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The Phoenix cycle: Global Leadership Transition in a Long-Wave Perspective
Joachim Karl Rennstich
Department of Political ScienceIndiana UniversityBloomington, IN 47405jrennsti@indiana.edu
For latest draft, please check: http://www.longtermchange.net/
Paper prepared for delivery to the 26th Political Economy of World-Systems 2002 Conference at the University of California at Riverside, Riverside, CA, May 3-4, 2002
Draft as of: TIME \@ "MMMM d, yyyy" April 25, 2002
Abstract
It has been argued that one of the reoccurring phenomenon of hegemonic transitions is the inability of the existing leader to establish a similar leadership position in a newly emerging and structurally different commercial and organizational arrangement. This shift in the geographical and political location of power has been explained as the outcome of the leaders experience of success in the current setting, creating an entrenched institutional setting (in a broader sense) that proves adaptive in defending its turf but less so in fostering the rise of new leading sectors. However, the case of Britains continued leadership over an extended period of time (and separate long waves) has shown that this is not always the case. This paper introduces the concept of internal and external global network environments in the world system and argues that the extension of leadership from an old to a new commercial and organizational arrangement is dependent on the systemic nature of the world system. A shift from an external to an internal network environment (or vice versa) allows the parallel development and rise of new leading sectors because they pose no threat to the existing institutional setting of the established leading sectors. The emerging new leading sectors do profit from the relative advantages of the current leadership position (in terms of capital, costs, etc.) without the resistance usually encountered from the established leading sectors. The paper develops a systematic account of the shifts from maritime commercial (external network environment) phases, over industrial (internal network environment) phases, to the rise of a digital commercial (external network environment) phase. It concludes that the shift from an industrial phase to the new digital commercial phase puts the current systemic leader, the United States, in a position of continued leadership over two long-waves.
Introduction
Beginning with the work of Braudel ADDIN EN.CITE Braudel199214811Braudel, Fernand1992BerkeleyUniversity of California Press13 v.0520081145 (v. 1)1982HC51 .B67413 1992
909.08Economic history.Social history.Civilization, Modern History.Civilization and capitalism, 15th-18th century: The structure of everyday lifeBraudel199214821Braudel, Fernand1992BerkeleyUniversity of California Press23 v.0520081153 (v. 2)1983HC51 .B67413 1992
909.08Economic history.Social history.Civilization, Modern History.Civilization and capitalism, 15th-18th century: The wheels of commerceBraudel199214831Braudel, Fernand1992BerkeleyUniversity of California Press33 v.0520081161 (v. 3)1984HC51 .B67413 1992
909.08Economic history.Social history.Civilization, Modern History.Civilization and capitalism, 15th-18th century: The perspective of the world(1992b; 1992c; 1992a), Wallerstein ADDIN EN.CITE Wallerstein197498810127859209Wallerstein, Immanuel MauriceThe modern world-systemNew YorkAcademic Press1974v.Europe Economic conditions.Economic history 16th century.Capitalism.Wallerstein198011571Wallerstein, Immanuel Maurice1980Mercantilism and the consolidation of the European world-economy, 1600-1750New YorkAcademic Pressxi, 3700127859233
0127859241 (pbk.)HC51 .W28 1974 vol. 2 HC52.5Economic history 1600-1750.Europe Economic conditions 17th century.Europe Economic conditions 18th century.Mercantile system History.Wallerstein19846821Wallerstein, Immanuel Maurice1984Cambridge University Pressviii, 1910521259185 (hard)
0521277604 (pbk.)Hc59 .w27 1984
330.9/048Economic history 1945-Government, Resistance to.Quality of life.The politics of the world-economy: the states, the movements, and the civilizations: essaysCambridge, UK and New YorkWallerstein1989115611989012785925X (alk. paper)
0127859268 (pbk. alk. paper)HC51 .W28 1974 vol. 3 HC52
330.94/02 s 330.94/0253Wallerstein, Immanuel MauriceThe second era of great expansion of the capitalist world-economy, 1730-1840sSan DiegoAcademic Pressxi, 372Studies in social discontinuityEconomic history 1600-1750.Economic history 1750-1918.Europe Economic conditions 18th century.Europe Economic conditions 19th century.Capitalism History.(1974; 1980; 1984; 1989) and others ADDIN EN.CITE Abu-Lughod1989964e.g., 10195058860 (alk. paper)Hc41 .a28 1989
330.94/017Abu-Lughod, Janet L.New YorkOxford University Press1989xvi, 443Economic history Medieval, 500-1500.International trade History.Cities and towns, Medieval.Before European hegemony: the world system A.D. 1250-1350Arrighi199413561Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
1859840159 (pbk.)HB501 .A75 1994
330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our timesArrighi19999141Arrighi, GiovanniSilver, Beverly J.Ahmad, Iftikhar1999Chaos and governance in the modern world systemMinneapolisUniversity of Minnesota Pressx, 3360816631514
0816631522 (pbk.)D299 .a75 1999
337World politics.International economic relations.Buzan200013401Buzan, BarryLittle, Richard2000Oxford University Pressxvi, 4520198780656JZ1249 .B89 2000
327.1/01International relations Philosophy.Social systems.International systems in world history: remaking the study of international relationsOxford, UK and New YorkChase-Dunn198914221Chase-Dunn, Christopher K.1989Cambridge, MAB. Blackwellviii, 4191557860114HC59 .C51424 1989
330.12/2Economic history 1945-Capitalism.Global formation: structures of the world-economyChase-Dunn199514191Chase-Dunn, Christopher K.1995The historical evolution of the international political economyBrookfield, VTE. Elgar Pub. Co.2 v.1852789859 (2 volume set)HF1359 .H58 1995
337International economic relations History.Economic development History.Competition, International History.Chase-Dunn199714231Chase-Dunn, Christopher K.Hall, Thomas D.1997Boulder, COWestview Pressxi, 3220813310059 (hard)
0813310067 (pbk.)HM101 .C464 1997
303.4/09Social change History.Capitalism History.Economic history.Rise and demise: comparing world-systemsDark199816761Dark, K. R.1998The waves of time: long-term change and international relationsLondon and New YorkPinter2841855674025 (hardcover)JZ1242 .D37 1998
320.1/2International relations.Political stability.Social change.Denemark200012209Denemark, Robert AllenFriedman, JonathanGills, Barry K.Modelski, George2000New YorkRoutledgecm.0415232767 (cloth)
0415232775 (pbk.)HN8 .W67 2000
303.4Social history.World history.Social change.World system history: the social science of long-term changeFrank19781158119780853454426HC51 .F68
330.9Frank, Andre GunderWorld accumulation, 1492-1789New YorkMonthly Review Press303Economic history.Capitalism History.Frank199810161Frank, Andre Gunder1998BerkeleyUniversity of California Pressxxix, 4160520211294 (alk. paper)
0520214749 (pbk. alk. paper)Hf1359 .f697 1998
337International economic relations History.Capitalism History.Competition, International History.Economic history.ReOrient: global economy in the Asian AgeFrank19936659Frank, Andre GunderGills, Barry K.1993London and New YorkRoutledgexxii, 3200415076781Hc26 .w67 1993Economic history.Historiography.The world system: five hundred years or five thousand?Freeman19836911Freeman, Christopher1983Long waves in the world economyLondon and Boston, MAButterworths0408221569Hc59Freeman200114491Freeman, ChristopherLouçã, Francisco2001Oxford University Pressxv, 4070199241074 (alk. paper)HB3729 .F738 2001
338.5/4Long waves (Economics) History.Information technology History.Industrial revolution.As time goes by: from the industrial revolutions to the information revolutionOxford, UK and New YorkGilpin198767310691077320 (alk. paper)
0691022623 (pbk.)Hf1411 .g55 1987Gilpin, RobertThe political economy of international relationsPrincetonPrinceton University Press1987xvi, 449International economic relations.Commercial policy.International finance.Goldstein198868410300039948 (alk. paper)
0300041128 (pbk. alk. paper)Hb3729 .g64 1988
338.5/42Goldstein, Joshua S.Yale University Press1988xiii, 433Long waves (Economics)Business cycles.New Haven, CTLong cycles: prosperity and war in the modern ageKennedy198868310049090194D210 .K46x 1988Kennedy, Paul M.LondonUnwin Hyman1988xxv, 677History, Modern.Economic history.Military history, Modern.Armaments Economic aspects.Balance of power.The rise and fall of the great powers: economic change and military conflict from 1500 to 2000Modelski19966571Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economicsHugill199316651Hugill, Peter J.1993World trade since 1431: geography, technology, and capitalismBaltimore, MDJohns Hopkins University Pressxxiii, 3760801842417 (acid-free paper)
0801851262 (pbk.)HC21 .H84 1993
382/.09Economic history.Capitalism History.International trade History.Technological innovations History.Modelski198791110295964308D32 .m63 1988
909.82Modelski, GeorgeLong cycles in world politicsSeattleUniversity of Washington Press1987244World politics.Cycles.Modelski200014967Modelski, George2000World System EvolutionDenemark, Robert AllenFriedman, JonathanGills, Barry K.Modelski, GeorgeWorld system history : the social science of long-term changeLondon and New YorkRoutledge24-530415232767 (cloth)
0415232775 (pbk.)HN8 .W67 2000
303.4Social history.World history.Social change.Pomeranz199915181Pomeranz, KennethTopik, Steven1999The world that trade created: society, culture, and the world economy, 1400-the presentArmonk, NYM.E. Sharpexvii, 2560765602490 (hc. alk. paper)HF352 .P58 1999
303.48/2Commerce History.Commerce Social aspects History.Culture History.Industrialization Social aspects History.International economic relations History.Economic history.Pomeranz200015191Pomeranz, Kenneth2000The great divergence: China, Europe, and the making of the modern world economyPrinceton, NJPrinceton University Pressx, 3820691005435 (cl alk. paper)HC240 .P5965 2000
337Europe Economic conditions 18th century.Europe Economic conditions 19th century.China Economic conditions 1644-1912.Economic development History.Comparative economics.Rasler198910171Rasler, Karen A.Thompson, William R.1989Boston, MAUnwin Hymanxvii, 2530044450974Hb195 .r36 1989
303.4/85War Economic aspects.Geopolitics.State, The.War and State Making: The Shaping of the Global PowersRasler199410181Rasler, Karen A.Thompson, William R.1994The Great Powers and Global Struggle, 1490-1990Lexington, KYUniversity Press of Kentuckyxx, 2750813118891 (acid-free)D31 .r37 1994
320.1/2World politics.World politics 1945-Geopolitics.Thompson199911109Thompson, William R.1999Great power rivalriesUniversity of South Carolina Pressviii, 4141570032793D217 .G74 1999
327World politics Congresses.Power (Social sciences) Congresses.Columbia, SCThompson200116619Thompson, William R.2001Evolutionary interpretations of world politicsNew YorkRoutledge3520415930588 (alk. paper)
0415930596 (pbk.)D32 .E98 2001
327.1World politics Congresses.International relations Philosophy Congresses.International cooperation Congresses.Power (Social sciences) Congresses.Political psychology Congresses.Tilly199217701Tilly, Charles1992Coercion, capital, and European states, AD 990-1992Cambridge, MABlackwellxi, 271Rev. pbk.1557863687 (pbk.)
155786067XJN94.A2 T54 1992
940Europe Politics and government.Europe Economic conditions.Capitalism Europe History.Tilly19971772119970847684091 (cloth alk. paper)
0847684105 (pbk. alk. paper)HM104 .T52 1997
306/.09Roads from past to futureLanhamRowman & Littlefieldix, 432Legacies of social thoughtHistorical sociology.Social history.Europe History 1492-Tilly, CharlesStinchcombe, Arthur L.(e.g., Abu-Lughod 1989; Arrighi 1994; Arrighi, Silver, and Ahmad 1999; Buzan and Little 2000; Chase-Dunn 1989, 1995; Chase-Dunn and Hall 1997; Dark 1998; Denemark et al. 2000; Frank 1978, 1998; Frank and Gills 1993; Freeman 1983; Freeman and Lou 2001; Gilpin 1987; Goldstein 1988; Kennedy 1988; Modelski and Thompson 1996; Hugill 1993; Modelski 1987, 2000; Pomeranz and Topik 1999; Pomeranz 2000; Rasler and Thompson 1989, 1994; Thompson 1999, 2001; Tilly 1992; Tilly and Stinchcombe 1997) we have taken significant steps toward our understanding of the governance of the world political economy in its historical development. Despite the large variety of approaches and models (or rather as a result therefore), the dynamics of systemic change, however, still require further attention. The purpose of this paper is to examine the process of transition from one hegemonic leader to the next. In doing so, we built on previous models by employing an evolutionary framework to the study of the transition mechanism, creating a synthesis of Arrighis and Modelski and Thompsons conceptualization of the hegemonic leadership transition process.
One of the main characteristics of hegemonic transitions in most treatments of the subject seems to be the inability of the existing leader to establish a similar leadership position in a newly emerging and structurally different commercial and organizational arrangement. This shift in the geographical and political location of power has been explained as the outcome of the leaders experience of success in the current setting, creating an entrenched institutional setting (in a broader sense) that proves adaptive in defending its turf but less so in fostering the rise of new leading sectors. However, the case of Britains continued leadership over an extended period of time (and separate long waves) has shown that this is not always the case.
This paper introduces the concept of internal and external global network environments in the world system and argues that the extension of leadership from an old to a new commercial and organizational arrangement is dependent on the capitalist mode and its effect on the systemic nature of the world system. A shift from an external to an internal network environment (or vice versa) allows the parallel development and rise of new leading sectors because they pose no threat to the existing institutional setting of the established leading sectors. The emerging new leading sectors do profit from the relative advantages of the current leadership position (in terms of capital, costs, etc.) without the resistance usually encountered from the established leading sectors.
A large literature has acknowledged the various significant changes currently occurring in the world system, often summarized as the effects of globalization. Here we argue (with many of the authors noted above) that globalization is not a recent development, but rather the recent stage of a systematic evolution of the world economic and social system. To understand the current shifts then, makes it necessary to gain a better understanding of the historical process of the evolution of this system. This paper develops a systematic account of the shifts from maritime commercial (external network environment) phases, over industrial (internal network environment) phases, to the rise of a digital commercial (external network environment) phase. In contrast to some authors, such as Wallerstein, who argue for the occurrence of a discontinuation of the developmental process of the world system, we propose a model that allows us to view the current changes as fully consistent with the past development of the world economic and social system. The paper closes with a discussion of the geographic locus of the next leader and concludes that the transition from an industrial phase to the new digital commercial phase puts the current systemic leader, the United States, in a position of continued leadership over two long-waves.
Leadership Transitions and Systemic Structure
As noted earlier, a multitude of models of hegemonic leadership and its transitions exist in the literature. We have chosen here to focus on the three conceptualizations of Wallerstein, Arrighi, and Modelski and Thompson for several reasons. First, these models represent broadly the main arguments and processes put forward based on the assumption that the current world system is an outgrowth of an evolutionary process for at least five centuries. Second, these models are not necessarily exclusionary but in fact complementary. We are thus able to create a synthesis of these models that incorporates their individual strengths while allowing us to overcome their respective weaknesses.
Existing Models of Hegemonic Change and Transition
Before we can go on to discuss the current process of change, it is necessary to briefly review some of the existing models and to develop a synthesis of these seemingly divergent but in our view compatible theorizations of systemic change and leadership transition. By applying an evolutionary framework we are able to use components of the existing models to create a new model of hegemonic change that takes into account not only the hegemonic crises but also systemic crises that result from changes in the capitalist mode of the system and lead to shift in the meta-structure of the world system.
Wallersteins Model of the Hegemonic Cycle
Wallerstein ADDIN EN.CITE Wallerstein198318690Wallerstein, Immanuel Maurice1983The Three Instances of Hegemony in the History of the Capitalist World-EconomyInternational Journal of Comparative Sociology241-2100-8January-April(1983) conceives of hegemony in the interstate system as the moment in which the enduring rivalry between great-powers is so unbalanced that one of these powers emerges as a primus inter pares. This elevated position of power is the outgrowth of its economic supremacy and only occurring during the phase in which the hegemonic state masters an edge in efficiency in all three major economic arenas, namely agro-industrial production, commerce, and finance. As a result, this primus has the ability to impose its rules and its wishes in the economic, political, military, diplomatic, and cultural spheres. Wallerstein identifies three such instances Dutch, British, and US hegemony as the outcome of long periods of competitive expansion resulting in a particular concentration of economic and political power. REF _Ref416966896 \h Figure 1 summarizes graphically the process of the rise and fall of hegemonic dominance in the world system.
/ REF _Ref416966896 \h Figure 1 about here/
Over the course of this competitive expansion, the rising hegemon acquires first a decisive edge in agro-industrial production, then also in commerce, and finally reaches a dominant position in finance as well. This process of concentration of productive, commercial, and financial fitness clustering in one state must be secured, however, through victory in a thirty-year-long climatic world war (in Wallersteins count the Thirty Years War from 1618 to 1648 [World War Alpha], the Napoleonic Wars from 1792 to 1815 [World War Beta], and the long Eurasian World Wars from 1914 to 1945 [World War Gamma]), acting as a catalyst encrusting the greater edge of the hegemonic state and protecting it against erosion through the creation of a postwar interstate settlement ADDIN EN.CITE Wallerstein19831869, 1040Wallerstein, Immanuel Maurice1983The Three Instances of Hegemony in the History of the Capitalist World-EconomyInternational Journal of Comparative Sociology241-2100-8January-April(Wallerstein 1983, 104).
One feature of this interstate settlement is the element of global liberalism. While enforcing the principle of the relatively free flow of goods, capital, and labor throughout the world economy, it not only serves the purpose of intensifying the hegemonic powers position of strength, but also delegitimizes the efforts of other state machineries to act against the economic superiority of the hegemonic power. At the same time, it allows for the diffusion of technological expertise (know-how) and causes the steady rise of labor factor costs, allowing the competing states to catch up. Eventually, these two factors combined lead to a loss of the dominating competitive fitness of the hegemon, allowing for a renewed competitive expansion of the system and the rise of a new hegemonic state ADDIN EN.CITE Wallerstein198318690Wallerstein, Immanuel Maurice1983The Three Instances of Hegemony in the History of the Capitalist World-EconomyInternational Journal of Comparative Sociology241-2100-8January-April(Wallerstein 1983).
Arrighi ADDIN EN.CITE Arrighi1999914, 241Arrighi, GiovanniSilver, Beverly J.Ahmad, Iftikhar1999Chaos and governance in the modern world systemMinneapolisUniversity of Minnesota Pressx, 3360816631514
0816631522 (pbk.)D299 .a75 1999
337World politics.International economic relations.(Arrighi, Silver, and Ahmad 1999, 24) points out to the obvious problem of this model, namely that is exogenizes the source of change that ultimately drives the system. Particular complexes of governmental and business agencies develop into an institutional setting (in a broader sense) proving to be more fit than others in the unfolding of the competitive expansion. This fitness, however, is derived from mere reaction to the challenges (in the case of the declining hegemon) or opportunities (in the case of the rising competitors) provided by the structural properties of the world capitalist system on which these actors seem to have no impact. In the words of Arrighi they are all product and not at all productive ADDIN EN.CITE Arrighi1999914, 241Arrighi, GiovanniSilver, Beverly J.Ahmad, Iftikhar1999Chaos and governance in the modern world systemMinneapolisUniversity of Minnesota Pressx, 3360816631514
0816631522 (pbk.)D299 .a75 1999
337World politics.International economic relations.(Arrighi, Silver, and Ahmad 1999, 24). Whereas he accepts the notion that the systemic properties act as powerful constraining and disposing forces on the selection of the hegemonic state, he argues for the need to include the factor of fundamental reorganization of the system by the hegemon resulting in a change of its properties.
Arrighis Model of Hegemonic Transition
Building on Wallersteins model of hegemonic cycles, but aiming to endogenize systemic change, Arrighi extends this model by employing a Gramscian ADDIN EN.CITE Gramsci197114341Gramsci, Antonio1971Selections from the prison notebooks of Antonio GramsciHoare, QuintonSmith, Geoffrey NowellNew YorkInternational PublishersHoare, QuintonSmith, Geoffrey Nowell(Gramsci 1971) notion of hegemony as something different than domination pure and simple: it is the additional power that accrues to a dominant group by virtue of its capacity to lead society in a direction that not only serves the dominant groups interest, but is also perceived by subordinate groups as serving a more general interest ADDIN EN.CITE Arrighi19991; emphasis in the original261Arrighi, GiovanniSilver, Beverly J.Ahmad, Iftikhar1999Chaos and governance in the modern world systemMinneapolisUniversity of Minnesota Pressx, 3360816631514
0816631522 (pbk.)D299 .a75 1999
337World politics.International economic relations.(Arrighi, Silver, and Ahmad 1999, 26; emphasis in the original). Arrighi defines world hegemony as referring specifically to the power of a state to exercise functions of leadership and governance over a system of sovereign states. Hegemony in this context includes not only push factors of (military and economic-based) coercion and a systemic reorganization by the hegemon but also pull factors that lead to a widespread imitation of the hegemonic state. Arguably the reorganization of the system, then, is as much depended on both, push and pull factors, or what Gramsci ADDIN EN.CITE Gramsci19711434, 571Gramsci, Antonio1971Selections from the prison notebooks of Antonio GramsciHoare, QuintonSmith, Geoffrey NowellNew YorkInternational PublishersHoare, QuintonSmith, Geoffrey Nowell(1971, 57) calls domination and moral leadership (see REF _Ref417049402 \h Figure 2).
/ REF _Ref417049402 \h Figure 2 about here/
Buried in the leaders own success as both a model and modeler leading to leadership against the leaders will ADDIN EN.CITE Schumpeter193416251Schumpeter, Joseph Alois1934The theory of economic development: an inquiry into profits, capital, credit, interest, and the business cycleCambridge, MAHarvard University Pressxii, 255HB175 .S462
330.1Economics.Economic history.(Schumpeter 1934) lies the demise of the leaders dominance of the system, leading to a systemic expansion and consequently a hegemonic crisis. Arrighi identifies three distinct, but closely related processes characterizing all historical hegemonic crises, namely interstate rivalries and interenterprise competition of followers and imitators, social conflicts arising out of the expansion of the volume and dynamic density ADDIN EN.CITE Durkheim193818701Durkheim, Emile1938The rules of sociological methodChicago, Ill.The University of Chicago presslx, 1468thSolovay, Sarah A.Mueller, John HenryHM24 .D962 1938
301.8Sociology Methodology.Durkheim198418721Durkheim, Emile1984The division of labor in societyNew YorkFree Presslix, 352W.D. Halls0029079500
0029079608 (pbk.)1933HD51 .D9613 1984
306/.36Division of labor.(Durkheim 1938; 1984) of the system causing the regulatory overstretch of existing institutions, and the interstitial emergence of new configurations of power. In addition, relying to a wide degree on Braudels ADDIN EN.CITE Braudel199214831Braudel, Fernand1992BerkeleyUniversity of California Press33 v.0520081161 (v. 3)1984HC51 .B67413 1992
909.08Economic history.Social history.Civilization, Modern History.Civilization and capitalism, 15th-18th century: The perspective of the world(1992a) identification of financial expansions, Arrighi puts a strong emphasis on what he argues to be the most evident manifestation of the capitalist nature of the modern world system ADDIN EN.CITE Arrighi1999914, 2311Arrighi, GiovanniSilver, Beverly J.Ahmad, Iftikhar1999Chaos and governance in the modern world systemMinneapolisUniversity of Minnesota Pressx, 3360816631514
0816631522 (pbk.)D299 .a75 1999
337World politics.International economic relations.(Arrighi, Silver, and Ahmad 1999, 231), namely the pattern of systemwide financial expansion. Employing Marxs general formula of capital
EMBED Equation.3
where M represents money capital (meaning liquidity, flexibility, freedom of choice), C stands for commodity capital (or capital invested in a particular input-output combination in view of a profit), and M means expanded monetary capital (and thus greater liquidity, flexibility, and freedom of choice), Arrighi ADDIN EN.CITE Arrighi19941356, 61Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
1859840159 (pbk.)HB501 .A75 1994
330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our times(1994, 6) goes on to argue that this formula can be interpreted as depicting not just the logic of historical capitalist investments, but also a reoccurring pattern of historical capitalism as world system. For Arrighi, then, the central driver of the capitalist world system becomes the alternating cycle of epochs of material expansion in the form of (1) phases of capital accumulations
EMBED Equation.3
setting in motion an increasing mass of commodities and consisting of phases of continuous change, during which the capitalist world-economy grows along a single-developmental path; and (2) phases of financial rebirth and expansion, formulaically noted as
EMBED Equation.3
with an increasing mass of money capital setting itself free from the its commoditized form, consisting of phases of discontinuous change during which growth along the established path has reached or is attaining its limits, with the capitalist world-economy shifting through radical restructurings and reorganizations onto another path. Taken together, these two phases constitute a full systemic cycle of accumulation. This reoccurring pattern of financial expansion is closely related to the pattern of inter-state competition not just for mobile capital (as argued by Weber), but also with the formation of political structures endowed with ever-more extensive and complex organizational capabilities to control the social and political environment of capital accumulation on a world scale ADDIN EN.CITE Arrighi19941356, 141Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
1859840159 (pbk.)HB501 .A75 1994
330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our times(Arrighi 1994, 14).
Triggered by the financial expansion, the outcome of the interplay between interstate rivalries, social conflicts, and the emergence of new configurations of power is the eventual breakdown of the hegemonic system and its transformation in a state of systemic chaos (see REF _Ref417049402 \h Figure 2). Systemic chaos, as defined by Arrighi, describes a situation of severe and seemingly irremediable systemic and self-reinforcing disorganization as a result of the institutional overstretch of the current regulatory regime. The same process of financial expansion, however, also triggers the emergence of a new complex of governmental and business agencies endowed with greater system-level organizational capabilities (or fitness in the language of evolutionary frameworks). Thus, the same processes that have generated systemic chaos have also generated the greater concentration of systemic capabilities that, if paired with the opportunity of systemic chaos, eventually result in the establishment of a new hegemonic cycle.
Modelski and Thompsons Model of Leadership Transition
Modelski and Thompson ADDIN EN.CITE Modelski198818731Modelski, GeorgeThompson, William R.1988Seapower in global politics, 1494-1993Seattle, WAUniversity of Washington Pressxii, 3800295965029V25 .M63 1988
359/.009/03Sea-power History.Sea-power Political aspects.Warships.Navies.Naval history, Modern.Cycles.World politics.Modelski19966571Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economicsModelski198791110295964308D32 .m63 1988
909.82Modelski, GeorgeLong cycles in world politicsSeattleUniversity of Washington Press1987244World politics.Cycles.Thompson20006561William R. Thompson2000The emergence of a global political economyLondon and New YorkRoutledge041521453xIPELong CycleK-WavesLeading SectorsLeading EconomiesWorld LeaderGlobal War(Modelski and Thompson 1988, 1996; Modelski 1987; Thompson 2000) have developed a model of hegemonic transition that emphasize the coevolution of the cycles of leadership long cycles in the terminology of Modelski and Thompson ADDIN EN.CITE Modelski197818740Modelski, George1978The Long Cycle of Global Politics and the Nation-StateComparative Studies in Society and History202214-35Long Cyclehegemonieshegemonic transitionsglobalizationModelski198791110295964308D32 .m63 1988
909.82Modelski, GeorgeLong cycles in world politicsSeattleUniversity of Washington Press1987244World politics.Cycles.Modelski19906850George Modelski1990Is World Politics Evolutionary Learning?International Organization4411-24Long cyclesK-wavesglobal powersThompson198816601Thompson, William R.1988On global war: historical-structural approaches to world politicsColumbia, SCUniversity of South Carolina Pressxxiii, 3150872495620U21.2 .T465 1988
355/.02War.International relations.Cycles.Modelski19966571Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economics(Modelski 1978; 1987; 1990; Thompson 1988; Modelski and Thompson 1996) with the economic processes of the K-wave. Rather than employing the concept of world-hegemony, the authors view hegemony in their model as leadership and hegemons as world powers (from a changing pool of global major power states). In this view, each successive long cycle consists of four phases (see REF _Ref417278866 \h Figure 3). After a selection of the world power in the phase of global war, this power finds its high point of leadership during the next phase of world power. Triggered by clusters of new innovations (both spatial and temporal), new leading sector arise in the next phase of deligitimation, which in concert with the diffusion of technological know-how leads to the rise of new configurations of power in the following phase of deconcentration, causing the rise of one or several challengers to the position of world power and leading eventually to another macrodecision in a new global war phase (see REF _Ref417278866 \h Figure 3).
/ REF _Ref417278866 \h Figure 3 about here/
The long cycle in this view is regarded, then, as the output of a political production function whose product is global leadership, here understood as addressing solutions for global problems ADDIN EN.CITE Modelski1996657, 7-81Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economics(Modelski and Thompson 1996, 7-8). The input-factors going into this production function are global reach (advantaged by insularity), a lead economy (i.e., the location of the clusters of innovations creating the dominant leading sectors of the world economy), an open (learning) society, and responsiveness to global demand (i.e., problems) through the facilitation of innovation. Some factors are more important than others during different phases. So, during the global war phase global reach becomes central, whereas during the world power phase the major driver becomes the leadings sectors and their position in the world economy. During the deligitimation phase the innovative potential (usually higher in emerging new leader) and flexible institutional settings are at a premium, whereas the deconcentration phase highlights the advantages of the resources of open societies ADDIN EN.CITE Modelski1996657, 81Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economics(Modelski and Thompson 1996, 8).
K-waves, defined as the rise and decline of leading sectors, bear important structural similarities with the long cycles of world powers. It is important to note that Modelski and Thompsons analysis of K-waves does not center simply on prices or macroeconomic quantities, but on worldwide leading commercial and industrial sectors in the economies originating in them. They arise from the clustering of basic innovations, understood as new products methods of production, opening of new markets and sources of raw materials, and the pioneering of new forms of business (or commercial) organizations ADDIN EN.CITE Schumpeter19341625, 661Schumpeter, Joseph Alois1934The theory of economic development: an inquiry into profits, capital, credit, interest, and the business cycleCambridge, MAHarvard University Pressxii, 255HB175 .S462
330.1Economics.Economic history.(Schumpeter 1934, 66). They do so in a four-phased industry and product life cycle and are international phenomenon and as such more visible if viewed from the perspective of a world economy. Thus, their similarities of unfolding (four phases), their common processes of clusters of endogenous economic (in the case of K-waves) and socio-political (in the case of long waves) innovations and innovative institutional settings as responses to (partly endogenous) priority global problems, and a common evolutionary character explains the double helix of K-waves and long cycles ADDIN EN.CITE Thompson20006561William R. Thompson2000The emergence of a global political economyLondon and New YorkRoutledge041521453xIPELong CycleK-WavesLeading SectorsLeading EconomiesWorld LeaderGlobal War(Thompson 2000).
A Synthesis of Systemic Transition Theories
Despite the difference in terminology ADDIN EN.CITE Rapkin19901875for reasons of conceptually different understandings of hegemony, see 7Rapkin, David P.1990The Contested Concept of Hegemonic LeadershipRapkin, David P.World Leadership and HegemonyBoulder, COLynne Rienner Publishers1-19(for reasons of conceptually different understandings of hegemony, see Rapkin 1990), their definition of long cycles as instances of structural change [and] processes that in recent centuries have periodically rearranged the structure of global political arrangements and given rise to the phenomenon of world powers ADDIN EN.CITE Modelski1996657, 71Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economics(Modelski and Thompson 1996, 7) provides a compatible conceptualization of hegemonic change and transition with the previous two models discussed earlier. This claim, of course, requires a brief explanation and we rely partially on Arrighi, himself a strong critic of the notion of compatibility of K-waves and secular cycles and his conceptualization of systemic cycles, to provide it.
Arrighi ADDIN EN.CITE Arrighi19941356, 71Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
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330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our times(1994, 7) admits that secular cycles (i.e., price logistics) and K-waves (as he identifies them in Braudels work) bear some striking similarities to his conceptualization of systemic cycles, argues, however, that secular price cycles and systemic cycles of accumulation are completely out of synchrony with one another, contending that faced with a choice between these two cycles, we have opted for systemic cycles because they are far more valid and reliable than secular or Kondratieff cycles ADDIN EN.CITE Arrighi19941356, 7, emphasis added1Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
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330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our times(Arrighi 1994, 7, emphasis added). This notion is based on his argument that systemic cycles of accumulation, unlike price logistics and K-waves, are inherently capitalist phenomena, pointing to a fundamental continuity in world-scale processes of capital accumulation in modern times, also constituting fundamental breaks in the strategies and structures that have shaped these processes over the centuries ADDIN EN.CITE Arrighi19941356, 8-91Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
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330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our times(Arrighi 1994, 8-9). This, of course, is complementary to the conceptualization of K-waves found in Modelski and Thompsons model. Arrighi himself acknowledges the similarities of conceptualization of K-waves by authors such as Mensch ADDIN EN.CITE Mensch19796891088410611XHc79.t4 m4513
338.5/42
Hc79.t4Mensch, GerhardCambridge, Mass.Ballinger Pub. Co.1979xix, 241Technological innovations.Economic history 1945-Patents.Depressions.Stalemate in technology: innovations overcome the depression(1979), Gordon ADDIN EN.CITE Gordon198018787Gordon, David1980Stages of Accumulation and Long Economic SwingsHopkins, Terence K.Wallerstein, Immanuel MauriceProcesses of the world-systemBeverly Hills, Calif.Sage Publications9-450803913788
0803913796 (pbk.)Hc13 .p77
330.9Economic history Congresses.Capitalism Congresses.Business cycles Congresses.Social classes Congresses.(1980), and Perez ADDIN EN.CITE Perez198313530Perez, Carlota1983Structural Change and Assimilation of New Technology in the economic and social systemsFutures155357-75(1983), but nevertheless stresses the significant difference of the two approaches on two grounds, their conceptualization of hegemony and the dynamic evolution of the system ADDIN EN.CITE Arrighi19941356, 271Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
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330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our times(Arrighi 1994, 27).
Whereas it is true that Modelski and Thompson stress the pull factors of leadership, it would be wrong to assert that this model does not allow for push factors as well. Especially during both, the global war, and world power phases, the push factor of naval force and superiority allows the leader to institutionalize its leadership to some degree. While Modelski and Thompson stress the combination of both pull and push factors acting in combination (as Arrighi does), they admit the limitations of this leadership, stressing that world powers are unable to exercise the same type and degree of command and control often attributed to imperial centers ADDIN EN.CITE Modelski1996657, 351Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economics(Modelski and Thompson 1996, 35). This, however, does not significantly differ from Arrighis conceptualization of hegemony, whos major focus is not the degree of control in terms of military coercive power, but rather in terms of the leaders ability to induce some form of transformative action, changing the mode of operation of the system in a fundamental way ADDIN EN.CITE Arrighi19941356, 271Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
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330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our times(Arrighi 1994, 27). This transformative character of hegemonic change is present in both conceptualizations.
Arrighi in addition mistakenly ascribes a non-evolutionary, static notion to Modelski and Thompsons leadership long cycle conceptualization. Both works build to some degree on Wallersteins model of hegemonic cycles but aim to overcome his limitation of exogenizing systemic change, by making the endogenous factors of the systemic change explicit in the model. Thus, Modelski and Thompson stress that both, K-waves and long cycles, are driven by endogenous basic innovations, both economic and socio-political in nature, and highly evolutionary in nature ADDIN EN.CITE Modelski1996657especially 1Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economicsModelski1996657for a more recent summary of the evolutionary aspects of the long cycle approach, see 1Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economics(especially Modelski and Thompson 1996).
In sum, despite some degree of difference, the greater number of similarities than differences in both approaches allows to form a synthesis of both models that takes into account the strengths of each respective model but introduces a new conceptualization. We believe it is worthwhile to construct such a synthesis in order to get a better theoretical understanding of the process of hegemonic transition, especially in regard to its future development. We might even make the certainly controversial argument that the historical account of hegemonic/leadership shifts is not as dramatically different as it seems. Whereas Arrighi argues, that to this point three hegemonic transitions Genoa to Dutch; Dutch to Britain; Britain to US occurred (with structural shifts from capitalist to capitalist/territorial to a combined territorial/capitalist system), Modelski and Thompson argue for a longer period of shifts of leadership (Northern Sung, Southern Sung, Genoa, Venice, Portugal, Dutch, Britain I, Britain II, US I). It is beyond the scope of this paper to discuss the possibility of Arrighis model to account for the same list of leadership transition; here we shall limit ourselves to the historical development of the transition as it unfolds in the European theater.
Two Types of Systemic Chaos
We agree with Arrighi ADDIN EN.CITE Arrighi19941356, 331Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
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330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our times(1994, 33), that inter-state and inter-enterprise competition can take different forms, and the form they take has important consequences for the way in which the modern world system as a mode of rule and as a mode of accumulation functions or does not function. Arrighi ADDIN EN.CITE Arrighi19941356, 44-51Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
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330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our times(1994, 44-5) broadly differentiates between capitalist and territorial systems, arguing that only with the emergence of the Dutch reorganization of political space in the interest of capital accumulation of capital the modern inter-state system came into being. Arrighi however also describes the important roots of the Dutch system emerging out of the Venetian and Genoese systems (or complex), using the metaphor of the development of the modern world system not along a single track but rather through several switches to new tracks laid by specific complexes of governmental and business agencies and with the Venetian, Genoese (in the fifteenth century), Dutch (in the seventeenth century), British (in the nineteenth), and for that matter also the US (in the twentieth century) acting as tracklaying vehicles for the emerging new systems ADDIN EN.CITE Arrighi1999914, 221Arrighi, GiovanniSilver, Beverly J.Ahmad, Iftikhar1999Chaos and governance in the modern world systemMinneapolisUniversity of Minnesota Pressx, 3360816631514
0816631522 (pbk.)D299 .a75 1999
337World politics.International economic relations.(Arrighi, Silver, and Ahmad 1999, 22). Modelski and Thompsons version of the development of the modern world system differs on several counts to that of Arrighis. As noted earlier, they argue for an evolution of the system with its beginnings in the rise of Northern Sung and Southern Sung China, Genoa, and Venice during the Chinese/Italian Renaissance (from 930 to the early fifteenth century), the west European development with Portugal, the Dutch Republic and Britain acting as leaders and transformers of the system (from the fifteenth century to the early nineteenth, and the shift towards a post-European system arising out the leadership of the U.S. emerging in the mid nineteenth century.
The notion of chaos as the result of the disintegration of the systemic system put into place by the hegemonic leader as an outcome of its waning power is present in both, Arrighis (from whom we have adopted the term) and Modelski and Thompsons model (using the term deconcentration) and both agree on the importance of the unraveling of the old for the creation of the new system. Both models differ, however in the account as to what causes the unraveling to start and to end. Modelski and Thomson view the emergence of new leading sectors, triggered by clusters of innovation and new capabilities together with the starting technological diffusion (also present in Wallersteins model) as the trigger for the hegemonic crisis and as an outcome interstate rivalries and interenterprise competition, whereas Arrighi argues that this competition is the cause of the crisis. Also, Modelski and Thompson, again similar to Wallerstein in this respect, have argued for the importance of the forceful challenge of the leader/hegemon during the global war/macrodecision phase acting as the final catalyst for the new leader to emerge and unfold its new leadership system (in Modelski and Thompsons view) or hegemony (in Wallersteins and Arrighis terminology). In other words, and to use Arrighis metaphor, in this view the old leader has to be beaten with new tricks out of the tracks before the new train can be set into motion.
/ REF _Ref417315620 \h Figure 4 about here/
We believe that these differences are not impossible to bridge ADDIN EN.CITE Boswell19991884see also 7Boswell, Terry1999Hegemony and Bifurcation Points in World HistoryBornschier, VolkerChase-Dunn, Christopher K.The Future of global conflictLondon and Thousand Oaks, CASage Publications262-2840761958657
0761958665 (pbk.)D860 .F875 1999
909.81World politics 1989-Great powers.Twenty-first century Forecasts.(see also Boswell 1999). REF _Ref417315620 \h Figure 4 graphically summarizes the model of hegemonic transition proposed in this paper. In our synthesis we combine Modelski and Thompsons notion of hegemonic crisis and global war as a catalyst for the transition to the new system with Arrighis concept of systemic transition and chaos (see REF _Ref417315620 \h Figure 4). Systemic expansion, in this view, allows the development of new clusters of innovations that lead to the emergence of new leading sectors and result in the emergence of new configurations of power in the form of alternative political and economic institutions. These developments cause the rise of a new center of systemic capabilities and an increased inter-state and inter-enterprise competition, ultimately laying the foundation for a new commercial and organizational arrangement and also the rise of challengers to the existing leader, whos domination of the system starts to decline. Two types of challengers have to be differentiated: catch-up challengers that aim to challenge the existing leader in the same tracks staying with Arrighis metaphor but with highly improved machinery aiming to overtake the leader on its own tracks. A second kind of challenger, however, aims to overtake the old leader on an all-together new set of tracks as a result of its innovative new means, both in technological and organizational terms and aiming to tackle global problems in a new commercial and arrangement. After the breakdown of the old arrangement results in a systemic chaos (equivalent to Modelski and Thompson deligitimation phase), the process of global warfare provides the macrodecision that triggers the rise of a new leader, so far always of the second track-changing kind, who reinforces the transformation of the world system through its institutional manifestation (push factor) of the new technological style ADDIN EN.CITE Perez198313530Perez, Carlota1983Structural Change and Assimilation of New Technology in the economic and social systemsFutures155357-75(Perez 1983) and experiences further reinforcement through the emulation of leader by other states during this phase (pull factor).
In contrast to Arrighis argument that the emergence of a capitalist mode (based on the old one, but qualitatively different and novel) identified in REF _Ref417315620 \h Figure 4 as systemic change falls together with the rise of a new hegemonic leader, we argue here that the emergence of a new capitalist mode enables the existing leader to develop dual and alternative (but to some degree complimentary) centers of systemic capabilities, causing the development of a different form of chaos and allowing for the generation of a Phoenix cycle of renewed leadership out of the ashes of its former status (for reasons laid out below). This is reflected in the model as laid out in REF _Ref417315620 \h Figure 4.
We differ between three major types of capitalist modes (during the time under study here, starting with the Genoan hegemony): commercial maritime, industrial, and digital commercial ADDIN EN.CITE Rennstich20021471on the effect of these types on rivalries between great powers, see 7Rennstich, Joachim K.2002The Future of Great Power RivalriesDunaway, Wilma A.New Theoretical Directions for the 21st Century World-SystemNew YorkGreenwood Press(on the effect of these types on rivalries between great powers, see Rennstich 2002a). Commercial maritime capitalism is in large part characterized by its emphasis on external networks of production and other value-adding processes (including division of labor) and the importance of flows within the world economic system. The leading sectors in this phase are predominately service- or flow-oriented. In Modelski and Thompsons ADDIN EN.CITE Modelski19966571Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economics(Modelski and Thompson 1996) account this includes the Champagne fairs and Genoan Atlantic trade and trade in the Black Sea during long cycle three (under Genoan leadership), Romanian and Levantine galley fleets during long cycle four (Venice), the control over Guinean gold and Indian pepper (Portugal), Baltic, Atlantic, and later Asian trade control of the Dutch, and Amerasian trade control of the British during long cycles five, six, and seven respectively. Industrial capitalism, by contrast, has its main center located in internal production networks. The leading sectors in this capitalist mode are commonly associated with our understanding of industrialization Britains dominance of cotton and iron production, and later railroads and steam during the eighth long cycle, followed by the leadership in steel, chemicals, electric power, motor vehicles, aviation, and electronics of the United States during the ninth long wave in Modelski and Thompsons count. We are currently witnessing the rise of a new capitalistic mode, here referred to as digital commercial capitalism for its strong resemblance of the earlier maritime commercial mode, especially in terms of its strong emphasis on external networks in the world economy. This system, however, denotes a new, unique capitalistic mode as a result of its inclusion of digital information as a new commodity and its much more sophisticated integration of production-networks.
Internal/External Networks vs. Capitalism/Territorialism
Both, Arrighi and Modelski and Thompson emphasize the critical division between territorially driven and (commercial) capitalist power structures. Whereas Modelski and Thompson argue for the continuation of this divide, Arrighi argues that Britain was able to fuse both structures, while during the following U.S. leadership a slight diffusion back towards a more capitalist orientation took place. Here we argue that while useful and important, the two perspectives can be combined by shifting the focus on the structure of networks and the division between capitalist modes dominated by internal or external networks rather than the focus on capitalism and territorialism.
The difference between the leading sectors in the maritime commercial (or digital commercial) and the industrial systems is, as Sen ADDIN EN.CITE Sen19841020, 71Sen, Gautam1984The military origins of industrialization and international trade rivalryNew YorkSt. Martin's Press2770312532369Hf1411 .s3326 1984
382/.3
Hf1411Commercial policy.Economic development.Military policy.(1984, 7) points out, the dual strategic significance for military self-sufficiency and national economic independence held to provide the rationale for the desire to acquire this group of industries. Great powers in this system try to establish internal rather than external networks, in order to, as Rosecrance puts it, excel in all economic functions, from mining and agriculture to production and distribution ADDIN EN.CITE Rosecrance19991170, 61Rosecrance, Richard N.1999New YorkBasic Books0465071414Trading States; globalization; global commerical networkThe rise of the virtual state: wealth and power in the coming century(Rosecrance 1999, 6). This emphasis on self-sufficiency and national economic independence characterizing the industrial environment stands in stark contrast to the necessities of an external network- and service-based environment as found in the maritime commercial and the digital commercial systems. Of course, this does not imply that trade dies away or renders unimportant. Far from it, trade remains an important factor in rivalries amongst nation states. It is not, however, the central basis of the leading sectors as in the maritime trade network system.
Arrighi (paraphrasing Marx general formula of capitalist production) argues for two logics of power: TMT (territorialism) versus MTM (capitalism), where M = economic command or money and T = territory, or
EMBED Equation.3
Following Arrighis argument further, Britains synthesis of both logics of power, territorial (T) and economic command (M) can be noted as
EMBED Equation.3
where economic command multiplied by its territorial control (MT) breeds further territorial gains multiplied by its economic command (TM), resulting in an enlarged economic command and territorial control (MT). For Arrighi, the following U.S. leadership, however, while building on Britains system, marks the return to an increased emphasis of economic command over territorial factors, since the British system of combining its economic strategy with an imperial strategy is no longer successfully executable in an increasingly complex world system. This has significant implications for the current transition (if indeed occurring at all). For Arrighi ADDIN EN.CITE Arrighi1999914, 801Arrighi, GiovanniSilver, Beverly J.Ahmad, Iftikhar1999Chaos and governance in the modern world systemMinneapolisUniversity of Minnesota Pressx, 3360816631514
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337World politics.International economic relations.(1999, 80), the difference between the current systemic transition in contrast to previous ones is that the scale and complexity of the modern world system have already become so large as to leave no little room for further increases. Taking into account Arrighis discussion of space-of-places and space-of-flows, the newly emerging system can thus be formulated as MtM, where T = space of places/territory, and t = space of flows/digital space. Using Arrighis conceptualization the evolutionary development of the modern world system can be noted as follows:
EMBED Equation.3
Employing the same use of Marxs general formula of capitalism, with the aim of a more general and simpler formula than the one above, we propose the following generalization of the evolutionary development of the modern world system. Also built on two logics of power but instead of focusing on the divide between territorialism and (commercial) capitalism as Arrighi and Modelski and Thompson do, we propose instead to focus on the divide between systems of internal and external networks
EMBED Equation.3
where N = network capital (flexibility, freedom of choice) and C = commodity capital (capital invested in particular input-output combinations), paraphrasing Marxs general formula MCM. Thus, we can identify the two divergent cycles of CNC (internal networks) and NCN (external networks) that describe the systematic development of each hegemonic (or leadership) cycle. Both, the commercial maritime as well as the digital commercial systemic phase would thus be characterized by a NCN cycle, whereas the phases dominated by an industrial capitalist mode follow a CNC cycle. Again, we believe this distinction is compatible with both, Modelski and Thompsons and Arrighis model, especially in regard to Arrighis discussion of the newly emerging systemic mode.
As a result, we can identify four distinct phases in the evolution of the modern world system: a territorial phase (China), a maritime commercial phase (Genoa, Venice, Portugal, Dutch, England I), and industrial phase (England II, US I), and the emerging digital commercial phase (US II). All four phases can be divided into two meta-systems (as a result of leading sectors and the different capitalist modes). Hegemonies are either characterized by the dominance of internal (territorial; industrial) or their external (maritime commercial; digital commercial) network structure. As laid out in REF _Ref417315620 \h Figure 4, the impact of the transition from an internal to an external network structure (or vice versa) is important not only in terms of the change in the general structure of the new commercial and organizational arrangement but also for the location of the new global leadership. So far, we have witnessed one occurrence of hegemonic and systemic transition (as understood in our model), where the existing leader (Britain) was aiming to maintain and strengthen its leadership and are currently experiencing a similar transition. It is this co-occurrence of hegemonic and systemic transition that allows for the development of what we term the Phoenix cycle of renewed leadership of the old hegemon.
The Phoenix Cycle
The process leading to the development of a systemic chaos as depicted in REF _Ref417315620 \h Figure 4 is normally driven by the clustering of innovations outside the leaders realm (both in a geographical and technological sense), paired with the technological diffusion from core leading sectors technologies (again in a broader sense) and the emergence of new leading sectors, triggering the centralization of new systemic capabilities in one or two newly emerging new centers, and eventually causing the rise of challengers to the existing leader. Given a change in the general capitalistic mode dominating the world system in divergent but broadly compatible forms acknowledged by both, Arrighi ADDIN EN.CITE Arrighi19941356, ch. 11Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
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330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our times(1994, ch. 1), and Modelski and Thompson ADDIN EN.CITE Modelski1996657, 71-21Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economics(Modelski and Thompson 1996, 71-2) historically we have witnessed a phenomenon here referred to as the Phoenix cycle. In instances (so far only one, namely Britains ability to defend her leadership position during the eighteenth and nineteenth century) where the systemic chaos is not only driven by the normal process of hegemonic crisis and breakdown, but also coincides with a systemic crisis (and eventual breakdown) triggered by a change in the major capitalist mode of the system (leading to a system meta-structure shift), the existing leader can defend its leadership position in the transforming world system if it is able to allow the parallel development of a new cluster of innovations and the rise of new leading sectors within its domain (see REF _Ref417315620 \h Figure 4).
As shown by a number of authors from various research traditions ADDIN EN.CITE Christensen19971038such as 1Christensen, Clayton M.1997The innovator's dilemma: when new technologies cause great firms to failBoston, MAHarvard Business School Pressxxiv, 2250875845851 (alk. paper)Axu-6103Hd53 .c49 1997
658Creative ability in business.Industrial management.Customer services.Success in business.Gilpin199610560Robert Gilpin1996Economic Evolution of National SystemsInternational Studies Quarterly403411-431Septemberfitness; IPEFreeman200114491Freeman, ChristopherLouçã, Francisco2001Oxford University Pressxv, 4070199241074 (alk. paper)HB3729 .F738 2001
338.5/4Long waves (Economics) History.Information technology History.Industrial revolution.As time goes by: from the industrial revolutions to the information revolutionOxford, UK and New YorkFreeman199710781Freeman, ChristopherSoete, Luc1997The economics of industrial innovationCambridge, Mass.MIT Pressviii, 4703rd0262561131 (alk. paper)
0262061953 (alk. hard)HD45 .F725 1997
338/.06Technological innovations Economic aspects.Freeman198810797Freeman, ChristopherPerez, Carlota1988Dosi, GiovanniFreeman, ChristopherNelson, Richard R.Silverberg, GeraldSoete, Luc L. G.Technical change and economic theoryLondon and New YorkPinter Publishers086187949XHC79.T4 T4 1988
338/.06Technological innovations Economic aspects.Economics.Structural Crises of Adjustment: Business Cycles and Investment BehaviourPorter199010671Porter, Michael E.1990The competitive advantage of nationsNew YorkFree Pressxxxii, 8550684841479 (hardcover)HD3611 .P654 1998
338.9Industrial policy.Competition, International.International business enterprises.Strategic planning.Economic development.Industrial management.Nelson1982105711226390674272277An evolutionary theory of economic changeCambridge, Mass.Belknap Press of Harvard University Press1982xi, 437EconomicsEconomic developmentOrganizational changeNelson, Richard R.Winter, Sidney G.UCB Bus&Econ HB71 .N44 1982
UCB Law Lib K27.E2 N44
UCB Main // WITHDRAWN HB71 .N44 1982
UCB Moffitt HB71 .N44 1982
UCD Shields HB71.N44 1982
UCI Main Lib HB71 .N44 1982
UCLA URL HB 71 N44 1982
UCR Rivera HB71 .N44 1982
UCSB Main Lib HB71 .N44 1982
UCSC McHenry HB71.N44 1982
UCSD SSH HB71 .N44 1982(such as Christensen 1997; Gilpin 1996; Freeman and Lou 2001; Freeman and Soete 1997; Freeman and Perez 1988; Porter 1990; Nelson and Winter 1982), past success often entails the very ingredients for future demise. Whereas continuous innovation still takes place within the existing leader, adaptation to a newly emerging, changed environment (as a result of the rise of new leading sectors elsewhere) proves very hard for a society that can (and usually does) become locked in into economic practices and institutions that in the past proved so successful. Powerful vested interests resist change, especially in circumstances were a nation is so powerful as to institutionalize its commercial and organizational arrangement on a global level, a change dire needed however to maintain its leadership. Gilpin ADDIN EN.CITE Arrighi19999141Arrighi, GiovanniSilver, Beverly J.Ahmad, Iftikhar1999Chaos and governance in the modern world systemMinneapolisUniversity of Minnesota Pressx, 3360816631514
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337World politics.International economic relations.Gilpin199610560Robert Gilpin1996Economic Evolution of National SystemsInternational Studies Quarterly403411-431Septemberfitness; IPE(1996, 413) thus concludes that a national system of political economy that most fit and efficient in one era of technology and market demand is very likely to be unfit in a succeeding age of new technologies and new demands.
The cyclical emergence of new commercial and organizational arrangements as shown by Modelski and Thompson, Freeman, and others entails such an environmental change. Thus, hegemonic transitions usually entail the shift from one leader to another due to what Boswell ADDIN EN.CITE Boswell19991884, 2657Boswell, Terry1999Hegemony and Bifurcation Points in World HistoryBornschier, VolkerChase-Dunn, Christopher K.The Future of global conflictLondon and Thousand Oaks, CASage Publications262-2840761958657
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909.81World politics 1989-Great powers.Twenty-first century Forecasts.(1999, 265) calls the advantage of backwardness. If we view the emergence of new commercial and organizational arrangements as a largely endogenous process, its emergence also causes an environmental shift that can be understood as an exogenous factor as well. However, the response of the existing leader to this change is largely driven by endogenous factors again. The same can be said for the change from one capitalist mode to another, setting off the transition from an internal network structure system to an external network-structured one (and vice versa). It is the set of leading sectors (an endogenous process) that causes over time the change of the systemic structure and thus a change of the meaning of fitness in the evolutionary selection process. The shift from one capitalist mode to another, then, is also both an endogenous but to some degree also an exogenous process.
As pointed out earlier, we have witnessed in the past that under certain circumstances the old hegemonic leader is capable of maintaining its leadership position. Instead of withering away, these leaders are able to renew themselves, like a phoenix arising from the ashes of its declining old leadership position. Several reasons account for this phenomenon.
Unhindered Rise of Second Center of Systemic Capability
One of the main obstacles for the existing hegemon, as discussed earlier, is the entrenchment of its own success. The institutionalization of its successful strategies creates powerful incentives to remain on course. These institutions prove not only to be sticky (in the sense that they outlast their original intent and aim to preserve the existing rather than adapt to change) but also defensive. New ways of doing things are thus less likely to emerge where such entrenched resistance exists, a phenomenon we can observe both on the micro- (individuals and firms) and macro-level (states). A crucial factor we have to take into account is the kind of global problems (as identified by Modelski and Thomson) the actors are trying to address. In a systemic environment that is driven by the same capitalistic mode, these problematiques will be more closely connected than in a situation in which the power strategy is based on two different capitalistic modes. It is important to keep in mind that the two network systems internal or external are reflective of different power strategies. The rise of a new commercial and organizational arrangement reflective of a different network environment provides less of a threat to the existing entrenched order and thus will be met with less resistance.
We know that the emergence of new leading sectors is a path-dependent process. Leading sectors of a new network environment are products of a different path than that of the existing commercial and organizational arrangement (despite their co-existence and often to some degree parallel historical trajectories). Originating in different power-logics, they can be quite complimentary in their development as for example Nef ADDIN EN.CITE Nef193418810Nef, John U.1934The Progress of Technology and the Growth of Large-Scale Industry in Great Britain, 1540-1640The Economic History Review513-24(1934) has demonstrated so eloquently. For Nef ADDIN EN.CITE Nef19341881, 220Nef, John U.1934The Progress of Technology and the Growth of Large-Scale Industry in Great Britain, 1540-1640The Economic History Review513-24(1934, 22)
the commercial revolution had a continuous influence reaching back to the Reformation upon industrial technology and the scale of mining and manufacturing. But so, in turn, the progress of industry had continuously stimulated in a variety of ways the progress of commerce. The former was quite as revolutionary as the latter, and quite as directly responsible for the Industrial Revolution. ADDIN EN.CITE Nef19341881, 220Nef, John U.1934The Progress of Technology and the Growth of Large-Scale Industry in Great Britain, 1540-1640The Economic History Review513-24(Nef 1934, 22)
This compatibility or even complimentary character is to a large degree the result of not only the difference in power strategies but also the difference in commercial strategies. External network arrangements tend to be service-oriented (in todays economic language) whereas internal network systems tend to be production-focused (see also earlier discussion on the difference between internal and network systems above). Thus, in the same manner as the commercial supremacy of Britain helped her to build up her industrial strength, the U.S. informational technologies and digital networking capabilities are based upon the strength of her earlier strengths in an internal network environment (i.e., microelectronics, mass production, aerospace technologies, and semiconductor production). As a result, the parallel development of two centers of systemic capabilities one rooted in the external network power logic, the other in the internal network power is not only possible but also complimentary and self-reinforcing.
Investment Flows Remain Internal
Another argument regularly put forward for the likely rise of a new hegemon is the notion of capital searching once liquidized in the M phase for new and better opportunities (i.e., higher returns as a result of new monopoly rents). For reasons laid out above, these opportunities tend to arise outside of the institutionalized setting of the existing leader. This process usually leads to the flow of capital from the existing leader to the rising new one. However, in the case of a systemic network structure shift and thus the possible development of dual centers within the same containers of power ADDIN EN.CITE Giddens198718821Giddens, Anthony1987The nation-state and violenceBerkeley, CAUniversity of California Press(Giddens 1987), these capital flows can (as in the case of Britain during its transition from a external network to an internal network power logic) remain internal and simply shift from one center to another but within the realms of the existing leader. We are witnessing a similar process currently in the case of the United States where not only internal flows are switching from an internal network power logic to opportunities arising in the emerging external network power logic driven enterprises but also external flows are significant for the rise of this new commercial and organizational arrangement. This does not only take place in the form of venture-capital financing, but also to a much larger degree in a shift from established institutions of capital distribution to newer forms. Put differently, in the case of a combined hegemonic and systemic breakdown, the old hegemonic leader re-emerges out of the ashes of its crumbling old commercial and organizational arrangement fed by the internal flows of its monetary capital (as well as that from others) and as a result is able to develop dual centers of systemic capability. The current co-development of dual financial centers within the United States may serve as example of the continuation of this process.
We currently witness the parallel importance of the declining old capitalist mode (industrial ( internal network structure) financial center, the New York Stock Exchange (NYSE), with its roots in the space-of-place power logic, but at the same time the rise and development of new capitalist mode (digital commercial ( external network) financial network center, characterized by its roots in a space-of-flows power logic, namely the Nasdaq. Although its origins can be traced back to May 17, 1792, when Twenty-four brokers subscribed to the original brokers agreement, forming the first organized stock market in New York, the NYSE was institutionalized in 1817 under the name New York Stock & Exchange Board which was changed in 1863 to its current-day name New York Stock Exchange. Replacing London as the worlds largest financial center, New York and its NYSE have become by far the worlds largest equity market, two and a half times the size of the next market in Japan (followed closely by London). The members (i.e., owners) of the NYSE are closely connected to the rise of the commercial and organizational arrangement that lead to the rise of the U.S. leadership in the world system. And the NYSE remains a highly influential capital market for U.S. (and increasingly international) enterprises.
At the same time, however, with the rise of electronic networks, the NYSE has experienced strong competition on a worldwide scale from increasingly electronically based equity marketplaces. New York, however, has also witnessed the parallel development of the worlds dominating electronic marketplace in the form of Nasdaq. Owned by the same set of owners (initially), Nasdaq started its trading life in 1971 at the moment, when most authors date the start of the hegemonic crisis of the U.S. and has since firmly established its dominance of the capital-side of the emerging digital network system. As the worlds largest electronic stock market, Nasdaq is not limited to one central trading location. Rather, trading is executed through Nasdaqs sophisticated computer and telecommunications network, which transmits real-time quote and trade data to more than 1.3 million users in 83 countries. Nasdaqs open architecture market structure allows a virtually unlimited number of participants to trade in a companys stock and is the result of an actively pursued spread of its hubs in other established markets. In 1994, Nasdaq surpassed the NYSE in annual share volume and despite the decline in trade and volume after the dot-com bubble burst in 2001 remains a powerful market with the potential to make floor-based markets such as the NYSE obsolete in the not too distant future.
Advantage of Old Leadership Position
Thus, instead of a disadvantage, the declining leader can use its existing institutional setting and resource not only to defend its predominance of the current commercial and organizational arrangement but at the same time facilitate these resources to its advantage by channeling the increasingly liquid capital flows not outside, but rather to the parallel developing new center of systemic capability. The ashes of its hegemonic decline prove to be fruitful in nurturing the rising new center. This does not prevent the rise of challengers. And it does not preclude the further unraveling of the existing order leading to a hegemonic breakdown. The unique circumstances of a combined systemic and hegemonic transition, however, provide the old leader with a significant head start in the development of its capabilities in the newly emerging system for reasons laid out above.
Enter: The Age of Chaos or Evolution of the System? A Conclusion
The current view in the literature on the future of world hegemony in the modern world system can be roughly divided into two groups. One group, most prominent among them Wallerstein ADDIN EN.CITE Wallerstein199412177Wallerstein, Immanuel Maurice1994Peace, Stability, and Legitimacy, 1990-2025/50Lundestad, GeirOslo/New YorkScandinavian University Press/Oxford University Press330-498200219224
8200039471 (pbk.)D443 .N685 1993World politics 20th century Congresses.Peace Congresses.Political stability Congresses.Legitimacy of governments Congresses.Balance of power Congresses.The fall of great powers : peace, stability, and legitimacyWallerstein199412177Wallerstein, Immanuel Maurice1994Peace, Stability, and Legitimacy, 1990-2025/50Lundestad, GeirOslo/New YorkScandinavian University Press/Oxford University Press330-498200219224
8200039471 (pbk.)D443 .N685 1993World politics 20th century Congresses.Peace Congresses.Political stability Congresses.Legitimacy of governments Congresses.Balance of power Congresses.The fall of great powers : peace, stability, and legitimacy(1994), argues for the end of the current system and the beginning of a prolonged, unresolved systemic chaos with a multi- or bipolar hegemonic structure or other varieties of a dissolution of the current system ADDIN EN.CITE Arrighi1999914e.g., 1Arrighi, GiovanniSilver, Beverly J.Ahmad, Iftikhar1999Chaos and governance in the modern world systemMinneapolisUniversity of Minnesota Pressx, 3360816631514
0816631522 (pbk.)D299 .a75 1999
337World politics.International economic relations.Goldfrank199918867Goldfrank, Walter L.1999Beyond Cycles of Hegemony: Economic, Social, and Military FactorsBornschier, VolkerChase-Dunn, Christopher K.The Future of global conflictLondon and Thousand Oaks, CASage Publications66-760761958657
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909.81World politics 1989-Great powers.Twenty-first century Forecasts.Bornschier199918887Bornschier, Volker1999Hegemonic Transition, West European Unification and the Future Structure of the CoreBornschier, VolkerChase-Dunn, Christopher K.The Future of global conflictLondon and Thousand Oaks, CASage Publications77-980761958657
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909.81World politics 1989-Great powers.Twenty-first century Forecasts.(e.g., Arrighi, Silver, and Ahmad 1999; Goldfrank 1999; Bornschier 1999). A second group allows for the evolution of the system but argues for a continuation of the basic mechanisms ADDIN EN.CITE Modelski1996657e.g., 1Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economicsChase-Dunn199714231Chase-Dunn, Christopher K.Hall, Thomas D.1997Boulder, COWestview Pressxi, 3220813310059 (hard)
0813310067 (pbk.)HM101 .C464 1997
303.4/09Social change History.Capitalism History.Economic history.Rise and demise: comparing world-systemsThompson20006561William R. Thompson2000The emergence of a global political economyLondon and New YorkRoutledge041521453xIPELong CycleK-WavesLeading SectorsLeading EconomiesWorld LeaderGlobal WarRennstich200211360Rennstich, Joachim Karl2002The New Economy, the Leadership Long Cycle, and the Nineteenth K-WaveReview of International Political Economy91150-82MarchBoswell19991884to some degree also 7Boswell, Terry1999Hegemony and Bifurcation Points in World HistoryBornschier, VolkerChase-Dunn, Christopher K.The Future of global conflictLondon and Thousand Oaks, CASage Publications262-2840761958657
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909.81World politics 1989-Great powers.Twenty-first century Forecasts.Arrighi19941356note also , 74-841Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
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330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our times(e.g., Modelski and Thompson 1996; Chase-Dunn and Hall 1997; Thompson 2000; Rennstich 2002b; to some degree also Boswell 1999; note also Arrighi 1994, 74-84).
This paper has aimed to provide a model bridging existing models on systemic and hegemonic transition and by doing so, allowing to put not only past historical hegemonic transitions into a new perspective but also to further our understanding of the current transitions and their implications for the future of the global world system. We believe that by introducing a new understanding of systemic transformation through the introduction of a systemic meta-structure differentiated between internal and external network structures we can not only provide a missing theoretical understanding of past transitions but maybe even more important make more sense of the current chaos. What unites most of the more recent accounts of the demise of the world system is the puzzling combination of the simultaneous military strength of the U.S. and its relative decline in economic and political terms. It seems rather peculiar, in this perspective, to witness the economic rise of the triad (and with it a shift of the center of the system further westwards and back into the Asian fold in many accounts) without the demise of the existing leaders military capability or at least the rise of a serious challenger or challengers in the short-and even medium-term. Taken together with the high complexity of the system, the perceived need for international cooperation not only in economic and socio-political, but increasingly also ecological terms, and its truly global proportions that renders dominance of the world system nearly impossible, the notion of a breakdown of the system and a uncertain future structure seems rather obvious. However, taking our model and the lessons of a prior occurrence of a Phoenix cycle with Britains second leadership of the world system into account, we can not only theoretically explain the current chaos but in fact would expect it to unfold in the manner it currently does. Thus, ours is not an attempt to twist existing long-wave explanations to fit current developments, but rather a theoretical extension and clarification based on existing ADDIN EN.CITE Modelski1996657as pursuit by 1Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economicsArrighi199413561Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
1859840159 (pbk.)HB501 .A75 1994
330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our timesRennstich200211360Rennstich, Joachim Karl2002The New Economy, the Leadership Long Cycle, and the Nineteenth K-WaveReview of International Political Economy91150-82March(as pursuit by Modelski and Thompson 1996; Arrighi 1994; Rennstich 2002b) empirical analysis of the historical evolution of the world system.
The rise of Japan, thus, becomes more closely aligned with the rise of France as a challenger to British hegemony during the eighteenth century and resulting in Britains defeat of the French challenge during the French Revolutionary and Napoleonic Wars and consequently Britains establishment of her second hegemonic period. This is not to argue for a future war between the U.S. and Japan, nor that Japan is the most likely candidate for the challenge of Americas claim for leadership of the world system. Our model does, however, provide some answers several authors, including Wallerstein, raise in order to explain the phenomenon of Japans economic and especially financial importance in the current world system but its apparent non-challenging behavior in terms of political power. Viewed as a challenge based in the same internal-network structure system, Japans capabilities seem far greater than if viewed as a challenge to Americas lead and rising dominance of the newly emerging external network structure-based new commercial and organizational arrangement.
A number of authors note the similarity between the Dutch systemic structure and the currently evolving system ADDIN EN.CITE Arrighi19941356e.g., 1Arrighi, Giovanni1994London and New YorkVersoxiv, 4001859849156
1859840159 (pbk.)HB501 .A75 1994
330.9/04Capitalism History.Economic history.The long twentieth century: money, power, and the origins of our timesBoswell199918847Boswell, Terry1999Hegemony and Bifurcation Points in World HistoryBornschier, VolkerChase-Dunn, Christopher K.The Future of global conflictLondon and Thousand Oaks, CASage Publications262-2840761958657
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909.81World politics 1989-Great powers.Twenty-first century Forecasts.Rennstich200214717Rennstich, Joachim K.2002The Future of Great Power RivalriesDunaway, Wilma A.New Theoretical Directions for the 21st Century World-SystemNew YorkGreenwood Press(e.g., Arrighi 1994; Boswell 1999; Rennstich 2002a), something perfectly consistent with our theoretical model here. The currently emerging new commercial and organizational structure, in so many ways characterized by its emphasis on external networks, resembles in many ways the earlier maritime commercial setting (also based on external network structures) in existence prior to the industrialized phase (largely dominated by an internal network structure). It does not, however, mark the simple return to an old setting. Ours is an evolutionary model and prior complexities do not simply dissolve. Thus, elements of the prior industrial system have become integral parts of the new digital commercial system. But just as in prior cycles, what once was the foundation of leading sectors and the basis of monopoly rents has become a necessary but commoditized element of the value-adding process. The newly emerging leading sectors are not based on the internal network structure of the prior industrial system anymore but rather both producing and products of the external network structure. This transition from an internal network to an external network structure allows for the development of a Phoenix cycle of renewed leadership, out of the ashes of its old hegemonic demise. As was the case in the prior transition from Britains dominance of the commercial external network structure to an industrial internal one, we cannot expect this transition to progress unchallenged, albeit we would certainly wish for the containment of a future global war and a different form of macro-decision. However, as the most recent events in the international interaction of states have reminded us so brutally, human political action and reaction remain the most static element in the evolution of the world system. We can only hope that our work can help to bring more insights as to the processes and outcomes of an increasingly interdependent and external network-based world system.
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Figure SEQ Figure \* ARABIC 1: Dynamics of Hegemonic Cycle, Wallerstein Model
RivalryHegemonyRivalry
Concentration of productive, commercial, and financial competitive fitness in a particular state (hegemony)
Economic and political consolidation of hegemony
Technology diffusion
Competitive Expansion (variation)GloballiberalismLoss of competitive fitnessCompetitive expansion (variation)Climaticworld war (selection)Rise of employment costs in hegemonic stateSource: Wallerstein ADDIN EN.CITE Wallerstein19846821Wallerstein, Immanuel Maurice1984Cambridge University Pressviii, 1910521259185 (hard)
0521277604 (pbk.)Hc59 .w27 1984
330.9/048Economic history 1945-Government, Resistance to.Quality of life.The politics of the world-economy: the states, the movements, and the civilizations: essaysCambridge, UK and New York(1984), graphical conceptualization based on Arrighi, and Silver ADDIN EN.CITE Arrighi1999914, 251Arrighi, GiovanniSilver, Beverly J.Ahmad, Iftikhar1999Chaos and governance in the modern world systemMinneapolisUniversity of Minnesota Pressx, 3360816631514
0816631522 (pbk.)D299 .a75 1999
337World politics.International economic relations.(1999, 25).
Figure SEQ Figure \* ARABIC 2: Dynamics of Hegemonic Transitions, Arrighi and Silver Model
HegemonyHegemonic TransitionNew HegemonyHegemonic CrisisHegemonic Breakdown
Systemic reorganization by hegemonic state
(innovation)
Interstate rivalries and interenterprise competition
Systemic chaosSystemic reorganization by new hegemonic state
(diffusion, imitation, and reinforcement)Systemic expansionSocial conflicts
(evolution)Emulation of the hegemonic state(variation)
Emergence of new configurations of power
Centralization of systemic capabilitiesEmulation of the new hegemonic stateSource: Based on Arrighi, and Silver ADDIN EN.CITE Arrighi1999914, 291Arrighi, GiovanniSilver, Beverly J.Ahmad, Iftikhar1999Chaos and governance in the modern world systemMinneapolisUniversity of Minnesota Pressx, 3360816631514
0816631522 (pbk.)D299 .a75 1999
337World politics.International economic relations.(1999, 29).
Figure SEQ Figure \* ARABIC 3: Leadership Transition Dynamics, Modelski and Thompson Model
HegemonyHegemonic TransitionNew HegemonyWorld PowerDelegitimationDeconcentrationGlobal WarWorld Power
Naval capability share/concentrationEconomic and political consolidation of leadership
Innovation
Rise of new leading sectors
Technological diffusion
Emergence of new configurations of power
Interstate rivalries and interenterprise competition
Macro-decision
Globalwarfare
Naval capability share/concentration
Rise of challenger(s)Leading sector share/concentrationLeading sector share/concentrationSource: Modelski and Thompson ADDIN EN.CITE Modelski19966571Modelski, GeorgeThompson, William R.1996Columbia, SCUniversity of South Carolina Pressxv, 2631570030545Hb3729 .m63 1996
337Long waves (Economics)International economic relationsWorld politicsIPELeading sectors and world powers: the coevolution of global politics and economics(1996).
Figure SEQ Figure \* ARABIC 4: Dynamics of Hegemonic Transitions, Rennstich Model
HegemonyHegemonic TransitionSystemic TransitionNew HegemonyHegemonic CrisisHegemonic BreakdownGlobal War
Systemic reorganization by hegemonic state
Innovation
Rise of new leading sectors
Technological diffusion
Emergence of new configurations of power
(variation)
Centralization of systemic capabilities
Rise of challengers(s)
selection
Globalwarfare
Globalwarfare
meta-selection
Systemic reorganization by new hegemonic state(diffusion, imitation, and reinforcement)Systemic expansion
Systemic chaos
Emulation of the hegemonic state
Emulation of the hegemonic state(innovation)
Change in capitalist modeEmergence of new system configurationsSystem meta structureshiftDual centers of systemic capabilitiesSystemic reorganization by old hegemonic stateSystemic CrisisSystemic BreakdownPhoenix Cycle
Hegemonic leadership is a highly contested concept and definitions vary significantly ADDIN EN.CITE Rapkin19901875for a discussion on the various definitions in this context, see 7Rapkin, David P.1990The Contested Concept of Hegemonic LeadershipRapkin, David P.World Leadership and HegemonyBoulder, COLynne Rienner Publishers1-19Goldstein1988684, especially chs. 6 and 1310300039948 (alk. paper)
0300041128 (pbk. alk. paper)Hb3729 .g64 1988
338.5/42Goldstein, Joshua S.Yale University Press1988xiii, 433Long waves (Economics)Business cycles.New Haven, CTLong cycles: prosperity and war in the modern age(for a discussion on the various definitions in this context, see Rapkin 1990; Goldstein 1988, especially chs. 6 and 13). For the purposes of this paper, we use the term hegemony, hegemonic leadership, and system leader interchangeably (for reasons developed more in depth later).
Here understood to be a land-based war that involves (not necessarily continuously) almost all the major military powers of the epoch in warfare that is very destructive of land and population.
For another attempt to bridge these seemingly divergent views, see also for example Boswell ADDIN EN.CITE Boswell199918847Boswell, Terry1999Hegemony and Bifurcation Points in World HistoryBornschier, VolkerChase-Dunn, Christopher K.The Future of global conflictLondon and Thousand Oaks, CASage Publications262-2840761958657
0761958665 (pbk.)D860 .F875 1999
909.81World politics 1989-Great powers.Twenty-first century Forecasts.(1999).
A necessary and more thorough discussion of the challenger process is unfortunately beyond the scope of this paper. We refer for the closest discussion of our understanding of the challenger process to the treatment of this issue in Thompson ADDIN EN.CITE Thompson2000656, ch. 81William R. Thompson2000The emergence of a global political economyLondon and New YorkRoutledge041521453xIPELong CycleK-WavesLeading SectorsLeading EconomiesWorld LeaderGlobal War(2000, ch. 8). Similar to Arrighi, Thompson views the divide between territorially-based and maritime-commercial powers as a crucial divide, and identifies three major challenging strategies, the capture-the-center strategy, an attack on the global network and/or the creation of an alternative network, and carving-out-a-subsystem strategy. In his challenger model of global leadership he thus emphasizes the factors of maritime-commercial orientation, proximity, similarity, and innovativeness of the challenger in comparison with the challenged leader.
For a similar account, see Cantwell ADDIN EN.CITE Cantwell198918801Cantwell, John1989Technological innovation and multinational corporationsOxford, UK and Cambridge, MAB. Blackwellxvi, 2390631138471HC79.T4 C36 1989
338.8/8Technological innovations Economic aspects.Competition, International.International business enterprises.(1989), who distinguishes between merchant capitalism (pre-1770s), industrial capitalism (1770s-1940s), and global capitalism (post-1940s).
To some degree, we can identify this notion of internal networks in Arrighis conceptualization of internalization of costs, security, etc.
The discussion, as to why China (or rather Chinese leaders) decided against the expansion of their lead during the first occurrence of the co-occurrence of a hegemonic- and systemic crisis is beyond the realm of this paper but increasingly receives more attention in the literature.
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