Late Capitalism, the US Hegemony, Global Turbulence and Their Connections - Essay Example

The US Hegemony and Global Turbulence Q) In his Long Twentieth Century, Giovanni Arrighi takes issue with other political economists for mistaking the rise and decline of US hegemony as a novel phenomenon. According to Arrighi, there are certain elements of US hegemony that are novel and some that it shares with past hegemones. First, identify the features that the rise and decline of US hegemony hold in common with past hegemonies. Second, identify what Arrighi finds unique about US hegemony. Third, describe what Arrighi feels will be some of the more likely outcomes of the decline of US hegemony. Finally, drawing upon other authors we have read, identify some of the strengths and weaknesses of Arrighi’s analysis of late capitalism. Introduction This write-up would first analyze the aspect of the rise and decline of the US hegemony, as elaborated and interpreted by Giovanni Arrighi, in his book “The Long Twentieth Century”. It would then also analyze the issue of late capitalism as put forward by Arrighi. Arrighi, by combining utmost logical arguments and related historical facts, comes out with an analysis that supports substantial levels of accuracy. The Rise and Fall of the US Hegemony The aspect of the US Hegemony, though is overall different from the prior hegemonies of various regions of the globe, yet shares some similarities with those past scenarios (hegemonies). Before dwelling on the elaboration of the uniqueness of the US hegemony, it would be worthwhile to focus on the common features mentioned above. Probably, the most striking feature that is common to all hegemonies of history, including the current one of the US, is the fact that, whenever the power centers sensed the danger of their position getting weakened, invariably, they initiated remedial measures by getting involved in conflicts concerning other parties. This involvement, along with the aspect of direct participation in the actual combat, also encompassed the issue of selling arms and weapons. That this sale went on to secure the immediate economic position of the zone having hegemony warrants no special mention. For instance, involvement of the Dutch in the conflict of the UK and France, and the role of the US in the Korean War speaks volumes of the aforesaid tendency of regions of hegemony, in getting involved in various conflicts for furthering their own commercial interests. (1) As per Giovanni Arrighi, there is another prominent aspect that is common in all hegemonies. Towards the conclusion of an accumulation cycle, the Capitalist Powers moved the focus away from the aspects of production, and on to making huge investments in zones where they are assured of earning significantly high profits. Whether it is the commercial activities of the British in its colonies during the 17th and 18th centuries, or the contemporary process of outsourcing of jobs by the US, all reflect on the above issue of investments in economically lucrative zones. (1) Based on the contents discussed in the preceding two paragraphs, it could be conveniently inferred that, during all periods of history, economies in a position of hegemony were constantly aware of all the social and political happenings in the World. This was primarily to get themselves quickly involved in a situation that not just safeguards them from any immediate risks, but also goes on to add strength to their position of hegemony. Lastly, there is another feature that is typical to the decline of not just the present US hegemony, but to all hegemonies of the bygone era. Here, it would be appropriate in recollecting that, for furthering their own objectives, economic powers have always got involved in conflicts, which strictly speaking, were not directly related to them. As a matter of fact, over a period of time, this very aspect turned out to be a major financial burden to the powers leading to many unpleasant economic circumstances in their regions, such as minimized income and enhanced poverty, among many others. This triggered a process where there was a gradual but sure weakening of economic position of regions, which until the recent past were hegemonies. The culmination of this process is displayed when the economic power shifts to some other regions of the globe, entirely. (1) Now, it would be highly apt in examining various aspects, owing to which the current US hegemony can be considered to be totally different from the preceding ones (hegemonies). It would not be an exaggeration in stating that the US had displayed topmost levels of dexterity in rising to the position of hegemony, and in the process, way outperforming all the prior capitalist powers. And this position of superiority is even more, when the matter of technological growth is taken into account. It needs no special mention that the US left no stone unturned in making sure that this technological surge is utilized for registering a drastic rise in its position as the global economic power. (1) The US started to grow as an economic giant only in the late 1930s, when the corresponding position of the British began to weaken. This effectively reflects on its (the US) relentless pursuits that enabled it to attain the stature of the World’s leading economic power center, and that too in a relatively short duration. Various policies of the US such as The Marshal Plan, the US Foreign Aid Program, and Point Four, to cite a few, were propelled by the primary motive of transforming the US as the globe’s leading economic and political hegemony. All these policies, along with the role of the US in bringing about the scenario of cold war, just go on to add further weight to the fact that, indeed, the US exhibited more craftiness than all previous powers in sustaining its dominance in worldwide economic issues. (1) Notwithstanding all the facts discussed above, it is rather surprising in noting that the US is gradually losing its position as the hegemony. In fact, it could be concluded that the duration for which the US had been in this position of global supremacy is less than that pertaining to some hegemonies of the past. For instance, the Dutch were the dominant force for nearly 120 years, between the years 1610 and 1730. Likewise, even the UK was the global economic power for more than two centuries. Similarly, the globe is now witnessing a steady decline in the US’s economic strength, and that too after it had been the hegemony only for just over seven decades. (1) In his “The Long Twentieth Century” Giovanni Arrighi states that the process of this gradual downfall of the US got triggered in the 1970s itself, when it (the US) was unable to effectively combat the economic repercussions resulting from the oil crisis. Subsequently, as per the accumulation cycle discussed in a preceding page, the income levels in the US started to fall, and there was also a constantly growing difference between the haves and have-nots. In fact, these circumstances were brought about chiefly by the actions of the US in neglecting production and concentrating on making investments in zones that promised huge returns. (1) Arrighi strongly opines that, along with this fall in power of the US, the global economic scenario would also be witnessing the emergence of some Far Eastern Countries like China and Japan as the dominant economic forces of the World. (1) It is not without a valid reason that Giovanni stated so. Japan and China are now having highly noteworthy growth rates, and in addition, the progress being witnessed by these two economies in the sphere of science & technology growth is par excellence. Moreover, in terms of availability of highly skilled workforce, both these countries are way ahead of the US. Based on all these facts, there would not be any hesitation in concluding that, within a short span of time, there is a strong likelihood of either China or Japan becoming the global economic hegemony. Giovanni Arrighi on Late Capitalism Giovanni Arrighi has also come out with his own interpretation and analysis of late capitalism, and the same would be examined here. Giovanni strongly argues that the trends being witnessed by the global economy over the past two decades would end in a disastrous manner, for the capitalistic powers. He attributes this to the phenomenon of distribution of excess volumes of income and wealth by the hegemonies. Arrighi maintains that this distribution is close to the point beyond which the economy would no longer be in a position to afford it (distribution). And this very fact is projected by Giovanni as the future nemesis for all these current economic giants of the globe. As a matter of fact, the contents of preceding few sentences are strongly related to the scenario discussed in previous page. There, it has been noted that the position of hegemony is now shifting towards Asian countries such as China and Japan, after moving away from the US. This interpretation could be treated as the strongest point of Giovanni’s analysis of late capitalism, as it encompasses highly precise projections by him. (2) Another positive feature of Arrighi’s analysis of Capitalism lies in the fact that he rightly identified Italy of about the thirteenth century as the zone where the global capitalism took birth. This was contrary to the theories and interpretations of the likes of Wallerstein, who maintain that the economic system (capitalism) originated in Europe, during the latter part of sixteenth century. Giovanni Arrighi along with Robert Brenner, another renowned contemporary economist, has rightly analyzed the present global economic crisis as a one that imperils the worldwide scenario of capitalism, and not as the one signifying a mere financial turmoil. (2) Probably, the weakness of Arrighi’s analysis of late capitalism is primarily attributable to the fact that, as admitted by himself, he did not include some highly key aspects in his “The Long Twentieth Century”. Some of those omitted things are dot.com boom, speculative bubbles and housing super-bubble, amongst others. And all these key facets of modern global capitalism have been thoroughly studied by some other prominent economists of the present-day era. Perhaps, this could be rated as being the sole shortcoming of the otherwise near flawless work of Arrighi, as logical explanation for all other relevant points has been provided with utmost precision in “The Long Twentieth Century”. (2) Conclusion In this essay, a genuine attempt has been made in covering all the salient points pertaining to the analysis and interpretation of Giovanni. His study of all the hegemonies enables in developing a sound knowledge of all pivotal facets. In fact, Arrighi’s work could be rated as amongst the best on the subject of economic hegemony, as the same followed a pattern that both fully conforms to logic and also highlights all relevant political and economic events. Likewise, this aspect of near flawlessness is very much applicable also to Giovanni’s interpretation of late capitalism, which in fact is strongly related to his observations on hegemonies. The reason for this lies in the fact that, both the analyses (hegemony and late capitalism) are primarily centered on the study of the rise and the steady decline of the US as the global economic power center, along with highlighting the growth of economies such as China and Japan. As a matter of fact, the current trends of the global economy are strongly suggesting that, all the related projections of Giovanni Arrighi are turning out to be factual realities. Q) In his Economics of Global Turbulence, Robert Brenner faults other theorists for their failure to discern the overall significance of the global decline in rates of profits. First, identify the leading features to which Brenner points as he traces the long upturn. Next, identify the mechanism to which Brenner ascribes the cause for the descent into chaos. Next, discuss the various possible outcomes to which Brenner feels global economic turbulence could give rise. Finally, drawing upon other theorists of late capitalism, identify some of the strengths and weaknesses of Brenner’s interpretation of late capitalism. Introduction In his book “The Economics of Global Turbulence”, Robert Brenner adopts an unorthodox approach that explains the rise and decline of global economy, after the Second World War. In addition, just like Giovanni Arrighi, even Brenner has brought out his analysis on the aspect of late capitalism, and the same would be covered in this study, too. Profitability – Oriented Analysis of Robert Brenner Brenner attributes the global economic turbulence of about the preceding three decades to the power struggle between Germany, the US and Japan – the three economic giants of the worldwide economic landscape. He also goes on to add that the aforesaid rise and decline cannot be aptly comprehended by applying traditional methods such as SSA Theory and the Marxist Theory. (3) Brenner argues that the volume of profit is directly related to the size of the investment. Based on that, he states that the worldwide crisis got triggered between 1965 and 1973, when there was a drastic decline in the profits of the manufacturing sector of the US. Brenner emphasizes on the fact that, this crisis is still persistent predominantly because of the scenario where the US could not bring about a rise in profit rates. As a matter of fact, by the middle of 1990s these profits dropped to abysmally low levels, and thus, further compounding the already grave economic circumstance. (3) Before dwelling further on the above aspect of decline in profits, the focus needs to be shifted on to the reasons that ensured high returns on investments, for the US, for the two decades after the Second World War. Immediately after the end of this war, the global economic operations were on a relatively smaller scale, and the US was the dominant force in all the proceedings. During this two decade phase, the US was holding the position of the global monopoly, encompassing almost all spheres of activity. In light of all that, it was but an obvious consequence that the US economy was enabled in displaying heightened levels of profit. The country’s monopolistic stature ensured that it was able to make investments that assured of highest profits. But gradually, there was a transformation in the state of affairs. By the advent of 1960s, the US started to be confronted by tough competition from the markets of Japan and Germany, which began to sell products in the US at minimized rates. It was after a very long duration that overseas entities were carrying out sales in the US markets, and the economy was not fully geared to combat the resultant economic implications. And thus the trend of steady decline in profits got triggered, and which is continuing even in this contemporary time. (3) Additionally, Robert Brenner puts forward four factors, which, according to him, were mainly responsible for the advent of the scenario of minimized profitability: A decline in the political power of the US, the enhancement in the strength of labor in the mid 1960s, restrictions on capital imposed by the wing of social security, and rise in competition from other capitalistic powers of the globe. (3) The profit-centric analysis of Brenner predicts certain consequences as being inevitable in the above-mentioned scene of steadily declining profits. He argues that at some point in future that is not too distant; the excess investments would lead to a total crash of the activity of building of capital. Brenner states that already minimal rates of profit would be severely jeopardized by the facet of constantly declining demand, not to mention the aspect of drop in usage levels of total capacities. Brenner maintains that the minimized profits would invariably bring about a drop in the rates of investment, and all that will lead to a scenario of reduced productivity as their obvious outcome. All these unpleasant circumstances would push the economy into the state of severe depression. The fact that, committed endeavors lasting for a long duration, coupled with eliminating redundant firms and technologies, are of paramount relevance for enabling the economy to come out of the depression warrants no special mention. (3) Robert Brenner on Late Capitalism Robert Brenner, in his “The Economics of Global Turbulence”, states that since about the past three-and-half decades the predominantly capitalistic-oriented global economy has been marked by many unprecedented recessions and economic crises. He adds that, this phase is also marked by decline in the dominant position of the US in the global economy. Undoubtedly, the US has been consistently initiating some measures for persisting with its dominant position; yet, comprehensive success is still elusive for the economy (the US). Brenner argues that, the reason for this lies in the fact that all those measures were not directed at tackling the primary cause of the problem – minimized profitability. (4) Brenner strongly maintains that, to a certain extent, the economic downturn of the contemporary era is also attributable to the actions of various governments. This is so because; all these governments have been craftily and deliberately bringing about circumstances, which leave no other option for various companies but to continue operating in segments yielding low profits. (4) Robert Brenner strongly conveys that all the apparently favorable trends such as surge in information technology, stock market bubble and housing bubble, etc, were actually attempts by the economy to conceal the shortcomings resulting from economic downturn. He also focuses on another highly vital fact. Even the various anti-labor and anti-welfare measures of the capitalistic powers, over the past three decades, which were aimed at just enhancing the profits, could not bring about a rise in their (capitalistic economies) performance levels. Brenner opines that all this effectively goes on to prove that the belief “a free capitalistic market is the only option for economic prosperity” is nothing but just a sheer misconception. (4) Based on the above paragraph, it could be inferred that Robert Brenner’s version of late capitalism has turned out to be a testimony to the fact that, long-term growth and prosperity is never possible in an entirely free economy where there is minimal governmental control. The logical manner in which Brenner made a thorough study of various phases for coming out with his doctrine signifies its major strength. At this juncture, it won’t be out of place in viewing the analysis of Robert Brenner, from the perspective of Giovanni Arrighi, as he too is a prominent economist who is also a contemporary of Brenner. Arrighi strongly criticizes the Brenner’s approach, which maintains that heightened competition from powerful entities is the sole reason for drop in profitability. In fact, this can be rated as being the main weakness of Brenner’s interpretation, as he conveniently ignored all other key factors playing a major role in determining profitability level. Another point that can be rated as a drawback of Brenner’s argument is the fact that, while elaborating on late capitalism, he gave his entire attention to the economies of the US, Germany and Japan. But the fact is that there are many other regions holding a relevant position on the worldwide economic landscape, and Brenner didn’t make an attempt to even briefly focus on them, leave alone an exhaustive elaboration. (4) Likewise, while discussing about the various phases of the US Economy, where its relentless pursuits of capitalistic objectives led to many ups and downs, Brenner overlooked some highly relevant political events. Policies of the US related to cold war, the adverse impact of the Vietnam War on the US economy, to cite a few, were some of the key events not included in the analysis of Brenner. There is another major shortcoming of the interpretation of Brenner, according to Arrighi. The former excessively emphasized on the relevance of manufacturing, by treating both capitalism and industrial capitalism as being synonymous with each other. (4) Conclusion Brenner’s interpretation on rise and fall of the US Economy, based on the aspect of profitability, is not without a few flaws, which have been highlighted by Arrighi. While analyzing various trends of about past five decades, Robert Brenner, by over-emphasizing on the manner in which tough competition adversely impacts profitability, totally ignored several other vital factors. And profitability is impacted also by these factors, and not just by enhanced competition. Notwithstanding all this, Brenner did present an almost accurate picture of the rise and decline of the US Economy, by thoroughly elaborating on various phases. It is just that, he omitted the study of all other vital points that determine profit rates, by overly focusing on just competition from other strong economies. In comparison, Brenner’s analysis of trends in late capitalism is more appropriate, which is more or less similar to those (analyses) related to Giovanni Arrighi and other contemporary economists. Even Brenner effectively focused on the contemporary trend, where gradually, eastern economies such as Japan and China are taking away the position of power from the US. In spite of the fact that, while dwelling on late capitalism, Brenner ignored some relevant political and economic events, yet, his observations on the overall scenario are indeed appropriate. Based on all these points, it could be concluded that Brenner did a great job in coming out with sound analyses pertaining to both the US Economy and also late capitalism. The only shortcoming of them (analyses) is that, Brenner’s interpretations did not encompass some key factors, events, etc, which actually are essential in having an exhaustive understanding of the subjects discussed. It needs to be added that, Brenner’s study of late capitalism subtly focuses on the fact that only that economy which is a blend of both socialism and capitalism would be able to sustain growth and prosperity. A totally free economy not having any regulatory control, despite its immediate prosperity, would invariably end up in severe economic crisis, as is evident by various happenings of the global economy, over the past four decades. SOURCES 1) “A Critique of Giovanni Arrighi’s The Long Twentieth Century”, developmentstrategies.org/commentary/1996Arrighi/1996Arrighi.htm, Internet, Courtney nelson’s DEVELOPMENT STRATEGIES, September 1996. 2) “Histories of the Present: Giovanni Arrighi, the Longue Duree of Geohistorical Capitalism, and the Current Crisis”, tni.org/article/histories-present-giovanni-arrighi-longue-duree-geohistorical-capitalism-and-current-crisis, Internet, Transnational Institute, July 2009. 3) “Review of Robert Brenner’s The Economics of Global Turbulence”, people.umass.edu/crotty/BR-chllge-ult.pdf, Internet, University of Massachusetts, ND. 4) “THE VOICE IMITATOR”, voiceimitator.blogspot.com/2009/11/robert-brenner-economic-of-global.html, Internet, Brian Rajski, November 24, 2009. Read More