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The Impasses of U.S.

Hegemony: Perspectives for the Twenty-first Century Author(s): Carlos Eduardo Martins and Timothy Thompson Reviewed work(s): Source: Latin American Perspectives, Vol. 34, No. 1, The Crisis of U.S. Hegemony in the Twenty-First Century (Jan., 2007), pp. 16-28 Published by: Sage Publications, Inc. Stable URL: http://www.jstor.org/stable/27647990 . Accessed: 04/12/2011 08:27
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The

Impasses

of U.S.

Hegemony

Perspectives

for the Twenty-first Century


Carlos Eduardo Martins

by

Translated

by Timothy Thompson

posed by theFernand Braudel Center group (mainlyGiovanni Arrighi), the cycles of


Nicolai work on Radovan and the notion crisis based 's Richta of civilizational us to view the U.S. crisis of hegemony as revolution allows the techno-scientific one of the most to the possibility world. It points important events in the contemporary of a complex that, complemented forces constructing of antioligarchic by the emergence of elements that would and political world mobilization, cultural support peace-centered Kondratieff, on unite periphery United and center, East and West, in the pursuit of a planetary civilization. crisis

A prospective

long-term

model

of U.S.

hegemony

based

on

the systemic

cycles

pro

would

Keywords:

States,

hegemony,

systemic

cycles, Kondratieff

cycles,

civilizational

Hegemony is a crucial topic in any analysis of contemporary international relations. It modem world-system, a development plays a fundamental role in the development of the driven by historical capitalism. The modern world-system is based on a world-economy

that links together the various political units within nation-states via flows of capital and commodities. This architecture allows economic interests, in theirglobalizing breadth, to free themselves from political interests.Notwithstanding, the absence of a central politi cal institutioncarries with it therisk of anarchy, and this creates the need for a political function that can control competition among states and maintain interstate coordination

must demonstrate that its international leadership For a state to achieve hegemony, it is strong enough to impose a general, systemic interest on individual national polities. But such leadership has limits beyond which it becomes an obstacle to the accumula tion of capital, because for the capitalist world-economy constructing world-empires would simply restore the rule of the political over the economic. Hegemonies, there fore, delineate a cyclical pattern in themodern world-system and must be continuously constructed and destroyed. In an initialphase of expansion, thehegemonic state concentrates its international lead

in order to define the economic, juridical, political, and military rules that guarantee the operation of a global capitalist economy. That function is the hegemonic state.

bases and only laterundermines itsfinancial and ideological dominance. The sequence in which military dominance deteriorates varies widely within each hegemony, however.
Carlos Eduardo Martins is research director of the UNESCO-UNU and an associate researcher Network on the Global Economy and at the Laboratory of Public Policy of the State is a Ph.D. candidate in English at Boston College.

ership on theproductive, commercial, financial, ideological, and military levels. In a sec ond phase, that of crisis, the foundations of its global leadership begin to deteriorate, although not uniformly. Stagnation first affects the state's productive and commercial

Sustainable University

Development of Rio de Janeiro. Timothy Thompson

LATIN AMERICAN PERSPECTIVES, DOI: 10.1177/0094582X06296325 ? 2007 Latin American Perspectives 16

Issue 152,Vol. 34 No. 1, January 2007 16-28

Martins

/ IMPASSES

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17

Although during the expansion phase the hegemonic state stimulates theworld-system and propels the development of its productive forces, during the crisis phase itbecomes an obstacle to development. As consensus has it, theworld entered a period ofU.S. hege mony in the 1950s. But at what point in that hegemony are we now? And how does it argue that since 1967 theUnited States has been in a period of hegemonic It stillmaintains its financial, ideological, and military hegemony, but it has been made increasingly vulnerable by the pressure that the current-account deficit in the balance of payments is exerting on the dollar, by neoliberalism's crisis of legiti I would decline. affect theworld-system?

macy, and by the unfolding impact of September 11, 2001, which has reignited both U.S. imperialism and military-political reactions against it, threatening to expand the costs of securing theworld-system to unforeseen dimensions.1 To situate the trajectory ofU.S. hegemony in theworld-system, we must bring the longue dur?e into our analy sis. To do so, we should consider the following analytical elements:

1. Systemic cycles, theorized by theworld-system school inworks by writers such as Giovanni Arrighi and Beverly Silver (1999) and Immanuel Wallerstein (1996). These cycles are organized according to hegemonies divided into phases of expansion and cri sis. During

the crisis phase, the hegemon uses its financial power to continue leading global accumulation, but its financial strength soon gives way to increasing deteriora tion of its productive and commercial bases. The disintegration of hegemony gives rise to a stage of systemic chaos, and a bifurcation emerges inwhich new power structures vie for control. In historical capitalism, this process culminates in "thirty years' wars" that end with a single configuration of power, one that reconstitutes theworld-system upon new bases and increases both its breadth and the interaction among its parts. 2. Kondratieff cycles, which are linked to organizational and technological revolu

tions and normally manifest themselves in 50- or 60-year periods divided into A phases (of expansion) and B-phases (of economic crisis). 3. Civilizational crisis, which is tied to a crisis in themode of production. A crisis in themode of production leads the ruling class, relying on the state, to overuse the polit ical instruments of surplus appropriation. This occurs when the ruling class has diffi culty extracting a surplus through themeans of production. In feudalism, for instance, technological revolutions in the field that increased productivity and stimulated trade relations put an end to vassalage. This process converted the nobility into the state and fostered absolutism

in league with bourgeois mercantilism. In capitalism, the wage labor system is called into question by automation. This is established by Marx in Capital and Grundrisse and taken up again by Richta (1971) in his theory of scientific technical revolution. Both writers establish automation as the principal motive force behind a downward trend in the rate of profit. Since the 1970s, the process of automa tion has become a planetary one, driving up unemployment and increasing state inter vention for the benefit of big capital. The

United States since 1994. This expansion will lack the brilliance of the phase thatdevel oped in the postwar period. Itwill be shorter and will promote lower rates of growth, since itwill be affected by two downward trends: civilizational crisis and theB-phase

trajectories of U.S. hegemony and themodern world-system in the coming decades should be understood in terms of these three long-run tendencies. I would argue that the expansion phase of a new Kondratieff cycle has been developing in the

of the systemic cycle. Within this new phase of expansion, the financial and ideologi cal foundations of U.S. hegemony will deteriorate, and theUnited States will lose the

18

LATINAMERICAN PERSPECTIVES

leadership position that it exercised in theworld economy from 1980 to 1990, when it was surpassed in dynamism only by East Asia. The world will enter a new phase of sys temic chaos, and no nation-state will be able to reconstruct theworld-system on new hegemonic bases. A bifurcation will occur: on one hand, therewill be forces attempt ing to restore historical capitalism toU.S. imperialism via the cohesion of the principal centers of global wealth, and, on the other hand, therewill be forces seeking to over come themodern world-system through a posthegemonic system. This confrontation will occur not only among nation-states (although, in part, it may be oriented in terms of them) but also transnationally. The transnational dimension, aimed at creating new forms of power to direct both human existence and the planet, has already manifested itself, for example, inmass demonstrations against U.S. imperialism and the oligarchic coordination of theworld economy and in attempts to organize social movements on a World Social Forum. If transnationalism succeeds, scale, most notably in the will be able to traverse the systemic chaos without succumbing to a cata humanity clysmic war. Transnational forces will create "drive belts" across nation-states, cir global

cumventing global oligarchies. But ifnationalism succeeds, itwill be difficult to avoid a move toward fascism, barbarism, and the use of the state as an instrumentof coercion.

THE CRISIS OF HEGEMONY AND ITS EMPIRICAL FOUNDATIONS


The assertion that we have entered a new Kondratieff cycle, established in the United States in 1994 and since extended to theworld economy, runs counter to sev eral other analyses. Some, on account of the increase in international competition among nation-states and the resultant chronic overproduction, posit a long depression in theworld economy, one thatbegan at the end of the 1960s (Brenner, 2003). Another view, with wider dissemination, affirms the long-depression hypothesis but attributes it to a different source: the establishment, since 1979, of a new, financialized system

of global accumulation (Strange, 1997; Chesnais, 1996 and 1998; Fiori and Tavares, 1998; Fiori, 1999; Fiori and Medeiros, 2001). I do not deny either the trend toward overproduction or the increased competitive ness in theworld economy, both of which derive in the end from the crisis of U.S. hege mony. Together, they give rise to a financial bubble whose origins lie in the necessity

of per capita gross domestic product (GDP), which is the principal indicator of Kondratieff cycles, and the rate of profit,which is theirprincipal determinant.2 If we examine these indicators in the United States, we will perceive the Kondratieff patternmost clearly. Between 1938 and 1966, per capita growth reached 3.0 percent. For this period, we have data for the rate of growth only between 1959 and 1966, when it reached an average of 10.3 percent. But the high level of conver gence between per capita growth rates between 1938 and 1966 and between 1959 and 1966 allows us to assume similar rates of profit for the two periods. Between 1967 and

of financing theU.S. balance of payments. Since 1994, the bubble and the increase in competitiveness have coincided with the recovery, in terms of economic growth and global leadership, of productive investment. Two indicators of this are the growth rate

GDP,

indicating the strengthof interest rates in theU.S. economy. In 1993, the picture changed again. The rate of profit increased abruptly and remained stable for a period of 6 years, something that had not happened in the previous 25. Between 1994 and

1993, the rate of profit fell by 35 percent, and per capita growth dropped 43 percent in relation to the previous interval. In this period, the national debt outstripped the

1999, the rate of growth reached an average of 8.7 percent, peaking at 9.8 percent in

Martins/IMPASSESOF U.S. HEGEMONY


14.0% 12.0%

19

0.0%

i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i CO CO 1^ o CO CO CO CM in lO CO i^ CO CO CO CO CO CO co CO co o s CO CO co CO O) o> CD co o> CO CO o o iCM CM Years

Figure 1. ILS. Rate of Profit, 1959-2004. Source: Council of Economic Advisers (2005b).

1959-1966

1967-1993 Periods

1994-1999

Figure 2. U.S. Rate of Profit, 1959-1999. Source: Council of Economic Advisers (2005b).

1938-1966

1967-1993 Periods

1994-2000

in U.S. per Capita Figure 3. Annual Variation Source: Council of Economic Advisers (2005b).

GDP,

1938-2000.

1997. The annual growth of per capita income reached 2.9 percent between 1994 and 2000, 70.6 percent above that of theKondratieff B-phase (Figs. 1-3). We do not have data on the rate of profit of the world economy, but per capita growth rates provide a basis formy claims. Beginning in the postwar period, theworld

20

LATINAMERICAN PERSPECTIVES

Figure 4. Annual Source: Maddison

in per Capita GDP Variation (2001) and Council of Economic

of theWorld Economy, Advisers (2005b).

1938-2000.

B-phase developed. During this period, per capita growth fell 48 percent and reached a rate of 1.2 percent per annum. Between 1994 and 2000, a new shift occurred: per capita income recovered its accelerated expansion, which reached a rate of 2.2 percent

economy underwent an extremely long Kondratieff A-phase. It began at the end of the 1930s and was propelled for 35 years by the expansion of U.S. hegemony, registering a per capita growth rate of 2.3 percent.3 Between 1974 and 1993, the Kondratieff

is that the expand at rates below those of theworld economy. Another consequence A-phase of thisKondratieff will be smaller and weaker than that of the previous one. Many would disagree that theUnited States is losing its hegemonic position in the world economy. As a sign of renewed hegemony, theywould point to the dollar's con version into a global currency that has financed theU.S. economic recovery since the United States begun to reclaim 1980s. The hastiest would even assert thatnot only has the

and signaled the emergence of the new Kondratieff (Fig. 4). The second thesis I asserted above was that this new Kondratieff cycle would be affected by the downward movement of theU.S. systemic cycle. As a consequence, theUnited States will cease leading theworld in economic growth and will most likely

itsfinancial and economic might but ithas begun to approach the status of an empire. However, to undertake a careful analysis, we must reinstate history as a method in theModern World System (1999), ological premise. In Chaos and Governance Giovanni Arrighi and Beverly Silver assert that, ifwe take into account the longue

dur?e, we will be able to identify patterns of repetition and evolution in the cycles of the modern world-system, patterns that may help us comprehend both the nature of the transformations we are living through and their consequences. Arrighi and Silver point out thatwhen the productive and commercial bases of a hegemony deteriorate, the dominant power seeks to retain its leadership by develop ing a system of financial accumulation. Through its control of high finance, it drains resources from theworld economy to finance its own economic growth, doing so in a

the case of Britain. We are all aware of the breakdown of this state's hege between 1870 and 1913. Its erosion did not occur uniformly, however. For 17 mony years?that is, between 1880 and 1896?Britain reversed the loss of relative power that had begun in the 1870s. In thatdecade, the per capita GDP of theBritish economy had Consider increased by 0.9 percent while that of theUnited States had increased by 2.7 percent. But during the 17 years in which it embraced a system of financial accumulation,

competitive environment of contention for circulating capital. However, it cannot withstand either the economic competition of new power configurations or the ideo logical attrition of becoming a drag on theworld economy.

Martins/IMPASSESOF U.S. HEGEMONY

21

31

2.5-'--^--7

0.5

-I-1-1

1870-1880
Source: Maddison (1997).

1880-1896

1897-1913

Figure 5. Per Capita GDP: United States (upperline) and Britain (lowerline), 1870-1913.

1.6 T

Figure 6. Annual Source: Maddison

Variation (1997).

in per Capita

GDP

of theWorld

Economy,

1870-1913.

Britain's growth exceeded both theworld average and thatof theU.S. economy. Against the 1.1 percent attained by theUnited States and theworld economy, itsper capita GDP expanded by 1.4 percent. Notwithstanding, the A-phase of a new Kondratieff thatbegan

in 1897 overturned theBritish economy in one fell swoop. The percentages of the 1870s returned, and the performance of the British economy went sour, falling below that of either theworld economy or theUnited States (Figs. 5 and 6). economy in the past 30 years. and 1982, U.S. growth trailed the world-economic 1967 average. Between 1983 and 2000, itonce again exceeded the average (Fig. 7). But for how much longer? As with Britain between 1880 and 1896, theUnited States, in its reliance on finan We can outline a similar scenario for the U.S.

Between

1983 and 2000, has managed to retain its prominence in theworld but it no longer leads the world in economic growth. Although Britain, economy, during its period of financialization, temporarily surpassed theUnited States, it still cialization between

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LATINAMERICAN PERSPECTIVES

1967-1982 Periods

1983-2000

and the World Economy Figure 7. Annual Variation inper Capita GDP of theUnited States (left) 1967-2000. (right),
Source: Maddison (2001) and Council of Economic Advisers (2005b).

China

Figure 8. Per Capita GDP, 1983-2000.


Source: Maddison (2001) and Council

of Economic

Advisers

(2005).

GDP

nomic vitality of China and India (Fig. 8). The appreciation of the exchange rate and the liberalization of trade and investment have formed thebasis of the strategy (established between 1967 and 1982) to reverseU.S. hegemonic decline. Through the appreciation of assets, the bourgeoisie and the govern ment of theUnited States acquired a significant portion of international liquidity in order to invest and stimulate growth.At the same time,with varying degrees of aggressiveness they encouraged competition in order to rid themselves of weak economic sectors. In the 1980s they turned to the national debt as a means of funding, but they encountered an

trailedGermany in terms of economic vitality: during this period Germany's per capita grew by 1.8 percent. For itspart, theUnited States, though ithas surpassed Japan, has not managed to surpass theEast Asian bloc, which has been propelled by the eco

obstacle in the unbridled expansion of the debt, which began to threaten social security and thewelfare system. In the 1990s they sought to restructure and expand the produc tive sector,but by 1998 their strategywas showing signs of exhaustion. In spite of impressing many analysts at its zenith, theU.S. growth strategy, even in its apparent solidity, demonstrated striking imbalances, the firstof which was the current-account deficit. The deficit was theflip side of the acquisition of international liquidity, and itmeant thatU.S. big capital had lost itswager, above all to East Asia, in attempting to recover competitiveness through competition.

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paradigm. Between 1990 and 1993, lower interest rates, restraint in of which were made possible by the military spending, and a cheaper work-hour?all at the startof the decade?increased the rate of profit and allowed the stock recession market and the productive sector to serve as instruments of external funding. The cri and the external financing of theGulf War produced a certain relief in the current-account deficit, but the return of growth pushed it up once more. Between 1992 and 1999, the shortfall in the current account grew 32 percent per sis of 1990-1991 annum until it reached 4.5 percent of the GDP (Council of Economic Advisers, in the second half of 2000, the economy decelerated into a state of 2005a). Beginning crisis and stagnation. Its regaining its accelerated growth seems tome improbable. Analysis of the crisis that began in 2000 sheds light on themodel of development theUnited States entered theA-phase of the new Kondratieff. The princi pal determinants of theU.S. crisis are the deficit in the balance of payments and an increase inwages, both of which were provoked by accelerated growth. The decline of U.S. commercial and productive power provokes a trend toward cur

Between 1980 and 1986, the deficit expanded at the astronomical rate of 71 percent per annum. There were two reasons for this striking defeat in the game of competition: (1) External savings were obtained through instruments that raised interest rates and deterred investment, and (2) These instrumentswere concentrated in themilitary sec tor, which, based on secretiveness and hierarchy, proved too obsolete for leadership in a microelectronic

with which

more than profits and threatened the inflow of foreign capital, since the capacity of the mass of capital was limited. To keep the threatunder con productive sector to absorb this trol, assets were appreciated through a new movement to increase the exchange rate, which began in 1996 and relied on interestrates.This movement was contradictory: while on the one hand itprovisionally maintained theflow of capital to the productive sector through speculative mechanisms, of the rate of profit.4 on the other hand it contributed to limiting the growth

obtained via the national debt. In the 1990s, financing shifted to the productive sector the deficit grew mergers, acquisitions, and stock-market indexation.Meanwhile, through

rent-account deficits that is driven by thebourgeoisie's unwillingness to accept its loss of relative power. Itwould prefer tomaintain an overvalued dollar and to finance current account deficits through external funding. In the 1980s, as we have seen, this fundingwas

An overvalued dollar has made theU.S. economy highly sensitive to external com petition. This has resulted in low rates of inflation,principally forproducers, and shrink age of the margin of negotiation in the face ofwage pressures. The leading sectors of the U.S. economy have been unable to accommodate an increase inwages by simply rais ing prices, and this represents a great obstacle to the expansion of the economy. In spite

were in 1962, their of the fact thataverage wages in theUnited States are lower than they was responsible for 66 percent of the decline in the rate of profit increase since 1996 between 1997 and 2001 that caused the crisis of 2001-2002 (Figs. 9-12). What does all of this add up to? Itmeans that,within this pattern of development, theU.S. economy will no longer perform in themiddle or long term at high rates of will not be able to accommodate the trend growth. Exposed to external competition, it toward risingwages encouraged by the decline in unemployment without significantly affecting the rate of profit.According to thismodel of development, to regain growth the United

States will need to increase unemployment and enact wage reductions.5 will continue towork against This state of affairs constitutes a formidable obstacle that U.S. development as long as its bourgeoisie refuses to accept a readjustment in the value of itswealth in relation to theworld economy.

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LATINAMERICAN PERSPECTIVES
$340.00 $320.00 $300.00

? $280.00
g $260.00 $240.00 $220.00 $200,

Years Figure 9. U.S. Real Weekly Source: Council of Economic Wages, Advisers 1959-2002. (2005b).

$10.00

Years 10. U.S. Real Hourly Wages, Figure Source: Council of Economic Advisers 1959-2002. (2005b).

Figure 11. U.S. Consumer. Source: Council

Inflation,

1997-2001: Advisers

Solid

line, Capital

goods;

broken line, Producer;

line with triangles,

of Economic

(2005b).

application,

though itmay stimulate the economy initially, will be limited by the resulting public deficits, which will have to be financed by higher interest rates. And any potential recovery based on the military sector will only contribute to further

Tax cuts, interest rate cuts, and increases inmilitary spending, all championed by the Bush administration, will keep this obstacle from ever being definitively cleared, since these measures do not constitute a sustainable approach to public policy. Their

Martins

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Wages of Decline Figure 12. Determinants Source: Council of Economic Advisers

Fixed Capital
in the U.S. (2005b). Rate of Profit,

Interest 1997-2001.

1900-1913 (A-1)

1913-1938 (B-1)

1938-1973 (A-2)

1974-1993 (B-2)

World Economy (Kondratieff Phases). Figure 13.Growth inper Capita GDP of the
Source: Maddison (1997; 2001).

waste because

2.8 percent and grew, between 2000 and 2004, by 2.1 percent. The world economy, however, attained a rate of 2.5 percent during this period, reversing the trends of the period of 1982-2000 (Maddison, 2001; Groningen Growth Centre, 2005; Council of Economic Advisers, 2005b). This new trajectory of theworld economy points to the stagnation of U.S. hegemony in the coming years and to the grafting of world-economic dynamism onto other regions, especially East Asia. In relation to the question raised above about the intensity of growth of theA-phase of the new Kondratieff, we have observed a number of patterns occurring between

In fact, since 2000, U.S. growth has trailed thatof theworld economy. Its per capita reached a yearly average of 1.5 percent. In growth rates in the period of 2000-2002 influenced by an initial push from global recovery, they attained a rate of 2003-2004,

of the sector's technological stagnation. Any such recovery will limit for the sake of national security and aggravate government deficits by being exports tied economically to the state.

1900 and today.Within each Kondratieff, theA-phases duplicate, approximately, the growth of the B-phases (Fig. 13). It is possible that theremay also be a certain corre spondence, due to their insertion in the longue dur?e, between the growth of A- and B-phases of distinct Kondratieffs. During the British cycle, the growth of the world economy between 1900 and 1913 (the A-phase of decline) outpaced the growth between 1870 and 1900 (the B-phase of hegemony) by 1.25 percent. If there were

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indeed a pattern relating A-phases and B-phases, we could expect, judging from the British case, a per capita growth of approximately 1.5 percent during the period of expansion that began in 1994, assuming that the same multiplier holds true for the It is possible, however, thatmodern techno expansion of the period of 1974-1993. logical acceleration may increase this rate somewhat, perhaps to about 2 percent.6 The third thesis I asserted above was that the coming systemic chaos would not yield to the succession patterns of themodern world-system. To overcome this chaos,

posthegemonic and socialist forces must establish a new world-system. In asserting this, I would appeal to three indicators: First, no single state can centralize all of the powers necessary for exercising hege mony. This is a sign of the acceleration of dynamic density in theworld-system. The variety, number, and quantity of transactions among the units of the system has accel erated to the degree that externalities now predominate in technological innovations. Private appropriation of the returns on such innovations is diminishing (OECD, 1991).

world with much lower per capita income, such as East Asia. This means that simple leadership in the accumulated capacity of science and tech nology does not guarantee themaintenance of a hegemonic situation (on the contrary, it may generate externalities for theworld economy) and thatperipheral countries can compete for the center of theworld economy nally organized to do so.7 insofar as they are internally and exter

The great oligarchic powers and their international enterprises defend themselves from this situation by entering into selective partnerships, but their response is notoriously insufficient. It does not prevent economic dynamism from shifting to regions of the

Second, the transferof economic dynamism to a region that is not only peripheral but represents 40 percent of humanity8 means an enormous rupture with the hege monic patterns of oligarchic wealth. Hegemonic countries represent between 0.3 per

metries between political and economic interests (Maddison, 2001). Finally, the new division of labor instituted by so-called global enterprises is erod ing any shared interestbetween theworking classes and the nation-states inwhich they reside. This occurs because, as Marini has observed, the growing interp?n?tration of markets is generalizing superexploitation of labor within the world economy. Superexploitation brings together systems of workforce reproduction and levels them out, but it also creates the objective conditions for the development of an international proletariat. Internationalism has been expanding on the basis of a complex of relations and modifications unfolding in theworld-system since the 1990s. As mentioned above, it is driven by the organization of social movements on a planetary scale, and it has

cent and 0.6 percent of humanity, which makes it impossible for the majority to exercise any control over the transferof wealth. The inversion now taking place points toward strong social control over produced wealth and toward the dissolution of asym

American Federation of Labor and Congress of example of this is the conversion of the the central U.S. labor union, which played a Industrial Organizations (AFL-CIO), role in the organization of protests against social and ecological "dumping" at the major World Trade Organization (WTO) in Seattle and is a third ministerial conference of the World Social Forum.9 contributor to the These three indicators point to the possibility of constructing a complex of antioli would unite periphery and center, East andWest, garchic forces that in the pursuit of a

recently been joined by forces thathad traditionally submitted themselves to the impe rialist interests of national bourgeoisies but have profoundly revised their approach because of the expansion of superexploitation to their own countries. The greatest

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planetary civilization. In and of themselves, however, these economic forces are inca pable of building a historical bloc that could found a new world-system. They must be complemented by the emergence of cultural and political elements that can enact peace-centered world mobilization to overcome themilitary power of the hegemon. In closing, I would like to offer a few words about Latin America in theworld-sys tem. The old world that is passing away reserves one of itsworst assignments for Latin

America. As

it struggles to postpone its general decline. Denationalization, mediocre prospects for development, social polarization, and cultural barbarism are the future that awaits us if we continue to follow the path of dependence. We must reclaim the political, social, and ideological initiative in the region and unite Latin America in a new internationalism.

the periphery of a decaying center, Latin America today serves the same function that India and China served in the last quarter of the nineteenth century and the first half of the twentieth?namely, to be an object of the hegemon's regional power as

NOTES
1.1 draw a distinction between hegemony and imperialism. The former refers to theworld-eeonomie dom ination of capitalist centers, which is exercised through ideological persuasion and consent. In hegemony, mil itary force, for dissuasion or actuation, is only a last resort. In imperialism, in contrast, domination is achieved through direct political control, violating the self-determination and sovereignty of peoples and states. Despite their differences, hegemony and imperialism do not necessarily represent historically antagonistic conditions. They may complement one another in fulfilling distinct functions in the order of global capitalism. to the percentage of profits in relation to the gross product of nonfi 2. The rate of profit corresponds nancial corporate businesses. With regard to profits, my point of reference is their value after taxes and after adjustments for inventory valuation and fixed capital consumption. With regard to gross product, I refer to its value after profits are deducted. 3. The A-phase of the postwar Kondratieff was longer for theworld economy than for theUnited States, running from 1939 to 1973. For the United States it ended around 1967, reflecting the transfer of world 4. This dynamism to other regions. is one of the factors explaining

economic

why the rate of profit during this period, though it entered a new did not regain the heights of the postwar years of expansion. Between 1959 and 1966 interest upturn, 1.4 percent of the gross product of nonfmancial absorbed and between 1994 and corporate businesses, 1999 it absorbed 2.8 percent (Council of Economic Advisers, 2005b). 5. The U.S. economic recovery that began in 2003 will be linked to increased unemployment, which has jumped from 4 percent in 2000 to 6 percent in 2003 and 5.5 percent in 2004, and poverty, which has increased from 11.3 percent in 2000 to 12.5 percent in 2003. inwhich the development and crisis of the prosperity phase 6. Ifwe consider the period of 1994-2002, of the new Kondratieff cent, which

are situated, we can observe a yearly per capita growth of approximately 1.9 per serves as an indicator of the potential for expansion of the cyclical phase thatwe are currently of greater technological dynamism in East Asian countries is the reduction, in rela in the differentials of per capita aggregate value inmanufacturing. In Japan, per in 1967, to 47.6 percent of the U.S. value, a pro value in manufacturing corresponded, States,

experiencing. 7. One expression tion to theUnited

capita aggregate itwas equivalent portion that rose to 86.3 percent in 1991 and fell to 72.3 percent in 2000. In South Korea to 11.3 percent in 1967 and jumped to 47.3 percent in 1998. In Taiwan, it jumped from 15.6 percent to 30.3 percent. China and India began at levels that were much lower but pointed toward upward trajectories. In China, to 4.5 percent in 1987 in relation toU.S. per capita aggregate value inmanufacturing corresponded to 7.5 percent in 1981 but rose value, but this index reached 7.9 percent in 1998. In India it corresponded to 12.5 percent in 1998 (Groningen Development Centre, 2005). 8. China, India, Japan, South Korea, and Taiwan tallied approximately 2,439,700,000 inhabitants in 1998, indicators, was then representing 41.2 percent of humanity. Their per capita GDP, according toMaddison's to US$3,871 in 1990 Geary-Khamis dollars. Their annual growth since 1967 has been 3.6 percent, that of theUnited tries, above all China States has been 1.9 percent. The disparity between the rates of growth of these coun and India, and those of theUnited States increased greatly beginning in the 1980s.

equal while

28

LATINAMERICAN PERSPECTIVES
9. The AFL-CIO

national

proposes a complex of transformations not only in international trade but also in inter the International Monetary Fund (IMF), and WTO, financing and investment. It takes aim at the the World Bank. With regard to international trade, it seeks to guarantee basic standards, which include the right to collective bargaining and freedom of association and the prohibition of child labor, slave labor, and

discrimination. Along with these aims, it proposes a reconsideration of the conditions imposed workplace on loans made to developing countries by the IMF and World Bank. It argues that these loans should above all, economic growth, democratic institutions, basic workers' rights, and environmental emphasize, protections. The AFL-CIO increase living standards for developing countries to have the resources to and environmental In this implement appropriate workplace regulations. regard it proposes the creation of development funds as well as the loosening of specifically financial con ditions on the repayment of external debt. It stresses, however, that each member country should be mon and itored for the establishment sanctions and possible of minimum exclusion and environmental workplace regulations and should from these international institutions in the event of violations. suffer calls attention to the necessity

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