The second study
>(Giovanni Arrighi and Beverly Silver et al, Chaos and Governance in
>the Modern World System, University of Minnesota Press, Minneapolis
>and London, 1999) focuses instead on the analogies and differences
>between the present hegemonic transition (to a yet unknown
>destination) with two earlier transitions of world capitalism
Why should reasoning by historical analogy be illuminating in this case?
>Although its capacity to compete in the commodity markets is
>declining, its capacity to act as the central clearing house of the
>international financial system is greater than that of any other
>center, including the centers that are emerging as the most
>competitive in the commodity markets.
Again, this picture of US industrial decline will not withstand the kind of disaggregated analysis Galbraith does (overall the critical knowledge intensive, capital goods sector has remained strong; the only year it lost its surplus, 1986, sales from foreign subsidiaries allowed maintainence of world wide market share--see Scherer). Moreover, those imports battering US industries are often from its own mncs' subsidiares, as Joyce Kolko was underlining more than a decade ago.
And do note Mowery's analysis of US dominance in the leading sectors of the semiconductor industry. Arrighi is simply blind to all this because the categories he uses--trade balance, industrial size--are too aggregated for fine analysis of leading edge industries which themselve not only earn technological rents but revitalise the entire industrial structure through the intersectoral flows. The US can appear to be losing in the commodity markets overall while winning big time where it counts. Of course a massive downturn in global investment demand and US capital will be the most fucked of all. The bigger they are, the harder they fall.
But Arrighi's biggest mistake is his neo mercantalist obsession with trade deficits as proof of US relative decline. For goodness sake, un upswing in production always goes together with rising imports of raw materials, semifinished goods and so on. The trade deficit can be just as much proof of the relative strength of US capital accumulation as its putative hegemonic decline.
One is the
>continuing shift of the epicenter of global processes of capital
>accumulation to East Asia. Contrary to widespread opinion, the
>persistence of the economic crisis in Japan after the crash of
>1990-92 and its transformation into a region-wide (East Asian) crisis
>in 1997- 98 in themselves do not support the contention that the
>shift has been reversed.
Where's Arrighi's evidence here for that shift. I do see strong US leads vis a vis Japan in aircraft, microprocessors, pharmaceuticals, biotech, etc. To be sure, Japan has niches in the leading new industries as do the UK, France and Germany. But to think the US has lost its industrial hegemony because Taiwan and Japan will control the DRAM market and China will run massive surpluses through the export of clothes and toys--all this these things that will show up as a trade deficit and thus indication of US relative decline--is really ludicrous.
As my co-authors and I show in Chaos and
>Governance in the Modern World System, in past transitions newly
>emerging centers of world-scale processes of capital accumulation
>became the epicenters of turbulence rather than expansion, before
>they acquired the capabilities to lead the world toward a new order.
Why should the past repeat itself. What's the causal explanation here?
The UK had difficulty applying the Bessemer process; there is no case that there is such technological stagnation in the US.
We'll leave aside China here; the recent straftor report indicates the one sidedness of Arrighi's treatment.
Already in the 1990's, the good performance of
>the US economy and the underlying speculative boom on Wall Street
>have been thoroughly dependent on East Asian money and cheap
>commodities.
No, given the crisis in demand within Japan and throughout Southeast Asia, Japan is completely dependent on the strength of the US market. He's got his hegemonies turned inside out.
While the money, in the form of investments and lending,
>has enabled the US economy to keep expanding in spite of a large and
>growing trade deficit,
That's right. The US gets a trade deficit at low interest rates? This is proof of Japan's hegemony? Really now.
the cheap commodities have contributed to
>keeping inflationary pressures down in spite of economic expansion.
And massive transfer of value through unequal terms of exchange is proof of their hegemony.. And strong investment demand for US capital goods despite deflationary and recessionary conditions because they are necessary more than ever to reduce unit costs? This is an example of lost US hegemony?
>It is not clear for how long a situation like this can be sustained,
>or how it can be remedied by the United States without bringing its
>own economic expansion to an end. What is clear is that, the longer
>it lasts, the more the present economic dependence of East Asia on
>the United States will be turned upside down.
This is bizarre. The end of the US expansion will be the end of all the economies tied to it, just as Japan's stagnation brought the NICs down. It follows that US collapse means Japan's and Taiwan's collapse, not their relative ascent. They are crucially dependent on the US market, not visa versa.
his undisputed supremacy is today the one and
>only decisive advantage of US industry in global markets.
Plenty of other US industries (esp critical segments of them) are doing pretty well.
Too tired to finish the rest of this idiosyncratic piece.
yours, rakesh