It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
It is now 20 years since the publication of Giovanni Arrighi’s The Long Twentieth Century, a highly influential and ambitious work charting the evolution of global capitalism over five centuries. Arrighi’s account posits the history of capitalism as a series of secular cycles, each consisting of expansionary material and financial phases. Every cycle is led by a hegemonic state, which houses an alliance of capitalist and governmental agencies best placed among various competitors to create the conditions for a stable profitable investment regime. The incipient hegemon’s competitive advantages over rivals (organizational, technological, geographical, etc.) gradually allow its capitalists to become the central actors in and beneficiaries of the most profitable circuits of accumulation. The dynamism of the hegemonic state-capital alliance drives (uneven) growth across the world-system as a whole, meaning that, generally speaking, the interests of all other capitalist actors become increasingly tied to supporting continued processes of hegemonic expansion. This tends to establish periods of relatively stable systemic growth, the material phase, which are eventually progressively undermined by their own contradictions. As returns on productive expansion under the organizational paradigm instituted by the hegemon diminish, capital begins to pull out of these activities and retreat into finance, in search of higher returns. The ensuing phase of financial expansion constitutes a brief belle époque in which the power of the hegemon appears to be resurgent. This proves illusory, however, as the financial expansion, not underpinned by growth in the real economy but in fact predicated upon an undermining of the bases of real growth, tends towards instability and quickly generates crisis. In turn, declining returns to financial capital promote a search for investment opportunities in a rising state-capitalist bloc that possesses the most advantages under the new conjuncture, eventually emerging as the new hegemon and providing the basis for another round of material expansion.