Historical Materialism review essay on Giovanni Arrighi’s Adam Smith in Beijing (London: Verso 2007).

 Christopher Chase-Dunn, Sociology, University of California-Riverside

v. 8/28/08   4935 words


Adam Smith in Beijing: a world-systems perspective


Giovanni Arrighi is an historical sociologist and one of the originators of the world-systems perspective (along with Immanuel Wallerstein, Samir Amin and Andre Gunder Frank). His Geometry of Imperialism (1978) is yet one of the very best dissections of modern economic and political-military power, and his The Long Twentieth Century (1994), which is a really about the last 600 years, is the best overall analysis of the modern Europe-centered world-system.

His latest book, Adam Smith in Beijing, provides a world historical comparison of the trajectories of China, Europe and the United States. Arrighi revisits the classics of political economy to explain the rise of the West, its eclipse of China in the nineteenth century, the rise and decline of U.S. hegemony in the twentieth century, and China’s recent rise to greater centrality in the world economy.

            Arrighi contends that two distinct paths of economic and political development, which he calls “capitalism” and “market society,” have allowed some modern national economies to escape the Malthusian trap of population pressure and economic stagnation.  Capitalism is the path that the West followed and market society is the path that has been followed by China. He also contends that the Chinese Revolution helped to create the conditions under which this kind of market society and paternalistic state could reemerge in the decades since Mao’s demise. Arrighi sees the recent rise of China as a progressive development that might help to facilitate the emergence of a more labor-friendly and less environmentally destructive world society.

            There is a lot at stake here. Arrighi is addressing the huge social scientific and political issues that are brought up by the East/West comparison and by the continuing decline of U.S. hegemony and the rise of the People’s Republic of China. He has produced a compelling world-systemic analysis that specifies both the similarities and the important structural differences between the British hegemonic trajectory of the 19th century and the U.S. hegemony of the 20th century. His analysis in Adam Smith… of the processes of financialization, neoliberalism and neo-conservative “imperial over-reach” as efforts to prolong U.S. hegemony build on his own earlier work and on studies by Robert Brenner and David Harvey.  

Adam Smith in Beijing is dedicated to Andre Gunder Frank and Frank’s influence is obvious throughout. Arrighi’s focus on China, and his rereading of Adam Smith, Karl Marx and Joseph Schumpeter, were inspired by Frank’s last book, Reorient (1998) in which Frank tried to overcome Eurocentrism by re-examining world history from 1400 to 1800.  Arrighi’s new book not only rereads the classics but also makes great use of a large corpus of recent scholarship that has been produced by a group of economic historians who were also inspired by Frank (Kaoru Sugihara, Takeshi Hamashita, Bin Wong and Kenneth Pomeranz).[1] These close studies of Chinese economic history show that there has been a distinctive and dynamic East Asian path of development. This review will outline the similarities and differences between Arrighi’s and Frank’ s analyses of the East/West comparison in world historical perspective.

            Arrighi shows that the use of The Wealth of Nations as a totem of neoliberal nostrums about the magic of markets, the wonders of capitalist globalization, and the evils of state regulation is based on ignoring much of what Smith actually said.  Arrighi’s contrasts of Smith with Marx and Schumpeter produce some very useful ideas for comparisons between the East and the West. Smith’s distinction between “natural” and “unnatural” paths of economic development is used by Arrighi to bolster the notion that China followed the internally-oriented “natural” path of market society, focusing on labor-intensive forms of development and on improving the domestic economy, whereas the capitalist success stories of the West have focused on capital intensive development that emphasized foreign trade, drew raw materials from distant colonies and made profits based on providing “financial services” to the larger world economy.[2] 

Smith also focused mainly on the conditions that allowed for national development, whereas Marx, like Thomas Friedman and many of the other breathless portrayers of the wonders of globalization, assumed a single integrated world market for capital and labor and a “flat world” in which global inequalities would soon be reduced by the rapid and even diffusion of capitalist development. Arrighi finds Smith giving advice to legislators about the dangers of allowing big capital to dictate state policies that are not in the interest of the nation as a whole. Smith also focuses on the demographic and geographical features of each national society (the container that is the state territory) as constituting important constraints and opportunities for the possibilities for national development.  Whereas Marx analyzed capitalism in order to provide a theory that would be useful to the workers of the world, Smith intended to provide a theory that would be useful to public-minded leaders of nation-states about the best ways to develop the wealth of their nations. 

            Arrighi does far better than Frank in seeing that there was a substantially independent East Asian international system prior to the nineteenth century. Frank claimed that there had been a single world system since the Bronze Age (Frank and Gills 1993). Surely there were some important long-distance effects of prestige goods trade and the diffusion of technologies back and forth across the Silk Roads in earlier centuries, but Eastern and Western geopolitics and statecraft did not become integrated into a single political-military interaction network until the European states surrounded and tried to penetrate China in the nineteenth century. Before that there was a substantially separate East Asian international system. After describing the first Opium War in 1841, Arrighi (p. 341) says, “After a disastrous war with Britain (now joined by France), China virtually ceased to be the center of a relatively self-contained East Asian interstate system.”

            The East Asian international trade-tribute system has been well described in the studies by Takeshi Hamashita (Arrighi, Hamashita and Selden 2003). China, far larger and more powerful than any other state in the East Asian system, had called the shots but did not engage in the kind of expansionist and imperialistic behavior that was so apparent in the relationship between the European powers and their colonies. Arrighi characterizes this as a pacific system relative to the international system of states in Europe, where interstate warfare was nearly continuous and huge world wars among the “great powers” broke out whenever hegemony failed. Arrighi contends that the relatively less contentious East Asian system was a consequence of the more inward-oriented and less expansive mode of development in China, but he also admits that the Chinese state was so large relative to the other states in the system that challenges to Chinese hegemony were not likely to occur and were unsuccessful when they did occur. Japan’s occasional efforts to become the East Asian hegemon failed until after the Europeans had brought the Qing dynasty to its knees.

            The new East Asian world historians argue that there was a dynamic East Asian model of development that was distinct from that of the West and different from the usual Eurocentric presumptions about a static Asiatic Mode of Production. They show convincingly that commodity production, markets and money were highly advanced in China and that some regions within China, especially South China and the Yangtze river valley, were very dynamic in terms of economic development in the 18th and 19th centuries.

Arrighi supports the idea that there was an “industrious revolution” in China in the eighteenth century in which intensive labor was used to produce commodities instead of replacing labor with machines. This kind of market society was characterized by Mark Elvin (1973) as a “high level equilibrium trap” in which capital had little incentive to invest in labor-saving technology because labor was so cheap. Arrighi and the new economic historians of East Asia emphasize the upside of this for employment. But this does not explain why the West was able to eclipse China in terms of wealth, technology and military power in the 19th and 20th centuries.          

            Frank had contended that China was the most developed center of the Eurasian world system until 1800, and that Europe had abruptly gotten the upper hand in the 19th century. Frank also argued that the European advantage was unsubstantial and would be a brief interlude that would soon be ended by a new rise of China.  But Frank did not do what Arrighi has done, which is to try to show what it was about the constellation of Chinese institutions that were different from, and superior to, the institutional structures of Europe. Frank contended that the existing evolutionary accounts of the rise of capitalism were Eurocentric nonsense. Instead he saw a continuous logic of accumulation that was based both on state power and the ability to make wealth by means of trade and production. 

According to this view states and wealthy elites have oscillated back and forth between a greater emphasis on state-controlled economies in some periods, and a greater emphases on markets and trade networks in other periods since the Bronze Age.  This logic of accumulation did not really evolve. It is understood as a great wheel that goes around and around. And after the 1970’s Frank did not see any possibility of a less exploitative future mode of production. According to Frank, China had been the center for millennia and the European interlude was brutish but would be mercifully short, but he had given up on  his earlier conviction that a socialist revolution might produce a new kind of future society.

            Arrighi’s analysis parts company from that of Frank in a number of ways. Arrighi agrees with Frank that China was more developed in terms of technology and institutions than Europe was until the end of the 18th century, but he does not see the European rise as sudden and completely conjunctural. Arrighi’s (1994) analysis of the development of capitalism in Europe is evolutionary and begins in the 15th century when Genoa, Portugal and Spain combined finance capital with an expansive intercontinental colonial expansion. And while Arrighi’s distinction between capitalism and market society holds the promise of future progress, it seems to be rather less of a qualitative transformation to a much more egalitarian kind of social system than those that have been depicted as possible by other analysts of capitalism.

Arrighi also supports the idea that one of the main explanations of the difference between China and the West has to do with the nature of class power over the state.  The idea of a capitalist state, in which merchants, industrialists and bankers exert great power over state policy, was thrown out by Frank as so much Eurocentric baggage. In The Long  Twentieth Century (1994) Arrighi had characterized the Chinese dynasties as tributary empires that were becoming increasingly commercialized. In Adam Smth …  he presents the Qing dynasty as a relatively benevolent welfare state that was trying to protect peasants from exploitation by local landowners and by merchants.  A key difference between the Chinese dynasties and the regimes of Europe had to do with the greater influence in Europe that capitalists had over state policy in the leading hegemonic core states.  On p. 92 Arrighi says “Thus Smith’s ‘unnatural’ path differs from the ‘natural,’ not because it has a larger number of capitalists but because capitalists have greater power to impose their class interest at the expense of the national interest.” And he goes on to say that, while this was not true for all the European states, it was the situation in those states that were most central in the European system – the hegemons.

In Volume 1 of The Modern World-System Immanuel Wallerstein (1974) noted a key difference between China and Europe in the “long sixteenth century” that had huge consequences. He pointed out that China had a central government – a “world empire” that could formulate and enforce a single policy over a very large area whereas Europe was a “world-economy” that was politically organized as a set of competing core states. In the same years that the Portuguese King Henry the Navigator was heading abroad, with Genoese support, to circumnavigate Africa for the purposes of outflanking the Venetian monopoly on East Indian spices, the Ming Dynasty was abandoning the Treasure Fleet explorations to Africa in order to concentrate on defending the heartland of the middle kingdom from steppe invaders. Central Asian steppe nomads had also repeatedly assaulted Europe, but there was no Emperor of Europe to tell the Portuguese to desist because resources needed husbanding to defend against the Central Asians.

Europe had a multicentric interstate system in which finance capital was beginning to play an important role in directing state policy (see Arrighi 1994 on Genoa, Portugal and Spain), while China was turning inward to maintain its centralized tributary empire. It was the weakness and small scale of tributary states in the West after the fall of Rome that allowed capitalism to become the predominant form of accumulation, while the strong tributary state in China, run by mandarins and occasionally by semiperipheral conquerors, that repeatedly succeeded in confiscating the wealth of those merchants or regional trading dynasts who posed a political threat to the control of the state.[3]

Arrighi confirms that growing European power over China was not primarily due to the cheap prices of European commodities that could knock down all Chinese walls. Most European goods could not compete for the home and rural markets within China even after the European states had forced the Qing regime to let them in. Rather the main big advantage that the Europeans enjoyed was in military technology.   Though Arrighi contends that the important differences between Europe and China were due to the ways in which political and economic institutions were combined, his analysis is not inconsistent with the conclusion that the key question is “who controls the state?” In Europe capitalists came to control, first city-states, and then the most successful nation-states. In China that never happened, though it may be happening now for the first time.

            One may ask what happened to capitalist efforts to gain state power in East Asia? Melakka, a Chinese ally in what is now Malaysia, was a semiperipheral capitalist city-state in the sea-borne carrying trade (Curtin 1984). But there was also Koxinga, a maritime capitalist state in Fujian and Taiwan that emerged in the 17th century transition from the Ming to the Qing dynasties (Arrighi 2007:333-4; Hung 2001). But the semperipheral capitalist city-states and maritime states were not as densely concentrated as they became in Europe, where the Italian and Hanse city-states flourished to create a regional maritime economy that influenced the emergence of national states. Capitalists were not absent from the stage in East Asia, but neither did they succeed in conquering the commanding heights of state power as they did in the most powerful states in the West.

            Recall that Arrighi contends that China was less imperialistic than the West in earlier centuries, concentrating more on domestic development than on global expansion. The East Asian interstate system with China at its core was indeed somewhat less prone to interstate war than was the multicentric European system of competing core states. As John Fitzpatrick (1992) pointed out, despite a relatively great degree of centralization, the East Asian system was still an interstate system that periodically broke down into smaller warring states. These breakdowns were less frequent than the nearly constant interstate wars of Europe, but this is may have been mainly due to the preponderance of power held by the East Asian hegemon – China, than to any difference in the modes of accumulation. An eight hundred pound gorilla can keep the peace.  Physical and human geography were undoubtedly relevant as part of the explanation of why China was able to re-erect a very large integrated state whereas, after the fall of Rome, Europe remained divided into smaller nation-states.  But the relatively greater importance of the capitalist mode of production in Europe may have also played a role in maintaining the multicentric structure of the European state system. The most capitalist states, the European hegemons, were the power balancers that led the coalitions that defeated those efforts that were made to convert the European state system into a continent-wide empire (the Hapsburgs, Napoleon and Germany twice in the 20th century). 

             But what of the political implications of Arrighi’s analysis for the present and the future? On page 166 of Adam Smith… Arrighi notes that “…hegemonic states play governmental functions at the global level,…”  He sees an important trend in the evolution of global governance by means of hegemony.  In the sequence from the Dutch hegemony of the seventeenth century, the British hegemony of the 19th century and the U.S. hegemony of the 20th century the ratio of the size of the home market of the hegemon to the size of the world economy as a whole greatly increased.  This quantitative trend is indicative of an important qualitative evolutionary process in which each successive hegemon internalizes ever more aspects of the whole process of global socio-cultural reproduction and expands the size of the population that is incorporated into its development project.[4]

Though Arrighi does not say this, his analysis implies that a future increase in political globalization based on hegemony would require a hegemonic national state that is significantly larger than the U.S. The fact that there are no other states larger than the U.S. in terms of economic size (the  European Union is about the same size, and China is much smaller) means that the hegemonic sequence as the evolution toward a more coordinated and integrated form of global governance by a single national state has probably come to an end. Of course a new period of hegemonic rivalry and deglobalization is likely during the decline of U.S. hegemony. Hopefully this will not devolve into another “Age of Extremes” of the kind that happened in the first half of the twentieth century (Hobsbawm 1994). But eventual further integrative evolution of global governance will require a condominium of existing states, or even a multilateral global state. As Peter Taylor (1996) said, the U.S. is probably the last of the hegemons. Further political integration in order to manage the massive global problems that have been created by capitalist industrialization will require a capable multilateral, and hopefully democratic, global state. This sheds a somewhat different light on discussions of global state formation by theorists of a global stage of capitalism such as Bill Robinson (2004).  If global capitalists are creating a global state it might be a good idea to democratize it and use it as a terrain of struggle for social justice and an instrument for dealing with environmental issues.

China is not large enough economically, despite its immense number of people, to become the next hegemon. And, as Arrighi carefully explains, the current regime in Beijing has made great efforts to avoid any discourse about hegemonic rise and global leadership. He persuasively contends that the current Chinese leadership just wants a level playing field upon which China can develop its economic potential. These leaders are also quite sensitive and resentful toward criticism from the West about the nature of their political institutions. Arrighi, Frank and many other academics in the West now recognize the pervasive nature of Eurocentrism. Our lack of knowledge about East Asian history has facilitated negative images of East Asian backwardness including the Marxian notion of “the Asiatic Mode of Production” and these have served well as justifications for colonialism and intervention. The apparent need of Western political leaders for a bogeyman (should Osama Bin Laden have an accident) understandably makes the Chinese leadership nervous. The Chinese leaders are well aware that the racist imagery of the Yellow Peril and China-bashing might again serve the agenda of Western political leaders looking for a scapegoat for current or future catastrophes.

This said, the Global Left  (Santos 2006) needs a good analysis of the possible helpful, or not so helpful, roles that the Chinese people and current and future Chinese governments might play in the coming decades.  Arrighi’s analysis implies that the Chinese development path provides a useful example for the rest of the world, and that the rise of China may help the rest of the world to reduce global inequalities and to move toward a more sustainable and just form of political economy.

Arrighi contends that contemporary China is pursuing a model of market society that is similar in many ways to the paternalistic commodifying “natural” path that Adam Smith saw in earlier centuries. Arrighi’s contention that China has not yet developed full-blown capitalism is largely based on Samir Amin’s observation that the rural peasantry has not yet been dispossessed of land and so full proletarianization has not emerged. One may wonder whether or not dispossession of land is still a requisite of capitalism in the age of flexible accumulation and outsourcing. Mike Davis (2005:97-100) tells the story of the Bangkok-based Charoen Pokphand Company (CP), a large-scale poultry producer who brought Tyson-style (American) industrialized chicken production (the “Livestock Revolution”) first to Thailand and then to China. Davis (2005:99) quotes Isabelle Delforge as saying “With contract farming, large companies control the whole production process: they lend money to farmers, they sell them chicks, feed and medicine, and they have the right to buy the whole production. But usually the company is not committed to buy the chickens if the demand is low. Contract farmers bear all the risks related to production and become extremely dependent on demand from the world market. They become factory workers in their own field.”  Davis reports that, after starting in Shenzen, CP has built more than one hundred feed mills and poultry-processing plants throughout China.  This all sounds rather like capitalism despite that farmers have not been dispossessed of their land.

            And regarding the idea that the current regime is relatively environment-friendly, again that depends on the comparison. The north Texas oil moguls are not a very high standard. The Chinese Communist Party’s embrace of the family-owned automobile for the masses could have at least employed California-style catalytic-converters ten years ago, a proven technology for reducing auto emissions that would not have added much to the cost of each car. Instead Chinese cities are choking.  Decisions like that are both bad for the environment and for the human population.

It would seem logical that Arrighi’s depiction of Chinese “market society” as a more sustainable and labor-friendly form of society than that of the capitalist West implies that other nations should emulate the Chinese model. in order to deal with the issues of inequality and environmental degradation that capitalist globalization has presented us with in the 21st century. But Arrighi (personal communication) denies that he is saying this.  He points out that the historical conditions that produced the institutional complexes and culture of China today are impossible to replicate, and also that the world does not need one model, but rather many approaches. And yet it is important to ask whether or not the institutional elements that Arrighi finds in China are of use elsewhere in the efforts to construct more humane and sustainable national societies and a democratic and egalitarian world society.

The notion that China may be an exemplar of contemporary egalitarianism in relations with the periphery would seem to be contradicted by the situation in Tibet and by the reports of many observers of Chinese projects in Africa.  Progressive world citizens will not condone China-bashing, and I agree with Arrighi that China is, and is likely to continue to be, a somewhat more progressive force in world politics than many other powerful actors. But what does the Chinese model of market society imply for those who are looking for progressive alternatives to global capitalism?

Arrighi’s effort to tease out the combination of economic and political instutional forms that make the difference between better and worse forms of modern society is a valuable start, but needs to be further developed. The contemporary global justice movement that perceives a “democratic deficit” in the existing institutions of global governance and in many forms of representative democracy that exist within core states is not likely to find much worth emulating in a paternalistic Confucianist state that the current Chinese regime seems to be moving toward.[5] The issue of democracy cannot be dismissed. It is unfortunate that the neoliberals and the neoconservatives have used a discourse about representative democracy and human rights to badger the Chinese regime, but this will not make these issues go away for the global Left.

 And the issue of institutional forms of property also badly needs to be addressed. China is allowing the expansion of private property in the major means of production and a reduction in state-owned enterprises. But private versus state ownership of large firms are not the only options.  Investment decisions in large-scale undertakings could be shaped by market mechanisms, thus allocating capital to firms that are productive and efficient, while profits are distributed to all adult citizens (Roemer 1994). The role of the state in this kind of market socialism is to redistribute shares to each individual at the age of adulthood.  Recent experiments in public ownership have mostly been carried out in the context of “shock therapy” in which neoliberal economists engineered a transition from former state-led and centrally planned economies to capitalism. Populations have been issued coupons, which are then rapidly bought up by a new class of capitalists, thus proving that this kind of market socialism does not work. But a country like China could carry out real experiments with market socialism in which the whole public benefits from the profits of large firms while at the same time using market mechanisms to allocate capital and labor. That would be a kind of market society worth emulating.

Adam Smith in Beijing helps us to rethink the past and the future of East/West relations and to consider the most basic issues about modes of production that are centrally important for both understanding the human past and for political action in the present and the future. It should be read widely and debated, especially by those who think that another world is possible.


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______________1994 The Long Twentieth Century. London: Verso.

_______________2006 “Spatial and other ‘fixes’ of historical capitalism” Pp. 201-212 in C., Chase-Dunn and Salvatore Babones (eds.) Global Social Change: Historical and Comparative Perspectives. Baltimore, MD: Johns Hopkins University Press.

_____. 2007 Adam Smith in Beijing. London: Verso

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[1] These authors all contributed to an important book edited by Arrighi, Hamashita and Mark Selden (2003).

[2] In his earlier book, The Long Twentieth Century, Arrighi (1994) adopted a definition of capitalism developed by Fernand Braudel that makes a similar distinction between market society (small commodity production) and the anti-market of high finance and monopoly profits.

[3] This explanation was rejected as so much Eurocentric claptrap by Frank because both Max Weber and Karl Marx had said as much.


[4] A succinct version of this theoretical framework is presented in Arrighi (2006).

[5] At the 2008 opening ceremony to the Beijing Olympic Games Confucian harmony erased all vestiges of the Chinese Revolution except the red flag. Mao was gone. The class struggle was gone. The heroic workers and peasants were gone. And so was the Red Detachment of Women. The representation of modern China to the world was a vision of social harmony, technological achievements of the past, openness to the world, and precise, large-scale drumming and tai chi. It was Confucian harmony devoid of patriarchy or any alternative version of legitimate authority except national pride.