[A-List] thinking out loud

[Mark Jones]

This is just thinking out loud, apologies for lack of originality, sense, 
footnotes, scholarship etc.

What is the nature of  the current crisis, where is it heading, what are 
the possible outcomes? The world system is holistic and overdetermined, but 
is composed of discrete elements articulated in different ways and with 
differing degrees of partial or relative autonomy. Different regions are 
subject to different dynamics and rates of growth and relative or absolute 
decline obviously differ. A G Frank, Immanuel Wallerstein and others have 
argued that the main trend in the world today is the decline of Anglo-Saxon 
hegemony and the re-ascent of Asia and above China. Will this be a new 
American Century, or is US hegemony as profoundly challenged as many now 
argue? Will China achieve regional hegemony, and is it capable of going on 
to true global hegemony? Or will China collapse when the sources of growth 
(easily identifiable and not the result of magic) fade and underlying 
demographic, ecological, resource and interethnic strains start to tell, 
possibly destroying the unitary Chinese socio-economic space just as the 
USSR was destroyed by its failure in global competition?

Second group of questions: if there is a transition from one global hegemon 
(the US) to another (China) and a transition from the present Anglo-Saxon 
world system to a differently-ordered world with Asia as the centre of 
gravity and the propulsive dynamic, how will this transition occur/be 
effected? Is a world war thinkable? It should be borne in mind that the 
transition from a declining to an ascendant hegemon can and has happened 
historically not by means of war but with the consent and active 
participation of the declining power, which in some cases may even push 
forward the claims of the ascendant power, surrendering its own hegemonic 
status and also freely giving up many strategic and economic possessions. 
There are examples of this from antiquity and in the middle ages, and the 
modern example is of the surrender by Britain of its global-hegemonic 
status to an initially-unwilling, isolationist USA during the 1930s-1940s. 
This process to some degree did falsify or at any rate qualify V I Lenin's 
thesis about inter-imperialist rivalry always leading to war, although 
arguably it was Lenin's own success in creating the USSR which caused this, 
by forcing the British to take a defeatist view of their own prospects. Is 
it thinkable that the US might surrender hegemony to China? Maybe it is 
more thinkable than we realise, once we canvas the alternatives, and once 
we look beyond the rabid posturings and imperialistic breast-beating of the 
US ruling class.

It is salutary to compare modern attitudes with those that were prevalent 
in Victorian Britain, during the period of unquestioned British global 
supremacy. Check out Rudyard Kiplingthe British were at least as sure of 
the manifest destiny of their imperial, civilising  mission and just as or 
far more arrogantly confident about the empire on which the sun would never 
set, and about the racial superiority of their kind. Nevertheless the time 
was not that long in coming before the British abandoned imperial 
pretensions and packed their colonial kit and left. Winston Churchill, in 
his desperate attempts to lever the US out of its isolationist neutrality 
in 1940, gave away many key strategic assets to Roosevelt, including not on 
the British and S African gold reserve, but the global network of island 
bases on which its imperial communications systems depended (and this was 
actually the hub or backbone of the information systems which then 
supported the world market).

The middle decades of the last century might best be seen as an 
interregnum, during which time the declining and the ascendant 
imperialisms, Britain and the US, colluded to see off rivals (Japan, 
Germany) and put down risings (Bolshevism). Once US hegemony was assured 
(by 1943-46) it was relatively straightforward to restructure the global 
system on the new, US-dominated basis, and to create the parastatal and 
international institutions and he framework of international law, which 
secured unchallenged US hegemony (the USSR ceased to be a serious challenge 
after 1945, except for two brief periods during the Korean War and Vietnam 
War).

The British surrendered their empire in pursuit of their own best interests 
and indeed of national survival. But the psychological trauma and the 
bitter taint of defeat scarred a whole generation of people not merely in 
the British ruling elites, either, but among wider social layers and 
classes which had a sentimental interest in the empire or had been bought 
off one way or anotherthis included very wide sections of the Bri9tish 
working class, especially the so-called aristocracy of labour, which 
followed shared the racist assumptions behind the ideology of empire and 
which had benefited materially from so-called 'social imperialism'from the 
military keynesian/welfare state reforms of the early postwar period.

In its heyday the British Empire was a more powerful and effective one than 
the US empire has been or is. The British did not only move around people 
in huge numbers, they also moved around vegetation. The British did more to 
transplant hitherto alien flora and fauna from one continent to another, 
thus reconstructing whole ecosystems, than any other empire (although the 
Romans did a lot more in that sphere than most people realise). It takes a 
lot of arrogance and a lot of certainty to do the kinds of things the 
British ever-so-freely took it on themselves to do. They reshaped whole 
continents, from Australasia to Africa to Latin America. And the successive 
waves of emigration from the homeland created a whole English-speaking 
world of which the US was to begin with only a subset and which it finally 
inherited, but did not create. The British ploughed their way through every 
precapitalist social formation they encountered and either wiped it out or 
through colonialism, totally reconstructed it. Nevertheless, despite its 
grandiose achievements, the British Empire, which seemed so enduring, was 
ephemeral. There is nothing to suggest that the seeming permanence of the 
US imperium should not be any more fleeting. There is also no reason to 
suppose that sheer self-interest might not drive Americans themselves into 
a recognition that the price of domination alone and unchallenged, is too 
high, and that therefore an accommodation must eventually be made with a 
rival who might one day become a successor. Since world war 2, the US has 
in fact made a practise of co-opting present and potential rivals into 
junior partnership. It has done this not only to Britain, but also to 
Germany (1960s), Japan (1970s-1980s) and latterly even to Russia. The US is 
now functionally organically locked into Chinese industrial capitalism; the 
two states are in a tight embrace, performing a minuet which is part dance 
of death and part marriage of necessity and of mutual elite interest.

Both states face many common problems and both need each other because of 
complementarities and useful asymmetries. However, the radical 
contradictions between them do make them imperial rivals. And the balance 
of power between them appears to be changing. The US has not been growing 
as much as it hoped or declared; China has been growing faster and has now 
entered a decisive phase of industrialisation, where its industry is so 
diverse, deep, broadly-based and synergistic that it appears to be crossing 
a threshold and is emerging as the world's premier industrial power, 
eclipsing all others, and with an R&D capability equivalent to that of the 
US or Japan.  Some estimates say that Chinese industrial production will 
outstrip the US during the present decade. It seems clear that Asia as a 
whole is poised on the cusp of precipitous changes, and that the US is 
clearly now the declining regional hegemon and China the rising regional 
hegemon. It is surely arguable and likely that China will become the 
dominant power in Asia without the need for war and without the USA being 
able to prevent this. Once the economic facts are in place, can the 
geopolitical consequences be far behind? What can prevent the binding 
together and fusion of Chinese, Japanese and Taiwanese industry and 
capital, but under Chinese hegemonic control?

Thus for the first time in its history, the US now faces the distinct 
possibility of the partial eclipse of its global power. I have no idea what 
will happen and I doubt if anybody can know, but it is surely plausible 
that the US will be obliged to accept with good grace, this strategic 
defeat, this seismic change in its status and position, because the US is 
simply no longer powerful enough to fight it. The rise of China to at least 
regional Asian ascendancy seems to be already in the script, and inevitable 
and unalterable outcome of present trends.

I know lots of caveats and objections can be entered here and I've thought 
of a few myself. For one thing, it may really be true that US technological 
and military supremacy is now so great that it will be impossible for China 
ever to *effectuate* its latent regional supremacy, impossible for China to 
ever take advantage of its potential power during some future world crisis 
which frees up the various logjams. In this case presumably the world 
economy will enter a very protracted period of stagnation and decline. 
Also, China may indeed go into crisis on one of a number of fronts: 
demography, ecology, resource depletion (energy/water etc).

A crucial indicator will be which state/regions comes out of a depression 
first; I think Gunder Frank dwelt on this a lot. Under present 
circumstances, it seems unlikely that the global bourses will recover very 
quickly and the present bear market might be very prolonged.  It might be 
15-20 years before the Dow hits 10,000 again, on historical precedent. 
Surely this means that growth is likely to be constrained, and we may still 
get a severe slump, as happened in 1931 following the Wall Street Crash of 
1929. It is said that this will not happen because mistakes made then will 
not be repeated: protectionism, futile and counter-productive attempts to 
balance budgets etc. But the same people who say this also often said there 
would never be another bear market and the New Economy was a Paradigm 
Change, blah-blah. Greenspan himself twittered on like this, remember? In 
any case, a slump can happen whatever kinds of Keynesian demand management 
is attempted. Deficit spending does not overcome modern deflationary 
crises. So, as Wynne Godley has just been arguing, a real and perhaps 
catastrophic slump, a real meltdown of the US economy in particular, is a 
distinct possibility, even a probability. In this case, we met get a decade 
or even more of mass unemployment and hell knows what besides, check the 
History Channel for details.

The region which emerges first from such a slump (and a slump is surely on 
balance more likely now, than not) will be well placed to move out of mere 
regional dominance and to assay the chances of becoming new global hegemon. 
If China survives the shocks and strains caused by a  global slump in 
demand, than it must be well-placed to emerge first from the subsequent 
trough. It is this line of thinking which leads me to argue that we 
probably are, as Frank says, in the throes of transition between hegemons, 
and that indeed the present world economic crisis may itself be symptomatic 
of this crisis of transition, just as global collapse in the 1920s was 
symptomatic of the final decay of British power. China is more competitive, 
and this is the bottom line. Sooner or later the capitalist world economy 
is likely to emerge from any economic setback, and the power which has the 
underlying competitive edge will come out first. It will then be in pole 
position to begin the process of institutional and legal-framework 
restructuring which can entrench its hegemony and make it normative.

There is one huge caveat to this whole line of argument, which is that it 
does not take account of underlying modal problems which afflict the world 
system and which may mean we are entering a still more radical and decisive 
epoch of historical challenge, upheaval and gross transformation of 
everything from geopolitics to everyday life. I'm talking here about the 
colossal threats posed by that cruel and compelling system of adverse 
factors: anthropogenic climate change, mass extinction of species, 
destruction of the biosphere, and loss of energy supplies. In my opinion 
these factors form a vast backdrop to all world-system or economic calculus 
and to all considerations at the level of inter-imperial rivalry a la 
Lenin. But before attempting to integrate this domains of issues into the 
discussion, let us consider again this big  what-if: what if China emerges 
first, in 5,7, 10 years or so, from an impending global economic slump?

The coming slump (if it does come) is likely, so some argue, to hit the US 
especially hard. The dollar will decline, industrial output will shrink, 
and living standards and the wage will be impacted. The US economy is 
wildly out of equilibrium and its external payments deficit is likely to 
get much worse before it gets better, and it will get better only at the 
price of consumption levels. Obviously this collapse in US demand will hit 
major exporters, China above all. China will then have over time to find 
other sources of demand, which means domestic demand and by export to other 
regions which may be doing a little better: India, Russia, Europe and 
perhaps above all, the big middle-eastern oil states.

The collapse of the dollar (if it happens) may take the US out of this game 
for a very long time. We now have a situation where the US, too, must 
export its way out of trouble. Now we shall really see just how competitive 
the New Economy is and how much US productivity did increase. But is anyone 
betting that the US can beat China at its own game? Walk round your house 
and mentally eliminate everything made in China, and see what's left. Now 
look for everything with Made in USA on it. I have a Coleman camping lamp. 
I think that's about all.

Once you strip out dollar hegemony and the advantages of being the global 
currency of last resort, you are left with a very naked emperor: except for 
his weaponry, control of the skies and sealanes and info networks, he has 
few cards left. Take away dollar hegemony and you have just another 
regional economy with lots of internal problems (soil exhaustion, 
aquifer-depletion, lack of indigenous energy supplies, polluted 
environment, poor infrastructure, badly-designed and highly 
expensive-to-maintain urban environment). If the US has to compete on a 
level playing field with the rest of the world, then it may find that its 
urban infrastructure is just as uneconomic and unsustainable as was the 
Soviet Union's  loss-making endeavour to base itself on the 
industrialisation of the Urals and Siberia. The USA currently uses twice as 
much energy and raw materials per capita as does for example, the United 
Kingdom. Over ten times more than China. It is desperately uncompetitive. 
When its dollar bill has to be backed up by real values, US per capita GNP 
may fall by half. It is hard for me at least, to see how the US can then 
hope to maintain its global reach, its unique hegemonic position.

Since China will be beset by achingly-serious problems of its own, and 
since the collapse of the world market must increase internal social 
instability, the Chinese regime will not be waiting around passively for 
the US to put the world to rights. It must produceand exportor die.

During the 1930s the two states who were first out of the depression were 
Germany and the USSR and they broke free on the basis of colossal military 
spending. Undoubtedly this is the first option large militarised states 
think of as the path to reflation, full employment and re-emergence in 
still more powerful form onto the world scene. There is great scope here 
for China too, for it is only just beginning a vast programme of defence 
spending and force expansion and modernisation. American defence spending 
is by comparison much less sustainable at present, let alone projected, 
levels, once you get a serious recession and a dollar decline. Moreover, 
the baroque nature of US arms means that defence spending doesn't do much 
to galvanise the wider economy. That is not yet true of China. Therefore in 
a major world depression, the Chinese are surely likely to dramatically 
increase defence spending as a way of boosting the economy as well as to 
reinforce growing regional hegemony. It is already true that the Chinese 
navy exercises much gunboat diplomacy in the coastal states of Asia. The 
Chinese will surely seek to emerge from a depression by means of strategic 
and economic domination of Asia as a whole, by saturating its markets and 
by hegemonising its skies, seas and info-nets.

I believe that some kind of Sino-American joint global hegemony must be the 
strategic direction both states will want or be enjoined to follow, for 
want of a more appetising alternative. No-one really wants war, and fear of 
Bolshevism remains a great restraint on inter-imperial rivalry. I believe 
that this century may drift towards the outcome which leaves the US as the 
junior partner to ascendant Chinese world hegemony. This may be a very 
protracted process and American attempts to stave off the inevitable may 
produce long periods of terrible stagnation. The US however is the 
declining hegemon. US imperialism greatly benefited from the defeat of the 
USSR and waxed spectacularly fat on the plunder it looted from the former 
Soviet bloc.

The last ten years have seen the greatest unforced capitulation in history 
(the unconditional surrender of the USSR) exploited by the biggest ponzi 
fraud in history (as Wynne Godley was just now saying in the FT), all 
helping to create the biggest stockmarket bubble in history. The present 
bear market is not just a correction to that gigantic and unprecedented 
sequence of human folly, unless you call Alaric's visit to ancient Rome a 
'correction'. This is surely the beginning of the end, not just of 
equity-culture in our lifetime, but of global Anglo-Saxon suzerainty. Andre 
Gunder Frank  was right, the pendulum is swinging back to Asia but it is 
doing so in conditions of the final blow-out of the resource-mining 
accumulation model of petroleum capitalism. It's therefore about transition 
between different modes of production as well as transition between the old 
declining and new rising hegemon.

If on the other hand, we are set on a course of global war, which was the 
outcome for the great depressions before 1914 and during the 1930s, then 
the Americas have only a very small window of opportunity (like Hitler 
enjoyed in 1939) before the military advantage swings against them as has 
the economic already, and this is the real meaning of Bush's 'pre-emptive 
strikes'. It is China they must pre-empt. The Islamic world, broken-backed 
as it is and will remain, is not the problem. This will be a war for the 
survival not just of the American Century but of that more precious icon, 
the place where people actually live-- the 'burbs--the greatest 
agglomeration of ostentatious consumptionespecially of energy 
consumption--and the biggest assembly of hostage-populations ever in history.

Even in his own lifetime it became clear to Lenin that his original 
assumptions about the necessity of inter-imperial warfare and the certainty 
of wars being followed by proletarian revolutions, would have to be 
qualified in the light both of experience and of new realities. When the 
science-fiction writer H G Wells visited Lenin in his Kremlin office in (I 
think) 1921, Wells told Lenin that although he did not know what weapons 
the next war would be fought with, he was quite sure that the one after it 
would be fought with bows and arrows. Lenin did not disagree: it was 
already apparent, before the advent of nuclear weapons, that modern warfare 
imposed intolerable costs on civilisation. It was this realisation above 
all which prompted Lenin's notions of peaceful coexistence: what use would 
the proletarian revolution be, if it inherited a wasteland? The effects of 
civil war and war of intervention on the young Soviet Russia in 1919-1921 
was completely catastrophic, almost as bad as nuclear war. And the USSR 
never recovered from world war 2, as Mark Harrison has shown in his 
admirable studies of Soviet economic development. The propensity of the 
bourgeois to destroy the earth rather than let the workers inherit it, 
presents a conundrum which neither Lenin nor any other revolutionary has 
thus far wholly managed to solve. But in the 20th century the bourgeoisie 
also learned a terrible lesson. This is why we should not assume that war 
between the USA and China is inevitable. Nevertheless the inner dynamic and 
logic of history shows that what IS inevitable is the decline of US 
hegemony and what is highly likely is the rise of China.

I think it is clear to both these powers, and to everyone else with an 
interest , that the keystone in the arch of US global power is the middle 
east, and that the sine qua non of US hegemony is control over oil. That 
was true throughout the last century and is even more true today when the 
US is no longer self-sufficient in energy but indeed is facing severe 
energy supply difficulties. Inn the short to medium term these energy 
supply difficulties can be met in part by conservation measures, for the 
phenomenal wastefulness of US society leaves much scope for saving. But 
this is not necessarily compatible with robust economic growth, despite 
what people like the Lovins brothers may think. And the USA cannot afford 
to lose the economic race with China. Nevertheless, it is almost certainly 
losing that race, and as mentioned earlier, Chinese gross (not per capita) 
industrial output will likely exceed that of the US (and Japan, and Europe) 
sometime this decade. This will leave military control of Arabian oil as 
almost the only remaining critical strategic asset (together with some 
military, intelligence and electronic technologies) left for the US to 
shore up its global position. The US's pre-emptive move on Iraq, if it 
happens, will be largely designed to pre-empt the day when China will 
assert its power in the middle east and become economically, and finally 
strategically dominant there too. Can this US strategy succeed?

Looking further ahead, ie three to five decades, can Chinese hegemony 
consolidate itself? I think this would bring us back to consideration of 
what I playfully call, a la chinois, the Five Great Evils: anthropogenic 
climate change, mass extinction of species, destruction of the biosphere, 
resource-depletion and loss of energy supplies. But the Five Great Evils 
have no meaning by themselves, not historically-speaking anyway. It is how 
people respond to them that matters, and this is shown by the form and 
intensity of class-struggle. At the moment class struggle has almost no 
political form of appearance, and proletarian self-consciousness is largely 
conspicuous by its absence. But that does not mean there is no class 
struggle; instead it takes the fetishistic, mystificatory form of national 
and inter-imperial rivalries. Only when this form-of-appearance is exploded 
by events, by sudden and unresolvable and acute general crisis, does class 
struggle appear directly on the historical stage, undisguised and visible 
to all.