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Phase A, Phase B, and American Power

Endless accumulation of capital in the world-system rests on the dependence of historically specific hegemonic institutions for constant realization of surplus value to be sustained. Given that the capitalist world economy has never culminated into a distinct world empire, the structure of the axial international social division of labor has centered on unequally powerful states competing for resources in the name of national interests to secure monopoly rents. The evolution of hegemons provide the spatial temporal fixes for setting norms and rules of world order and system level solutions to condition, to a certain degree, some level of word-systemic stability.

Hegemonies, it is argued in the literature (see here)  are not permanent entities. The world economy is prone to structural crises due to institutional inertia stemming from overaccumulation, class antagonisms, and essentially the nature anarchy of in global production—all of which eventually contradict the long-run sustainability of hegemonies. The rise and fall of hegemonies are systemic cycles of accumulation (SCA'S) defined in terms of Kondratieff long waves, which are periods of approximately 40-60 years, separated by A phases and B phases (see here). The A phase is marked by the concentration of heightened economic activity translating into commercial primacy and political/military strength.

Inevitably, it is contended, there is a contradiction which marks a turning point. This is when, it is pressuposed, the unquestioned supremacy of material production of the dominant state is essentially contested, undermining profit rates for the capitalist world economy, as a whole, and leading to stagnation and bifurcation. It is perceived that the hegemon's capacity to provide system-level organizational solutions wanes. This is phase B of the Kondratieff long wave. What ensues is a conscious innovative restructuring, marked by financial expansion, in which capricious rent-seeking predominates.

Phase B is the belle époque of a declining hegemony, in which vulture capitalism reins in and casino capitalism on the world stage nefariously transfers purchasing power from strata with high marginal propensities to consume to strata with low marginal propensity to consume. Social compromises allowing for some sort of broadly shared prosperity throughout the world is fastidiously phased out. ‘An increasing mass of money capital sets itself free from its commodity form, and accumulation proceeds through financial deals’ (Arrighi 1994: 6).  Financialisation appears to create renewed prosperity for the hegemon, but this is illusory; it is ‘a sign of autumn’ – it conceal crises of over accumulation and foreshadows, in the short-run, the deathknell of hegemonic power.

Does the age of American-led global financialisation mark such a precipitous fall? In my view, specifically with respect to American hegemony, Phase B manifests prepotence. As Strange (see here) once argued:
America has the ability […] to exert predominant influence for good or ill over the creation of credit in the world’s monetary system. […] The United States is the only government capable of creating dollar assets that are accepted and salable word-wide. […] In most countries, whether the balance of payments is in surplus or deficit indicates the strength or weakness of its financial position.  With the United States, the exact converse can be true.  Indeed, to run a persistent deficit for a quarter of a century with impunity indicates not American weakness, but rather American [structural] power in the [world] system.

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