This post examines the piece of erudition titled: "The Long Twentieth Century" by Giovanni Arrighi -- a world renown world systems theorist and Italian economist who held tenure in the department of sociology at John Hopkins University until his passing in 2009. It traces the development of the world capitalist system dating back from the 1300's Venetian State monopolistic capitalism up until the present day signal crisis of capitalism that has afflicted the United States. Through his work, Arrighi has demonstrated that we are at a fundamental turning point in the world capitalist order with the East Asian region poised to take control of the world monetary order. However, with a catch: we now see a bifurcation between monetary power and military power. The East Asian region will constitute the new global monetary power but the West still maintains its military dominance while steadily losing its monetary dominance on the world scale.
Throughout the Renaissance era dating back to the 1300's, we began to see the systemic rise of capital accumulation on a world scale. Arrighi traces the first systemic cycle of accumulation to the City States comprising of what is today modern day Italy. The Venetians specifically were the first group to accumulate capital on this enlarged scale through a monopolistic state-centered form of capitalistic dominance through its specific trade, the textile industry. Constantly throughout this era, they were under continual threat from neighboring city states however. It wasn't long until a new world order began to form with the rise of the great territorialism empires, the Spanish and the Portuguese. Moreover, the Spanish. But the Spanish and its royalty couldn't do it by themselves and in order to continue to explore and maintain their far flung networks of tribute and exchange along with territory in the 'New World' they had to have the financial backing of the Genoese capitalist class -- a rich group of merchants and bankers. Thus, we witnessed an acceleration of the accumulation of capital that began to transmit itself on the world scale with the Genoese financing the territorialist and imperial Spanish. This conjunction between a small group of wealthy merchants and bankers comibined with the powerful military strength of the time of the Spanish allowed Capital to grow extravagantly.
As time went on however, the finances of the Spanish crown started to dry up. The rise of the United Provinces (Dutch) were principally to blame as they began to loosen their hold on imperial Spain and fight back. The United Provinces took their war with the Spanish to the high seas constantly committing acts of piracy, looting, and attacking the Spanish Armada. Over time, these attacks took their hold on the Spanish empire and the Dutch accumulated a significant amount of trade and begin to control principally the most important trading route of the time -- that of the Baltic sea while maintaining a monopoly on grain prices. Furthermore, they consolidated trade routes for the lucrative East Indie market and increased their rents via controlling the spice trade. However, Dutch power couldn't hold on forever and it was in almost constant tension with other competing Empires at the time. The Dutch maintained their hold on the world capitalist system from roughly the end of the 16th century to the end of the 18th century. When their continual search and expansion for trade had finally reached its pinnacle as it reached Marx's dictum that states the continual expansion of trade will overtime lead to a decrease in profits -- the Dutch began to run into trouble. With profit margins shrinking, they became more outlandish and after defeating the British in the 3rd Anglo-Dutch War which was principally fought on the seas. The Dutch at the same time started to Finance Britain and an increasing amount of financial flows flowed through Britain as they withdrew from trade as it was no longer profitable and entered into high finance. Then, with the outbreak of the Revolutionary War, the Dutch had chosen to back France and the united States against Britain who was trying to pacify its colonies. Britain was steadily growing in strength at this time and although defeated they came back and at this moment, crushed the Dutch in the 4th Anglo-Dutch war. Britain then became the uncontested superpower of the seas and hegemony of the world capitalist order now centered on the United Kingdom.
The United Kingdom swiftly consolidated trade routes of the Baltic sea at the same time expanding trade around India and the East Indies while finally giving the Chinese the commodity they would finally accept -- opium -- albeit against the wishes of the emperor. The British East India Company forcefully pushed opium upon China and its inhabitants. Moreover, it consolidated trade worldwide through its far flung network of colonies overseas and trade principally began to be centered upon England. It became so powerful it was able to control the world price of goods and liberalism along with the market economy became the standard. Britain ruled the world unilaterally for what is dubbed 'the 100 years peace' under pax Britannica from roughly 1814 until the outbreak of WW1. After the war however, it became heavily indebted to the United States as the US financed Great Britain heavily in order to sustain its wartime economy. WW2 ensued as the US failed to take leadership of the world system into its hands. This outcome officially terminated British hegemony and the United States took the reign of the world capitalist system.
With the US at the helm, they made the world into their own hands. The Marshall plan ensued and the rebuilding of the Western world (plus Japan) followed. It was strategic for the US to allow the rebuilding of Japan economically not only as a source for the export of its goods but also to have and maintain a reliable partner in the pacific in order to keep a close eye on the developments going on in the East Asian region – principally those of the Korean peninsula and China. The US also undertook what is labeled as ‘military keynesianism’ or the rebuilding of national economies through the arming of security assistance and hardware constantly creating a demand and supply for innovation – both militarily and technologically. The US along with other countries of Western Europe and Japan had lived in the golden age from approximately 1945 until the early 1970s when a series of shifts began to happen. The oil shocks ensued and the petroleum producing states had formed OPEC and inflationary measures from the oil shock had brought the US economy to its knees. At the same time it could no longer meet its foreign obligations and began to turn from a creditor into a debtor nation although this shift was slow and gradual. The Vietnam war further demonstrated the crisis of which was occurring in the United States at the time and brought about questions of legitimacy to the very democracy of the American government. America’s heyday of industrial production of output was over and it withdrew into high finance alongside the formation of a neoliberal government. Principally, the shift from markets to competition. Everything became a business and every decision was made according to a rational pursuit of profit. In the end, Arrighi concludes that the US is now in a crisis of capitalism and we are witnessing a shift of economic dominance centered away from the Western world and moving towards the Eastern World.