIncreaseofAccumulatedJapaneseDirectForeignInvestment

TheEastAsianSpace-of-Flows,LateTwentiethCenturyEvolutionaryPatternsofWorldCapitalism

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313327344347

361361375

Tomygraduatestudentsat5UNY-Bing/mmton,1979-94

PrefaceandAcknowledgements

Thisbookbeganalmostfifteenyearsagoasastudyoftheworldeconomiccrisisofthe1970s.Thecrisiswasconceptualizedasthethirdandconcludingmomentofasinglehistoricalprocessdefinedbytherise,fullexpansion,anddemiseoftheUSsystemofcapitalaccumulationonaworldscale.TheothertwomomentsweretheGreatDepressionof1873-96andthethirty-yearcrisisof191445.Thethreemomentstakentogetherdefinedthelongtwentiethcenturyasaparticularepochorstageofdevelopmentofthecapitalistworld-economy.

AsIoriginallyconceivedthisbook,thelongtwentiethcenturyconstituteditsexclusivesubject-matter.Tobesure,IwasawarefromthestartthattheriseoftheUSsystemcouldonlybeunderstoodinrelationtothedemiseoftheBritishsystem.ButIfeltnoneedordesiretotaketheanalysisfurtherbackthanthesecondhalfofthenineteenthcentury.

OvertheyearsIchangedmymind,andthebookturnedintoastudyofwhathavebeencalledthetwointerdependentmasterprocessesofthe[modern]era:thecreationofasystemofnationalstatesandtheformationofaworldwidecapitalistsystem(Tilly1984:147).Thischangewaspromptedbytheveryevolutionoftheworldeconomiccrisisinthe1980s.WiththeadventoftheReaganera,thefinancializationofcapital,whichhadbeenoneofseveralfeaturesoftheworldeconomiccrisisofthe1970s,becametheabsolutelypredominantfeatureofthecrisis.AshadhappenedeightyyearsearlierinthecourseofthedemiseoftheBritishsystem,observersandscholarsbeganoncemorehailingfinancecapitalasthelatestandhigheststageofworldcapitalism.

ItwasinthisintellectualatmospherethatIdiscoveredinthesecondandthirdvolumesofFernandBraudelstrilogy,CapitalismandCivilization,theinterpretativeschemethatbecamethebasisofthisbook.Inthisinterpretativescheme,financecapitalisnotaparticularstageofworldcapitalism,letaloneitslatestandhigheststage.Rather,itisarecurrentphenomenonwhichhasmarkedthecapitalisterafromitsearliestbeginningsinlatemedievalandearlymodernEurope.Throughoutthe

xi

xiiTHELONGTWENTIETHCENTURY

capitalisterafinancialexpansionshavesignalledthetransitionfromoneregimeofaccumulationonaworldscaletoanother.Theyareintegralaspectsoftherecurrentdestructionofoldregimesandthesimultaneouscreationofnewones.

Inthelightofthisdiscovery,Ireconceptualizedthelongtwentiethcenturyasconsistingofthreephases:(1)thefinancialexpansionofthelatenineteenthandearlytwentiethcenturies,inthecourseofwhichthestructuresoftheoldBritishregimeweredestroyedandthoseofthenewUSregimewerecreated;(2)thematerialexpansionofthe1950sand1960s,duringwhichthedominanceofthenewUSregimetranslatedinaworld-wideexpansionoftradeandproduction;and(3)thecurrentfinancialexpansion,inthecourseofwhichthestructuresofthenowoldUSregimearebeingdestroyedandthoseofanewregimearepresumablybeingcreated.Moreimportantly,intheinterpretativeschemewhichIderivedfromBraudel,thelongtwentiethcenturynowappearedasthelatestoffoursimilarlystructuredlongcenturies,eachconstitutingaparticularstageofdevelopmentofthemoderncapitalistworldsystem.Itbecamecleartomethatacomparativeanalysisofthesesuccessivelongcenturiescouldrevealmoreaboutthedynamicandlikelyfutureoutcomeofthepresentcrisisthananin-depthanalysisofthelongtwentiethcenturyassuch.

Thisrecastingoftheinvestigationinamuchlongertimeframehasresultedinacontractionofthespacetakenupbytheovertdiscussionofthelongtwentiethcenturytoaboutone-thirdofthebook.Ihavenonethelessdecidedtoretaintheoriginaltitleofthebooktounderscorethestrictlyinstrumentalnatureofmyexcursionsintothepast.Thatistosay,theonlypurposeofreconstructingthefinancialexpansionsofearliercenturieshasbeentodeepenourunderstandingofthecurrentfinancialexpansionastheconcludingmomentofaparticularstageofdevelopmentofthecapitalistworldsystemthestageencompassedbythelongtwentiethcentury.

Theseexcursionsintothepastbroughtmeontothetreacherousterrainofworldhistoricalanalysis.CommentingonBraudelsmagnumopusfromwhichIhavedrawninspiration,CharlesTillyhaswiselywarnedusagainstthedangersofventuringonthisterrain:

Ifconsistencybeahobgoblinoflittleminds,Braudelhasnotroubleescapingthedemon.WhenBraudelisnotbedevilinguswithourdemandsforconsistency,heparades...indecision.ThroughoutthesecondvolumeofCivilisationmatrie//e,herepeatedlybeginstotreattherelationshipbetweencapitalistsandstatemakers,thenveersaway...Preciselybecausetheconversationrangessowidely,alookbackoverthethirdvolumessubjectmatterbringsastonishment:Thegrandthemesofthefirstvolumepopulation,food,

PREFACEANDACKNOWLEDGEMENTSxiii

clothing,technologyhavealmostentirelydisappeared!...ShouldwehaveexpectedanythingelsefromamanofBraudelstemper?Heapproachesaproblembyenumeratingitselements;fondlingitsironies,contradictions,andcomplexities;confrontingthevarioustheoriesscholarshaveproposed;andgivingeachtheoryitshistoricaldue.Thesumofalltheoriesis,alas,notheory....IfBraudelcouldnotbringoffthecoup,whocould?PerhapssomeoneelsewillsucceedinwritingatotalhistorythataccountsfortheentiredevelopmentofcapitalismandthefullgrowthoftheEuropeanstatesystem.Atleastforthetimebeing,wearebetterofftreatingBraudelsgiantessayasasourceofinspirationratherthanamodelofanalysis.ExceptwithaBraudellendingitextrapower,avesselsolargeandcomplexseemsdestined

tosinkbeforeitreachesthefarshore.(Tilly1984:70-1,73-4)

Tillysrecommendationisthatwedealwithmoremanageableunitsofanalysisthanentireworldsystems.Themoremanageableunitsheprefersarethecomponentsofparticularworldsystems,suchasnetworksofcoercionthatclusterinstates,andnetworksofexchangethatclusterinregionalmodesofproduction.Bysystematicallycomparingthesecomponents,wemaybeabletofixaccountsofspecificstructuresandprocesseswithinparticularworldsystemstohistoricallygroundedgeneralizationsconcerningthoseworldsystems(Tilly1984:63,74).

InthisbookIhavesoughtanotherwayoutofthediflicultiesinvolvedinaccountingforthefulldevelopmentofworldcapitalismandofthemoderninterstatesystem.InsteadofjumpingoffBraudelsvesselofworldhistoricalanalysis,Istayedonittodothekindsofthingthatwerenotinthecaptainsintellectualtemperamenttodobutwerewithinthereachofmyweakereyesandshakierlegs.IletBraudelplowformethehighseasofworldhistoricalfact,andchoseformyselfthesmallertaskofprocessinghisoverabundantsupplyofconjecturesandinterpretationsintoaneconomical,consistent,andplausibleexplanationoftheriseandfullexpansionofthecapitalistworldsystem.

ItsohappensthatBraudelsnotionoffinancialexpansionsasclosingphasesofmajorcapitalistdevelopmentshasenabledmetobreakdowntheentirelifetimeofthecapitalistworldsystem(Braudelslonguedure)intomoremanageableunitsofanalysis,whichIhavecalledsystemiccyclesofaccumulation.AlthoughIhavenamedthesecyclesafterparticularcomponentsofthesystem(Genoa,Holland,Britain,andtheUnitedStates),thecyclesthemselvesrefertothesystemasawholeandnottoitscomponents.Whatiscomparedinthisbookarethestructuresandprocessesofthecapitalistworldsystemasawholeatdifferentstagesofitsdevelopment.OurfocusonthestrategiesandstructuresofGenoese,Dutch,British,andUSgovernmentalandbusinessagenciesisdueexclusivelytotheirsuccessivecentralityintheformationofthesestages.

Thisisadmittedlyaverynarrowfocus.AsIexplainintheIntroduction,

xivTHELONGTWENTIETHCENTURY

systemiccyclesofaccumulationareprocessesofthecommandingheightsofthecapitalistworld-economyBraudelsrealhomeofcapitalism.Thankstothisnarrowfocus,IhavebeenabletoaddtoBraudelssurveyofworldcapitalismsomelogicalconsistencyandsomeextramileagethetwocenturiesthatseparateusfrom1800,whereBraudelendedhisjourney.Butthenarrowingofthefocusalsohasgreatcosts.Classstruggleandthepolarizationoftheworld-economyincoreandperipherallocalesbothofwhichplayedaprominentroleinmyoriginalconceptionofthelongtwentiethcenturyhavealmostcompletelydroppedoutofthepicture.

Manyreaderswillbepuzzledorevenshockedbytheseandotheromissions.AllIcantellthemisthattheconstructionpresentedhereisonlyoneofseveralequallyvalid,thoughnotnecessarilyequallyrelevant,accountsofthelongtwentiethcentury.Ihavepresentedelsewhereaninterpretationofthelongtwentiethcenturywhichfocusesonclassstruggleandcore-peripheryrelations(seeArrighi1990b).Havingcompletedthisbook,therearemanynewinsightsthatIwouldliketoaddtothatearlierinterpretation.Nevertheless,thereareveryfewthingsthatIwouldchange.AsfarasIcantell,thataccountstillstandsfromitsownangleofvision.Buttheaccountpresentedinthisbook,asindicatedbyitssubtitle,isthemorerelevanttoanunderstandingoftherelationshipbetweenmoneyandpowerinthemakingofourtimes.

InordertobringmyleanerversionofBraudelsvesseltothefarshoresofthelatetwentiethcentury,IhadtovowtokeepoutofthedebatesandpolemicsthatragedintheislandsofspecializedknowledgethatIvisitedandraided.LikeArnoMayer,Ifreelyadmittobeinganardentlumperandmasterbuilderratherthananavidsplitterandwrecker.Andlikehim,allIaskisapatienthearingandthat[the]bookbetakenandjudgedasawholeandnotonlyinitsdiscreteparts(Mayer,1981:x).

TheideathatIshouldwriteabookaboutthelongtwentiethcenturywasnotminebutPerryAndersons.AfteraheateddiscussionaboutoneoftheseverallongpapersthatIhadwrittenontheworldeconomiccrisisofthe1970s,heconvincedme,aslongagoas1981,thatonlyafulllengthbookwasanadequatemediumforthekindofconstructionIhadinmind.Hethenkeptawatchfuleyeonmywanderingsthroughthecenturies,alwaysgivinggoodadviceonwhattodoandnottodo.

IfPerryAndersonisthemainculpritformyinvolvementinthisoverambitiousproject,ImmanuelWallersteinisthemainculpritformakingtheprojectevenmoreambitiousthanitoriginallywas.InlengtheningthetimehorizonoftheinvestigationtoencompassBraudelslonguedure,Iwasinfactfollowinginhisfootsteps.HisinsistenceinourdailyworkattheFernandBraudelCenterthatthetrendsandconjuncturesofmylongtwentiethcenturymightreflectstructures

PREFACEANDACKNOWLEDGEMENTSxv

andprocessesthathadbeeninplacesincethesixteenthcenturyweresufficientlyunsettlingtomakemecheckthevalidityoftheclaim.AsIchecked,Isawdifferentthingsthanhehad;andevenwhenIsawthesamethings,Igavethemadifferenttreatmentandapplicationthanhehasbeendoingin771eModernW/orld-System.ButininsistingthatthelonguedureofhistoricalcapitalismwastherelevanttimeframeforthekindofconstructionIhadinmind,hewasabsolutelyright.Withouthisintellectualstimulusandprovocation,IwouldnotevenhavethoughtofwritingthisbookinthewayIdid.

Betweenconceivingabooklikethisandactuallywritingit,thereisagulfthatIwouldneverhavebridgedwereitnotfortheexceptionalcommunityofgraduatestudentswithwhomIhavebeenfortunatetoworkduringmyfifteenyearsatSUNY-Binghamton.Knowinglyorunknowingly,themembersofthiscommunityhaveprovidedmewithmostofthequestionsandmanyoftheanswersthatconstitutethesubstanceofthiswork.Collectively,theyarethegiantonwhoseshouldersIhavetravelled,andtothemthebookisrightfullydedicated.

AsmastermindoftheSociologyGraduateProgramatSUNYBinghamton,TerenceHopkinsislargelyresponsibleforturningBinghamtonintotheonlyplacewhereIcouldhavewrittenthisbook.HeisalsoresponsibleforanythingthatisvaluableinthemethodologyIhaveused.Astheharshestofmycriticsandthestrongestofmysupporters,BeverlySilverhasplayedacentralroleintherealizationofthiswork.Withoutherintellectualguidance,Iwouldhavegoneastray;withouthermoralsupport,IwouldhavesettledforfarlessthanIeventuallydid.

Anearlierversionofchapter1waspresentedattheSecondESRCConferenceonStructuralChangeintheWestheldatEmmanuelCollege,Cambridge,inSeptember1989,andwassubsequentlypublishedinReview(Summer1990)andreprintedinGill(1993).Sectionsofchapters2and3werepresentedattheThirdESRCConferenceonthesametopicheldatEmmanuelCollegeinSeptember1990.Participationinthesetwoconferences,aswellasintheprecedingoneheldinSeptember1988,addedsteamtomyvesselatatimewhenitmightotherwisehavesunk.IamverygratefultoFredHallidayandMichaelMannforinvitingmetotheentireseriesofESRCconferences,toJohnHobsonfororganizingthemeffectively,andtoalltheotherparticipantsforthestimulatingdiscussionswehad.

PerryAnderson,GopalBalakrishnan,RobinBlackburn,TerenceHopkins,ResatKasaba,RaviPalat,ThomasReifer,BeverlySilver,andImmanuelWallersteinreadandcommentedonthemanuscriptbeforethefinalroundofrevisions.Theirdifferentspecializationsandintellectualperspectiveshelpedmeenormouslyinfixingwhatcouldbefixedintheproductofthishazardousenterprise.ThomasReiferalsohelpedmein

xviTHELONGTWENTIETHCENTURY

alast-minutecheckofreferencesandquotations.Withgreaterreasonthaniscustomary,Itakefullresponsibilityforwhatremainsunfixedandunchecked.

Finally,aspecialthanksgoestomysonAndrea.WhenIbeganthiswork,hewasabouttoenterhighschool.BythetimeIwaswritingthelastdraft,hehadcompletedhistesidz[auralinphilosophyattheUniversitaStataleinMilan.Throughout,hewastrulythebestofsons.Butasthisworkwasdrawingtoaclose,hehadbecomealsoaninvaluableeditorialadviser.Ifthebookfindsanyreadershipoutsidethehistoricalandsocialscienceprofessions,Ioweitlargelytohim.

GIOVANNIARRIGHI

March1994

Introduction

Overthelastquarterofacenturysomethingfundamentalseemstohavechangedinthewayinwhichcapitalismworks.Inthe1970s,manyspokeofcrisis.Inthe1980s,mostspokeofrestructuringandreorganization.Inthe1990s,wearenolongersurethatthecrisisofthe1970swaseverreallyresolvedandtheviewhasbeguntospreadthatcapitalisthistorymightbeatadecisiveturningpoint.

Ourthesisisthatcapitalisthistoryisindeedinthemidstofadecisiveturningpoint,butthatthesituationisnotasunprecedentedasitmayappearatfirstsight.Longperiodsofcrisis,restructuringandreorganization,inshort,ofdiscontinuouschange,havebeenfarmoretypicalofthehistoryofthecapitalistworld-economythanthosebriefmomentsofgeneralizedexpansionalongadefinitedevelopmentalpathliketheonethatoccurredinthe1950sand1960s.Inthepast,theselongperiodsofdiscontinuouschangeendedinareconstitutionofthecapitalistworld-economyonnewandenlargedfoundations.Ourinvestigationisaimedprimarilyatidentifyingthesystemicconditionsunderwhichanewreconstitutionofthiskindmayoccurand,ifitdoesoccur,whatitmaylooklike.

Changessinceabout1970inthewaycapitalismfunctionslocallyandgloballyhavebeenwidelynoted;thoughtheprecisenatureofthesechangesisstillamatterofsomedebate.Butthattheyamounttosomethingfundamentalisthecommonthemeofarapidlygrowingliterature.

Therehavebeenchangesinthespatialconfigurationofprocessesofcapitalaccumulation.Inthe1970sthepredominanttendencyappearedtobetowardsarelocationofprocessesofcapitalaccumulationfromhigh-incometolow-incomecountriesandregions(Frobel,Heinrichs,andKreye1980;BluestoneandHarrison1982;Massey1984;Walton1985).Inthe1980s,incontrast,thepredominanttendencyappearedtobetowardstherecentralizationofcapitalinhigh-incomecountriesandregions(Gordon1988).Butwhateverthedirection

1

2THELONGTWENTIETHCENTURY

ofthemovement,thetendencysince1970hasbeentowardsgreatergeographicalmobilityofcapital(Sassen1988;Scott1988;StorperandWalker1989).

Thishasbeencloselyassociatedwithchangesintheorganizationofprocessesofproductionandexchange.SomeauthorshaveclaimedthatthecrisisofFordistmassproductionbasedonsystemsofspecializedmachines,operatingwithintheorganizationaldomainsofverticallyintegrated,bureaucraticallymanaged,giantcorporationshascreateduniqueopportunitiesforarevivalofsystemsofflexiblespecializationbasedonsmall-batchcraftproduction,carriedoutinsmallandmedium-sizedbusinessunitscoordinatedbymarket-likeprocessesofexchange(PioreandSable1984;SableandZeitlin1985;HirstandZeitlin1991).Othershavefocusedonthelegalregulationofincome-generatingactivitiesandhavenotedhowtheever-increasingformalizationofeconomiclifethatis,theproliferationoflegalconstraintsontheorganizationofprocessesofproductionandexchangehascalledforththeoppositetendencytowardsinformalizationthatis,aproliferationofincome-generatingactivitiesthatbypasslegalregulationthroughonekindoranotherofpersonalorfamilialentrepreneurialism(Lomnitz1988;Portes,Castells,andBenton1989;Feige1990;Portes1994).

Partlyoverlappingthisliterature,numerousstudieshavefollowedinthefootstepsoftheFrenchregulationschoolandhaveinterpretedcurrentchangesinthemodeofoperationofcapitalismasastructuralcrisisofwhattheycalltheFordistKeynesianregimeofaccumulation(forasurvey,seeBoyer1990;Jessop1990;TickellandPeck1992).Thisregimeisconceptualizedasconstitutingaparticularphaseofcapitalistdevelopmentcharacterizedbyinvestmentsinfixedcapitalthatcreatethepotentialforregularincreasesinproductivityandmassconsumption.Forthispotentialtoberealized,adequategovernmentalpoliciesandactions,socialinstitutions,normsandhabitsofbehavior(themodeofregulation)wererequired.KeynesianismisdescribedasthemodeofregulationthatenabledtheemergentFordistregimefullytorealizeitspotential.Andthisinturnisconceivedofastheunderlyingcauseofthecrisisofthe1970s(Aglietta1979b;DeVroey1984;Lipietz1987;1988).

Byandlarge,regulationistsareagnosticastowhatthesuccessorofFordismKeynesianismmightbe,orindeedastowhethertherewilleverbeanotherregimeofaccumulationwithanappropriatemodeofregulation.Inasimilarvein,butusingadifferentconceptualapparatus,ClausOffe(1985)and,moreexplicitly,ScottLashandJohnUrry(1987)havespokenoftheendoforganizedcapitalismand

oftheemergenceofdisorganizedcapitalism.Thecentralfeatureof

INTRODUCTION3

organizedcapitalismtheadministrationandconsciousregulationofnationaleconomiesbymanagerialhierarchiesandgovernmentofficialsisseenasbeingjeopardizedbyanincreasingspatialandfunctionaldeconcentrationanddecentralizationofcorporatepowers,whichleavesprocessesofcapitalaccumulationinastateofseeminglyirremediabledisorganization.

Takingissuewiththisemphasisonthedisintegrationratherthancoherenceofcontemporarycapitalism,DavidHarvey(1989)suggeststhat,infact,capitalismmaybeinthemidstofahistoricaltransitionfromFordismKeynesianismtoanewregimeofaccumulation,whichhetentativelycallsflexibleaccumulation.Between1965and1973,heargues,thedifficultiesmetbyFordismandKeynesianismincontainingtheinherentcontradictionsofcapitalismbecamemoreandmoreapparent:Onthesurface,thesedifficultiescouldbestbecapturedbyoneword:rigidity.Therewereproblemswiththerigidityoflong-termandlargescaleinvestmentsinmassproductionsystems,withtherigidityofregulatedlabormarketsandcontracts,andwiththerigidityofstatecommitmentstoentitlementanddefenseprograms.

Behindallthesespecificrigiditieslayaratherunwieldyandseeminglyfixedconfigurationofpoliticalpowerandreciprocalrelationsthatboundbiglabor,bigcapital,andbiggovernmentintowhatincreasinglyappearedasadysfunctionalembraceofsuchnarrowlydefinedvestedinterestsastoundermineratherthansecurecapitalaccumulation.(Harvey1989:142)

TheUSandBritishgovernmentsattempttomaintainthemomentumofthepost-wareconomicboomthroughanextraordinarilyloosemonetarypolicymetwithsomesuccessinthelate1960sbutbackfiredintheearly1970s.Rigiditiesincreasedfurther,realgrowthceased,inflationarytendenciesgotoutofhand,andthesystemoffixedexchangerates,whichhadsustainedandregulatedthepost-warexpansion,collapsed.Sincethattime,allstateshavebeenatthemercyoffinancialdiscipline,eitherthroughtheeffectsofcapitalflightorbydirectinstitutionalpressures.Therehad,ofcourse,alwaysbeenadelicatebalancebetweenfinancialandstatepowersundercapitalism,butthebreakdownofFordismKeynesianismevidentlymeantashifttowardstheempowermentoffinancecapitalvis-a-visthenationstate(Harvey1989:145,168).

Thisshift,inturn,hasledtoanexplosioninnewfinancialinstrumentsandmarkets,coupledwiththeriseofhighlysophisticatedsystemsoffinancialcoordinationonaglobalscale.Itisthisextraordinaryefflorescenceandtransformationinfinancialmarkets

4THELONGTWENTIETHCENTURY

thatHarvey,notwithouthesitation,takesastherealnoveltyofcapitalisminthe1970sand1980sandthekeyfeatureoftheemergingregimeofflexibleaccumulation.Thespatialreshufflingofprocessesofproductionandaccumulation,theresurgenceofcraftproductionandofpersonal/familialbusinessnetworks,thespreadofmarket-likecoordinationsattheexpenseofcorporateandgovernmentalplanningall,inHarveysview,arediflerentfacetsofthepassagetothenewregimeofflexibleaccumulation.However,heisinclinedtoseethemasexpressionsofthesearchforfinancialsolutionstothecrisistendenciesofcapitalism(Harvey1989:191-4).

Harveyisfullyawareofthedifficultiesinvolvedintheorizingthetransitiontoflexibleaccumulationassumingthatthatiswhatcapitalismisactuallyexperiencingandpointstoseveraltheoreticaldilemmas.

Canwegraspthelogic,ifnotthenecessity,ofthetransition?Towhatdegreedopastandpresenttheoreticalformulationsofthedynamicsofcapitalismhavetobemodifiedinthelightoftheradicalreorganizationsandrestructuringstakingplaceinboththeproductiveforcesandsocialrelations?Andcanwerepresentthecurrentregimesufhcientlywelltogetsomegripontheprobablecourseandimplicationsofwhatappearstobeanongoingrevolution?ThetransitionfromFordismtoflexibleaccumulationhas...posedseriousdifhcultiesfortheoriesofanysort....Theonlygeneralpointofagreementisthatsomethingsignificanthaschangedinthewaycapitalismhasbeenworkingsinceabout1970.

(Harvey1989:173)

ThequestionsthathaveinformedthisstudyaresimilartoHarveys.Buttheanswersaresoughtinaninvestigationofcurrenttendenciesinthelightofpatternsofrecurrenceandevolution,whichspantheentirelifetimeofhistoricalcapitalismasaworldsystem.Oncewestretchthespacetimehorizonofourobservationsandtheoreticalconjecturesinthisway,tendenciesthatseemednovelandunpredictablebegintolookfamiliar.

Morespecifically,thestartingpointofourinvestigationhasbeenFernandBraudelscontentionthattheessentialfeatureofhistoricalcapitalismoveritslonguedurethatis,overitsentirelifetimehasbeentheflexibilityandeclecticismofcapitalratherthantheconcreteformsassumedbythelatteratdifferentplacesandatdiflerenttimes:

Letmeemphasizethequalitythatseemstometobeanessentialfeatureofthegeneralhistoryofcapitalism:itsunlimitedflexibility,itscapacityforchangeandadaptation.Ifthereis,asIbelieve,acertainunityincapitalism,fromthirteenthcenturyItalytothepresent-dayWest,itishereaboveallthat

INTRODUCTION5

suchunitymustbelocatedandobserved.(Braudel1982:433;emphasisintheoriginal)

Incertainperiods,evenlongperiods,capitalismdidseemtospecialize,asinthenineteenthcentury,whenitmovedsospectacularlyintothenewworldofindustry.Thisspecializationhasledhistoriansingeneral

.toregardindustryasthefinalfloweringwhichgavecapitalismitstrueidentity.Butthisisashort-termview:

[After]theinitialboomofmechanization,themostadvancedkindofcapitalismrevertedtoeclecticism,toanindivisibilityofinterestssotospeak,asifthecharacteristicadvantageofstandingatthecommandingheightsoftheeconomy,todayjustasmuchasinthedaysofJacquesCoeur(thefourteenthcenturytycoon)consistedpreciselyofnothavingtoconfineoneselftoasinglechoice,ofbeingeminentlyadaptable,hencenon-specialized.(Braudel1982:381;emphasisintheoriginal;translationamendedasindicatedinWallerstein

l99l:2l3)

ItseemstomethatthesepassagescanbereadasarestatementofKarlMarxsgeneralformulaofcapital:MCM.Moneycapital(M)meansliquidity,flexibility,freedomofchoice.Commoditycapital(C)meanscapitalinvestedinaparticularinputoutputcombinationinviewofaprofit.Hence,itmeansconcreteness,rigidity,andanarrowingdownorclosingofoptions.Mmeansexpandedliquidity,flexibility,andfreedomofchoice.

Thusunderstood,Marxsformulatellsusthatcapitalistagenciesdonotinvestmoneyinparticularinputoutputcombinations,withalltheattendantlossofflexibilityandfreedomofchoice,asanendinitself.Rather,theydosoasameanstowardstheendofsecuringanevengreaterflexibilityandfreedomofchoiceatsomefuturepoint.Marxsformulaalsotellsusthatifthereisnoexpectationonthepartofcapitalistagenciesthattheirfreedomofchoicewillincrease,orifthisexpectationissystematicallyunfulfilled,capitaltend:toreverttomoreflexibleformsofinvestmentaboveall,toitsmoneyform.Inotherwords,capitalistagenciespreferliquidity,andanunusuallylargeshareoftheircashflowtendstoremaininliquidform.

ThissecondreadingisimplicitinBraudelscharacterizationoffinancialexpansionasasymptomofmaturityofaparticularcapitalistdevelopment.IndiscussingthewithdrawaloftheDutchfromcommerceinthemiddleoftheeighteenthcenturytobecomethebankersofEurope,Braudelsuggeststhatsuchawithdrawalisarecurrentworldsystemictendency.Thesametendencyhadearlierbeeninevidenceinfifteenth-centuryItaly,whentheGenoesecapitalistoligarchyswitched

6THELONGTWENTIETHCENTURY

fromcommoditiestobanking,andinthelatterhalfofthesixteenthcentury,whentheGenoesenobilivccc/7i,theofficiallenderstothekingofSpain,graduallywithdrewfromcommerce.FollowingtheDutch,thetendencywasreplicatedbytheEnglishinthelatenineteenthandearlytwentiethcenturies,whentheendofthefantasticventureoftheindustrialrevolutioncreatedanoversupplyofmoneycapital(Braudel1984:2423,246).

Aftertheequallyfantasticventureofso-calledFordismKeynesianism,UScapitalfollowedasimilarpathinthe1970sand1980s.Braudeldoesnotdiscussthefinancialexpansionofourday,whichgainedmomentumafterhehadcompletedhistrilogyonCivilizationmmCapitalism.Nevertheless,wecanreadilyrecognizeinthislatestrebirthoffinancecapitalyetanotherinstanceofthatreversaltoeclecticismwhichinthepasthasbeenassociatedwiththematuringofamajorcapitalistdevelopment:[Every]capitalistdevelopmentofthisorderseems,byreachingthestageoffinancialexpansion,tohaveinsomesenseannounceditsmaturity:it[is]asignofautumn(Braudel1984:246;emphasisadded).

Marxsgeneralformulaofcapital(MCM')canthereforebeinterpretedasdepictingnotjustthelogicofindividualcapitalistinvestments,butalsoarecurrentpatternofhistoricalcapitalismasworldsystem.Thecentralaspectofthispatternisthealternationofepochsofmaterialexpansion(MCphasesofcapitalaccumulation)withphasesoffinancialrebirthandexpansion(CM'phases).Inphasesofmaterialexpansionmoneycapitalsetsinmotionanincreasingmassofcommodities(includingcommoditizedlabor-powerandgiftsofnature);andinphasesoffinancialexpansionanincreasingmassofmoneycapitalsetsitselffreefromitscommodityform,andaccumulationproceedsthroughfinancialdeals(asinMarxsabridgedformulaMM').Together,thetwoepochsorphasesconstituteafullsystemiccycleofaccumulation(MCM').

Ourinvestigationisessentiallyacomparativeanalysisofsuccessivesystemiccyclesofaccumulationinanattempttoidentify(1)patternsofrecurrenceandevolution,whicharereproducedinthecurrentphaseoffinancialexpansionandofsystemicrestructuring;and(2)theanomaliesofthiscurrentphaseoffinancialexpansion,whichmayleadtoabreakwithpastpatternsofrecurrenceandevolution.Foursystemiccyclesofaccumulationwillbeidentified,eachcharacterizedbyafundamentalunityoftheprimaryagencyandstructureofworldscaleprocessesofcapitalaccumulation:aGenoesecycle,fromthefifteenthtotheearlyseventeenthcenturies;aDutchcycle,fromthelatesixteenthcenturythroughmostoftheeighteenthcentury;aBritishcycle,fromthelatterhalfoftheeighteenthcenturythroughtheearlytwentieth

INTRODUCTION7

century;andaUScycle,whichbeganinthelatenineteenthcenturyandhascontinuedintothecurrentphaseoffinancialexpansion.Asthisapproximateandpreliminaryperiodizationimplies,consecutivesystemiccyclesofaccumulationoverlap,andalthoughtheybecomeprogressivelyshorterinduration,theyalllastlongerthanacentury:hencethenotionofthelongcentury,whichwillbetakenasthebasictemporalunitintheanalysisofworld-scaleprocessesofcapitalaccumulation.

ThesecyclesarealtogetherdiH7erentfromthesecularcycles(orpricelogistics)andtheshorterKondratieffcyclestowhichBraudelhasattachedsomuchimportance.SecularandKondratieffcyclesarebothempiricalconstructsofuncertaintheoreticalstandingderivedfromobservedlong-termfluctuationsincommodityprices(forsurveysoftherelevantliterature,seeBarr1979;Goldstein1988).Secularcyclesbearsomestrikingsimilaritiestooursystemiccycles;theyarefourinnumber,theyalllastlongerthanacentury,andtheybecomeprogressivelyshorter(Braudel1984:78).However,secularpricecyclesandsystemiccyclesofaccumulationarecompletelyoutofsynchronywithoneanother.Afinancialexpansionisequallylikelytocomeatthebeginning,middle,orendofasecular(price)cycle(seefigure3.4onp.220,thisvolume).

Braudeldoesnotattempttoreconcilethisdiscrepancybetweenhisdatingoffinancialexpansionsonwhichourperiodizationofsystemiccyclesofaccumulationisbasedandhisdatingofsecular(price)cycles.Andnorshallwe.Facedwithachoicebetweenthesetwokindsofcycles,wehaveoptedforsystemiccyclesbecausetheyarefarmorevalidandreliableindicatorsofwhatisspecificallycapitalistinthemodernworldsystemthansecularorKondratieffcycles.

Indeed,thereisnoagreementintheliteratureonwhatlong-termfluctuationsinpriceswhetherofthelogisticortheKondratieffkindindicate.Theyarecertainlynotreliableindicatorsofthecontractionsandexpansionsofwhateverisspecificallycapitalistinthemodernworldsystem.Profitabilityandthecommandofcapitaloverhumanandnaturalresourcescandecreaseorincreasejustasmuchinadownswingasinanupswing.Italldependsonwhosecompetitionisdrivingpricesupordown.Ifitisthecapitaliststhemselves,howeverdefined,thatarecompetingmore(less)intenselythantheirnon-capitalistsuppliersandcustomers,profitabilitywillfall(rise)andthecommandofcapitaloverresourceswilldecrease(increase),regardlessofwhethertheoveralltendencyofpricesistoriseorfall.

NordopricelogisticsandKondratieffsseemtobespecificallycapitalistphenomena.ItisinterestingtonotethatinJoshuaGoldsteinssynthesis

8THELONGTWENTIETHCENTURY

oftheempiricalfindingsandtheoreticalunderpinningsoflong-wavestudies,thenotionofcapitalismplaysnoroleatall.Statistically,hefindsthatlongwavesinpricesandproductionareexplainedprimarilybytheseverityofwhathecallsgreatpowerwars.Asforcapitalism,theissueofitsemergenceandexpansionisputsquarelyoutsidethescopeofhisinvestigation(Goldstein1988:258-74,286).

Theissueoftherelationshipbetweentheriseofcapitalismandlongtermpricefluctuationshastroubledworldsystemstudiesrightfromthestart.NicoleBousquet(1979:503)considereditembarrassingthatpricelogisticslongpre-dated1500.Forthesamereason,AlbertBergesen(1983:78)wonderedwhetherpricelogisticsrepresentthedynamicsoffeudalismorcapitalism,orboth.EvenImperialChinaseemstohaveexperiencedwave-likephenomenaofthesamekindasEurope(Hartwell1982;Skinner1985).Mostunsettlingofall,BarryGillsandAndreGunderFrank(1992:621-2)havemaintainedthatthefundamentalcyclicalrhythmsandseculartrendsoftheworldsystemshouldberecognizedashavingexistedforsome5000years,ratherthanthe500yearsthathasbeenconventionalintheworldsystemandlongwaveapproaches.

Inshort,theconnectionbetweenBraudelssecularcyclesandthecapitalistaccumulationofcapitalhasnoclearlogicalorhistoricalfoundation.Thenotionofsystemiccyclesofaccumulation,incontrast,derivesdirectlyfromBraudelsnotionofcapitalismasthenonspecializedtoplayerinthehierarchyoftheworldoftrade.Thistoplayeriswherelarge-scaleprofitsaremade.Heretheprofitsarelarge,notjustbecausethecapitaliststratummonopolizesthemostprofitablelinesofbusiness;evenmoreimportantisthefactthatthecapitaliststratumhastheflexibilityneededtoswitchitsinvestmentscontinuallyfromthelinesofbusinessthatfacediminishingreturnstothelinesthatdonot(Braudel1982:22,231,428-30).

AsinMarxsgeneralformulaofcapital(MCM'),soinBraudelsdefinitionofcapitalismwhatmakesanagencyorsocialstratumcapitalistisnotitspredispositiontoinvestinaparticularcommodity(e.g.labor-power)orsphereofactivity(e.g.industry).Anagencyiscapitalistinvirtueofthefactthatitsmoneyisendowedwiththepowerofbreeding(Marxsexpression)systematicallyandpersistently,regardlessofthenatureoftheparticularcommoditiesandactivitiesthatareincidentallythemediumatanygiventime.ThenotionofsystemiccyclesofaccumulationwhichwehavederivedfromBraudelshistoricalobservationofrecurrentfinancialexpansionsfollowslogicallyfromthisstrictlyinstrumentalrelationshipofcapitalismtotheworldoftradeandproduction,andemphasizesit.Thatistosay,financialexpansionsaretakentobesymptomaticofa

INTRODUCTION9

Situationinwhichtheinvestmentofmoneyintheexpansionoftradeandproductionnolongerservesthepurposeofincreasingthecashflowtothecapitaliststratumaseffectivelyaspurefinancialdealscan.Insuchasituation,capitalinvestedintradeandproductiontendstoreverttoitsmoneyformandaccumulatemoredirectly,asinMarxsabridgedformulaMM.

Systemiccyclesofaccumulation,unlikepricelogisticsandKondratieffs,arethusinherentlycapitalistphenomena.Theypointtoafundamentalcontinuityinworld-scaleprocessesofcapitalaccumulationinmoderntimes.Buttheyalsoconstitutefundamentalbreaksinthestrategiesandstructuresthathaveshapedtheseprocessesoverthecenturies.LikesomeconceptualizationsofKondratieffs,suchasGerhardMenschs(1979),DavidGordons(1980),andCarlotaPerezs(1983),ourcycleshighlightthealternationofphasesofcontinuouschangewithphasesofdiscontinuouschange.

Thus,oursequenceofpartlyoverlappingsystemiccyclesbearsacloseformalresemblancetoMenschsmetamorphosismodelofsocioeconomicdevelopment.Mensch(1979:73)abandonsthenotionthattheeconomyhasdevelopedinwavesinfavorofthetheorythatithasevolvedthroughaseriesofintermittentinnovativeimpulsesthattaketheformofsuccessiveS-shapedcycles(seefigure1.1).Hismodeldepictsphasesofstablegrowthalongawell-definedpathalternatingwithphasesofcrisis,restructuring,andturbulence,whicheventuallyrecreatetheconditionsofstablegrowth.

Menschsmodelrefersprimarilytogrowthandinnovationsinparticularindustriesorinparticularnationaleconomies,andassuchhasnoimmediaterelevancetoourinvestigation.Nevertheless,theideaofcyclesconsistingofphasesofcontinuouschangealongasinglepathalternatingwithphasesofdiscontinuouschangefromonepathtoanotherunderliesoursequenceofsystemiccyclesofaccumulation.Thedifferenceisthatwhatdevelopsinourmodelisnotaparticularindustryornationaleconomybutthecapitalistworld-economyasawholeoveritsentirelifetime.Thus,(MC)phasesofmaterialexpansionwillbeshowntoconsistofphasesofcontinuouschange,duringwhichthecapitalistworld-economygrowsalongasingledevelopmentalpath.And(CM')phasesoffinancialexpansionwillbeshowntoconsistofphasesofdiscontinuouschangeduringwhichgrowthalongtheestablishedpathhasattainedorisattainingitslimits,andthecapitalistworldeconomyshiftsthroughradicalrestructuringsandreorganizationsontoanotherpath.

Historically,growthalongasingledevelopmentalpathandshiftsfromonepathtoanotherhavenotbeensimplytheunintendedoutcomeoftheinnumerableactionsundertakenautonomouslyatanygiventime

10THELONGTWENTIETHCENTURY

>>

Indexnumbersofgrowth

Time

Source:Mensch(1979:73).

1.1MenschsMetamorphosisModel

byindividualsandthemultiplecommunitiesintowhichtheworldeconomyisdivided.Rather,therecurrentexpansionsandrestructuringsofthecapitalistworld-economyhaveoccurredundertheleadershipofparticularcommunitiesandblocsofgovernmentalandbusinessagencieswhichwereuniquelywellplacedtoturntotheirownadvantagetheunintendedconsequencesoftheactionsofotheragencies.Thestrategiesandstructuresthroughwhichtheseleadingagencieshavepromoted,organized,andregulatedtheexpansionortherestructuringofthecapitalistworld-economyiswhatweshallunderstandbyregimeofaccumulationonaworld-scale.Themainpurposeoftheconceptofsystemiccyclesistodescribeandelucidatetheformation,consolidation,anddisintegrationofthesuccessiveregimesthroughwhichthecapitalistworld-economyhasexpandedfromitslatemedievalsub-systemicembryotoitspresentglobaldimension.

TheentireconstructionrestsonBraudelsunconventionalviewoftherelationshipthatlinkstheformationandenlargedreproductionofhistoricalcapitalismasworldsystemtoprocessesofstateformationontheoneside,andofmarketformationontheother.Theconventionalviewinthesocialsciences,inpoliticaldiscourse,andinthemassmediaisthatcapitalismandthemarketeconomyaremoreorlessthesamething,andthatstatepowerisantitheticaltoboth.Braudel,incontrast,seescapitalismasbeingabsolutelydependentforitsemergenceandexpansiononstatepowerandasconstitutingtheantithesisofthemarketeconomy(cf.Wallerstein1991:chs14-15).

Morespecifically,Braudelconceivedofcapitalismasthetoplayerofathree-tieredstructureastructureinwhich,asinallhierarchies,

INTRODUCTION1]

theupper[layers]couldnotexistwithoutthelowerstagesonwhichtheydepend.Thelowestanduntilveryrecentlybroadestlayeristhatofanextremelyelementaryandmostlyself-sufficienteconomy.Forwantofabetterexpression,hecalledthisthelayerofmateriallife,thestratumofthenon-economy,thesoilintowhichcapitalismthrustsitsrootsbutwhichitcanneverreallypenetrate(Braudel1982:21-2,229%

Above[thislowestlayer],comesthefavouredterrainofthemarketeconomy,withitsmanyhorizontalcommunicationsbetweenthedifferentmarkets:hereadegreeofautomaticcoordinationusuallylinkssupply,demandandprices.Thenalongside,orratherabovethislayer,comesthezoneoftheanti-mar/eet,wherethegreatpredatorsroamandthelawofthejungleoperates.Thistodayasinthepast,beforeandaftertheindustrialrevolutionisthereal

homeofcapitalism.(Braudel1982:229-30;emphasisadded)

Aworldmarketeconomy,inthesenseofmanyhorizontalcommunicationsbetweendifferentmarkets,emergedfromthedepthoftheunderlyinglayerofmateriallifelongbeforecapitalism-as-worldsystemroseabovethelayerofthemarketeconomy.AsJanetAbuLughod(1989)hasshown,aloosebutnonethelessclearlyrecognizablesystemofhorizontalcommunicationsbetweentheprincipalmarketsofEurasiaandAfricawasalreadyinplaceinthethirteenthcentury.Andforallweknow,GillsandFrankmaywellberightintheirclaimthatthissystemofhorizontalcommunicationsactuallyemergedseveralmillenniaearlier.

Bethatasitmay,thequestionthatbearsdirectlyonourresearchisnotwhenandhowaworldmarketeconomyroseabovetheprimordialstructuresofeverydaylife;itiswhenandhowcapitalismroseabovethestructuresofthepre-existingworldmarketeconomyand,overtime,acquireditspowertoreshapethemarketsandlivesoftheentireworld.AsBraudel(1984:92)pointsout,themetamorphosisofEuropeintothemonstrousshaperofworldhistorythatitbecameafter1500wasnotasimpletransition.Rather,itwasaseriesofstagesandtransitions,theearliestdatingfromwellbeforewhatisusuallyknownastheRenaissanceofthelatefifteenthcentury.

ThemostdecisivemomentofthisseriesoftransitionswasnottheproliferationofelementsofcapitalistenterpriseacrossEurope.ElementsofthiskindhadoccurredthroughouttheEurasiantradingsystemandwerebynomeanspeculiartotheWest:

Everywhere,fromEgypttoJapan,weshallfindgenuinecapitalists,wholesalers,therentiersoftrade,andtheirthousandsofauxiliariesthe

12THELONGTWENTIETHCENTURY

commissionagents,brokers,money-changersandbankers.Asforthetechniques,possibilitiesorguaranteesofexchange,anyofthesegroupsofmerchantswouldstandcomparisonwithitswesternequivalents.BothinsideandoutsideIndia,Tamil,Bengali,andGujeratimerchantsformedclose-knitpartnershipswithbusinessandcontractspassinginturnfromonegrouptoanother,justastheywouldinEuropefromtheFlorentinestotheLucchese,theGenoese,theSouthGermansortheEnglish.Therewereeven,inmedievaltimes,merchantkingsinCairo,AdenandthePersianGulfports.(Braudel

l984:486)

Nowhere,exceptinEurope,didtheseelementsofcapitalismcoalesceintothepowerfulmixthatpropelledEuropeanstatestowardstheterritorialconquestoftheworldandtheformationofanall-powerfulandtrulyglobalcapitalistworld-economy.Fromthisperspective,thereallyimportanttransitionthatneedstobeelucidatedisnotthatfromfeudalismtocapitalismbutfromscatteredtoconcentratedcapitalistpower.Andthemostimportantaspectofthismuchneglectedtransitionistheuniquefusionofstateandcapital,whichwasrealizednowheremorefavorablyforcapitalismthaninEurope:

Capitalismonlytriumphswhenitbecomesidentifiedwiththestate,whenitisthestate.Initsfirstgreatphase,thatoftheItaliancity-statesofVenice,Genoa,andFlorence,powerlayinthehandsofthemoneyedelite.InseventeenthcenturyHollandthearistocracyoftheRegentsgovernedforthebenefitandevenaccordingtothedirectivesofthebusinessmen,merchants,andmoneylenders.Likewise,inEnglandtheGloriousRevolutionof1688markedtheaccessionofbusinesssimilartothatinHolland.(Braudel1977:64-5;emphasisadded)

Theobverseofthisprocesshasbeeninterstatecompetitionformobilecapital.AsMaxWeberpointedoutinhisGeneralEconomicHistory,inantiquity,asinthelateMiddleAges,Europeancitieshadbeentheseedbedsofpoliticalcapitalism.Inbothperiodstheautonomyofthesecitieswasprogressivelyerodedbylargerpoliticalstructures.Nevertheless,whileinantiquitythislossofautonomymeanttheendofpoliticalcapitalism,inearlymoderntimesitmeanttheexpansionofcapitalismintoanewkindofworldsystem:

Inantiquitythefreedomofthecitieswassweptawaybyabureaucraticallyorganizedworldempirewithinwhichtherewasnolongeraplaceforpoliticalcapitalism....[In]contrastwithantiquity[inthemodernerathecities]cameunderthepowerofcompetingnationalstatesinaconditionofperpetualstruggleforpowerinpeaceorwar.Thiscompetitivestrugglecreatedthelargestopportunitiesformodernwesterncapitalism.777eseparatestateshadtocompeteformobilecapital,whichdictatedtothemtheconditionsunderwhich

INTRODUCTIONl3

itwouldassistthemtopower....Henceitistheclosednationalstatewhichaffordedtocapitalismitschancefordevelopmentandaslongasthenationalstatedoesnotgiveplacetoaworldempirecapitalismalsowillendure.(Weber

1961:247-9;emphasisadded)

InmakingthesamepointinEconomyandSociety,Weber(1978:3534)furthersuggestedthatthiscompetitionformobilecapitalamonglarge,approximatelyequalandpurelypoliticalstructuresresulted

inthatmemorablealliancebetweentherisingstatesandthesought-afterandprivilegedcapitalistpowersthatwasamajorfactorincreatingmoderncapitalism....Neitherthetradenorthemonetarypoliciesofthemodernstates...canbeunderstoodwithoutthispeculiarpoliticalcompetitionandequilibriumamongtheEuropeanstatesduringthelastfivehundredyears.

Ouranalysiswillsubstantiatetheseremarksbyshowingthatinterstatecompetitionhasbeenacriticalcomponentofeachandeveryphaseoffinancialexpansionandamajorfactorintheformationofthoseblocsofgovernmentalandbusinessorganizationsthathaveledthecapitalistworld-economythroughitssuccessivephasesofmaterialexpansion.ButinpartialqualificationofWebersthesis,ouranalysiswillalsoshowthattheconcentrationofpowerinthehandsofparticularblocsofgovernmentalandbusinessagencieshasbeenasessentialtotherecurrentmaterialexpansionsofthecapitalistworld-economyasthecompetitionamongapproximatelyequalpoliticalstructures.Asarule,majormaterialexpansionshaveoccurredonlywhenanewdominantblocaccruedsufficientworldpowertobeinapositionnotjusttobypassorriseaboveinterstatecompetition,buttobringitundercontrolandensureminimalinterstatecooperation.Whathaspropelledtheprodigiousexpansionofthecapitalistworld-economyoverthelastfivehundredyears,inotherwords,hasnotbeeninterstatecompetitionassuch,butinterstatecompetitionincombinationwithanever-increasingconcentrationofcapitalistpowerintheworldsystematlarge.

Theideaofanever-increasingconcentrationofcapitalistpowerinthemodernworldsystemisimplicitinapatternnotedbyKarlMarxinCapital.LikeWeber,MarxattributedgreatimportancetotheroleplayedbythesystemofnationaldebtspioneeredbyGenoaandVeniceinthelateMiddleAgesinpropellingtheinitialexpansionofmoderncapitalism:

Nationaldebts,i.e.,thealienationofthestatewhetherdespotic,constitutionalorrepublicanmarkedwithitsstampthecapitalisticera....Aswiththestrokeofanenchanterswand,[thepublicdebt]endowsbarren

14THELONGTWENTIETHCENTURY

moneywiththepowerofbreedingandthusturnsitintocapital,withoutthenecessityofitsexposingitselftothetroublesandrisksinseparablefromitsemploymentinindustryoreveninusury.Thestate-creditorsactuallygivenothingaway,forthesumlentistransformedintopublicbonds,easilynegotiable,whichcangoonfunctioningintheirhandsjustassomuchhard

cashwould.(Marx1959:754-5)

Marxsfocusonthedomesticaspectsofcapitalaccumulationpreventedhimfromappreciatingthecontinuingsignificanceofnationaldebtsinasystemofstatesinconstantcompetionwithoneanotherforassistancefromcapitalistsfortheirpowerpursuits.ForMarx,thealienationoftheassetsandfuturerevenuesofstateswassimplyanaspectofprimitiveaccumulationAdamSmithspreviousaccumulation,anaccumulationnottheresultofthecapitalistmodeofproduction,butitsstartingpoint(Marx1959:713).Nevertheless,Marxdidacknowledgethecontinuingsignificanceofnationaldebts,notastheexpressionofinterstatecompetition,butasmeansofaninvisibleinter-capitalistcooperation,whichstartedcapitalaccumulationoverandoveragainacrossthespacetimeofthecapitalistworld-economyfromitsinceptionthroughhisownday:

Withthenationaldebtaroseaninternationalcreditsystem,whichoftenconcealsoneofthesourcesofprimitiveaccumulationinthisorthatpeople.ThusthevillainiesoftheVenetianthievingsystemformedoneofthesecretbasesofthecapital-wealthofHollandtowhomVeniceinherdecadencelentlargesumsofmoney.SowasitwithHollandandEngland.Bythebeginningofthe18thcentury...Hollandhadceasedtobethenationpreponderantincommerceandindustry.Oneofitsmainlinesofbusiness,therefore,[became]thelendingoutofenormousamountsofcapital,especiallytoitsgreatrivalEngland.[Andthe]samethingisgoingonto-daybetweenEnglandandtheUnitedStates.(Marx1959:7556)

Marx,however,failedtonoticethatthesequenceofleadingcapitaliststatesoutlinedinthispassageconsistsofunitsofincreasingsize,resources,andworldpower.AllfourstatesVenice,theUnitedProvinces,theUnitedKingdom,andtheUnitedStateshavebeengreatpowersofthesuccessiveepochsduringwhichtheirrulinggroupssimultaneouslyplayedtheroleofleaderinprocessesofstateformationandofcapitalaccumulation.Seensequentially,however,thefourstatesappeartohavebeengreatpowersofaverydifferentandincreasingorder.Asweshalldetailinthecourseofthisstudy,themetropolitandomainsofeachstateinthissequenceencompassalargerterritoryandagreatervarietyofresourcesthanthoseofitspredecessor.Moreimportantly,thenetworksofpowerandaccumulationthatenabledthestatesinquestiontoreorganize

INTRODUCTION15

andcontroltheworldsystemwithinwhichtheyoperatedgrewinscaleandscopeasthesequenceprogresses.

Itcanthusbeseenthattheexpansionofcapitalistpoweroverthelastfivehundredyearshasbeenassociatednotjustwithinterstatecompetitionformobilecapital,asunderscoredbyWeber,butalsowiththeformationofpoliticalstructuresendowedwithever-moreextensiveandcomplexorganizationalcapabilitiestocontrolthesocialandpoliticalenvironmentofcapitalaccumulationonaworld-scale.Overthelastfivehundredyearsthesetwounderlyingconditionsofcapitalistexpansionhavebeencontinuallyrecreatedinparallelwithoneanother.Wheneverworld-scaleprocessesofcapitalaccumulationasinstitutedatanygiventimeattainedtheirlimits,longperiodsofinterstatestruggleensued,duringwhichthestatethatcontrolledorcametocontrolthemostabundantsourcesofsurpluscapitaltendedalsotoacquiretheorganizationalcapabilitiesneededtopromote,organize,andregulateanewphaseofcapitalistexpansionofgreaterscaleandscopethantheprecedingone.

Asarule,acquiringtheseorganizationalcapabilitieswasfarmoretheresultofpositionaladvantagesinthechangingspatialconfigurationofthecapitalistworld-economythanofinnovationassuch.Braudel(1977:66-7)goesasfarassayingthatinnovationplayednorolewhatsoeverinthesuccessivespatialshiftsofthecenterofsystemicprocessesofaccumulation:AmsterdamcopiedVenice,asLondonwouldsubsequentlycopyAmsterdam,andasNewYorkwouldonedaycopyLondon.Asweshallsee,thisprocessofimitationwasfarmorecomplexthanthesimplesequenceoutlinedhereimplies.Eachshiftwillbeshowntohavebeenassociatedwithatrueorganizationalrevolutioninthestrategiesandstructuresoftheleadingagencyofcapitalistexpansion.Nevertheless,Braudelscontentionthattheshiftsreflectedthevictoryofanewregionoveranoldonecombinedwithavastchangeofscalewillstand.

TheflowsofcapitalfromdecliningtorisingcentersthatMarxnotedweretheinstrumentofattemptsonthepartofdecliningcenterstolaysomeclaimtothelarge-scalesurplusesthataccruedtothenewcenters.Flowsofthiskindhavecharacterizedallpastfinancialexpansions.Thecurrentfinancialexpansion,incontrast,issaidtodivergefromthispattern.

AsweshalldocumentintheEpilogue,thecurrentfinancialexpansionhaswitnessedtheexplosivegrowthofJapanandlesserEastAsianstatestoanewcenterofworld-scaleprocessesofcapitalaccumulation.Andyettherewaslittleevidenceinthe1980sofamajorflowofcapitalfromthedecliningcentertothisemergentcenter.Onthecontrary,asJoelKotkinandYorikoKishimoto(1988:123)havepointedout,afterquotingfrom

16THELONGTWENTIETHCENTURY

thepassageinwhichMarxdescribesthesecretsupportthatdecliningleadersofprocessesofcapitalaccumulationhaveaccordedtotheirsuccessors,inastunningreversalofMarxsdictum,theUnitedStatesisnotfollowingthepatternofothercapital-exportingempires(Venice,HollandandGreatBritain),butnowisattractinganewwaveofoverseasinvestment.Intheirview,thisreversalisdueprimarilytothepullexercisedonforeigncapitalbytheUnitedStatesrelativelackofcontroloverforeignbusinessactivity,expandingpopulation,physicalexpanse,vastresources,andstatusastheworldsrichestandmostdevelopedcontinentalpower.Inpartialsupportofthiscontention,theyreporttheviewofthechiefeconomistofaJapanesebankandwell-knowneconomicnationalistHiroshiTakeuchi,accordingtowhomtheUnitedStateshasthescaleandresourcesthatJapanwillneverpossess.Asaresult,JapanesesurplusesflowedtotheUnitedStatesjustasBritishsurplusesdidinthelatenineteenthcentury.TheJapaneserolewillbetoassisttheUnitedStatesbyexportingourmoneytorebuildyoureconomy.Thisistheevidencethatoureconomyisfundamentallyweak.ThemoneygoestoAmericabecauseyouarefundamentallystrong(quotedinKotkinandKishimoto1988:122-3).

TakeuchisviewofJapanesepowerrelativetoUSpowerisbasicallythesameasthatexpressedbySamuelHuntingtonataHarvardseminaronJapanheldin1979.AsBruceCumings(1987:64)reports,whenEzraVogelopenedtheseminarbysaying:IamreallyverytroubledwhenIthinkthroughtheconsequencesoftheriseofJapanesepower,HuntingtonsreplywasthatJapanwasinfactanextraordinarilyweakcountry.Itsmostfundamentalweaknesseswereenergy,food,andmilitarysecurity.

Thisassessmentisbasedontheconventionalviewofinterstatepowerasconsistingprimarilyofrelativesize,self-sufficiency,andmilitaryforces.SuchaviewentirelyoverlooksthefactthatthetechnologyofpowerofcapitalismtoborrowanexpressionfromMichaelMann(1986)hasbeenquitedifferentfromterritorialism.AsWeberunderscoresinthepassagesquotedabove,andasourinvestigationwillsubstantiate,competitionformobilecapitalamonglargebutapproximatelyequalpoliticalstructureshasbeenthemostessentialandenduringfactorintheriseandexpansionofcapitalistpowerinthemodernera.Unlesswetakeintoaccounttheeffectsofthiscompetitiononthepowerofthecompetingstatesandonthepowerofthestatalandnon-statalorganizationsthatassistthemeconomicallyinthestruggle,ourassessmentsofrelationshipsofforcesintheworldsystemareboundtobefundamentallyflawed.ThecapabilitiesofsomeItaliancity-statesoverseveralcenturiestokeepatbaymilitarilyandtoinfluencepoliticallythegreatterritorialpowersoflatemedievalandearlymodernEuropewouldbeasincomprehensibleasthe

INTRODUCTION17

suddencollapseanddisintegrationinthelate1980sandearly1990softhelargest,mostself-sufficient,andsecondgreatestmilitarypowerofourtimes:theUSSR.

ItisnoaccidentthattheseemingreversalofMarxsdictumnotedbyKotkinandKishimotooccurredinthemidstofasuddenescalationofthearmamentsraceandpolitical-ideologicalstrugglebetweentheUnitedStatesandtheUSSRFredHallidays(1986)SecondColdWar.Norisitbychancethatthefinancialexpansionofthe1970sand1980sattaineditsmomentofgreatestsplendorpreciselyatthetimeofthissuddenescalation.ToparaphraseMarx,itwasatthistimethatthealienationoftheUSstateproceededfasterthaneverbefore;andtoparaphraseWeber,itwasatthistimethatthecompetitionformobilecapitalbetweenthetwolargestpoliticalstructuresintheworldcreatedforcapitalismanextraordinarynewopportunityforself-expansion.

TheflowofcapitalfromJapantotheUnitedStatesintheearly1980smustbeseeninthiscontext.PoliticalconsiderationsinspiredbyJapansdependenceon,andsubordinationto,USworldpowernodoubtplayedacriticalroleinpromptingJapanesecapitaltoassisttheUnitedStatesintheescalationofthepowerstruggle,asTakeuchiseemstoimply.Nevertheless,assubsequenteventshaveshown,politicalconsiderationswereinseparablefromconsiderationsofprofit.

Inthisrespect,theflowofcapitalfromJapantotheUnitedStateswasnotasanomalousasKotkinandKishimotothought.Itwassomewhatanalogoustothefinancialassistancethattherisingcapitalistpower(theUnitedStates)gavethedecliningcapitalistpower(theUnitedKingdom)inthetwoworldwars.TheAnglo-Germanconfrontations,unliketheUSSovietconfrontationofthe1980s,were,ofcourse,hotratherthancold.Butthefinancialrequirementsofthetwoconfrontationsandtheprofitsthatcouldbeexpectedfrombackingthewinnerwerenonethelesscomparable.

ThemaindifferencebetweenUSfinancialassistancetoBritaininthetwoworldwarsandJapanesefinancialassistancetotheUnitedStatesintheSecondColdWarliesintheoutcomes.WhereastheUnitedStatesreapedenormousbenefits,Japandidnot.Asweshallseeinchapter4,thetwoworldwarsandtheiraftermathweredecisivemomentsintheredistributionofassetsfromBritaintotheUnitedStateswhichhastenedthechangeofleadershipinsystemicprocessesofcapitalaccumulation.DuringandaftertheSecondColdWar,incontrast,therewasnocomparableredistribution.Infact,Japanprobablynevergotitsmoneyback.

ThegreatestlossesweresufferedasaconsequenceofthefallinthevalueoftheUSdollarafter1985.Thismeantthatmoneyborrowedingreatlyovervalueddollarswasservicedandrepaidinundervalued

18THELONGTWENTIETHCENTURY

dollars.ThelossesinflictedonJapanesecapitalbythedevaluationweresuchthatJapanesebusinessandtheJapanesegovernmentwithdrewtheirpreviouslyunconditionalfinancialsupportfortheUSgovernment.Inmid-1987JapaneseprivateinvestorsreversedtheirexportofcapitaltotheUnitedStatesforthefirsttimesincetheearly1980s.AndafterthestockmarketcrashofOctober1987,theJapaneseMinistryofFinancedidnothingtoencouragefinancialintermediariestosupporttheimportantauctionofUSgovernmentdebtheldinNovember1987(Helleiner1992:434).

ThedifficultiesJapanmetinwieldingitsincreasingcommandoversurpluscapitalinordertoredistributeassetsfromUStoJapanesecontrolwerenotsimplytheresultofthehistoricallyunprecedentedpowerofUSpublicandprivateagencies,actinginconcert,tomanipulatedemandandsupply,interestrates,andratesofexchangeinworldfinancialmarkets.TheacquisitionofmaterialassetsintheUnitedStatespresenteddifficultiesofitsown.AsfarasJapanesecapitalwasconcerned,theworldsrichestandmostdevelopedcontinentalpowerprovedtobenotasdevoidofcontroloverforeignbusinessasKotkinandKishimotothought.

Thiscontrolhasbeenmoreinformalthanformal,butisnolessrealforallthat.TherehavebeenculturalbarriersofthekindbestepitomizedbythehystericalreactiontriggeredinandbytheUSmediawhenJapanesecapitalboughttheRockefellerCenterinNewYorkCity.SinceJapanesepurchasesofUSrealestatepaledincomparisonwithEuropean,Canadian,andAustralianpurchases,thereactionsentthemessagetobuyersandsellersalikethatJapanesemoneydidnothavequitethesamerighttoacquireUSassetsasdidthemoneyofforeignersofEuropeanstock.

IfthemassmediahavebeenthechiefprotagonistsinerectingculturalbarrierstothetransferofUSassetstoJapanesecapital,theUSgovernmenthasplayeditspartbyerectingpoliticalbarriers.ItwelcomedJapanesemoneytofinanceitsdeficitandpublicdebtandtoestablishproductionfacilitiesthatcreatedjobsintheUnitedStatesandreducedtheUSbalanceofpaymentsdeficit.Butitstronglydiscouragedthatsamemoneyfromtakingoverprofitablebutstrategicallysensitiveenterprises.Thus,inMarch1987protestsfromtheSecretaryofDefense,CasparWeinbergenandSecretaryofCommerce,MalcomBaldridge,convincedFujitsuthatitwouldbeprudenttowithdrawitsattempttotakeovertheFairchildSemiconductorCorporation.Yet,asStephenKrasner(1988:29)remarked:FairchildwasownedbytheFrenchcompanySchlumberger,sotheissuewasnotsimplyoneofforeignownership.

Whatculturalandpoliticalbarrierscouldnotstop,thebarrierstoentrybuiltintotheverystructureofUScorporatecapitalismdid.ThecomplexitiesofUScorporatelifeprovedtobemoreinsurmountable

INTRODUCTION19

barrierstoentryforJapanesemoneythanculturalhostilityandpoliticalmistrust.ThebiggesteverJapanesetakeoversintheUnitedStatesSonystakeoverofColumbiaPicturesin1989,andMatsushitastakeoverofMCAthefollowingyearfailedcompletelyintheirobjective.WhentheSonydealwasstruck,themediaover-reactedandNewswee/escovertalkedofJapansinvasionofHollywood.Andyet,asBillEmmottwroteintheop-edpageoftheNewYorkTimes(26November1993:A19),

lessthantwoyearspassedbeforeitbecameclearthatthescaresandhyperbolehadgotitwrong....[T]heJapaneseinvasionofU.S.businesshasbeennosuchthing.EventhebestJapanesecompanieshavemadespectacularandcostlymistakesandhavenottakencontrolevenofthebusinessestheypurchased,letaloneofcultureandtechnology.(seealsoEmmott1993)

Inshort,therealanomalyofUSJapaneserelationsduringthecurrentfinancialexpansionisnotthatJapanesecapitalflowedtotheUnitedStatesintheearly1980s;rather,itisthatJapanesecapitalbenefitedsolittlefromassistingtheUnitedStateseconomicallyinthefinalescalationoftheColdWarwiththeformerUSSR.Isthisanomalysymptomaticofafundamentalchangeinthemechanismsofinterstatecompetitionformobilecapitalwhichhavepropelledandsustainedtheexpansionofcapitalistpoweroverthelastsixhundredyears?

Thesemechanismshaveaclearbuilt-inlimit.Capitalistpowerintheworldsystemcannotexpandindefinitelywithoutundermininginterstatecompetitionformobilecapitalonwhichtheexpansionrests.Soonerorlaterapointwillbereachedwherethealliancesbetweenthepowersofstateandcapitalthatareformedinresponsetothiscompetitionbecomesoformidablethattheyeliminatethecompetitionitselfand,therefore,thepossibilityfornewcapitalistpowersofahigherordertoemerge.ArethedifficultiesmetbytheemergingstructuresofJapanesecapitalisminprofitingfrominterstatecompetitionformobilecapitalasymptomofthefactthatthispointhasbeenreached,orisabouttobereached?Or,torephraseit,dothestructuresofUScapitalismconstitutetheultimatelimitofthesixcenturies-longprocessthroughwhichcapitalistpowerhasattaineditspresent,seeminglyallencompassingscaleandscope?

Inseekingplausibleanswerstothesequestions,thecomplementaryinsightsofWeberandMarxconcerningtheroleofhighfinanceinthemoderneramustbesupplementedbyAdamSmithsinsightsconcerningtheprocessofworldmarketformation.LikeMarxafterhim,SmithsawintheEuropeandiscoveriesofAmericaandofapassagetotheEastIndiesviatheCapeofGoodHopeadecisiveturningpointinworldhistory.He

20THELONGTWENTIETHCENTURY

wasnonethelessfarlesssanguinethanMarxabouttheultimatebenefitsoftheseeventsforhumanity:

Theirconsequenceshavealreadybeengreat;but,intheshortperiodofbetweentwoandthreecenturieswhichhaselapsedsincethesediscoveriesweremade,itisimpossiblethatthewholeextentoftheirconsequencescanhavebeenseen.Whatbenefits,orwhatmisfortunestomankindmayhereafterresultfromtheseevents,nohumanwisdomcanforesee.Byuniting,insomemeasure,themostdistantpartsoftheworld,byenablingthemtorelieveoneanotherswants,toincreaseoneanothersenjoyments,andtoencourageoneanothersindustry,theirgeneraltendencywouldseemtobebeneficial.Tothenatives,however,bothoftheEastandWestIndies,allthecommercialbenefitswhichcanhaveresultedfromtheseeventshavebeensunkandlostinthedreadfulmisfortuneswhichtheyhaveoccasioned.Thesemisfortunes,however,seemtohavearisenratherfromaccidentthanfromanythinginthenatureofthoseeventsthemselves.Attheparticulartimewhenthesediscoveriesweremade,thesuperiorityofforcehappenedtobesogreatonthesideoftheEuropeans,thattheywereenabledtocommitwithimpunityeverysortofinjusticeinthoseremotecountries.Hereafter,perhaps,thenativesofthosecountriesmaygrowstronger,orthoseofEuropemaygrowweaker,andtheinhabitantsofallthedifferentquartersoftheworldmayarriveatthatequalityofcourageandforcewhich,byinspiringmutualfear,canaloneoverawetheinjusticeofindependentnationsintosomesortofrespectfortherightsofoneanother.Butnothingseemsmorelikelytoestablishthisequalityofforcethanthatmutualcommunicationofknowledgeandofallsortsofimprovementswhichanextensivecommercefromallcountriestoallcountriesnaturally,orrathernecessarily,carriesalongwithit.(Smith

1961:II,141;emphasisadded)

TheprocesssketchedinthispassagepresentssomestrikingsimilaritieswithBraudelsviewoftheformationofacapitalistworld-economy:thefortunesoftheconqueringWestandthemisfortunesoftheconquerednon-Westasjointoutcomesofasinglehistoricalprocess;thelongtimehorizonneededtodescribeandassesstheconsequencesofthissinglehistoricalprocess;andmostimportantforourpresentpurposes,thecentralityofforceindeterminingthedistributionofcostsandbenefitsamongparticipantsinthemarketeconomy.

Smith,ofcourse,didnotusethetermcapitalismatermintroducedinthevocabularyofthesocialsciencesonlyinthetwentiethcentury.Yet,hisassessmentthatsuperiorityofforcewasthemostimportantfactorinenablingtheconqueringWesttoappropriatemostofthebenefitsandtoimposeontheconquerednon-Westmostofthecostsofthewidermarketeconomyestablishedasaresultoftheso-calledDiscoveries,parallelsBraudelsassessmentthatthefusionofstateandcapitalwasthe

INTRODUCTION21

vitalingredientintheemergenceofadistinctlycapitalistlayerontopof,andinantithesisto,thelayerofmarketeconomy.Asweshallseeinchapter3,inSmithsschemeofthingslarge-scaleprofitscanbemaintainedforanylengthoftimeonlythroughrestrictivepractices,buttressedbystatepower,whichconstrainanddisruptthenaturaloperationofthemarketeconomy.Inthisschemeofthings,asinBraudels,theupperlayerofmerchantsandmanufacturerswhocommonlyemploythelargestcapitals,andwhobytheirwealthdrawtothemselvesthegreatestshareofthepublicconsideration(Smith1961:I,278)istrulytheanti-market,Braudelscontra-mart/76.

However,BraudelsandSmithsconceptionsoftherelationshipbetweenthemarketeconomyanditscapitalistantithesisdifferinoneimportantrespect.ForBraudeltherelationshipisfundamentallystatic.Heneitherseesnorforeseesanysynthesisemergingfromthestrugglebetweenthesisandantithesis.Smith,incontrast,doesseesuchasynthesisemergingoutofthewitheringawayofinequalityofforceundertheimpactoftheveryprocessofworldmarketformation.Asthelastsentenceofthepassagequotedaboveindicates,SmiththoughtthatthewideninganddeepeningofexchangesintheworldmarketeconomywouldactasanunstoppableequalizerofrelationshipsofforcebetweentheWestandthenon-West.

Amoredialecticalconceptionofhistoricalprocessesisnotnecessarilymoreaccuratethanalessdialecticalone.Asitturnedout,formorethan150yearsafterSmithadvancedthethesisofthecorrosiveimpactofprocessesofworldmarketformationonthesuperiorityofforceoftheWest,theinequalityofforcebetweenWestandnon-Westincreasedratherthandecreased.Worldmarketformationandthemilitaryconquestofthenon-Westproceededintandem.Bythe1930s,onlyJapanhadfullyescapedthemisfortunesofWesternconquest,butonlybyitselfbecominganhonorarymemberoftheconqueringWest.

Then,duringandaftertheSecondWorldWar,thewheelturned.ThroughoutAsiaandAfricaoldsovereigntieswerere-establishedandscoresofnewoneswerecreated.Tobesure,massivedecolonizationwasaccompaniedbytheestablishmentofthemostextensiveandpotentiallydestructiveapparatusofWesternforcetheworldhadeverseen.Thefarflungnetworkofquasi-permanentoverseasmilitarybasesputinplacebytheUnitedStatesduringandaftertheSecondWorldWar,Krasner(1988:21)notes,waswithouthistoricalprecedent;nostatehadpreviouslybaseditsowntroopsonthesovereignterritoryofotherstatesinsuchextensivenumbersforsolongapeacetimeperiod.Andyet,onthebattlefieldsofIndochina,thisworld-encompassingmilitaryapparatusprovedtobewhollyinadequatetothetaskofcoercingoneofthepoorestnationsonearthtoitswill.

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ThesuccessfulresistanceoftheVietnamesepeoplemarkedtheapogeeofaprocessinitiatedbytheRussianRevolutionof1917,wherebytheWestandnon-WestwerereshuffledintoatripartitegroupingconsistingofaFirst,Second,andThirdWorld.Whilethehistoricalnon-WestcametobegroupedalmostentirelyintheThirdWorld,thehistoricalWestsplitintothreedistinctcomponents.Itsmoreprosperouscomponents(NorthAmerica,WesternEurope,andAustralia)joinedbyJapan,cametoconstitutetheFirstWorld.Oneofitslessprosperouscomponents(theUSSRandEasternEurope)cametoconstitutetheSecondWorld,andanother(LatinAmerica)joinedthenon-WesttoconstitutetheThirdWorld.PartlyacauseandpartlyaneffectofthistripartitefissionofthehistoricalWest,thefortunesofthenon-WestfromtheendoftheSecondWorldWartotheVietnamWarseemedtobeintheascendant.

WritingforthebicentenaryofthepublicationoftheW/ealt/7ofNations,andshortlyaftertheUnitedStateshaddecidedtowithdrawfromVietnam,PaoloSylos-Labini(1976:230-2)speculatedonwhetherSmithsvisionwasabouttoberealizedwhetherthetimehadfinallycomewhentheinhabitantsofallthedifferentquartersoftheworld...arriveatthatequalityofcourageandforcewhich,byinspiringmutualfear,canaloneoverawetheinjusticeofindependentnationsintosomesortofrespectfortherightsofoneanother.Theeconomicconjuncturealsoseemedtosignalthatsomeequalizationofrelationshipofforcesintheworldsystematlargewasimminent.ThenaturalresourcesofThirdWorldcountrieswereingreatdemand,aswastheirabundantandcheaplabor.AgentsofFirstWorldbankerswerequeuingupintheante-chambersofThird(andSecond)Worldgovernmentsofferingatbargainpricestheoverabundantcapitalthatcouldnotfindprofitableinvestmentintheirhomecountries.TermsoftradehadturnedsharplyagainstthecapitalistWest,andtheincomegapbetweenFirstandThirdWorldcountriesseemedtobenarrowing.

Withinsixyears,though,ithadbecomeclearthatanyhope(orfear)ofanimminentequalizationoftheopportunitiesofthepeoplesoftheworldtobenefitfromthecontinuingprocessofworldmarketformationwas,tosaytheleast,premature.UScompetitionformobilecapitalinworldmoneymarketstofinanceboththeSecondColdWarandthebuyingofelectoralvotesathomethroughtaxcuts,suddenlydriedupthesupplyoffundstoThirdandSecondWorldcountriesandtriggeredamajorcontractioninworldpurchasingpower.TermsoftradeswungbackinfavorofthecapitalistWestasfastandassharplyastheyhadswungagainstitinthe1970s,andtheincomegapbetweenthecapitalistWestandtherestoftheworldbecamewiderthanever

(Arrighi1991

INTRODUCTION23

Nevertheless,thebacklashdidnotrestorethestatusquoante.Ontheonehand,thesuperiorityofforceofthecapitalistWestseemedtohavebecomegreaterthanever.Disorientedanddisorganizedbytheincreasingturbulenceoftheworld-economy,andhardpressedbytheSecondColdWar,theUSSRwassqueezedoutofthesuperpowerbusiness.Insteadofhavingtwosuperpowerstoplayoffagainstoneanother,ThirdWorldcountriesnowhadtocompetewiththefragmentsoftheSovietempireingainingaccesstothemarketsandresourcesofthecapitalistWest.AndthecapitalistWest,underUSleadership,movedquicklytotakeadvantageofthesituationtotightenitsdefactoglobalmonopolyofthelegitimateuseofviolence.

Ontheotherhand,superiorityofforceandthecapitalistaccumulationofcapitalseemedtodivergegeopoliticallyasneverbefore.ThedeclineofSovietpowerwasmatchedbytheemergenceofwhatBruceCumings(1993:25-6)hasaptlycalledthecapitalistarchipelagoofEastandSoutheastAsia.Thisarchipelagoconsistsofseveralislandsofcapitalism,whichriseaboveaseaofhorizontalexchangesamonglocalandworldmarketsthroughthecentralizationwithintheirdomainsoflarge-scaleprofitsandhighvalue-addedactivities.Belowthissealiethehuge,low-cost,andhighlyindustriouslaboringmassesoftheentireEastandSoutheastAsianregions,intowhichthecapitalistislandsthrusttheirrootsbutwithoutprovidingthemwiththemeansneededtorisetoorabovesealevel.

Japanisbyfarthelargestamongthesecapitalistislands.Lesserislandsofthecapitalistarchipelagoarethecity-statesofSingaporeandHongKong,thegarrisonstateofTaiwan,andthehalfnationstateofSouthKorea.Noneofthesestatesispowerfulbyconventionalstandards.HongKonghasnotevenattainednorprobablywilleverattainfullsovereignty.ThethreebiggerstatesJapan,SouthKorea,andTaiwanarewhollydependentontheUnitedStatesnotjustformilitaryprotectionbutalsoformuchoftheirenergyandfoodsuppliesaswellasfortheprofitabledisposaloftheirmanufactures.Yet,collectively,thecompetitivenessoftheEastandSoutheastAsiancapitalistarchipelagoasthenewworkshopoftheworldisthesinglemostimportantfactorforcingthetraditionalcentersofcapitalistpowerWesternEuropeandNorthAmericatorestructureandreorganizetheirownindustries,theirowneconomies,andtheirownwaysoflife.

Whatkindofpoweristhisthatevenanexperteyecanhardlydiscern?Isitanewkindofsuperiorityofforceor,rather,thebeginningoftheendofthesuperiorityofforceonwhich,overthelastfivehundredyears,thecapitalistfortunesoftheWesthavebeenbuilt?IscapitalisthistoryabouttoendthroughtheformationofatrulyglobalworldempirebasedontheenduringsuperiorityofforceoftheWestasMaxWeberseemedto

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envisage,orisitgoingtoendthroughtheformationofaworldmarketeconomyinwhichthesuperiorityofforceoftheWestwithersawayasAdamSmithseemedtoenvisage?

Inseekingplausibleanswerstothesequestionsweshallproceedbysuccessiveapproximations.Chapter1focusesontheprocessofformationandexpansionofthemoderninterstatesystemastheprimarylocusofworldpower.TheearliestbeginningsofthisprocesswillbetracedtotheformationinlatemedievalEuropeofanorthernItaliansub-systemofcapitalistcity-states.Thissub-systemwasandremainedanenclaveofthedisintegratingmodeofruleofmedievalEuropeaformofwarlordismsubjectedtoandheldtogetherbythedualsystemicpowerofpopeandemperor.Itnonethelessprefigured,andunintentionallycreatedtheconditionsfor,theemergencetwocenturieslaterofthelargerWestphaliasystemofnationstates.

Theglobalexpansionofthissystemwillthenbedescribedasconsistingofaseriesoftransitions,inthecourseofwhichthesystemaspreviouslyinstitutedbrokedown,onlytobereconstitutedonwidersocialfoundations.ThispreliminaryanalysisendswiththelatetwentiethcenturycrisisoftheenlargedandthoroughlytransformedWestphaliaSystem.Indiagnosingthesymptomsofthepresentcrisis,anewresearchagendawillbeformulatedwhichfocusesmoredirectlyonthespaceof-flowsofbusinessorganizationsthanonthespace-of-placesofgovernments.Itisatthispointthatourconstructionandcomparisonofsystemiccyclesofaccumulationwillbegin.

ThecomparativeanalysisthroughwhichsystemiccyclesofaccumulationwillbeconstructedfollowstheprocedurethatPhilipMcMichael(1990)hascalledincorporatingcomparison.Thecyclesarenotpresumedbutconstructed,bothfactuallyandtheoretically,withtheexplicitpurposeofgainingsomeunderstandingofthelogicandlikelyoutcomeofthepresentfinancialexpansion.Thecomparisonisincorporatedintotheverydefinitionoftheresearchproblem:itconstitutesthesubstanceratherthantheframeworkoftheinquiry.Thecyclesthatemergefromtheinquiryareneithersubordinatedpartsofapreconceivedwhole,norindependentinstancesofacondition;theyareinterconnectedinstancesofasinglehistoricalprocessofcapitalistexpansionwhichtheythemselvesconstituteandmodify.

Chapter2constructsthefirsttwoinstancesofthissinglehistoricalprocessofcapitalistexpansion:theGenoeseandtheDutchcycles.Chapter3addsanewstagetotheprocessbydefiningthethird(British)cycleandcomparingitwiththefirsttwo.Theconcludingsectionofthechaptermakesexplicitandseekssomeplausibleexplanationforthepatternofrecurrenceandevolutionrevealedbythecomparativeanalysisofthefirstthreecycles.Thestageisthussetfortheconstructionin

INTRODUCTION25

chapter4ofthefourth(US)systemiccycleofaccumulation,portrayedasanoutgrowthoftheprecedingcyclesandthematrixofourtimes.IntheEpilogueweshallreturntothequestionsthatwehaveraisedinthisIntroduction.

Thisreconstructionofcapitalisthistoryhasitsownlimitation.Thenotionofsystemiccycleofaccumulation,wehavenoted,derivesdirectlyfromBraudelsnotionofcapitalismasthetoplayerofthehierarchyoftheworldoftrade.Ouranalyticalconstruct,therefore,focusesonthattoplayerandoffersalimitedviewofwhatgoesoninthemiddlelayerofmarketeconomyandthebottomlayerofmateriallife.Thisissimultaneouslythemainstrengthandthemainweaknessoftheconstruct.Itisitsmainstrengthbecausethetoplayeristherealhomeofcapitalismandatthesametimeitislesstransparentandlessexploredthantheintermediatelayerofthemarketeconomy.Thetransparencyoftheactivitiesthatconstitutethelayerofmarketeconomyandthewealthofdata(particularlyquantitativedata)thattheseactivitiesgenerate,havemadethisintermediatelayertheprivilegedarenaofhistoricalsocialscienceandeconomics.Thelayersbelowandabovethemarketeconomyareinsteadshadowyzones(zonesdbpacite).Thebottomlayerofmateriallifeishardtoseeforlackofadequatehistoricaldocuments.Theupperlayer,incontrast,ishardtoseebecauseoftheactualinvisibilityorthecomplexityoftheactivitiesthatconstituteit

(Braudel1981:23-4;Wallerstein1991:208-9):

Atthisexaltedlevel,afewwealthymerchantsineighteenth-centuryAmsterdamorsixteenthcenturyGenoacouldthrowwholesectorsoftheEuropeanorevenworldeconomyintoconfusion,fromadistance.Certaingroupsofprivilegedactorsareengagedincircuitsandcalculationsthatordinarypeopleknewnothingof.Foreignexchange,forexample,whichwastiedtodistanttrademovementsandtothecomplicatedarrangementsforcredit,wasasophisticatedartopenonlytoafewinitiatesatmost.Tome,thissecondshadowyzone,hoveringabovethesunlitworldofthemarketeconomyandconstitutingitsupperlimitsotospeak,representsthefavoreddomainofcapitalism....Withoutthiszone,capitalismisunthinkable:thisiswhereittakesupresidenceandprospers.(Braudel1981:24)

Systemiccyclesofaccumulationaremeanttothrowsomelightonthisshadowyzonewithoutwhichcapitalismisunthinkable.Theyarenotmeanttotelluswhatgoesoninthelowerlayers,exceptforwhatisdirectlyrelevanttothedynamicofthesystemiccyclesthemselves.This,ofcourse,leavesmuchoutofsightorinthedark,includingtheprivilegedarenasofworldsystemsstudies:core-peripheryandlabor-capitalrelations.Butwecannotdoeverythingatonce.

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Marx(1959:176)invitedustotakeleaveforatimeof[the]noisysphere[ofcirculation],whereeverythingtakesplaceonthesurfaceandinviewofallmen,andfollow[thepossessorofmoneyandthepossessoroflabor-power]intothehiddenabodeofproduction,onwhosethresholdtherestaresusinthefaceNoadmittanceexceptonbusiness.Here,hepromised,[w]eshallatlastforcethesecretofprofitmaking.Braudelalsoinvitedustotakeleaveforatimeofthenoisyandtransparentsphereofthemarketeconomy,andfollowthepossessorofmoneyintoanotherhiddenabode,whereadmittanceisonlyonbusinessbutwhichisonefloorabove,ratherthanonefloorbelowthemarketplace.Here,thepossessorofmoneymeetsthepossessor,notoflabor-power,butofpoliticalpower.Andhere,promisedBraudel,weshallforcethesecretofmakingthoselargeandregularprofitsthathasenabledcapitalismtoprosperandexpandendlesslyoverthelastfivetosixhundredyears,beforeandafteritsventuresintothehiddenabodesofproduction.

Thesearecomplementaryprojects,notalternativeones.However,wecannotgotothetopandthebottomfloorsatthesametime.GenerationsofhistoriansandsocialscientistshavetakenupMarxsinvitationandhaveextensivelyexploredthebottomfloor.Insodoing,theymaynothavediscoveredthesecretofprofit-makingintheindustrialphaseofcapitalism,buttheyhavecertainlydiscoveredmanyofitssecrets.Thendependencyandworldsystemtheoristsandpractitionershaveinvitedustohaveanotherlookatthemiddlefloorofmarketeconomytoseehowitslawstendtopolarizethehiddenabodesofproductionintocoreandperipherallocales.Inthiswaymoreofthesecretsofprofit-makinghavebeenexposed.Butfewhaveventuredtothetopflooroftheanti-marketwhere,inthewordsofBraudelshyperbole,thegreatpredatorsroamandthelawoftheungleoperatesandwherethesecretsofthelonguedureofhistoricalcapitalismaresaidtobehidden.

Todaywhenworldcapitalismseemstobeprospering,notbythrustingitsrootsmoredeeplyintothelowerlayersofmateriallifeandmarketeconomy,butbypullingthemoutisasgoodatimeasanytotakeupBraudelsinvitationandexploretherealhomeofcapitalismonthetopfloorofthehouseoftrade.Thatandthatonlyiswhatweareabouttoundertake.

Itfollowsthatourconstructionisbothpartialandsomewhatindeterminate.Partialbecauseitseekssomeunderstandingofthelogicofthepresentfinancialexpansionabstractingfromthemovementsthatgoonundertheirownsteamandlawsatthelevelsoftheworldsmarketeconomiesandoftheworldsmaterialcivilizations.Itissomewhatindeterminateforthesamereason.Thelogicofthetoplayerisonlyrelativelyautonomousfromthelogicsofthelowerlayersandcanbefullyunderstoodonlyinrelationtotheseotherlogics.

INTRODUCTION27

Certainly,asourconstructionproceeds,whatinitiallymayappeartobemerehistoricalcontingencywillbegintoappeartoreflectastructurallogic.Nevertheless,thetensionbetweenthetwokindsofappearancecannotbefullyresolvedwithinthelimitsofourresearchagenda.Afullresolutionofthetensionifthatispossiblerequiresthatwedescendagaintoexplorethelowerlayersofmarketeconomyandmateriallifewiththeknowledgeandquestionsbroughtbackfromthejourneyintothetoplayerwhichthisbookundertakes.

TheThreeHegemoniesofHistoricalCapitalismHegemony,Capitalism,andTerritorialism

ThedeclineofUSworldpowersinceabout1970hasoccasionedawaveofstudiesontheriseanddeclineofhegemonies(HopkinsandWallerstein1979;Bousquet1979;1980;Wallerstein1984),corehegemonicstates(Chase-Dunn1989),worldorglobalpowers(Modelski1978;1981;1987;ModelskiandThompson1988;Thompson1988;1992),cores(Gilpin1975),andgreatpowers(Kennedy1987).Thesestudiesdifferconsiderablyintheirobjectofstudy,methodology,andconclusionsbuttheyhavetwocharacteristicsincommon.First,ifandwhentheyusethetermhegemony,theymeandominance(cf.Rapkin1990)and,second,theirfocusandemphasisisonanallegedbasicinvarianceofthesystemwithinwhichthepowerofastaterisesanddeclines.

Mostofthesestudiesrelyonsomenotionofinnovationandleadershipindefiningtherelativecapabilitiesofstates.ForModelski,systemicinnovationsandleadershipincarryingthemoutareassumedtobethemainsourcesofworldpower.Butinallthesestudies,includingModelskis,systemicinnovationsdonotchangethebasicmechanismsthroughwhichpowerintheinterstatesystemrisesanddeclines.Infact,theinvarianceofthesemechanismsisgenerallyheldtobeoneofthecentralfeaturesoftheinterstatesystem.

Theconceptofworldhegemonyadoptedhere,incontrast,refersspecificallytothepowerofastatetoexercisefunctionsofleadershipandgovernanceoverasystemofsovereignstates.Inprinciple,thispowermayinvolvejusttheordinarymanagementofsuchasystemasinstitutedatagiventime.Historically,however,thegovernmentofasystemofsovereignstateshasalwaysinvolvedsomekindoftransformativeaction,whichchangedthemodeofoperationofthesysteminafundamentalway.

28

THETHREEHEGEMONIESOFHISTORICALCAPITALISM29

Thispowerissomethingmoreanddifferentfromdominancepureandsimple.Itisthepowerassociatedwithdominanceexpandedbytheexerciseofintellectualandmoralleadership.AsAntonioGramsciemphasized,withreferencetohegemonyatthenationallevel,

thesupremacyofasocialgroupmanifestsitselfintwoways,asdominationandasintellectualandmoralleadership.Asocialgroupdominatesantagonisticgroups,whichittendstoliquidate,ortosubjugateperhapsevenbyarmedforce;itleadskindredoralliedgroups.Asocialgroupcan,andindeedmust,alreadyexerciseleadershipbeforewinninggovernmentalpower(thisindeedisoneoftheprincipalconditionsforwinningsuchpower);itsubsequentlybecomesdominantwhenitexercisespower,butevenifitholdsitfirmlyinitsgrasp,itmustcontinuetoleadaswell.(Gramsci1971:578)

ThisisareformulationofMachiavellisconceptionofpowerasacombinationofconsentandcoercion.Coercionimpliestheuseofforce,oracrediblethreatofforce;consentimpliesmoralleadership.Inthisdichotomythereisnoroomforthemostdistinctiveinstrumentofcapitalistpower:controlovermeansofpayment.InGramscisconceptualizationofpowerthegreyareathatliesbetweencoercionandconsentisoccupiedbycorruptionandfraud:

Betweenconsentandforcestandscorruption/fraud(whichischaracteristicofcertainsituationswhenitishardtoexercisethehegemonicfunction,andwhentheuseofforceistoorisky).Thisconsistsinprocuringthedemoralizationandparalysisoftheantagonist(orantagonists)bybuyingitsleaderseithercovertly,or,incaseofimminentdanger,openlyinordertosowdisarrayandconfusioninitsranks.(Gramsci1971:80n)

Inourschemeofthings,muchmorethanmerecorruptionandfraudstandsinthegreyareabetweencoercionandconsent.Butuntilweturntoexplorethisareathroughtheconstructionofsystemiccyclesofaccumulation,weshallassumethatnoautonomoussourceofworldpowerliesbetweencoercionandconsent.Whereasdominancewillbeconceivedofasrestingprimarilyoncoercion,hegemonywillbeunderstoodastheadditionalpowerthataccruestoadominantgroupbyvirtueofitscapacitytoplacealltheissuesaroundwhichconflictragesonauniversalplane.

ItistruethattheStateisseenastheorganofoneparticulargroup,destinedtocreatefavorableconditionsforthelattersmaximumexpansion.Butthedevelopmentandexpansionoftheparticulargroupareconceivedof,andpresented,asbeingthemotorforceofauniversalexpansion,adevelopmentofallthenationalenergies.(Gramsci1971:181-2)

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Theclaimofthedominantgrouptorepresentthegeneralinterestisalwaysmoreorlessfraudulent.Nevertheless,followingGramsci,weshallspeakofhegemonyonlywhentheclaimisatleastpartlytrueandaddssomethingtothepowerofthedominantgroup.Asituationinwhichtheclaimofthedominantgrouptorepresentthegeneralinterestispurelyfraudulentwillbedefinedasasituationnotofhegemonybutofthefailureofhegemony.

Sincethewordhegemony,initsetymologicalsenseofleadershipandinitsderivedsenseofdominance,normallyreferstorelationsbetweenstates,itisentirelypossiblethatGramsciwasusingthetermmetaphoricallytoclarifyrelationsbetweensocialgroupsthroughananalogywithrelationsbetweenstates.IntransposingGramscisconceptofsocialhegemonyfromintra-staterelationstointerstaterelationsasArrighi(1982),Cox(1983;1987),Keohane(1984a),Gill(1986;1993),andGillandLaw(1988)amongothersdoexplicitlyorimplicitlywemaysimplyberetracinginreverseGramscismentalprocess.Insodoingwearefacedwithtwoproblems.

Thefirstconcernsthedoublemeaningofleadership,particularlywhenappliedtorelationsbetweenstates.Adominantstateexercisesahegemonicfunctionifitleadsthesystemofstatesinadesireddirectionand,insodoing,isperceivedaspursuingageneralinterest.Itisthiskindofleadershipthatmakesthedominantstatehegemonic.Butadominantstatemayleadalsointhesensethatitdrawsotherstatesontoitsownpathofdevelopment.BorrowinganexpressionfromJosephSchumpeter(1963:89),thissecondkindofleadershipcanbedesignatedasleadershipagainstonesownwillbecause,overtime,itenhancescompetitionforpowerratherthanthepowerofthehegemon.Thesetwokindsofleadershipmaycoexistatleastforatime.Butitisonlyleadershipinthefirstsensethatdefinesasituationashegemonic.

Thesecondproblemconcernsthefactthatitismoredifficulttodefineageneralinterestattheleveloftheinterstatesystemthanitisatthelevelofindividualstates.Atthelevelofindividualstates,anincreaseinthepowerofthestatevi:-a-vi:otherstatesisanimportantcomponentandinitselfameasureofthesuccessfulpursuitofageneral(thatis,national)interest.Butpowerinthissensecannotincreaseforthesystemofstatesasawhole,bydefinition.Itcan,ofcourse,increaseforaparticulargroupofstatesattheexpenseofallotherstates,butthehegemonyoftheleaderofthatgroupisatbestregionalorcoalitional,notatrueworldhegemony.

Worldhegemoniesasunderstoodherecanonlyariseifthepursuitofpowerbystatesinrelationtooneanotherisnottheonlyobjectiveofstateaction.Infact,thepursuitofpowerintheinterstatesystemisonlyonesideofthecointhatjointlydefinesthestrategyandstructureofstates

THETHREEI-IEGEMONIESOFHISTORICALCAPITALISM31

quaorganizations.Theothersideisthemaximizationofpowervi:-4-2/issubjects.Astatemaythereforebecomeworldhegemonicbecauseitcancrediblyclaimtobethemotorforceofageneralexpansionofthecollectivepowerofrulers2/is-4-2/issubjects.Orconversely,astatemaybecomeworldhegemonicbecauseitcancrediblyclaimthattheexpansionofitspowerrelativetosomeorevenallotherstatesisinthegeneralinterestofthesubjectsofallstates.

Claimsofthiskindaremostlikelytobetruthfulandcredibleinconditionsofsystemicchaos.Chaosisnotthesamethingasanarchy.Althoughthetwotermsareoftenusedinterchangeably,anunderstandingofthesystemicoriginsofworldhegemoniesrequiresthatwedistinguishbetweenthetwo.

Anarchydesignatesabsenceofcentralrule.Inthissense,themodernsystemofsovereignstatesaswellasthesystemofruleofmedievalEuropeoutofwhichthelatteremerged,qualifyasanarchicsystems.Yet,eachofthesetwosystemshadorhasitsownimplicitandexplicitprinciples,norms,rules,andprocedureswhichjustifyourreferringtothemasorderedanarchiesoranarchicorders.

Theconceptoforderedanarchywasfirstintroducedbyanthroplogistsseekingtoexplicatetheobservedtendencyoftribalsystemstogenerateorderoutofconflict(Evans-Pritchard1940;Gluckman1963:ch.1).Thistendencyhasbeenatworkinthemedievalandmodernsystemsofruleaswell,becauseinthesesystemstootheabsenceofcentralrulehasnotmeantlackoforganizationand,withinlimits,conflicthastendedtogenerateorder.

Chaosandsystemicchaos,incontrast,refertoasituationoftotalandapparentlyirremediablelackoforganization.Itisasituationthatarisesbecauseconflictescalatesbeyondthethresholdwithinwhichitcallsforthpowerfulcountervailingtendencies,orbecauseanewsetofrulesandnormsofbehaviorisimposedon,orgrowsfromwithin,anoldersetofrulesandnormswithoutdisplacingit,orbecauseofacombinationofthesetwocircumstances.Assystemicchaosincreases,thedemandforordertheoldorder,aneworder,anyorder!tendstobecomemoreandmoregeneralamongrulers,oramongsubjects,orboth.Whicheverstateorgroupofstatesisinapositiontosatisfythissystem-widedemandfororderisthuspresentedwiththeopportunityofbecomingworldhegemonic.

Historically,thestatesthathavesuccessfullyseizedthisopportunitydidsobyreconstitutingtheworldsystemonnewandenlargedfoundationstherebyrestoringsomemeasureofinterstatecooperation.Inotherwords,worldhegemonieshavenotrisenanddeclinedinaworldsystemthatexpandedindependentlyonthebasisofaninvariantstructure,howeverdefined.Rather,themodernworldsystemitselfhasbeenformedby,and

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hasexpandedonthebasisof,recurrentfundamentalrestructuringsledandgovernedbysuccessivehegemonicstates.

TheserestructuringsareacharacteristicphenomenonofthemodernsystemofrulewhichemergedoutofthedecayandeventualdisintegrationofthemedievalEuropeansystemofrule.AsjohnRuggiehasargued,thereisafundamentaldifferencebetweenthemodernandthemedieval(European)systemsofrule.Bothcanbecharacterizedasanarchic,butanarchy,inthesenseofabsenceofcentralrule,meansdifferentthings,accordingtotheprinciplesonthebasisofwhichtheunitsofthesystemareseparatedfromoneanother:Ifanarchytellsust/mtthepoliticalsystemisasegmentalrealm,differentiationtellsusonw/mtbasisthesegmentsaredetermined(Ruggie1983:274;emphasisintheoriginal).

Themedievalsystemofruleconsistedofchainsoflord-vassalrelationships,basedonanamalgamofconditionalpropertyandprivateauthority.Asaresult,differentjuridicalinstancesweregeographicallyinterwovenandstratified,andpluralallegiances,asymmetricalsuzeraintiesandanomalousenclavesabounded(Anderson1974:37-8).Inaddition,rulingeliteswereextremelymobileacrossthespaceoftheseoverlappingpoliticaljurisdictions,beingabletotravelandassumegovernancefromoneendofthecontinenttotheotherwithouthesitationordifficulty.Finally,thissystemofrulewaslegitimatedbycommonbodiesoflaw,religion,andcustomthatexpressedinclusivenaturalrightspertainingtothesocialtotalityformedbytheconstituent

units(Ruggie1983:275):

Insum,thiswasquintessentiallyasystemofsegmentalrule;itwasanarchy.Butitwasaformofsegmentalterritorialrulethathadnoneoftheconnotationsofpossessivenessandexclusivenessconveyedbythemodernconceptofsovereignty.Itrepresentedaheteronomousorganizationofterritorialrights

andclaimsofpoliticalspace.(