In the conclusion to his major two-part essay on the new US imperialism, Giovanni Arrighi situates the contradictions of the current American ‘spatial fix’ for the problems of overaccumulation in the context of a longue durée of systemic cycles. Have Washington’s attempts to secure its world role through the invasion of Iraq instead hastened the rise of China?

GIOVANNI ARRIGHIHEGEMONY UNRAVELLING—2

In the first part of this essay, I argued that the recent resurgence of the concepts of ‘empire’ and ‘imperialism’ is above all a consequence of the Bush Administration’s embrace of a new imperialist programme in the wake of 9/11—that of the neoconservative Project for a New American Century. [1] The paper sought to investigate the social, economic and political circumstances which prompted the adoption of that policy, and in particular its relation to the turbulence of the global economy since the 1970s. In dealing with these questions, I began by examining David Harvey’s interpretation of the relationship between imperialism and capitalist development in The New Imperialism, focusing specifically on Harvey’s concepts of ‘spatial fix’ and ‘accumulation by dispossession’ as means to analyse the Bush Administration’s present course. [2] I argued that, far from laying the foundations for a second ‘American Century’, the occupation of Iraq has jeopardized the credibility of us military might; it has further undermined the centrality of the United States and the dollar in the global political economy; and it has strengthened the tendency towards the emergence of China as an alternative to us leadership in the East Asian region and beyond. It would have been hard to imagine a more rapid and complete failure of the neo-conservative imperial project. In all likelihood, the neo-conservative bid for global supremacy will go down in history as one of the several ‘bubbles’ that punctuated the terminal crisis of us hegemony. [3] 

The bursting of this peculiar bubble has transformed but by no means done away with the world-historical circumstances that generated the Project for a New American Century. In this concluding part of the article, I will highlight these circumstances by using Harvey’s concepts of spatial fix and accumulation by dispossession in a longer perspective than he does. Within this optic, the new imperialism will appear as the outcome of a protracted historical process consisting of spatial fixes of increasing scale and scope, on the one hand, and on the other, of an American attempt to bring this process to an end through the formation of a us-centred world government. This attempt, I will argue, was integral to us hegemony from the start. Under George W. Bush, however, it has reached its limits and in all likelihood will cease to be the primary determinant of ongoing transformations of the global political economy.

I. OVERACCUMULATION AND FINANCIALIZATION

As Harvey suggests, there is an interesting correspondence between Hannah Arendt’s theoretical observation in The Origins of Totalitarianism that ‘a never-ending accumulation of power [is] necessary for the protection of a never-ending accumulation of capital’, and my own empirical observation in The Long Twentieth Century that the expansion of world capitalism has been based on the emergence of ever more powerful leading capitalist organizations. [4] The correspondence, however, is not as ‘exact’ as he suggests. For Arendt’s observation refers to the accumulation of power and capital within states, whereas mine refers to the accumulation of power and capital in an evolving system of states. The difference is crucial in more than one respect.

Arendt draws our attention to the process whereby individual capitalist states tend to experience an accumulation of ‘superfluous money’ (that is, of more capital than can be profitably reinvested within their national boundaries) and a need to grow more powerful in order to be able to protect growing property. From this perspective, imperialism of the capitalist sort is a policy aimed both at finding profitable external outlets for surplus capital and at strengthening the state. My observation, in contrast, draws our attention to the process whereby increasingly powerful capitalist organizations have become the agency of the expansion of a system of accumulation and rule that from the start encompassed a multiplicity of states. From this perspective, imperialism of the capitalist sort is an aspect of the recurrent struggles through which capitalist states have used coercive means in the attempt to turn in their favour the spatial shifts entailed in the ‘endless’ accumulation of capital and power. [5] 

As Harvey underscores, finance capital backed by state power plays a crucial mediating role both in the production of space that is involved in the enlarged reproduction of capital and in the ‘cannibalistic practices and forced devaluations’ that constitute the essence of accumulation by dispossession. He is nonetheless vague about the world-historical coordinates of this role. Like Arendt, he seems to adhere to the view that finance capital has been an outgrowth of nineteenth-century industrial capitalism. While this may be true of capitalist development in some states, it is certainly not true of it on a world scale.

Cycles of accumulation

As Fernand Braudel has demonstrated, ‘finance capitalism’, or what we now call financialization, ‘was no newborn child of the 1900s.’ Rather,

in the past—in say Genoa or Amsterdam—following a wave of growth in commercial capitalism and the accumulation of capital on a scale beyond the normal channels for investment, finance capitalism was already in a position to take over and dominate, for a while at least, all the activities of the business world. [6] 

This claim has a double significance for our present purposes. First, it suggests that, world-historically, financialization (the capacity of finance capital ‘to take over and dominate, for a while at least, all the activities of the business world’) has been the result of a recurrent overaccumulation of capital (‘the accumulation of capital on a scale beyond the normal channels for investment’). And second, it indicates that this tendency towards the repeated overaccumulation and financialization of capital was in evidence long before capitalism became associated with industrialism.

Braudel also provides a list of dates, places, and agencies that enable us to ground in world-historical space and time Harvey’s theoretical considerations concerning finance capital. He suggests that the withdrawal of the Dutch from commerce around 1740 to become ‘the bankers of Europe’ was typical of a recurrent world-systemic tendency. The same process was in evidence in Italy in the fifteenth century, and again around 1560, when the leading groups of the Genoese business diaspora gradually relinquished commerce to exercise for about seventy years a rule over European finances comparable to that exercised in the twentieth century by the Bank for International Settlements at Basle—‘a rule that was so discreet and sophisticated that historians for a long time failed to notice it.’ After the Dutch, the British replicated the same tendency during and after the Great Depression of 1873–96, when ‘the fantastic venture of the industrial revolution’ created an overabundance of money capital. After the equally ‘fantastic venture’ of so-called Fordism-Keynesianism, we may add, us capital since the 1970s has followed a similar trajectory. ‘[Every] capitalist development of this order seems, by reaching the stage of financial expansion, to have in some sense announced its maturity: it [is] a sign of autumn’. [7] 

In the light of these observations, Marx’s general formula of capital (mcm') may be reinterpreted as depicting, not just the logic of individual capitalist investments, but also a recurrent pattern of world capitalism. The central aspect of this pattern is the alternation of epochs of material expansion (mc phases of capital accumulation) with phases of financial expansion (cm' phases). In phases of material expansion, money capital (m) sets in motion an increasing mass of commodities (c), including commoditized labour power and gifts of nature; and in phases of financial expansion, an expanded mass of money capital (m') sets itself free from its commodity form, and accumulation proceeds through financial deals (as in Marx’s abridged formula mm'). Taken together, the two epochs or phases constitute what I have called a systemic cycle of accumulation (mcm'). [8] 

Starting from these premises, I have identified four such cycles, each encompassing a ‘long’ century: a Genoese–Iberian cycle, covering the period from the fifteenth to the early seventeenth centuries; a Dutch cycle, from the late sixteenth to the late eighteenth centuries; a British cycle, from the mid eighteenth to the early twentieth centuries; and a us cycle, from the late nineteenth century to the current phase of financial expansion. Each cycle is named after (and defined by) the particular complex of governmental and business agencies that led the world capitalist system towards first the material and then the financial expansions that jointly constitute the cycle. Consecutive systemic cycles of accumulation overlap with one another at their beginnings and ends, because phases of financial expansion have not only been the ‘autumn’ of major developments of world capitalism. They have also been periods in the course of which a new leading governmental-business complex emerged and over time reorganized the system, making possible its further expansion. [9] 

Material and financial expansions are both processes of a system of accumulation and rule that has increased in scale and scope over the centuries but has from its earliest beginnings encompassed a large number and variety of governmental and business agencies. Within each cycle, material expansions occur because of the emergence of a particular bloc of governmental and business agencies capable of leading the system towards a new spatial fix that creates the conditions for wider or deeper divisions of labour. Under these conditions, returns to capital invested in trade and production increase; profits tend to be ploughed back into the further expansion of trade and production more or less routinely; and, knowingly or unknowingly, the system’s main centres cooperate in sustaining one another’s expansion. Over time, however, the investment of an ever-growing mass of profits in trade and production inevitably leads to the accumulation of capital over and above what can be reinvested in the purchase and sale of commodities without drastically reducing profit margins. At this point, capitalist agencies tend to invade one another’s spheres of operation; the division of labour that previously defined the terms of their mutual co-operation breaks down; and competition becomes increasingly vicious. The prospects of recouping the capital invested in trade and production decrease, and capitalist agencies tend to keep in liquid form a larger proportion of their incoming cash flows. The stage is thus set for the change of phase from material to financial expansion.

In all financial expansions of systemic significance, the accumulation of surplus capital in liquid form had three main effects. First, it transformed surplus capital embodied in landscapes, infrastructures and means of trade and production into an expanding supply of money and credit. Second, it deprived governments and populations of the revenues that they previously derived from the trade and production that were no longer undertaken because unprofitable or too risky. Finally, and largely as a corollary of the first two effects, it created highly profitable market niches for financial intermediaries capable of channelling the growing supply of liquidity into the hands either of governments and populations in financial straits, or of public and private entrepreneurs intent on opening up new avenues of profit-making in trade and production.

As a rule, the leading agencies of the preceding material expansion were best positioned to occupy these market niches and thus lead the system of accumulation toward the financial expansion. This capacity to switch from one kind of leadership to another has been the main reason why, after experiencing the signal crisis of their hegemonies, all incumbent centres of world capitalism enjoyed a belle époque of temporary but nonetheless quite significant reflation of their wealth and power. The reason why belles époques of historical capitalism have all been temporary phenomena is because they have tended to deepen rather than solve the underlying overaccumulation crisis. They have thereby exacerbated economic competition, social conflicts, and interstate rivalries to levels that it was beyond the incumbent centres’ powers to control. Before we proceed to discuss the ever-changing nature of the struggles that ensued, two observations are in order.

Transition mechanisms

The first is that all financial expansions entailed accumulation by dispossession. Suffice it to mention that lending surplus capital to governments and populations in financial straits was profitable only to the extent that it redistributed assets or incomes from the borrowers to the agencies that controlled surplus capital. Massive redistributions of this kind have indeed been key ingredients of all the belles époques of finance capitalism—from Renaissance Florence to the Reagan and Clinton eras. In and by themselves, however, they provided no solution to the underlying overaccumulation crisis. On the contrary, by transferring purchasing power from strata and communities with a lower liquidity preference (that is, with a lesser disposition to accumulate money capital) to strata and communities with a higher liquidity preference, they tended to provoke an even greater overaccumulation of capital and the recurrence of profitability crises. Moreover, by alienating the strata and communities that were being dispossessed, they tended to provoke a legitimacy crisis as well. A combination of profitability and legitimacy crises is, of course, the underlying condition to which Arendt and Harvey trace the imperialism of their respective times. Nevertheless, comparable conditions were also in evidence in earlier financial expansions, directly or indirectly exacerbating conflicts within and among states. [10] 

At least initially, the escalation of interstate conflicts benefited incumbent centres, because it inflated states’ financial needs and thereby intensified their mutual competition for mobile capital—a competition that Max Weber called ‘the world-historical distinctiveness of [the modern] era’. [11] But once conflicts escalated into major wars, the incumbent centres generally lost out even in the financial sphere to newly emergent centres that were better positioned to provide the ‘endless’ accumulation of capital and power with a spatial fix of greater scale and scope than the previous one.

This brings us to the second observation, which concerns the transfer of surplus capital from incumbent to emerging centres of capitalist development. As previously noted, the role that Marx attributed to the credit system in promoting such a reallocation points to an invisible inter-capitalist co-operation that reduces the need for accumulation by dispossession in emerging centres. We also noted that Marx’s sequence of leading capitalist centres (Venice, Holland, England, United States) points to a series of spatial fixes of increasing scale and scope that created the conditions for the resolution of each preceding overaccumulation crisis and the take-off of a new phase of material expansion. [12] To this we should now add that wars played a crucial role. In at least two instances (from Holland to Britain and from Britain to the United States), the reallocation of surplus capital from mature to emerging centres began long before the escalation of interstate conflicts. This early transfer, however, established claims on the assets and future incomes of the emerging centres that brought back to the mature centres flows of interest, profits and rents that equalled or even surpassed the original investment. Instead of weakening, it therefore strengthened the position of the incumbent centres in the world of high finance. But once wars escalated, the creditor-debtor relation that linked the mature to the emerging centres was forcibly reversed and the reallocation to the emerging centres became both more substantial and permanent. The mechanisms of the reversal varied considerably from transition to transition. But in all cases, wars were essential ingredients in the change of guard at the commanding heights of world capitalism. [13] 

II. LINEAGES OF THE NEW IMPERIALISM

Contrary to the reading of some critics, my concept of systemic cycles of accumulation does not portray the history of capitalism as ‘the eternal return of the same.’ [14] It shows instead that precisely when the ‘same’ (i.e., recurrent system-wide financial expansions) appeared to return, new rounds of intercapitalist competition, interstate rivalries, accumulation by dispossession, and production of space on an ever-increasing scale revolutionized the geography and mode of operation of world capitalism, as well as its relationship to imperialistic practices. Thus, if we focus on the ‘containers of power’ [15] that have housed the ‘headquarters’ of the leading capitalist agencies of successive cycles of accumulation, we immediately see a progression from a city-state and cosmopolitan business diaspora (the Genoese); to a proto-national state (the United Provinces) and its joint-stock chartered companies; to a multinational state (the United Kingdom) and its globe-encircling tributary empire; to a continent-sized national state (the United States) and its world-encompassing system of transnational corporations, military bases and institutions of world governance. [16] 

As this progression shows, none of the agencies that have promoted the formation and expansion of world capitalism correspond to the mythical national state of political and social theory: Genoa and the UnitedProvinces were something less, the United Kingdom and the United States something more than national states. And from the very beginning, the networks of accumulation and power that enabled these agencies to play a leading role in the formation and expansion of world capitalism were not ‘contained’ within the metropolitan territories that defined their proto-national, multinational, or national identities. Indeed, long-distance trade, high finance, and related imperialistic practices (that is, war-making and empire-building activities) were even more essential sources of profit for the early than for the later agencies. As Arendt maintains, imperialism must indeed be considered ‘the first stage in the political rule of the bourgeoisie rather than the last stage of capitalism.’ [17] But that first stage should be situated in early-modern city-states rather than in late nineteenth-century national states, as she suggests.

The fact that imperialistic practices were a more critical source of profit in the early than in the later stages of capitalist expansion does not mean that the policies and actions of the later agencies have been less imperialistic than those of the earlier ones. On the contrary, they have become more rather than less so, because of an increasing interpenetration of the capitalist and territorialist strategies of power. This tendency can be clearly observed by comparing the historical geography of successive systemic cycles of accumulation.

Even before the first cycle began to materialize, some Italian city-states, most notably Venice, had demonstrated the viability of a capitalist strategy of power in the early-modern European context. Rulers pursuing territorialist strategies sought to accumulate power by expanding their territorial domains. The bourgeoisies that controlled the Italian city-states, in contrast, sought to accumulate power by expanding their command over money capital, while abstaining from territorial acquisitions unless they were absolutely essential to the accumulation of capital. [18] The success of this strategy rested on the interaction of two conditions. One was the balance of power among the larger territorial organizations of the European subcontinent. The other was the extroversion of the emerging European system of states—the fact, that is, that the successful pursuit of profit and power withinEurope depended critically on privileged access to resources outsideEurope through trade or plunder. The balance of power ensured not just the political survival of territorially parsimonious capitalist organizations. It also ensured that the competition among the larger territorial organizations for financial resources would empower the capitalist organizations that controlled those resources. At the same time, the extroversion of the European power struggle ensured that this competition would be continually renewed by the need of the states to outdo one another in gaining privileged access to extra-European resources.

Initially, the combination of these two conditions was extremely favourable to the capitalist strategy of power. Indeed, it was so favourable that its most successful agency was an almost entirely de-territorialized organization. For the Genoese–Iberian designation of the first systemic cycle of accumulation does not refer to the Republic of Genoa as such—a city-state which throughout the cycle led a politically precarious existence and ‘contained’ very little power. It refers instead to the transcontinental commercial and financial networks that enabled the Genoese capitalist class, organized in a cosmopolitan diaspora, to deal on a par with the most powerful rulers of Europe and to turn these rulers’ mutual competition for capital into a powerful engine for the self-expansion of its own capital. From this position of strength, the Genoese capitalist diaspora entered into a highly profitable relationship of informal political exchange with the rulers of Portugal and Imperial Spain. By virtue of this relationship, Iberian rulers undertook all the war- and state-making activities involved in the formation of a world-encircling market and empire, while Genoa’s diaspora capitalists specialized in facilitating commercially and financially these activities. Unlike the Fuggers, who were ruined by their connection with Imperial Spain, the Genoese probably gained from the relationship more than their Iberian partners did. As Richard Ehrenberg noted, ‘it was not the Potosí silver mines, but the Genoese fairs of exchange which made it possible for Philip ii to conduct his world power policy decade after decade.’ But in the process, as Suárez de Figueroa lamented in 1617, Spain and Portugal were turned into ‘the Indies of the Genoese’. [19] 

Rise of Amsterdam

In the second (Dutch) systemic cycle of accumulation, the conditions for the pursuit of a strictly capitalist strategy of power remained favourable, but not as favourable as they had been in the first cycle. To be sure, the intense conflicts that set the larger territorial states of Europe against one another were essential to the Dutch ascent, and in 1648 the Peace of Westphalia provided the European balance of power with some institutional stability. Moreover, in the seventeenth century the Dutch could expand the spatial scale of their operations from the Baltic to the Atlantic and the Indian Ocean as easily and swiftly as they did only because the Iberians had already conquered the Americas and established a direct sea route to the East Indies. Nevertheless, the geopolitical landscape created in Europe by the Iberian world-encircling spatial fix left no room for the kind of capitalist strategy of power that had made the fortunes of the Genoese diaspora in the ‘long’ sixteenth century. Indeed, the Dutch succeeded in carving out of the Iberian seaborne and territorial empires the Amsterdam-centred system of commercial entrepots and joint-stock chartered companies that became the foundation of the second systemic cycle of accumulation precisely by doing what the Genoese had not been doing, that is, by becoming self-sufficient in war- and state-making. [20] 

Violet Barbour has claimed that this Amsterdam-centred system was the last instance of ‘a veritable empire of trade and credit . . . held by a city in her own right, unsustained by the forces of a modern state.’ [21] Since the United Provinces combined features of the disappearing city-states with those of the rising national states, whether it qualifies as a ‘modern state’ is a controversial issue. But whichever characteristics one may want to emphasize, the Dutch cycle does appear to have been the watershed between two distinct ages of historical capitalism: the age of the city on the one side, and that of the territorial state and the national economy on the other.

At the heart of a Europe swollen with success and tending, by the end of the eighteenth century, to embrace the whole world, the dominant central zone had to grow in size to balance the entire structure. Cities standing alone, or almost alone, by now lacked sufficient purchase on the neighbouring economies from which they drew strength; soon they would no longer measure up to the task. The territorial states would take over. [22] 

We shall deal later with the issue of why the central zone had to ‘grow in size’ so as ‘to balance the entire structure’. For now let us note that the emergence of territorial states as the leading agencies of capitalist expansion brought about a far greater interpenetration of capitalism and imperialism than had hitherto been the case. Although the fortunes of the Genoese capitalist diaspora had been thoroughly dependent on the war-making and empire-building activities of its Iberian partners, the diaspora itself abstained completely from such activities. Genoese capitalism and Iberian imperialism sustained one another but through a relationship of political exchange that reproduced their separate organizational identities from beginning to end. While no such separation existed in the Dutch cycle, the eighty-year long struggle for independence that the United Provinces waged against Imperial Spain endowed Dutch capitalism with a long-lasting anti-imperialist identity. Even after that struggle had come to an end, Peter de la Court could portray Holland as a ‘cat’ in a jungle of ‘wild beasts’. The wild beasts were the territorial states of Europe: ‘Lions, Tygers, Wolves, Foxes, Bears, or any other Beast of Prey, which often perish by their own Strength, and are taken where they lie in wait for others.’ A cat does resemble a lion. But Holland was and would remain a cat because ‘we who are naturally Merchants, cannot be turned into Souldiers’ and ‘there is more to be gotten by us in a time of Peace and good Trading, than by War, and the ruin of Trade’. [23] 

In reality, the Dutch system of accumulation, which would indeed have benefited more from peace than from war after Westphalia, had been built through war and the ruin of Iberian trade before it. Moreover, in the non-European world, especially in the Indonesian archipelago, the ‘cat of Holland’ was second to none of the European ‘beasts of prey’ in the use of violence to destroy existing landscapes of trade and production in order to create landscapes more favourable to the ‘endless’ accumulation of Dutch capital. De la Court’s metaphor does nonetheless draw a distinction between the imperialism of the larger territorial states of Europe and the capitalism of the territorially parsimonious DutchRepublic that remained discernible throughout the Dutch cycle. For the strategy of power of the DutchRepublic was primarily based, not on the expansion of its territorial domains, but on the expansion of its control over money capital and the international credit system. Combining the strengths of the Venetian and Genoese strategies, it relied on money and credit as the key means by which the struggles among the territorial states of Europe were turned into an engine of the self-expansion of Dutch capital. Over time, however, the escalation of these struggles undermined the success of the Dutch strategy, and simultaneously created the conditions for a complete fusion of capitalism and imperialism in the practices of the state that eventually emerged as the new leader of capitalist expansion. [24] 

In order to gain some insight into the reasons for this fusion we must return to Braudel’s contention that the territorial scale of the dominant centre of the system of

accumulation had somehow to grow in step with the increase in the spatial scale of the system. Braudel himself suggests that one of the main reasons why the small territorial scale of Holland became a handicap in holding the centre of the globalizing European system of accumulation was a structural shortage of labour. ‘Holland,’ he claims, ‘could only fulfil her role as freighter of the high seas if she could obtain the necessary extra labour from among the wretched of Europe.’ It was the poverty of the rest of Europe that ‘enabled the Dutch to “set up” their Republic.’ [25] But once an increasing number of European states sought to internalize within their own domains the sources of Dutch wealth and power through one variant or another of mercantilism and imperialism, competition over European labour resources intensified and the size of the DutchRepublic turned into an increasingly insurmountable obstacle. As Stavorinus lamented,

ever since the year 1740, the many naval wars, the great increase of trade and navigation, particularly in many countries, where formerly these pursuits were little attended to, and the consequent great and continual demands for able seamen, both for ships of war and for merchantmen, have so considerably diminished the supply of them, that, in our own country, where there formerly used to be a great abundance of mariners, it is now, with great difficulty and expense, that any vessel can procure a proper number of able hands to navigate her. [26] 

Nor could the Dutch compete with larger territorial states in settling colonies, simply because too few Dutchmen were available for the purpose. As a result, in North America most of the colonial population and nearly all of the well-to-do merchant, planter and professional classes were of British origin, accustomed to manufactures from British sources and sales through British factors. English ports thus began to challenge and then to outdo Amsterdam’s entrepot trade. Moreover, while Dutch industries languished, English industries expanded rapidly under the joint impact of Atlantic trade and increasing governmental protection. [27] British success in outcompeting the Dutch, both in overseas commercial and domestic industrial expansion, gradually reduced Amsterdam’s share of entrepot trade. But the death blow to Dutch commercial supremacy came from the spread of mercantilism to the Baltic region and the consequent disruption of what had all along been the ‘mother trade’ of Dutch capitalism. [28] 

London’s dominion

It was in this context that the United Kingdom emerged as the new leader of the ‘endless’ accumulation of capital and power through a complete fusion of capitalism and imperialism. Once London had displaced Amsterdam as the financial centre of the globalizing European system of states, as it did by the 1780s, the United Kingdom became the main beneficiary of inter-state competition for mobile capital. In this respect, it became the heir of the capitalist tradition initiated by the Genoese in the ‘long’ sixteenth century and developed further by the Dutch in the ‘long’ seventeenth century. In other respects, however, the United Kingdom was also the heir of the imperialist tradition initiated by the Iberian partners of the Genoese—a tradition which the ‘anti-imperialism’ of the Dutch and the stabilization of the European balance of power at Westphalia had reversed only temporarily and partially. [29] 

This peculiar fusion of capitalism and imperialism provided ‘endless’ accumulation with a spatial and organizational fix that differed from that of the Dutch cycle in key respects. Geopolitically, the system of states established at Westphalia under Dutch leadership was truly anarchic—characterized, that is, by the absence of central rule. The inter-state system reconstituted after the Napoleonic Wars under British leadership, in contrast, was one in which the European balance of power was transformed, for a while at least, into an instrument of informal British rule. Having gained mastery over the balance of power during the wars, the British took a number of steps to ensure that it would remain in their hands. While reassuring the absolutist governments of continental Europe organized in the Holy Alliance that changes in the balance of power would come about only through consultation in the newly established Concert of Europe, they created two counterweights to their power. In Europe, they requested and obtained that defeated France be included among the Great Powers, albeit held in check by being ranked with second tier powers. In the Americas, they countered the Holy Alliance’s designs to restore colonial rule by asserting the principle of non-intervention in Latin America and by inviting the United States to support this principle. What later became the Monroe Doctrine—the idea that Europe should not intervene in American affairs—was initially a British policy. [30] 

By pursuing its national interest in the preservation and consolidation of a fragmented and ‘balanced’ power structure in Continental Europe, Britain fostered the perception that its overwhelming world power was being exercised in the general interest—the interest of former enemies as well as of former allies, of the new republics of the Americas as well as of the old monarchies of Europe. This perception was consolidated by Britain’s unilateral liberalization of its trade, which culminated in the repeal of the Corn Laws in 1846 and of the Navigation Acts in 1849. Over the following twenty years, close to one third of the exports of the rest of the world went to Britain—the United States, with almost 25 percent of all imports and exports, being Britain’s single largest trading partner, and European countries accounting for another 25 percent. Through this policy, Britain cheapened the domestic costs of vital supplies and at the same time provided the means of payment for other countries to buy its manufactures. It also drew much of the Western world into its trading orbit, fostering inter-state co-operation and securing low protection costs for its overseas trade and territorial empire. [31] 

In this respect, the uk-centred system of accumulation also differed radically from its Dutch predecessor. In both systems, the metropolitan territories of the

leading capitalist state played the role of central entrepot. But soon after the Dutch system had become predominant, it began to be challenged by the aggressive mercantilism of both Britain and France. The British system, in contrast, could consolidate further through the longest peace in European history—Polanyi’s Hundred Years’ Peace (1815–1914). Britain’s mastery of the European balance of power and centrality in world trade were mutually reinforcing conditions of this peace. The first reduced the chances that any state would have the capabilities to challenge British commercial supremacy in the same way the British had challenged Dutch supremacy after Westphalia. The second ‘caged’ a growing number of territorial states in a global division of labour that strengthened each one’s interest in preserving the uk-centred system. And the more general this interest became, the easier it was for Britain to manipulate the balance of power to prevent the emergence of challenges to its commercial supremacy.

This combination of circumstances depended critically on a third difference between the British and Dutch systems. Whereas the Dutch entrepot was primarily a commercial one, the British entrepot was also industrial, the ‘workshop of the world.’ England had long been one of the main industrial centres of Europe. But it was only in the course of the eighteenth century that the expansion of England’s entrepot trade and massive governmental expenditure during the Napoleonic Wars turned British industrial capabilities into an effective instrument of national aggrandizement. [32] The Napoleonic Wars, in particular, constituted a decisive turning point. In McNeill’s words,

government demand created a precocious iron industry, with a capacity in excess of peacetime needs, as the post-war depression of 1816–20 showed. But it also created the condition for future growth by giving British ironmasters extraordinary incentives for finding new uses for the cheaper product their new, large-scale furnaces were able to turn out. Military demands on the British economy thus went far to shape the subsequent phases of the industrial revolution, allowing the improvement of steam engines and making such critical innovations as the iron railway and iron ship possible at a time and under conditions which simply would not have existed without the wartime impetus to iron production. [33] 

In the course of the nineteenth century, railways and steamships forged the globe into a single interacting economy as never before. In 1848, there was nothing resembling a railway network outside Britain. Over the next thirty years or so, notes Eric Hobsbawm, ‘the most remote parts of the world [began] to be linked together by means of communication which had no precedent for regularity, for the capacity to transport vast quantities of goods and numbers of people, and above all, for speed.’ As this system of transport and communication took shape, world trade expanded at unprecedented rates. From the mid 1840s to the mid 1870s, the volume of seaborne merchandise between the major European states more than quadrupled, while the value of the exchanges between Britain and the Ottoman Empire, Latin America, India and Australasia increased about sixfold. Eventually, this expansion of world trade intensified inter-state competition and rivalries. But in the middle decades of the century the advantages of hooking up to the British entrepot so as to draw upon its equipment and resources were too great to be willingly foregone by any European state. [34] 

Unlike the seventeenth-century Dutch world-trading system, which was always a purely mercantile one, the nineteenth-century British world-trading system thus also became an integrated system of mechanized transport and production. Britain was both the chief organizer and the chief beneficiary of this system, within which it performed the double function of central clearing-house and regulator. While the function of central clearing-house was inseparable from Britain’s role as the workshop of the world, the function of central regulator was inseparable from its role as the leading empire-builder in the non-European world. To return to de la Court’s metaphor, unlike Holland, which was and remained a ‘cat’, Britain was and remained a territorial ‘beast of prey’ whose conversion to capitalism only whetted its appetite for territorial expansion. As previously noted, the plunder of India enabled Britain to buy back the national debt from the Dutch and to start the Napoleonic Wars nearly free from foreign debt. It thereby facilitated the sixfold increase in British public expenditure in 1792–1815 to which McNeill attributes a decisive role in shaping the capital-goods phase of the industrial revolution. More important, it initiated the process of conquest of a territorial empire in South Asia that was to become the principal pillar of Britain’s global power.

The unfolding of this process has been detailed elsewhere. [35] Here, I shall simply mention the two main aspects of its relationship to the enlarged reproduction of British power, one demographic and one financial. India’s huge demographic resources buttressed Britain’s world power both commercially and militarily. Commercially, Indian workers were forcibly transformed from major competitors of European textile industries into major producers of cheap food and raw materials for Europe. Militarily, Indian manpower was organized in a European-style colonial army, funded entirely by the Indian taxpayer, and used throughout the nineteenth century in the long series of wars through which Britain opened up Asia and Africa to Western trade and investment. As for the financial aspect, the devaluation of the Indian currency, the imposition of the infamous Home Charges—through which India was made to pay for the privilege of being pillaged and exploited by Britain—and the Bank of England’s control over India’s foreign exchange reserves, jointly turned India into the ‘pivot’ of Britain’s world financial and commercial supremacy. [36] 

British decline

Under British leadership, the ‘endless’ accumulation of capital and power thus came to be embedded in a spatial fix of greater scale and scope than in the Genoese–Iberian and Dutch cycles. But for that very reason it eventually resulted in a far more massive overaccumulation of capital. As in the earlier cycles, the incumbent centre was initially best positioned to take advantage of the intensification of competition that signalled the change of phase from material to financial expansion. The ensuing Edwardian belle époque, however, was but a preamble to an escalation of inter-state conflicts that once again revolutionized the historical geography of world capitalism. The analogous ‘revolution’ of the late eighteenth and early nineteenth centuries had eliminated from the struggle for capitalist leadership proto-national states like the United Provinces. In the ‘revolution’ of the first half of the twentieth century, it was the turn of the national states themselves to be squeezed out of the struggle unless they controlled integrated agricultural-industrial-military complexes of continental scale.

‘Britain’s new insecurity and growing militarism and Jingoism [towards the end of the nineteenth century],’ notes Andrew Gamble, ‘arose because the world seemed suddenly filled with industrial powers, whose metropolitan bases in terms of resources and manpower and industrial production were potentially much more powerful than Britain’s.’ [37] The rapid industrialization of the unified Germany after 1870 was particularly upsetting for the British, because it created the conditions for the rise of a land power in Europe capable of aspiring to continental supremacy and of challenging Britain’s maritime rule. During the First World War, Britain and its allies succeeded in containing Germany, and Britain even increased the reach of its overseas territorial empire. But the financial costs of these military-political successes destroyed Britain’s capacity to hold the centre of world capitalism.

During the war Britain did continue to function as principal banker and loan-raiser on the world’s credit markets, not just for itself, but also by guaranteeing loans to Russia, Italy and France. This looked like a repetition of its eighteenth-century role as ‘banker of the coalition.’ There was nonetheless one critical difference: the huge trade deficit with the United States, which was supplying billions of dollars’ worth of munitions and foodstuffs to the Allies but required few goods in return. ‘Neither the transfer of gold nor the sale of Britain’s enormous dollar securities could close this gap; only borrowing on the New York and Chicago money markets, to pay the American munitions suppliers in dollars, would do the trick.’ [38] WhenBritain’s credit approached exhaustion, the us threw its economic and military weight into the struggle, tilting the balance to its debtors’ advantage. Mastery over the European balance of power had shifted decisively from British to us hands. The insularity that the English Channel no longer provided, the Atlantic still did. More important, as innovations in means of transport and communications continued to overcome spatial barriers, America’s remoteness became less of a disadvantage commercially and militarily. ‘Indeed, as the Pacific began to emerge as a rival economic zone to the Atlantic, the usa’s position became central—a continent-sized island with unlimited access to both of the world’s major oceans.’ [39] 

Washington’s ascendancy

This ‘continent-sized island’ had long been in the making. It was the spatial product of the century-long process of territorial seizure and occupation through which the United States had ‘internalized’ imperialism from the very beginning of its history. [40] But it was the transport revolution and the industrialization of war in the second half of the nineteenth century that turned it into a powerful agricultural-industrial-military complex with decisive competitive and strategic advantages vis-à-vis European states. To be sure, Britain’s world-encompassing territorial empire contained even greater resources than the United States. Nevertheless, the global dispersion and weak mutual integration of Britain’s colonial domains—in contrast with the regional concentration and strong mutual integration, both political and economic, of the territorial domains of the United States—was a crucial difference in the spatial configuration of the leading capitalist states of the ‘long’ nineteenth and twentieth centuries respectively. As noted earlier, Britain’s far-flung empire was an essential ingredient in the formation and consolidation of the uk-centred system of accumulation. But as soon as interstate competition for ‘living space’ intensified under the impact of the transport revolution and the industrialization of war, the protection costs of Britain’s metropolitan and overseas domains began to escalate, and its imperial possessions turned from assets into liabilities. At the same time, the overcoming of spatial barriers brought about by these same two phenomena turned the continental size, compactness, insularity, and direct access to the world’s two major oceans of the United States into decisive strategic advantages in the escalating inter-state power struggle. [41] 

Unsurprisingly, the struggle ended with the arrival of the bipolar world so often forecast in the nineteenth and early twentieth centuries: ‘the international order . . . now moved “from one system to another”. Only the United States and the ussr counted . . . and of the two, the American ‘superpower’ was vastly superior.’ [42] As Thomas McCormick has underscored, us leaders fought the Second World War ‘not simply to vanquish their enemies, but to create the geopolitical basis for a postwar world order that they would both build and lead’. In the pursuit of this ambitious end, awareness of British precedents during the Napoleonic Wars helped. In particular,

Britain entered the main European theatre only when the war had reached its final and decisive stage. Its direct military presence acted to inhibit any other continental power from attempting to take France’s place in the continental power structure and reinforced the legitimacy of Britain’s claim to a dominant say in peace negotiations. In parallel fashion, the United States entered the European theatre only in the last and determinant phase of World War ii. Operation Overlord, its invasion ofFrance in June 1944, and its push eastward into Germany similarly restrained potential Russian ambitions in the west and assured America’s seat at the head of the peace table. [43] 

These analogies reflect the fact that in both transitions, mastery of the balance of power in the inter-state system was essential to the empowerment of the rising hegemonic state. But the spatial and organizational fix of the ‘endless’ accumulation of capital and power that came into being under us hegemony could not be the same as the British. On the contrary, it had to reflect the new historical geography of capitalism that had emerged from the irrevocable destruction of the nineteenth-century British spatial fix. By way of conclusion, I shall now highlight the nature and contradictions of the us spatial fix and seek answers to the question raised at the beginning of the essay of why ‘scaring hell out of the American people’ worked wonders in establishing us hegemony under Truman but is now bringing that hegemony to an end. [44] 

III. THEWORLDSTATE THAT NEVER WAS

In a book first published in 1948, Ludwig Dehio argued that each round of the European power struggle had created the conditions of a geographical expansion of the European-centred system of sovereign states, of a ‘migration’ of the locus of power further west and east, and of an irreversible mutation in the structure of the expanding system. Indeed, Dehio presented his study of the mechanisms that had reproduced the European balance of power over the preceding five centuries as dealing ‘with a structure that has ceased to exist . . . in a manner of speaking, [as] the result of an autopsy.’

The balance of power in the Occident was preserved only because new counterweights from territories beyond its frontiers could again and again be thrown into the scale against forces seeking supremacy . . . In World War ii, the forces that had left Europe in successive emigrations . . . turned back toward the region from which they had come . . . The old pluralistic system of small states was completely overshadowed by the giant young powers which it had summoned to its aid . . . Thus the old framework that had encompassed the European scene . . . is breaking up. The narrower stage is losing its overriding importance as a setting for a strong cast of its own, and is being absorbed into the broader proscenium. On both stages the two world giants are taking over the protagonists’ role . . . A divided system of states reverts again and again to a condition of flux. But the old European tendency toward division is now being thrust aside by the new global trend toward unification. And the onrush of this trend may not come to rest until it has asserted itself throughout our planet. [45] 

Half a century after this was written, the collapse of one of the two ‘world giants’ and the further centralization of global military capabilities in us hands made these remarks sound prophetic. But well before Dehio pointed to the demise of ‘the old European tendency toward division’, Franklin D. Roosevelt had already addressed the issue of what kind of political structure might emerge out of ‘the new global trend toward unification’. Looking back at thirty years of world wars, revolutions, counterrevolutions and the most serious economic breakdown in capitalist history, he had become convinced that worldwide chaos could be overcome only through a fundamental reorganization of world politics. Central to his vision was the idea that security for the world had to be based on us power exercised through international institutions. ‘But for such a scheme to have a broad ideological appeal to the suffering peoples of the world, it had to emanate from an institution less esoteric than an international monetary system and less crude than a set of military alliances or bases.’ [46] 

The key body here was to be the United Nations, with its appeal to the universal desire for peace and the longing of poor nations for independence and eventual equality with the rich nations. Not without reason, Franz Schurmann finds the political implications of this vision revolutionary.

For the first time in world history, there was a concrete institutionalization of the idea of world government. Whereas the League of Nations was guided by an essentially nineteenth-century spirit of a congress of nations, the United Nations was openly guided by American political ideas . . . There was nothing revolutionary about the kind of world system Britain created through its empire. There was something revolutionary about the world market system that flowed out of Britain in the eighteenth century . . . Britain’s true imperial greatness was economic, not political. The United Nations, however, was and remains a political idea. The American Revolution had proven that nations could be constructed through the conscious and deliberate actions of men . . . What Roosevelt had the audacity to conceive and implement was the extension of this process of government-building to the world as a whole. [47] 

Roosevelt’s vision of world government had both social objectives and fiscal-financial implications. It was a conscious projection on a world scale of the us New Deal.

The essence of the New Deal was the notion that big government must spend liberally in order to achieve security and progress. Thus postwar security would require liberal outlays by the United States in order to overcome the chaos created by the war. Aid to . . . poor nations would have the same effect as social welfare programs within the United States—it would give them the security to overcome chaos and prevent them from turning into violent revolutionaries. Meanwhile, they would be drawn inextricably into the revived world market system. By being brought into the general system, they would become responsible, just as American unions had during the war. Helping Britain and the remainder of Western Europe would rekindle economic growth, which would stimulate transatlantic trade and, thus, help the American economy in the long run. America had spent enormous sums running up huge deficits in order to sustain the war effort. The result had been astounding and unexpected economic growth. Postwar spending would produce the same effect on a worldwide scale. [48] 

And so it did, but only after Roosevelt’s ‘one-worldism’—which included the ussr among the poor nations of the world to be incorporated into the new order for the benefit and security of all—became Truman’s ‘free-worldism,’ which turned the containment of Soviet power into the main organizing principle of us hegemony. Roosevelt’s revolutionary idealism—which saw in institutions of world government the primary instrument through which the New Deal would be extended to the world as a whole—was displaced by the reformist realism of his successors who institutionalized us control over world money and global military power as the primary instruments of us hegemony. [49] 

For Roosevelt’s project was simply too idealistic for the tastes of Congress and us business. The world was too big and too chaotic a place for the United States to reorganize in its image, particularly if the reorganization had to be achieved through organs of world government within which the us government would have to compromise with the views and interests of friends and foes alike. Congress and the American business community were far too ‘rational’ in their calculations of the pecuniary costs and benefits of us foreign policy to release the means necessary to carry out such an unrealistic plan. Indeed, as previously noted, had Korea not ‘come along’ and given Truman what he needed to ‘scare hell out of the American people’, even the us and European rearmament envisaged in nsc-68 might not have been funded. But Korea did come along and massive rearmament during and after the Korean war gave a tremendous boost to the us and world economies.

With the us government acting as a highly permissive world central bank, American military aid to foreign governments and direct military expenditures abroad—both of which rose constantly between 1950 and 1958 and again between 1964 and 1973—pumped liquidity back into world trade and production, which both grew at unprecedented rates. [50] According to McCormick, the 23-year period inaugurated by the Korean War and concluded by the Paris peace accords of 1973, which virtually ended the Vietnam War, was ‘the most sustained and profitable period of economic growth in the history of world capitalism.’ [51] 

This is the period that many call the ‘Golden Age of Capitalism’. Although the rate of expansion of world trade and production in the 1950s and 1960s was indeed exceptional by historical standards, this was hardly capitalism’s first golden age. Just as impressive was Hobsbawm’s Age of Capital (1848–75), which late-nineteenth-century observers compared to the Age of the Great Discoveries. [52] Like the ‘age of capital’ a hundred years earlier, the golden age of the 1950s and 1960s ended in a long period of financial expansion that culminated in a resurgence of imperialistic practices. The true novelty of the present resurgence in comparison with that of a century ago is the attempt of the declining hegemonic power to resist that decline by turning itself into a world state. Such an attempt is a continuation by other means and under radically different circumstances of Roosevelt’s world-government project. Although Roosevelt’s one-world, global-New Deal vision never materialized, Truman’s downsized, militarized, Cold War version resulted in a major expansion of us capital and power. Why then is the neo-conservative project now failing so badly in repeating that experience under conditions of even greater centralization of global military capabilities in us hands?

Forms of protection

Charles Tilly’s conceptualization of state activities as complementary facets of the organization and monopolization of violence enables us to provide a simple

answer to this question. Whatever else governments might do, argues Tilly, they ‘stand out from other organizations by their tendency to monopolize the concentrated means of violence.’ This tendency materializes through four different kinds of activity: protection, state-making, war-making, and extraction. Protection is the most distinctive ‘product’ of governmental activities. As Tilly underscores, ‘the word “protection” sounds two contrasting tones.’ With one tone, it evokes the comforting notion of a powerful friend who provides a shelter from danger. With the other, it evokes the sinister image of a racket in which a bully forces merchants to pay tribute in order to avoid a damage that the bully himself tacitly or openly threatens to deliver.

Which image the word ‘protection’ brings to mind depends mainly on our assessment of the reality and externality of the threat. Someone who produces both the danger and, at a price, the shield against it, is a rack