Richard Moore


I hesitate to post this article, as it is only available online to subscribers 
of NLR (New Left Review).  I've decided to go ahead, partly because the article 
is so important, and partly as an advertisement for NLR and for Arrighi's book, 
"The Long Twentieth Century".


Original source URL:

New Left Review 33, May-June 2005

In the conclusion to his major two-part essay on the new US imperialism, 
Giovanni Arrighi situates the contradictions of the current American Œspatial 
fix¹ for the problems of overaccumulation in the context of a longue durée of 
systemic cycles. Have Washington¹s attempts to secure its world role through the
invasion of Iraq instead hastened the rise of China?


In the first part of this essay, I argued that the recent resurgence of the 
concepts of Œempire¹ and Œimperialism¹ is above all a consequence of the Bush 
Administration¹s embrace of a new imperialist programme in the wake of 9/11‹that
of the neoconservative Project for a New American Century. [1] The paper sought 
to investigate the social, economic and political circumstances which prompted 
the adoption of that policy, and in particular its relation to the turbulence of
the global economy since the 1970s. In dealing with these questions, I began by 
examining David Harvey¹s interpretation of the relationship between imperialism 
and capitalist development in The New Imperialism, focusing specifically on 
Harvey¹s concepts of Œspatial fix¹ and Œaccumulation by dispossession¹ as means 
to analyse the Bush Administration¹s present course. [2] I argued that, far from
laying the foundations for a second ŒAmerican Century¹, the occupation of Iraq 
has jeopardized the credibility of US military might; it has further undermined 
the centrality of the United States and the dollar in the global political 
economy; and it has strengthened the tendency towards the emergence of China as 
an alternative to US leadership in the East Asian region and beyond. It would 
have been hard to imagine a more rapid and complete failure of the 
neo-conservative imperial project. In all likelihood, the neo-conservative bid 
for global supremacy will go down in history as one of the several Œbubbles¹ 
that punctuated the terminal crisis of US hegemony. [3]

The bursting of this peculiar bubble has transformed but by no means done away 
with the world-historical circumstances that generated the Project for a New 
American Century. In this concluding part of the article, I will highlight these
circumstances by using Harvey¹s concepts of spatial fix and accumulation by 
dispossession in a longer perspective than he does. Within this optic, the new 
imperialism will appear as the outcome of a protracted historical process 
consisting of spatial fixes of increasing scale and scope, on the one hand, and 
on the other, of an American attempt to bring this process to an end through the
formation of a US-centred world government. This attempt, I will argue, was 
integral to US hegemony from the start. Under George W. Bush, however, it has 
reached its limits and in all likelihood will cease to be the primary 
determinant of ongoing transformations of the global political economy.


As Harvey suggests, there is an interesting correspondence between Hannah 
Arendt¹s theoretical observation in The Origins of Totalitarianism that Œa 
never-ending accumulation of power [is] necessary for the protection of a 
never-ending accumulation of capital¹, and my own empirical observation in The 
Long Twentieth Century that the expansion of world capitalism has been based on 
the emergence of ever more powerful leading capitalist organizations. [4] The 
correspondence, however, is not as Œexact¹ as he suggests. For Arendt¹s 
observation refers to the accumulation of power and capital within states, 
whereas mine refers to the accumulation of power and capital in an evolving 
system of states. The difference is crucial in more than one respect.

Arendt draws our attention to the process whereby individual capitalist states 
tend to experience an accumulation of Œsuperfluous money¹ (that is, of more 
capital than can be profitably reinvested within their national boundaries) and 
a need to grow more powerful in order to be able to protect growing property. 
From this perspective, imperialism of the capitalist sort is a policy aimed both
at finding profitable external outlets for surplus capital and at strengthening 
the state. My observation, in contrast, draws our attention to the process 
whereby increasingly powerful capitalist organizations have become the agency of
the expansion of a system of accumulation and rule that from the start 
encompassed a multiplicity of states. From this perspective, imperialism of the 
capitalist sort is an aspect of the recurrent struggles through which capitalist
states have used coercive means in the attempt to turn in their favour the 
spatial shifts entailed in the Œendless¹ accumulation of capital and power. [5]

As Harvey underscores, finance capital backed by state power plays a crucial 
mediating role both in the production of space that is involved in the enlarged 
reproduction of capital and in the Œcannibalistic practices and forced 
devaluations¹ that constitute the essence of accumulation by dispossession. He 
is nonetheless vague about the world-historical coordinates of this role. Like 
Arendt, he seems to adhere to the view that finance capital has been an 
outgrowth of nineteenth-century industrial capitalism. While this may be true of
capitalist development in some states, it is certainly not true of it on a world

Cycles of accumulation

As Fernand Braudel has demonstrated, Œfinance capitalism¹, or what we now call 
financialization, Œwas no newborn child of the 1900s.¹ Rather,

in the past‹in say Genoa or Amsterdam‹following a wave of growth in commercial 
capitalism and the accumulation of capital on a scale beyond the normal channels
for investment, finance capitalism was already in a position to take over and 
dominate, for a while at least, all the activities of the business world. [6]

This claim has a double significance for our present purposes. First, it 
suggests that, world-historically, financialization (the capacity of finance 
capital Œto take over and dominate, for a while at least, all the activities of 
the business world¹) has been the result of a recurrent overaccumulation of 
capital (Œthe accumulation of capital on a scale beyond the normal channels for 
investment¹). And second, it indicates that this tendency towards the repeated 
overaccumulation and financialization of capital was in evidence long before 
capitalism became associated with industrialism.

Braudel also provides a list of dates, places, and agencies that enable us to 
ground in world-historical space and time Harvey¹s theoretical considerations 
concerning finance capital. He suggests that the withdrawal of the Dutch from 
commerce around 1740 to become Œthe bankers of Europe¹ was typical of a 
recurrent world-systemic tendency. The same process was in evidence in Italy in 
the fifteenth century, and again around 1560, when the leading groups of the 
Genoese business diaspora gradually relinquished commerce to exercise for about 
seventy years a rule over European finances comparable to that exercised in the 
twentieth century by the Bank for International Settlements at Basle‹Œa rule 
that was so discreet and sophisticated that historians for a long time failed to
notice it.¹ After the Dutch, the British replicated the same tendency during and
after the Great Depression of 1873­96, when Œthe fantastic venture of the 
industrial revolution¹ created an overabundance of money capital. After the 
equally Œfantastic venture¹ of so-called Fordism-Keynesianism, we may add, US 
capital since the 1970s has followed a similar trajectory. Œ[Every] capitalist 
development of this order seems, by reaching the stage of financial expansion, 
to have in some sense announced its maturity: it [is] a sign of autumn¹. [7]

In the light of these observations, Marx¹s general formula of capital (MCM') may
be reinterpreted as depicting, not just the logic of individual capitalist 
investments, but also a recurrent pattern of world capitalism. The central 
aspect of this pattern is the alternation of epochs of material expansion (MC 
phases of capital accumulation) with phases of financial expansion (CM' phases).
In phases of material expansion, money capital (M) sets in motion an increasing 
mass of commodities (C), including commoditized labour power and gifts of 
nature; and in phases of financial expansion, an expanded mass of money capital 
(M') sets itself free from its commodity form, and accumulation proceeds through
financial deals (as in Marx¹s abridged formula MM'). Taken together, the two 
epochs or phases constitute what I have called a systemic cycle of accumulation 
(MCM'). [8]

Starting from these premises, I have identified four such cycles, each 
encompassing a Œlong¹ century: a Genoese­Iberian cycle, covering the period from
the fifteenth to the early seventeenth centuries; a Dutch cycle, from the late 
sixteenth to the late eighteenth centuries; a British cycle, from the mid 
eighteenth to the early twentieth centuries; and a US cycle, from the late 
nineteenth century to the current phase of financial expansion. Each cycle is 
named after (and defined by) the particular complex of governmental and business
agencies that led the world capitalist system towards first the material and 
then the financial expansions that jointly constitute the cycle. Consecutive 
systemic cycles of accumulation overlap with one another at their beginnings and
ends, because phases of financial expansion have not only been the Œautumn¹ of 
major developments of world capitalism. They have also been periods in the 
course of which a new leading governmental-business complex emerged and over 
time reorganized the system, making possible its further expansion. [9]

Material and financial expansions are both processes of a system of accumulation
and rule that has increased in scale and scope over the centuries but has from 
its earliest beginnings encompassed a large number and variety of governmental 
and business agencies. Within each cycle, material expansions occur because of 
the emergence of a particular bloc of governmental and business agencies capable
of leading the system towards a new spatial fix that creates the conditions for 
wider or deeper divisions of labour. Under these conditions, returns to capital 
invested in trade and production increase; profits tend to be ploughed back into
the further expansion of trade and production more or less routinely; and, 
knowingly or unknowingly, the system¹s main centres cooperate in sustaining one 
another¹s expansion. Over time, however, the investment of an ever-growing mass 
of profits in trade and production inevitably leads to the accumulation of 
capital over and above what can be reinvested in the purchase and sale of 
commodities without drastically reducing profit margins. At this point, 
capitalist agencies tend to invade one another¹s spheres of operation; the 
division of labour that previously defined the terms of their mutual 
co-operation breaks down; and competition becomes increasingly vicious. The 
prospects of recouping the capital invested in trade and production decrease, 
and capitalist agencies tend to keep in liquid form a larger proportion of their
incoming cash flows. The stage is thus set for the change of phase from material
to financial expansion.

In all financial expansions of systemic significance, the accumulation of 
surplus capital in liquid form had three main effects. First, it transformed 
surplus capital embodied in landscapes, infrastructures and means of trade and 
production into an expanding supply of money and credit. Second, it deprived 
governments and populations of the revenues that they previously derived from 
the trade and production that were no longer undertaken because unprofitable or 
too risky. Finally, and largely as a corollary of the first two effects, it 
created highly profitable market niches for financial intermediaries capable of 
channelling the growing supply of liquidity into the hands either of governments
and populations in financial straits, or of public and private entrepreneurs 
intent on opening up new avenues of profit-making in trade and production.

As a rule, the leading agencies of the preceding material expansion were best 
positioned to occupy these market niches and thus lead the system of 
accumulation toward the financial expansion. This capacity to switch from one 
kind of leadership to another has been the main reason why, after experiencing 
the signal crisis of their hegemonies, all incumbent centres of world capitalism
enjoyed a belle époque of temporary but nonetheless quite significant reflation 
of their wealth and power. The reason why belles époques of historical 
capitalism have all been temporary phenomena is because they have tended to 
deepen rather than solve the underlying overaccumulation crisis. They have 
thereby exacerbated economic competition, social conflicts, and interstate 
rivalries to levels that it was beyond the incumbent centres¹ powers to control.
Before we proceed to discuss the ever-changing nature of the struggles that 
ensued, two observations are in order.

Transition mechanisms

The first is that all financial expansions entailed accumulation by 
dispossession. Suffice it to mention that lending surplus capital to governments
and populations in financial straits was profitable only to the extent that it 
redistributed assets or incomes from the borrowers to the agencies that 
controlled surplus capital. Massive redistributions of this kind have indeed 
been key ingredients of all the belles époques of finance capitalism‹from 
Renaissance Florence to the Reagan and Clinton eras. In and by themselves, 
however, they provided no solution to the underlying overaccumulation crisis. On
the contrary, by transferring purchasing power from strata and communities with 
a lower liquidity preference (that is, with a lesser disposition to accumulate 
money capital) to strata and communities with a higher liquidity preference, 
they tended to provoke an even greater overaccumulation of capital and the 
recurrence of profitability crises. Moreover, by alienating the strata and 
communities that were being dispossessed, they tended to provoke a legitimacy 
crisis as well. A combination of profitability and legitimacy crises is, of 
course, the underlying condition to which Arendt and Harvey trace the 
imperialism of their respective times. Nevertheless, comparable conditions were 
also in evidence in earlier financial expansions, directly or indirectly 
exacerbating conflicts within and among states. [10]

At least initially, the escalation of interstate conflicts benefited incumbent 
centres, because it inflated states¹ financial needs and thereby intensified 
their mutual competition for mobile capital‹a competition that Max Weber called 
Œthe world-historical distinctiveness of [the modern] era¹. [11] But once 
conflicts escalated into major wars, the incumbent centres generally lost out 
even in the financial sphere to newly emergent centres that were better 
positioned to provide the Œendless¹ accumulation of capital and power with a 
spatial fix of greater scale and scope than the previous one.

This brings us to the second observation, which concerns the transfer of surplus
capital from incumbent to emerging centres of capitalist development. As 
previously noted, the role that Marx attributed to the credit system in 
promoting such a reallocation points to an invisible inter-capitalist 
co-operation that reduces the need for accumulation by dispossession in emerging
centres. We also noted that Marx¹s sequence of leading capitalist centres 
(Venice, Holland, England, United States) points to a series of spatial fixes of
increasing scale and scope that created the conditions for the resolution of 
each preceding overaccumulation crisis and the take-off of a new phase of 
material expansion. [12] To this we should now add that wars played a crucial 
role. In at least two instances (from Holland to Britain and from Britain to the
United States), the reallocation of surplus capital from mature to emerging 
centres began long before the escalation of interstate conflicts. This early 
transfer, however, established claims on the assets and future incomes of the 
emerging centres that brought back to the mature centres flows of interest, 
profits and rents that equalled or even surpassed the original investment. 
Instead of weakening, it therefore strengthened the position of the incumbent 
centres in the world of high finance. But once wars escalated, the 
creditor-debtor relation that linked the mature to the emerging centres was 
forcibly reversed and the reallocation to the emerging centres became both more 
substantial and permanent. The mechanisms of the reversal varied considerably 
from transition to transition. But in all cases, wars were essential ingredients
in the change of guard at the commanding heights of world capitalism. [13]


Contrary to the reading of some critics, my concept of systemic cycles of 
accumulation does not portray the history of capitalism as Œthe eternal return 
of the same.¹ [14] It shows instead that precisely when the Œsame¹ (i.e., 
recurrent system-wide financial expansions) appeared to return, new rounds of 
intercapitalist competition, interstate rivalries, accumulation by 
dispossession, and production of space on an ever-increasing scale 
revolutionized the geography and mode of operation of world capitalism, as well 
as its relationship to imperialistic practices. Thus, if we focus on the 
Œcontainers of power¹ [15] that have housed the Œheadquarters¹ of the leading 
capitalist agencies of successive cycles of accumulation, we immediately see a 
progression from a city-state and cosmopolitan business diaspora (the Genoese); 
to a proto-national state (the United Provinces) and its joint-stock chartered 
companies; to a multinational state (the United Kingdom) and its 
globe-encircling tributary empire; to a continent-sized national state (the 
United States) and its world-encompassing system of transnational corporations, 
military bases and institutions of world governance. [16]

As this progression shows, none of the agencies that have promoted the formation
and expansion of world capitalism correspond to the mythical national state of 
political and social theory: Genoa and the United Provinces were something less,
the United Kingdom and the United States something more than national states. 
And from the very beginning, the networks of accumulation and power that enabled
these agencies to play a leading role in the formation and expansion of world 
capitalism were not Œcontained¹ within the metropolitan territories that defined
their proto-national, multinational, or national identities. Indeed, 
long-distance trade, high finance, and related imperialistic practices (that is,
war-making and empire-building activities) were even more essential sources of 
profit for the early than for the later agencies. As Arendt maintains, 
imperialism must indeed be considered Œthe first stage in the political rule of 
the bourgeoisie rather than the last stage of capitalism.¹ [17] But that first 
stage should be situated in early-modern city-states rather than in late 
nineteenth-century national states, as she suggests.

The fact that imperialistic practices were a more critical source of profit in 
the early than in the later stages of capitalist expansion does not mean that 
the policies and actions of the later agencies have been less imperialistic than
those of the earlier ones. On the contrary, they have become more rather than 
less so, because of an increasing interpenetration of the capitalist and 
territorialist strategies of power. This tendency can be clearly observed by 
comparing the historical geography of successive systemic cycles of 

Even before the first cycle began to materialize, some Italian city-states, most
notably Venice, had demonstrated the viability of a capitalist strategy of power
in the early-modern European context. Rulers pursuing territorialist strategies 
sought to accumulate power by expanding their territorial domains. The 
bourgeoisies that controlled the Italian city-states, in contrast, sought to 
accumulate power by expanding their command over money capital, while abstaining
from territorial acquisitions unless they were absolutely essential to the 
accumulation of capital. [18] The success of this strategy rested on the 
interaction of two conditions. One was the balance of power among the larger 
territorial organizations of the European subcontinent. The other was the 
extroversion of the emerging European system of states‹the fact, that is, that 
the successful pursuit of profit and power within Europe depended critically on 
privileged access to resources outside Europe through trade or plunder. The 
balance of power ensured not just the political survival of territorially 
parsimonious capitalist organizations. It also ensured that the competition 
among the larger territorial organizations for financial resources would empower
the capitalist organizations that controlled those resources. At the same time, 
the extroversion of the European power struggle ensured that this competition 
would be continually renewed by the need of the states to outdo one another in 
gaining privileged access to extra-European resources.

Initially, the combination of these two conditions was extremely favourable to 
the capitalist strategy of power. Indeed, it was so favourable that its most 
successful agency was an almost entirely de-territorialized organization. For 
the Genoese­Iberian designation of the first systemic cycle of accumulation does
not refer to the Republic of Genoa as such‹a city-state which throughout the 
cycle led a politically precarious existence and Œcontained¹ very little power. 
It refers instead to the transcontinental commercial and financial networks that
enabled the Genoese capitalist class, organized in a cosmopolitan diaspora, to 
deal on a par with the most powerful rulers of Europe and to turn these rulers¹ 
mutual competition for capital into a powerful engine for the self-expansion of 
its own capital. From this position of strength, the Genoese capitalist diaspora
entered into a highly profitable relationship of informal political exchange 
with the rulers of Portugal and Imperial Spain. By virtue of this relationship, 
Iberian rulers undertook all the war- and state-making activities involved in 
the formation of a world-encircling market and empire, while Genoa¹s diaspora 
capitalists specialized in facilitating commercially and financially these 
activities. Unlike the Fuggers, who were ruined by their connection with 
Imperial Spain, the Genoese probably gained from the relationship more than 
their Iberian partners did. As Richard Ehrenberg noted, Œit was not the Potosí 
silver mines, but the Genoese fairs of exchange which made it possible for 
Philip II to conduct his world power policy decade after decade.¹ But in the 
process, as Suárez de Figueroa lamented in 1617, Spain and Portugal were turned 
into Œthe Indies of the Genoese¹. [19]

Rise of Amsterdam

In the second (Dutch) systemic cycle of accumulation, the conditions for the 
pursuit of a strictly capitalist strategy of power remained favourable, but not 
as favourable as they had been in the first cycle. To be sure, the intense 
conflicts that set the larger territorial states of Europe against one another 
were essential to the Dutch ascent, and in 1648 the Peace of Westphalia provided
the European balance of power with some institutional stability. Moreover, in 
the seventeenth century the Dutch could expand the spatial scale of their 
operations from the Baltic to the Atlantic and the Indian Ocean as easily and 
swiftly as they did only because the Iberians had already conquered the Americas
and established a direct sea route to the East Indies. Nevertheless, the 
geopolitical landscape created in Europe by the Iberian world-encircling spatial
fix left no room for the kind of capitalist strategy of power that had made the 
fortunes of the Genoese diaspora in the Œlong¹ sixteenth century. Indeed, the 
Dutch succeeded in carving out of the Iberian seaborne and territorial empires 
the Amsterdam-centred system of commercial entrepots and joint-stock chartered 
companies that became the foundation of the second systemic cycle of 
accumulation precisely by doing what the Genoese had not been doing, that is, by
becoming self-sufficient in war- and state-making. [20]

Violet Barbour has claimed that this Amsterdam-centred system was the last 
instance of Œa veritable empire of trade and credit . . . held by a city in her 
own right, unsustained by the forces of a modern state.¹ [21] Since the United 
Provinces combined features of the disappearing city-states with those of the 
rising national states, whether it qualifies as a Œmodern state¹ is a 
controversial issue. But whichever characteristics one may want to emphasize, 
the Dutch cycle does appear to have been the watershed between two distinct ages
of historical capitalism: the age of the city on the one side, and that of the 
territorial state and the national economy on the other.

At the heart of a Europe swollen with success and tending, by the end of the 
eighteenth century, to embrace the whole world, the dominant central zone had to
grow in size to balance the entire structure. Cities standing alone, or almost 
alone, by now lacked sufficient purchase on the neighbouring economies from 
which they drew strength; soon they would no longer measure up to the task. The 
territorial states would take over. [22]

We shall deal later with the issue of why the central zone had to Œgrow in size¹
so as Œto balance the entire structure¹. For now let us note that the emergence 
of territorial states as the leading agencies of capitalist expansion brought 
about a far greater interpenetration of capitalism and imperialism than had 
hitherto been the case. Although the fortunes of the Genoese capitalist diaspora
had been thoroughly dependent on the war-making and empire-building activities 
of its Iberian partners, the diaspora itself abstained completely from such 
activities. Genoese capitalism and Iberian imperialism sustained one another but
through a relationship of political exchange that reproduced their separate 
organizational identities from beginning to end. While no such separation 
existed in the Dutch cycle, the eighty-year long struggle for independence that 
the United Provinces waged against Imperial Spain endowed Dutch capitalism with 
a long-lasting anti-imperialist identity. Even after that struggle had come to 
an end, Peter de la Court could portray Holland as a Œcat¹ in a jungle of Œwild 
beasts¹. The wild beasts were the territorial states of Europe: ŒLions, Tygers, 
Wolves, Foxes, Bears, or any other Beast of Prey, which often perish by their 
own Strength, and are taken where they lie in wait for others.¹ A cat does 
resemble a lion. But Holland was and would remain a cat because Œwe who are 
naturally Merchants, cannot be turned into Souldiers¹ and Œthere is more to be 
gotten by us in a time of Peace and good Trading, than by War, and the ruin of 
Trade¹. [23]

In reality, the Dutch system of accumulation, which would indeed have benefited 
more from peace than from war after Westphalia, had been built through war and 
the ruin of Iberian trade before it. Moreover, in the non-European world, 
especially in the Indonesian archipelago, the Œcat of Holland¹ was second to 
none of the European Œbeasts of prey¹ in the use of violence to destroy existing
landscapes of trade and production in order to create landscapes more favourable
to the Œendless¹ accumulation of Dutch capital. De la Court¹s metaphor does 
nonetheless draw a distinction between the imperialism of the larger territorial
states of Europe and the capitalism of the territorially parsimonious Dutch 
Republic that remained discernible throughout the Dutch cycle. For the strategy 
of power of the Dutch Republic was primarily based, not on the expansion of its 
territorial domains, but on the expansion of its control over money capital and 
the international credit system. Combining the strengths of the Venetian and 
Genoese strategies, it relied on money and credit as the key means by which the 
struggles among the territorial states of Europe were turned into an engine of 
the self-expansion of Dutch capital. Over time, however, the escalation of these
struggles undermined the success of the Dutch strategy, and simultaneously 
created the conditions for a complete fusion of capitalism and imperialism in 
the practices of the state that eventually emerged as the new leader of 
capitalist expansion. [24]

In order to gain some insight into the reasons for this fusion we must return to
Braudel¹s contention that the territorial scale of the dominant centre of the 
system of accumulation had somehow to grow in step with the increase in the 
spatial scale of the system. Braudel himself suggests that one of the main 
reasons why the small territorial scale of Holland became a handicap in holding 
the centre of the globalizing European system of accumulation was a structural 
shortage of labour. ŒHolland,¹ he claims, Œcould only fulfil her role as 
freighter of the high seas if she could obtain the necessary extra labour from 
among the wretched of Europe.¹ It was the poverty of the rest of Europe that 
Œenabled the Dutch to ³set up² their Republic.¹ [25] But once an increasing 
number of European states sought to internalize within their own domains the 
sources of Dutch wealth and power through one variant or another of mercantilism
and imperialism, competition over European labour resources intensified and the 
size of the Dutch Republic turned into an increasingly insurmountable obstacle. 
As Stavorinus lamented,

ever since the year 1740, the many naval wars, the great increase of trade and 
navigation, particularly in many countries, where formerly these pursuits were 
little attended to, and the consequent great and continual demands for able 
seamen, both for ships of war and for merchantmen, have so considerably 
diminished the supply of them, that, in our own country, where there formerly 
used to be a great abundance of mariners, it is now, with great difficulty and 
expense, that any vessel can procure a proper number of able hands to navigate 
her. [26]

Nor could the Dutch compete with larger territorial states in settling colonies,
simply because too few Dutchmen were available for the purpose. As a result, in 
North America most of the colonial population and nearly all of the well-to-do 
merchant, planter and professional classes were of British origin, accustomed to
manufactures from British sources and sales through British factors. English 
ports thus began to challenge and then to outdo Amsterdam¹s entrepot trade. 
Moreover, while Dutch industries languished, English industries expanded rapidly
under the joint impact of Atlantic trade and increasing governmental protection.
[27] British success in outcompeting the Dutch, both in overseas commercial and 
domestic industrial expansion, gradually reduced Amsterdam¹s share of entrepot 
trade. But the death blow to Dutch commercial supremacy came from the spread of 
mercantilism to the Baltic region and the consequent disruption of what had all 
along been the Œmother trade¹ of Dutch capitalism. [28]

London¹s dominion

It was in this context that the United Kingdom emerged as the new leader of the 
Œendless¹ accumulation of capital and power through a complete fusion of 
capitalism and imperialism. Once London had displaced Amsterdam as the financial
centre of the globalizing European system of states, as it did by the 1780s, the
United Kingdom became the main beneficiary of inter-state competition for mobile
capital. In this respect, it became the heir of the capitalist tradition 
initiated by the Genoese in the Œlong¹ sixteenth century and developed further 
by the Dutch in the Œlong¹ seventeenth century. In other respects, however, the 
United Kingdom was also the heir of the imperialist tradition initiated by the 
Iberian partners of the Genoese‹a tradition which the Œanti-imperialism¹ of the 
Dutch and the stabilization of the European balance of power at Westphalia had 
reversed only temporarily and partially. [29]

This peculiar fusion of capitalism and imperialism provided Œendless¹ 
accumulation with a spatial and organizational fix that differed from that of 
the Dutch cycle in key respects. Geopolitically, the system of states 
established at Westphalia under Dutch leadership was truly 
anarchic‹characterized, that is, by the absence of central rule. The inter-state
system reconstituted after the Napoleonic Wars under British leadership, in 
contrast, was one in which the European balance of power was transformed, for a 
while at least, into an instrument of informal British rule. Having gained 
mastery over the balance of power during the wars, the British took a number of 
steps to ensure that it would remain in their hands. While reassuring the 
absolutist governments of continental Europe organized in the Holy Alliance that
changes in the balance of power would come about only through consultation in 
the newly established Concert of Europe, they created two counterweights to 
their power. In Europe, they requested and obtained that defeated France be 
included among the Great Powers, albeit held in check by being ranked with 
second tier powers. In the Americas, they countered the Holy Alliance¹s designs 
to restore colonial rule by asserting the principle of non-intervention in Latin
America and by inviting the United States to support this principle. What later 
became the Monroe Doctrine‹the idea that Europe should not intervene in American
affairs‹was initially a British policy. [30]

By pursuing its national interest in the preservation and consolidation of a 
fragmented and Œbalanced¹ power structure in Continental Europe, Britain 
fostered the perception that its overwhelming world power was being exercised in
the general interest‹the interest of former enemies as well as of former allies,
of the new republics of the Americas as well as of the old monarchies of Europe.
This perception was consolidated by Britain¹s unilateral liberalization of its 
trade, which culminated in the repeal of the Corn Laws in 1846 and of the 
Navigation Acts in 1849. Over the following twenty years, close to one third of 
the exports of the rest of the world went to Britain‹the United States, with 
almost 25 percent of all imports and exports, being Britain¹s single largest 
trading partner, and European countries accounting for another 25 percent. 
Through this policy, Britain cheapened the domestic costs of vital supplies and 
at the same time provided the means of payment for other countries to buy its 
manufactures. It also drew much of the Western world into its trading orbit, 
fostering inter-state co-operation and securing low protection costs for its 
overseas trade and territorial empire. [31]

In this respect, the UK-centred system of accumulation also differed radically 
from its Dutch predecessor. In both systems, the metropolitan territories of the
leading capitalist state played the role of central entrepot. But soon after the
Dutch system had become predominant, it began to be challenged by the aggressive
mercantilism of both Britain and France. The British system, in contrast, could 
consolidate further through the longest peace in European history‹Polanyi¹s 
Hundred Years¹ Peace (1815­1914). Britain¹s mastery of the European balance of 
power and centrality in world trade were mutually reinforcing conditions of this
peace. The first reduced the chances that any state would have the capabilities 
to challenge British commercial supremacy in the same way the British had 
challenged Dutch supremacy after Westphalia. The second Œcaged¹ a growing number
of territorial states in a global division of labour that strengthened each 
one¹s interest in preserving the UK-centred system. And the more general this 
interest became, the easier it was for Britain to manipulate the balance of 
power to prevent the emergence of challenges to its commercial supremacy.

This combination of circumstances depended critically on a third difference 
between the British and Dutch systems. Whereas the Dutch entrepot was primarily 
a commercial one, the British entrepot was also industrial, the Œworkshop of the
world.¹ England had long been one of the main industrial centres of Europe. But 
it was only in the course of the eighteenth century that the expansion of 
England¹s entrepot trade and massive governmental expenditure during the 
Napoleonic Wars turned British industrial capabilities into an effective 
instrument of national aggrandizement. [32] The Napoleonic Wars, in particular, 
constituted a decisive turning point. In McNeill¹s words,

government demand created a precocious iron industry, with a capacity in excess 
of peacetime needs, as the post-war depression of 1816­20 showed. But it also 
created the condition for future growth by giving British ironmasters 
extraordinary incentives for finding new uses for the cheaper product their new,
large-scale furnaces were able to turn out. Military demands on the British 
economy thus went far to shape the subsequent phases of the industrial 
revolution, allowing the improvement of steam engines and making such critical 
innovations as the iron railway and iron ship possible at a time and under 
conditions which simply would not have existed without the wartime impetus to 
iron production. [33]

In the course of the nineteenth century, railways and steamships forged the 
globe into a single interacting economy as never before. In 1848, there was 
nothing resembling a railway network outside Britain. Over the next thirty years
or so, notes Eric Hobsbawm, Œthe most remote parts of the world [began] to be 
linked together by means of communication which had no precedent for regularity,
for the capacity to transport vast quantities of goods and numbers of people, 
and above all, for speed.¹ As this system of transport and communication took 
shape, world trade expanded at unprecedented rates. From the mid 1840s to the 
mid 1870s, the volume of seaborne merchandise between the major European states 
more than quadrupled, while the value of the exchanges between Britain and the 
Ottoman Empire, Latin America, India and Australasia increased about sixfold. 
Eventually, this expansion of world trade intensified inter-state competition 
and rivalries. But in the middle decades of the century the advantages of 
hooking up to the British entrepot so as to draw upon its equipment and 
resources were too great to be willingly foregone by any European state. [34]

Unlike the seventeenth-century Dutch world-trading system, which was always a 
purely mercantile one, the nineteenth-century British world-trading system thus 
also became an integrated system of mechanized transport and production. Britain
was both the chief organizer and the chief beneficiary of this system, within 
which it performed the double function of central clearing-house and regulator. 
While the function of central clearing-house was inseparable from Britain¹s role
as the workshop of the world, the function of central regulator was inseparable 
from its role as the leading empire-builder in the non-European world. To return
to de la Court¹s metaphor, unlike Holland, which was and remained a Œcat¹, 
Britain was and remained a territorial Œbeast of prey¹ whose conversion to 
capitalism only whetted its appetite for territorial expansion. As previously 
noted, the plunder of India enabled Britain to buy back the national debt from 
the Dutch and to start the Napoleonic Wars nearly free from foreign debt. It 
thereby facilitated the sixfold increase in British public expenditure in 
1792­1815 to which McNeill attributes a decisive role in shaping the 
capital-goods phase of the industrial revolution. More important, it initiated 
the process of conquest of a territorial empire in South Asia that was to become
the principal pillar of Britain¹s global power.

The unfolding of this process has been detailed elsewhere. [35] Here, I shall 
simply mention the two main aspects of its relationship to the enlarged 
reproduction of British power, one demographic and one financial. India¹s huge 
demographic resources buttressed Britain¹s world power both commercially and 
militarily. Commercially, Indian workers were forcibly transformed from major 
competitors of European textile industries into major producers of cheap food 
and raw materials for Europe. Militarily, Indian manpower was organized in a 
European-style colonial army, funded entirely by the Indian taxpayer, and used 
throughout the nineteenth century in the long series of wars through which 
Britain opened up Asia and Africa to Western trade and investment. As for the 
financial aspect, the devaluation of the Indian currency, the imposition of the 
infamous Home Charges‹through which India was made to pay for the privilege of 
being pillaged and exploited by Britain‹and the Bank of England¹s control over 
India¹s foreign exchange reserves, jointly turned India into the Œpivot¹ of 
Britain¹s world financial and commercial supremacy. [36]

British decline

Under British leadership, the Œendless¹ accumulation of capital and power thus 
came to be embedded in a spatial fix of greater scale and scope than in the 
Genoese­Iberian and Dutch cycles. But for that very reason it eventually 
resulted in a far more massive overaccumulation of capital. As in the earlier 
cycles, the incumbent centre was initially best positioned to take advantage of 
the intensification of competition that signalled the change of phase from 
material to financial expansion. The ensuing Edwardian belle époque, however, 
was but a preamble to an escalation of inter-state conflicts that once again 
revolutionized the historical geography of world capitalism. The analogous 
Œrevolution¹ of the late eighteenth and early nineteenth centuries had 
eliminated from the struggle for capitalist leadership proto-national states 
like the United Provinces. In the Œrevolution¹ of the first half of the 
twentieth century, it was the turn of the national states themselves to be 
squeezed out of the struggle unless they controlled integrated 
agricultural-industrial-military complexes of continental scale.

ŒBritain¹s new insecurity and growing militarism and Jingoism [towards the end 
of the nineteenth century],¹ notes Andrew Gamble, Œarose because the world 
seemed suddenly filled with industrial powers, whose metropolitan bases in terms
of resources and manpower and industrial production were potentially much more 
powerful than Britain¹s.¹ [37] The rapid industrialization of the unified 
Germany after 1870 was particularly upsetting for the British, because it 
created the conditions for the rise of a land power in Europe capable of 
aspiring to continental supremacy and of challenging Britain¹s maritime rule. 
During the First World War, Britain and its allies succeeded in containing 
Germany, and Britain even increased the reach of its overseas territorial 
empire. But the financial costs of these military-political successes destroyed 
Britain¹s capacity to hold the centre of world capitalism.

During the war Britain did continue to function as principal banker and 
loan-raiser on the world¹s credit markets, not just for itself, but also by 
guaranteeing loans to Russia, Italy and France. This looked like a repetition of
its eighteenth-century role as Œbanker of the coalition.¹ There was nonetheless 
one critical difference: the huge trade deficit with the United States, which 
was supplying billions of dollars¹ worth of munitions and foodstuffs to the 
Allies but required few goods in return. ŒNeither the transfer of gold nor the 
sale of Britain¹s enormous dollar securities could close this gap; only 
borrowing on the New York and Chicago money markets, to pay the American 
munitions suppliers in dollars, would do the trick.¹ [38] When Britain¹s credit 
approached exhaustion, the US threw its economic and military weight into the 
struggle, tilting the balance to its debtors¹ advantage. Mastery over the 
European balance of power had shifted decisively from British to US hands. The 
insularity that the English Channel no longer provided, the Atlantic still did. 
More important, as innovations in means of transport and communications 
continued to overcome spatial barriers, America¹s remoteness became less of a 
disadvantage commercially and militarily. ŒIndeed, as the Pacific began to 
emerge as a rival economic zone to the Atlantic, the USA¹s position became 
central‹a continent-sized island with unlimited access to both of the world¹s 
major oceans.¹ [39]

Washington¹s ascendancy

This Œcontinent-sized island¹ had long been in the making. It was the spatial 
product of the century-long process of territorial seizure and occupation 
through which the United States had Œinternalized¹ imperialism from the very 
beginning of its history. [40] But it was the transport revolution and the 
industrialization of war in the second half of the nineteenth century that 
turned it into a powerful agricultural-industrial-military complex with decisive
competitive and strategic advantages vis-à-vis European states. To be sure, 
Britain¹s world-encompassing territorial empire contained even greater resources
than the United States. Nevertheless, the global dispersion and weak mutual 
integration of Britain¹s colonial domains‹in contrast with the regional 
concentration and strong mutual integration, both political and economic, of the
territorial domains of the United States‹was a crucial difference in the spatial
configuration of the leading capitalist states of the Œlong¹ nineteenth and 
twentieth centuries respectively. As noted earlier, Britain¹s far-flung empire 
was an essential ingredient in the formation and consolidation of the UK-centred
system of accumulation. But as soon as interstate competition for Œliving space¹
intensified under the impact of the transport revolution and the 
industrialization of war, the protection costs of Britain¹s metropolitan and 
overseas domains began to escalate, and its imperial possessions turned from 
assets into liabilities. At the same time, the overcoming of spatial barriers 
brought about by these same two phenomena turned the continental size, 
compactness, insularity, and direct access to the world¹s two major oceans of 
the United States into decisive strategic advantages in the escalating 
inter-state power struggle. [41]

Unsurprisingly, the struggle ended with the arrival of the bipolar world so 
often forecast in the nineteenth and early twentieth centuries: Œthe 
international order . . . now moved ³from one system to another². Only the 
United States and the USSR counted . . . and of the two, the American 
Œsuperpower¹ was vastly superior.¹ [42] As Thomas McCormick has underscored, US 
leaders fought the Second World War Œnot simply to vanquish their enemies, but 
to create the geopolitical basis for a postwar world order that they would both 
build and lead¹. In the pursuit of this ambitious end, awareness of British 
precedents during the Napoleonic Wars helped. In particular,

Britain entered the main European theatre only when the war had reached its 
final and decisive stage. Its direct military presence acted to inhibit any 
other continental power from attempting to take France¹s place in the 
continental power structure and reinforced the legitimacy of Britain¹s claim to 
a dominant say in peace negotiations. In parallel fashion, the United States 
entered the European theatre only in the last and determinant phase of World War
II. Operation Overlord, its invasion of France in June 1944, and its push 
eastward into Germany similarly restrained potential Russian ambitions in the 
west and assured America¹s seat at the head of the peace table. [43]

These analogies reflect the fact that in both transitions, mastery of the 
balance of power in the inter-state system was essential to the empowerment of 
the rising hegemonic state. But the spatial and organizational fix of the 
Œendless¹ accumulation of capital and power that came into being under US 
hegemony could not be the same as the British. On the contrary, it had to 
reflect the new historical geography of capitalism that had emerged from the 
irrevocable destruction of the nineteenth-century British spatial fix. By way of
conclusion, I shall now highlight the nature and contradictions of the US 
spatial fix and seek answers to the question raised at the beginning of the 
essay of why Œscaring hell out of the American people¹ worked wonders in 
establishing US hegemony under Truman but is now bringing that hegemony to an 
end. [44]


In a book first published in 1948, Ludwig Dehio argued that each round of the 
European power struggle had created the conditions of a geographical expansion 
of the European-centred system of sovereign states, of a Œmigration¹ of the 
locus of power further west and east, and of an irreversible mutation in the 
structure of the expanding system. Indeed, Dehio presented his study of the 
mechanisms that had reproduced the European balance of power over the preceding 
five centuries as dealing Œwith a structure that has ceased to exist . . . in a 
manner of speaking, [as] the result of an autopsy.¹

The balance of power in the Occident was preserved only because new 
counterweights from territories beyond its frontiers could again and again be 
thrown into the scale against forces seeking supremacy . . . In World War II, 
the forces that had left Europe in successive emigrations . . . turned back 
toward the region from which they had come . . . The old pluralistic system of 
small states was completely overshadowed by the giant young powers which it had 
summoned to its aid . . . Thus the old framework that had encompassed the 
European scene . . . is breaking up. The narrower stage is losing its overriding
importance as a setting for a strong cast of its own, and is being absorbed into
the broader proscenium. On both stages the two world giants are taking over the 
protagonists¹ role . . . A divided system of states reverts again and again to a
condition of flux. But the old European tendency toward division is now being 
thrust aside by the new global trend toward unification. And the onrush of this 
trend may not come to rest until it has asserted itself throughout our planet. 

Half a century after this was written, the collapse of one of the two Œworld 
giants¹ and the further centralization of global military capabilities in US 
hands made these remarks sound prophetic. But well before Dehio pointed to the 
demise of Œthe old European tendency toward division¹, Franklin D. Roosevelt had
already addressed the issue of what kind of political structure might emerge out
of Œthe new global trend toward unification¹. Looking back at thirty years of 
world wars, revolutions, counterrevolutions and the most serious economic 
breakdown in capitalist history, he had become convinced that worldwide chaos 
could be overcome only through a fundamental reorganization of world politics. 
Central to his vision was the idea that security for the world had to be based 
on US power exercised through international institutions. ŒBut for such a scheme
to have a broad ideological appeal to the suffering peoples of the world, it had
to emanate from an institution less esoteric than an international monetary 
system and less crude than a set of military alliances or bases.¹ [46]

The key body here was to be the United Nations, with its appeal to the universal
desire for peace and the longing of poor nations for independence and eventual 
equality with the rich nations. Not without reason, Franz Schurmann finds the 
political implications of this vision revolutionary.

For the first time in world history, there was a concrete institutionalization 
of the idea of world government. Whereas the League of Nations was guided by an 
essentially nineteenth-century spirit of a congress of nations, the United 
Nations was openly guided by American political ideas . . . There was nothing 
revolutionary about the kind of world system Britain created through its empire.
There was something revolutionary about the world market system that flowed out 
of Britain in the eighteenth century . . . Britain¹s true imperial greatness was
economic, not political. The United Nations, however, was and remains a 
political idea. The American Revolution had proven that nations could be 
constructed through the conscious and deliberate actions of men . . . What 
Roosevelt had the audacity to conceive and implement was the extension of this 
process of government-building to the world as a whole. [47]

Roosevelt¹s vision of world government had both social objectives and 
fiscal-financial implications. It was a conscious projection on a world scale of
the US New Deal.

The essence of the New Deal was the notion that big government must spend 
liberally in order to achieve security and progress. Thus postwar security would
require liberal outlays by the United States in order to overcome the chaos 
created by the war. Aid to . . . poor nations would have the same effect as 
social welfare programs within the United States‹it would give them the security
to overcome chaos and prevent them from turning into violent revolutionaries. 
Meanwhile, they would be drawn inextricably into the revived world market 
system. By being brought into the general system, they would become responsible,
just as American unions had during the war. Helping Britain and the remainder of
Western Europe would rekindle economic growth, which would stimulate 
transatlantic trade and, thus, help the American economy in the long run. 
America had spent enormous sums running up huge deficits in order to sustain the
war effort. The result had been astounding and unexpected economic growth. 
Postwar spending would produce the same effect on a worldwide scale. [48]

And so it did, but only after Roosevelt¹s Œone-worldism¹‹which included the USSR
among the poor nations of the world to be incorporated into the new order for 
the benefit and security of all‹became Truman¹s Œfree-worldism,¹ which turned 
the containment of Soviet power into the main organizing principle of US 
hegemony. Roosevelt¹s revolutionary idealism‹which saw in institutions of world 
government the primary instrument through which the New Deal would be extended 
to the world as a whole‹was displaced by the reformist realism of his successors
who institutionalized US control over world money and global military power as 
the primary instruments of US hegemony. [49]

For Roosevelt¹s project was simply too idealistic for the tastes of Congress and
US business. The world was too big and too chaotic a place for the United States
to reorganize in its image, particularly if the reorganization had to be 
achieved through organs of world government within which the US government would
have to compromise with the views and interests of friends and foes alike. 
Congress and the American business community were far too Œrational¹ in their 
calculations of the pecuniary costs and benefits of US foreign policy to release
the means necessary to carry out such an unrealistic plan. Indeed, as previously
noted, had Korea not Œcome along¹ and given Truman what he needed to Œscare hell
out of the American people¹, even the US and European rearmament envisaged in 
NSC-68 might not have been funded. But Korea did come along and massive 
rearmament during and after the Korean war gave a tremendous boost to the US and
world economies.

With the US government acting as a highly permissive world central bank, 
American military aid to foreign governments and direct military expenditures 
abroad‹both of which rose constantly between 1950 and 1958 and again between 
1964 and 1973‹pumped liquidity back into world trade and production, which both 
grew at unprecedented rates. [50] According to McCormick, the 23-year period 
inaugurated by the Korean War and concluded by the Paris peace accords of 1973, 
which virtually ended the Vietnam War, was Œthe most sustained and profitable 
period of economic growth in the history of world capitalism.¹ [51]

This is the period that many call the ŒGolden Age of Capitalism¹. Although the 
rate of expansion of world trade and production in the 1950s and 1960s was 
indeed exceptional by historical standards, this was hardly capitalism¹s first 
golden age. Just as impressive was Hobsbawm¹s Age of Capital (1848­75), which 
late-nineteenth-century observers compared to the Age of the Great Discoveries. 
[52] Like the Œage of capital¹ a hundred years earlier, the golden age of the 
1950s and 1960s ended in a long period of financial expansion that culminated in
a resurgence of imperialistic practices. The true novelty of the present 
resurgence in comparison with that of a century ago is the attempt of the 
declining hegemonic power to resist that decline by turning itself into a world 
state. Such an attempt is a continuation by other means and under radically 
different circumstances of Roosevelt¹s world-government project. Although 
Roosevelt¹s one-world, global-New Deal vision never materialized, Truman¹s 
downsized, militarized, Cold War version resulted in a major expansion of US 
capital and power. Why then is the neo-conservative project now failing so badly
in repeating that experience under conditions of even greater centralization of 
global military capabilities in US hands?

Forms of protection

Charles Tilly¹s conceptualization of state activities as complementary facets of
the organization and monopolization of violence enables us to provide a simple 
answer to this question. Whatever else governments might do, argues Tilly, they 
Œstand out from other organizations by their tendency to monopolize the 
concentrated means of violence.¹ This tendency materializes through four 
different kinds of activity: protection, state-making, war-making, and 
extraction. Protection is the most distinctive Œproduct¹ of governmental 
activities. As Tilly underscores, Œthe word ³protection² sounds two contrasting 
tones.¹ With one tone, it evokes the comforting notion of a powerful friend who 
provides a shelter from danger. With the other, it evokes the sinister image of 
a racket in which a bully forces merchants to pay tribute in order to avoid a 
damage that the bully himself tacitly or openly threatens to deliver.

Which image the word Œprotection¹ brings to mind depends mainly on our 
assessment of the reality and externality of the threat. Someone who produces 
both the danger and, at a price, the shield against it, is a racketeer. Someone 
who provides a needed shield but has little control over the danger¹s appearance
qualifies as a legitimate protector, especially if his price is no higher than 
his competitors¹. Someone who supplies reliable, low-priced shielding both from 
local racketeers and from outside marauders makes the best offer of all.

By this standard, Tilly goes on to argue, the provision of protection by 
governments often qualifies as racketeering.

To the extent that the threats against which a given government protects its 
citizens are imaginary or are consequences of its own activities, the government
has organized a protection racket. Since governments themselves commonly 
simulate, stimulate or even fabricate threats of external war and since the 
repressive and extractive activities of governments often constitute the largest
current threats to the livelihoods of their own citizens, many governments 
operate in essentially the same way as racketeers. There is, of course, a 
difference: racketeers, by the conventional definition, operate without the 
sanctity of governments. [53]

Following Arthur Stinchcombe, Tilly claims that the legitimacy of power-holders 
depends far less on the assent of those on whom power is exercised than on the 
assent of other power-holders. To this, Tilly adds that other authorities Œare 
much more likely to confirm the decisions of a challenged authority that 
controls substantial force; not only fear of retaliation, but also desire to 
maintain a stable environment recommend that general rule.¹ [54] The credibility
of, and difficulty of resisting, a particular government¹s claim to provide 
protection thus increase with its success in monopolizing concentrated means of 
violence. This involves the elimination or neutralization of rivals both inside 
its territorial domains (state-making) and outside them (war-making). And since 
protection, state-making and war-making all require financial and material 
resources, extraction consists of the activities through which governments 
procure those resources. If carried out effectively, each of these four 
activities Œgenerally reinforces the others.¹ [55]

Changing US role

Tilly¹s model emphasizes the synergy among protection-producing, state-making, 
war-making, and extraction activities in ensuring governmental success in 
monopolizing concentrated means of violence at the national level. In order to 
apply the model to the US case of a government that has been trying to organize 
and monopolize concentrated means of violence at the global level, two 
qualifications are necessary. Firstly, the formation of a world state blurs the 
distinction between state-making and war-making activities, because the would-be
world state claims the entire world as its prospective domain and thus de facto 
rejects the distinction between intra- and inter-state domains. Hence the 
widespread description of the many Œwars¹ that the United States has been waging
since the end of the Second World War as police actions rather than wars. 
Moreover, since the Œsanctity of governments¹ still belongs to the national 
states, the would-be world state faces greater difficulties in presenting itself
as the organizer of Œlegitimate protection¹ rather than of a Œprotection 

Bearing these qualifications in mind, we can understand the failure of the Bush 
administration to repeat the achievements of the Truman administration in terms 
of the difference between a protection racket and legitimate protection. Despite
all its limits, the downsized, militarized, world-government project launched by
Truman qualified as, and was perceived by a large number of power holders at the
national level to be, legitimate protection. In part, this was due to US 
reliance throughout the 1950s and 1960s on the United Nations to ensure that at 
least some of the Œsanctity of governments¹, which still resided at the national
level, would be accorded to US world-governmental activities. The two main 
reasons why the US Cold War project qualified as legitimate protection, however,
were factual rather than institutional.

The first reason, to paraphrase Tilly, was that it offered a needed shield 
against a danger the United States had not produced. Although economically and 
politically the United States had been the main beneficiary of the escalating 
violence of the first half of the twentieth century, the epicentre of the 
escalation was Europe, not the United States. Europe was most in need of the 
shield because, as Arno Mayer notes in a different context, in both world wars 
ŒEurope¹s blood sacrifice was immeasurably greater and more punishing than 
America¹s.¹ [56] But the sacrifice originated in European conflicts. By offering
a world order capable of reducing the chances that similar conflicts would 
recur, the United States qualified as a legitimate protector.

The second reason was that the United States offered effective protection at an 
unbeatable price. Roosevelt and Truman were both proposing to finance the 
worldwide provision of protection with the surplus capital that had accumulated 
in the United States during the preceding thirty years of worldwide chaos. No 
state, let alone any of the newly-created international institutions, had the 
resources necessary to match such a low-priced offer. Indeed, the main problem 
for the Truman administration was not finding clients for the protection it was 
offering, but persuading Congress that the investment of US surplus capital in 
the production of protection on a world scale actually was in the national 
interest. It was to this end that Truman artfully inflated the communist threat.

This situation began to change with the Œsignal crisis¹ of US hegemony of the 
late 1960s and early 1970s. The Vietnam War demonstrated that US protection was 
not as reliable as the United States claimed and its clients expected. In the 
First and Second World Wars, the United States had grown rich and powerful by 
letting other countries do most of the actual fighting; by supplying them with 
credit, food and weapons; by watching them exhaust one another financially and 
militarily; and by intervening late in the struggle to ensure an outcome 
favourable to its national interest. In Vietnam, by contrast, it had to do most 
of the fighting itself in a socially, culturally and politically hostile 
environment, while its European and East Asian clients gathered strength as 
economic competitors and American multinationals accumulated profits in 
extraterritorial financial markets, depriving the US government of badly needed 
tax revenue. As a result of this combination of circumstances, US military might
lost credibility and the gold­dollar standard collapsed. To make matters worse, 
the United Nations turned into a sounding board for Third World grievances, 
generating little legitimacy for the US exercise of world-governmental 

After a decade of deepening crisis, the Reagan Administration initiated the 
transformation of legitimate protection into protection racket. It discarded the
United Nations as a source of legitimacy for US hegemony. It began strong-arming
Japan‹which happened to be both the client most dependent on US protection and 
the fastest accumulator of surplus capital‹into restraining its competition 
vis-à-vis the United States through Œvoluntary¹ export restrictions (a device 
unprecedented in international trade) and into using its surplus capital to 
finance the growing US budget and trade deficits. It ratcheted up the balance of
terror with the USSR through a major escalation of the armament race. And it 
engaged a great variety of local bullies (including Saddam Hussein) and 
religious fundamentalists (including Osama bin Laden) in the rollback of Third 
World and Soviet power. The United States thus began to charge a price for its 
protection, and at the same time to produce the dangers against which it would 
later offer protection.

The success of the Reagan Administration in undermining Third World and Soviet 
power created the illusion under George Bush Senior that the US Œempire of 
bases¹ could be made to pay for itself. As Chalmers Johnson has pointed out, 
such an empire was (and is) far more vulnerable than Œthe older, self-financing 
empires¹ to trade deficits and capital movements. ŒOccasionally,¹ however, the 
US empire of bases Œmakes money because, like gangsters in the 1930s who forced 
the people and businesses under their sway to pay protection money, the United 
States pressures foreign governments to pay for its imperial projects.¹ The most
prominent of these occasions was the first Iraq war. By bringing the United 
Nations back to provide legitimacy for the war, the Bush Administration managed 
to extract from its wealthiest and militarily most dependent clients (most 
notably, Saudi Arabia, Kuwait, the United Arab Emirates, Germany and especially 
Japan) financial contributions totalling $54.1 billion, while the US 
contribution of $7 billion amounted to just over half of Japan¹s $13 billion. 
[57] Moreover, this huge payment was extracted for protection, not against a 
danger like communism which the United States had not created, but against a 
danger that could in part be traced to US support for Saddam Hussein¹s war 
against Iran.

The shift from legitimate protection to protection racket continued by other 
means under Clinton. UN mediation as a means of generating legitimacy for US 
police actions was again discarded, this time in favour of a collective pursuit 
through NATO of choice Œhumanitarian¹ missions. At the same time, the Bretton 
Woods institutions were refurbished as instruments of US rule over an 
increasingly integrated global market. The Œsuccess¹ of the Bosnia and Kosovo 
missions, along with the irresistible rise of the new-economy bubble, gave 
credence to Secretary of State Albright¹s representation of the United States as
the Œindispensable nation¹. But the foundation of this Œindispensability¹ was 
not the alleged capacity of the United States, as Albright claimed, to Œsee 
further than other countries into the future.¹ [58] Rather, it was a general 
fear of the irreparable damage that US policies could inflict on the rest of the
world. The dangers against which the United States was now offering protection 
were dangers that the United States itself had created or could create. And the 
trillions of dollars that foreign governments began pouring into the coffers of 
the US government showed that protection was not low-priced any more.

Dispensable America?

The neo-conservatives in the Bush administration thus did not initiate the 
transformation of the US from legitimate protector into racketeer. When they 
came to power it was already at an advanced stage. But by pushing it too far, 
they unwittingly ended up exposing its limits, both military and economic. As we
saw in the first part of this essay, their attempt to demonstrate that American 
military might could effectively police the world and at the same time ensure 
the continuing centrality of the United States in the global political economy 
failed in both respects. [59] We can now trace this double failure to an 
overstretch of the US worldwide protection racket.

Colin Powell himself once evoked Tilly¹s sinister image of protection when he 
said that the United States ought Œto be the bully on the block.¹ The rest of 
the world would happily accept this role, he went on to assert, calling up the 
comforting image of protection, because the United States Œcan be trusted not to
abuse that power.¹ [60] We do not know on what grounds Powell based this belief.
But if the reports from around the world cited earlier are at all accurate, the 
comforting image of US protection had given way to the sinister one of a United 
States trying to strong-arm everyone onto its own foreign policy agenda. More 
important, the attempt was not succeeding.

The most compelling piece of evidence is the reluctance of even its most 
faithful clients to provide the United States with the resources it needed to 
extricate itself from the Iraqi quagmire. Despite Powell¹s attempt to put up a 
brave front by declaring a success the Œdonors conference¹ convened in Madrid 
after the UN Security Council had provided the Iraq occupation with some 
juridical legitimacy, payments fell far short of expectations and, 
significantly, of the amounts that had been raised for the 1991 war. Actual 
donations (that is, grants) were less than one-eighth of the $36 billion target 
and considerably less than a quarter of the US $20 billion pledge. In marked 
contrast with the highly successful extortions of the first Iraq war, this time 
the United States was left holding the bag. Germany and Saudi Arabia gave 
virtually nothing. Even Japan¹s $1.5 billion pledge‹by far the largest at 
Madrid‹was meagre in comparison with the $13 billion Japan disgorged for the 
first Iraq war, especially given that in real terms dollars were worth 
considerably more in 1991 than in 2003.

This sharp decline in the capacity of the United States to extract protection 
payments from clients can be traced to a perception that its protection has 
become counterproductive, either because the US squeezes some of its clients dry
and then leaves them exposed to greater dangers than the ones from which they 
have been protected, as in the case of Saudi Arabia; or because US actions 
threaten to create greater future dangers than the present ones against which it
offers protection‹as has probably been Germany¹s perception. In part, however, 
the dramatic reduction of tribute payments can be attributed to a belief that 
the need for US protection, for what it is worth, is less compelling than it was
in 1991. This belief has been far more widespread than the ritualistic respect 
still paid to US power might indicate. But it is probably most important in the 
case of Japan and other US clients in the East Asian region.

For until very recently, many states in the region still viewed US protection as
essential for countering the real or imagined threat that China posed to their 
security. Today, in contrast, China is no longer seen as a serious threat, and 
even if such a threat were to re-emerge, US protection is perceived as 
unreliable. Moreover, the capacity of the United States to extract protection 
payments from its East Asian clients has been further curtailed by the 
combination of increasing US dependence on East Asian money and decreasing 
dependence of East Asian countries on the US market with the consolidation of 
China as their largest, fastest-growing, and most profitable market.

As shown in the first part of this essay, the attraction of China as an economic
and strategic partner reaches well beyond the East Asian region. China¹s ascent 
is indeed reminiscent of the US ascent during the world wars of the first half 
of the twentieth century. Just as the United States emerged as the real winner 
of the Second World War after the USSR had broken the back of the Wehrmacht in 
1942­43, so now all the evidence seems to point to China as the real winner of 
the War on Terrorism whether or not the United States eventually succeeds in 
breaking the back of al Qaeda and the Iraqi insurgency. [61] The perspective 
adopted in this article is insufficient to address the questions of whether this
Œvictory¹ can translate into a new global spatial fix and what such a fix might 
look like. All it allows us to say is that the new imperialism of the Project 
for a New American Century probably marks the inglorious end of the sixty-year 
long struggle of the United States to become the organizing centre of a world 
state. The struggle changed the world but even in its most triumphant moments, 
the US never succeeded in its endeavour. Coming at the end of this long process,
all George W. Bush has done is to prove Albright wrong. ŒThe US, it turns out,¹ 
laments Michael Lind, Œis a dispensable nation.¹

In recent memory, nothing could be done without the US. But today, most 
international institution-building of any long-term importance in global 
diplomacy and trade occurs without American participation . . . Europe, China, 
Russia, Latin America and other regions and nations are quietly taking measures 
whose effect . . . will be to cut America down to size. [62]

The debunking of the Œindispensable nation¹ myth does not mean that the United 
States may not engage in acts of provocation that could spark a conflict with 
China on a regional and possibly global scale, as envisaged in Harvey¹s 
worst-case scenario. Nor does it mean that at some point the United States and 
Europe might not join forces in the kind of Œultra-imperialistic¹ project that 
Harvey considers the only realistic alternative to Œthe raw militaristic 
imperialism¹ of US neo-conservatives. [63] It does mean, however, that both 
alternatives look less likely today than they did two years ago. And, to more 
optimistic minds, it may also indicate that less violent and more benevolent 
alternatives than those envisaged by Harvey are emerging as real historical 

[1] Arrighi, ŒHegemony Unravelling¹, Part 1, NLR 32, March­April 2005.

[2] David Harvey, The New Imperialism, Oxford 2003.

[3] George Soros characterized the neo-conservative bid for global supremacy as 
a Œbubble¹ well before its unravelling became evident. Soros, The Bubble of 
American Supremacy: Correcting the Misuse of American Power, New York 2004.

[4] Harvey, New Imperialism, p. 34; see Arrighi, ŒHegemony Unravelling¹, Part 1,
p. 29.

[5] I prefer the qualifier Œendless¹ to the Œnever-ending¹ used by Arendt, 
because Œendless¹ conveys the more accurate meaning of an accumulation that 
allegedly Œnever ends¹ and is at the same time an Œend in itself,¹ whether it 
actually ends or not. I will use Œendless¹ in inverted commas to underscore this
double meaning.

[6] Fernand Braudel, Civilisation and Capitalism, 15th­18th Century, vol. 3: The
Perspective of the World, London 1984, p. 604.

[7] Braudel, Perspective of the World, pp. 157, 164, 242­3, 246. Emphasis added.

[8] Arrighi, The Long Twentieth Century: Money, Power and the Origins of Our 
Times, London 1994, pp. 4­6.

[9] On the historical and theoretical underpinning of systemic cycles of 
accumulation, see Arrighi, Long 20th Century. For a detailed analysis of the 
transitions from Dutch to British and from British to US hegemony, see Arrighi 
and Beverly Silver, Chaos and Governance in the Modern World System, Minneapolis

[10] Arrighi, Long 20th Century, Arrighi and Silver, Chaos, especially chapter 

[11] Weber, Economy and Society, Berkeley 1978, p. 354. See also Weber, General 
Economic History, New York 1961, p. 249.

[12] Arrighi, ŒHegemony Unravelling¹, Part 1, p. 16.

[13] In the Dutch-British reversal, the key mechanism was the plunder of India 
during and after the Seven Years¹ War, which enabled Britain to buy back the 
national debt from the Dutch and thus start the Napoleonic Wars nearly free from
foreign debt. See Ralph Davis, The Industrial Revolution and British Overseas 
Trade, Leicester 1979, pp. 55­56; P. J. Cain and A. G. Hopkins, ŒThe Political 
Economy of British Expansion Overseas, 1750­1914¹, the Economic History Review, 
2nd ser., vol. 33, no. 4, p. 471, and Arrighi, Long 20th Century, pp. 208­212. 
In the British­US reversal, the key mechanism was US wartime supply of 
armaments, machinery, food, and raw materials far in excess of what Britain 
could pay out of current incomes. See Barry Eichengreen and Richard Portes, 
ŒDebt and Default in the 1930s: Causes and Consequences¹, European Economic 
Review, vol. 30, no. 3, p. 601­3; Paul Kennedy, The Rise and Fall of the Great 
Powers: Economic Change and Military Conflict from 1500 to 2000, New York 1987, 
p. 268; Arrighi and Silver, Chaos, pp. 73­77. The peculiarities of the ongoing 
US­East Asian reversal have already been hinted at in the second section of 
ŒHegemony Unravelling¹, Part 1, and will be explored further in the concluding 
section of the present article.

[14] Michael Hardt and Antonio Negri, Empire, Cambridge, MA 2000, p. 239.

[15] Anthony Giddens introduced this expression to characterize states, 
especially national states. As the reader will notice, the expression is used 
here to designate a broader set of organizations. Giddens, Contemporary Critique
of Historical Materialism, vol. 2: The Nation-State and Violence, Berkeley 1987.

[16] For detailed accounts of this progression, see Arrighi, Long 20th Century; 
Arrighi and Silver, Chaos, chapter 1; Arrighi and Silver, ŒCapitalism and World 
(Dis)Order¹, Review of International Studies, vol. 27, no. 5, pp. 257­279.

[17] Hannah Arendt, The Origins of Totalitarianism [1951], New York 1966, p. 

[18] Arrighi, Long 20th Century, pp. 33­4.

[19] Ehrenberg is quoted in Peter Kriedte, Peasants, Landlords and Merchant 
Capitalists: Europe and the World Economy, 1500­1800, Cambridge 1983, p. 47 and 
de Figueroa in J. H. Elliott, The Old World and the New 1492­1650, Cambridge 
1970, p. 96. For details on the Genoese­Iberian cycle, see Arrighi, Long 20th 
Century, pp. 109­32, 145­51.

[20] Arrighi, Long 20th Century, pp. 36­47, 127­51; Arrighi and Silver, Chaos, 
pp. 39­41, 99­109.

[21] Violet Barbour, Capitalism in Amsterdam in the Seventeenth Century, 
Baltimore, MD 1950, p. 13.

[22] Braudel, Perspective of the World, p. 175. Emphasis added.

[23] Quoted in Peter Taylor, ŒTen Years that Shook the World? The United 
Provinces as First Hegemonic State¹, Sociological Perspectives, vol. 37, no. 1, 
pp. 36, 38.

[24] Arrighi, Long 20th Century, pp. 144­158, Arrighi and Silver, Chaos, pp. 

[25] Braudel, Perspective of the World, pp. 192­3.

[26] Quoted in Charles Boxer, The Dutch Seaborne Empire, 1600­1800, New York 
1965, p. 109.

[27] Boxer, Dutch Seaborne Empire, p. 109; Ralph Davis, ŒThe Rise of Protection 
in England, 1689­1786¹, Economic History Review, vol. 19, no. 2, p. 307; 
ŒEnglish Foreign Trade, 1700­1774¹ in W. E. Minchinton, ed., The Growth of 
English Overseas Trade in the Seventeenth and Eighteenth Centuries, London 1969,
p. 115; and Minchinton, Growth of English Overseas Trade, p. 13, Introduction.

[28] ŒThe basic reason for the decisive decline of the Dutch world-trading 
system in the 1720s and 1730s was the wave of new-style industrial mercantilism 
which swept practically the entire continent from around 1720 . . . Down to 1720
countries such as Prussia, Russia, Sweden, and Denmark-Norway had lacked the 
means and, with the Great Northern War in progress, the opportunity, to emulate 
the aggressive mercantilism of England and France. But in the years around 1720 
a heightened sense of competition among the northern powers, combined with the 
diffusion of new technology and skills, often Dutch or Huguenot in origin, led 
to a dramatic change. Within the next two decades most of northern Europe was 
incorporated into a framework of systematic industrial mercantilist policy.¹ 
Jonathan Israel, Dutch Primacy in World Trade, 1585­1740, Oxford 1989, pp. 

[29] See Arrighi, Long 20th Century, pp. 47­58, 159­169.

[30] See Karl Polanyi, The Great Transformation: The Political and Economic 
Origins of Our Time, [1944], Boston 1957, pp. 5­7, 259­62; David Weigall, 
Britain and the World, 1815­1986: A Dictionary of International Relations, New 
York 1987, pp. 58, 111; Henry Kissinger, A World Restored: Metternich, 
Castlereagh and the Problems of Peace, 1812­22, New York 1964, pp. 38­9; Alonso 
Aguilar Monteverde, Pan-Americanism from Monroe to the Present: A View from the 
Other Side, New York 1968, pp. 23­5.

[31] Michael Barratt Brown, After Imperialism, London 1963, p. 63; Paul Kennedy,
The Rise and Fall of British Naval Mastery, London 1976, pp. 156­64, 149­50; 
Joseph Nye, Bound to Lead: The Changing Nature of American Power, New York 1990,
p. 53.

[32] Arrighi, Long 20th Century, ch. 3.

[33] William McNeill, The Pursuit of Power: Technology, Armed Force and Society 
since AD 1000, Chicago 1982, pp. 211­12.

[34] Eric Hobsbawm, The Age of Capital 1848­1875, New York 1979, pp. 37­9, 50­4.

[35] Arrighi and Silver, Chaos, pp. 106­114; 223­46.

[36] On these and other aspects of tribute extraction from India, see Barratt 
Brown, The Economics of Imperialism, Harmondsworth 1974, pp. 133­6; B. R. 
Tomlinson, ŒIndia and the British Empire, 1880­1935¹, Indian Economic and Social
History Review, vol. 12, no. 4, pp. 337­80; Marcello de Cecco, The International
Gold Standard: Money and Empire, New York 1984, pp. 62­3; David Washbrook, 
ŒSouth Asia, the World System and World Capitalism¹, Journal of Asian Studies, 
vol. 49, no. 3, p. 481; Amiya Kumar Bagchi, ŒThe Other Side of Foreign 
Investment by Imperial Powers¹, Economic and Political Weekly, 8 June 2002.

[37] Andrew Gamble, Britain in Decline: Economic Policy, Political Strategy and 
the British State, London 1985, p. 58.

[38] Kennedy, Rise and Fall of the Great Powers, p. 268.

[39] Joshua Goldstein and David Rapkin, ŒAfter Insularity. Hegemony and the 
Future World Order¹, Futures, vol. 23, no. 9, p. 946.

[40] ŒAmerican historians who speak complacently of the absence of the 
settler-type colonialism characteristic of the European powers merely conceal 
the fact that the whole internal history of United States imperialism was one 
vast process of territorial seizure and occupation. The absence of 
territorialism ³abroad² was founded on an unprecedented territorialism ³at 
home².¹ Gareth Stedman Jones, ŒThe History of US Imperialism¹, in Robin 
Blackburn, ed., Ideology in Social Science: Readings in Critical Social Theory, 
New York 1972, pp. 216­17. Emphasis in the original. See also John Agnew, The 
United States in the World-Economy: A Regional Geography, Cambridge 1987.

[41] Arrighi and Silver, Chaos, pp. 66­84.
[42] Kennedy, Rise and Fall of the Great Powers, p. 357.

[43] Thomas McCormick, America¹s Half-Century: United States Foreign Policy in 
the Cold War, Baltimore 1989, pp. 33­5.

[44] Arrighi, ŒHegemony Unravelling¹, Part 1, p. 27.

[45] Ludwig Dehio, The Precarious Balance: Four Centuries of the European Power 
Struggle [1948], New York 1962, pp. 264­6, 269.

[46] Franz Schurmann, The Logic of World Power: An Inquiry into the Origins, 
Currents and Contradictions of World Politics, New York 1974, p. 68.

[47] Schurmann, Logic of World Power, p. 71.
[48] Schurmann, Logic of World Power, p. 67.
[49] See Schurmann, Logic of World Power, pp. 5, 67, 77.

[50] See David Calleo, The Atlantic Fantasy: The US, NATO and Europe, Baltimore,
MD 1970, pp. 86­7; Robert Gilpin, The Political Economy of International 
Relations, Princeton 1987, pp. 133­4.

[51] McCormick, America¹s Half-Century, p. 99.
[52] Hobsbawm, Age of Capital, p. 32.

[53] Charles Tilly, ŒWar Making and State Making as Organized Crime¹ in P. B. 
Evans, D. Rueschemeyer, and T. Skocpol, eds., Bringing the State Back In, 
Cambridge 1985, pp. 170­1. Emphasis added.

[54] Arthur Stinchcombe, Constructing Social Theories, New York 1968, p. 150; 
Tilly, ŒWar Making and State Making¹, p. 171.

[55] Tilly, ŒWar Making and State Making¹, pp. 171, 181.

[56] Arno Mayer, ŒBeyond the Drumbeat: Iraq, Preventive War, ³Old Europe²¹, 
Monthly Review, March 2003.

[57] Chalmers Johnson, The Sorrows of Empire: Militarism, Secrecy, and the End 
of the Republic, London 2004, pp. 25, 307. According to Johnson, the United 
States later boasted that it had even made a small net profit from the conflict.
See also Hobsbawm, Age of Extremes: The Short 20th Century, 1914­1991, London 
1994, p. 242. This was the first and only time that the United States not merely
sought to make its clients pay for one of its major wars, but actually succeeded
in the endeavour. In itself, the success of the extortion was not a sign of 
hegemony, because at the height of its hegemony the United States paid in full 
for its wars and the protection of its clients. Rather, it was a sign that US 
hegemony had ceased to be hegemoney but was still sufficiently entrenched to 
enable the United States to make its clients pay for the protection it was 
providing. The failure of George W. Bush to make US clients pay for the second 
Iraq war (see below), in contrast, can be taken as a sign that by then the 
United States had lost both hegemoney and hegemony.

[58] Quoted by Stephen Sestanovich in ŒNot Much Kinder and Gentler¹, The New 
York Times, 3 February 2005.

[59] Arrighi, ŒHegemony Unravelling¹, Part 1, pp. 50­80.
[60] Quoted in Harvey, New Imperialism, p. 80.

[61] An Institute of Electrical and Electronics Engineers panellist recently 
recalled the old joke that the US fought the Cold War and Japan won. ŒThe new 
joke is that the US is fighting the war on terror, but China is winning¹. (ŒEast
Asia Rising¹, It so happens that both jokes capture 
important aspects of the dynamic of historical capitalism.

[62] Michael Lind, ŒHow America Became the World¹s Dispensable Nation¹, 
Financial Times, 25 January 2005.

[63] Arrighi, ŒHegemony Unravelling¹, Part 1, p. 50; Harvey, New Imperialism, 
pp. 209­11.

Also available in:

By the same author:

Hegemony Unravelling‹1

The Social and Political Economy of Global Turbulence

The African Crisis

Financial Expansions in World Historical Perspective: A Reply to Robert Pollin

World Income Inequalitites and the Future of Socialism

Marxist Century, American Century: The Making and Remaking of the World Labour 

Towards a Theory of Capitalist Crisis

'Political Economy of South Africa'

The Political Economy of Rhodesia

Download a PDF file

See the contents of NLR 33

Buy a copy of NLR 33

Subscribe to the New Left Review

Posting archives:
Escaping the Matrix website:
cyberjournal website:

Community Democracy Framework:

Subscribe cyberjournal list: •••@••.•••  (send blank message)

cyberjournal blog (join in):

Moderator: •••@••.•••  (comments welcome)