American Hegemony

The Impasses of U.S. Hegemony: Perspectives for the Twenty-first CenturyAuthor(s): Carlos Eduardo Martins and Timothy ThompsonReviewed work(s):Source: Latin American Perspectives, Vol. 34, No. 1, The Crisis of U.S. Hegemony in theTwenty-First Century (Jan., 2007), pp. 16-28Published 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

by Carlos Eduardo Martins

Translated by Timothy Thompson

A prospective long-term model of U.S. hegemony based on the systemic cycles pro

posed by the Fernand Braudel Center group (mainly Giovanni Arrighi), the cycles of Nicolai Kondratieff, and the notion of civilizational crisis based on Radovan Richta 's

work on the techno-scientific revolution allows us to view the U.S. crisis of hegemony as

one of the most important events in the contemporary world. It points to the possibility of

constructing a complex of antioligarchic forces that, complemented by the emergence of cultural and political elements that would support peace-centered world mobilization,

would unite periphery and center, East and West, in the pursuit of a planetary civilization.

Keywords: United States, hegemony, systemic cycles, Kondratieff cycles, civilizational crisis

Hegemony is a crucial topic in any analysis of contemporary international relations. It

plays a fundamental role in the development of the modem world-system, a development 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 their globalizing breadth, to

free themselves from political interests. Notwithstanding, the absence of a central politi cal institution carries with it the risk of anarchy, and this creates the need for a political function that can control competition among states and maintain interstate coordination 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.

For a state to achieve hegemony, it must demonstrate that its international leadership 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 the modern world-system and must be continuously constructed and destroyed.

In an initial phase of expansion, the hegemonic state concentrates its international lead

ership on the productive, 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 bases and only later undermines its financial 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 Network on the Global Economy and

Sustainable Development and an associate researcher at the Laboratory of Public Policy of the State

University of Rio de Janeiro. Timothy Thompson is a Ph.D. candidate in English at Boston College.

LATIN AMERICAN PERSPECTIVES, Issue 152, Vol. 34 No. 1, January 2007 16-28 DOI: 10.1177/0094582X06296325 ? 2007 Latin American Perspectives

16

Martins / IMPASSES OF U.S. HEGEMONY 17

Although during the expansion phase the hegemonic state stimulates the world-system and propels the development of its productive forces, during the crisis phase it becomes an obstacle to development. As consensus has it, the world entered a period of U.S. hege mony in the 1950s. But at what point in that hegemony are we now? And how does it

affect the world-system? I would argue that since 1967 the United States has been in a period of hegemonic

decline. It still maintains 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 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 the world-system to unforeseen dimensions.1 To situate the trajectory of U.S. hegemony in the world-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 the world-system school in works 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 in which 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 the world-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 the mode of production. A crisis in

the mode 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 the means 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 trajectories of U.S. hegemony and the modern 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 United States since 1994. This expansion will lack the brilliance of the phase that devel

oped in the postwar period. It will be shorter and will promote lower rates of growth, since it will be affected by two downward trends: civilizational crisis and the B-phase of the systemic cycle. Within this new phase of expansion, the financial and ideologi cal foundations of U.S. hegemony will deteriorate, and the United States will lose the

18 LATIN AMERICAN PERSPECTIVES

leadership position that it exercised in the world 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 the world-system on new

hegemonic bases. A bifurcation will occur: on one hand, there will be forces attempt

ing to restore historical capitalism to U.S. imperialism via the cohesion of the principal centers of global wealth, and, on the other hand, there will be forces seeking to over come the modern 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, in mass demonstrations against U.S. imperialism and the oligarchic coordination of the world economy and in attempts to organize social movements on a

global scale, most notably in the World Social Forum. If transnationalism succeeds,

humanity will be able to traverse the systemic chaos without succumbing to a cata

clysmic war. Transnational forces will create "drive belts" across nation-states, cir

cumventing global oligarchies. But if nationalism succeeds, it will be difficult to avoid a move toward fascism, barbarism, and the use of the state as an instrument of 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 the world 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 the world economy, one that began 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 the world 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 financing the U.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

of per capita gross domestic product (GDP), which is the principal indicator of Kondratieff cycles, and the rate of profit, which is their principal determinant.2

If we examine these indicators in the United States, we will perceive the Kondratieff pattern most 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

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

GDP, indicating the strength of interest rates in the U.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

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


14.0%

12.0%

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 CO CM lO CO CO CO

in CO co

CO i co i^ CO O)

1^ o>

o CO CD

CO CO

CO CO co

CO CO o>

CO CO

CO i co o CO o i- CM

s o 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

Figure 3. Annual Variation in U.S. per Capita GDP, 1938-2000. Source: Council of Economic Advisers (2005b).

1997. The annual growth of per capita income reached 2.9 percent between 1994 and

2000, 70.6 percent above that of the Kondratieff 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 for my claims. Beginning in the postwar period, the world


Figure 4. Annual Variation in per Capita GDP of the World Economy, 1938-2000. Source: Maddison (2001) and Council of Economic Advisers (2005b).

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

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 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 the U.S. systemic cycle. As a consequence, the United States will cease leading the world in economic growth and will most likely

expand at rates below those of the world economy. Another consequence is that the

A-phase of this Kondratieff will be smaller and weaker than that of the previous one.

Many would disagree that the United States is losing its hegemonic position in the

world economy. As a sign of renewed hegemony, they would point to the dollar's con

version into a global currency that has financed the U.S. economic recovery since the

1980s. The hastiest would even assert that not only has the United States begun to reclaim

its financial and economic might but it has begun to approach the status of an empire. However, to undertake a careful analysis, we must reinstate history as a method

ological premise. In Chaos and Governance in the Modern World System (1999), Giovanni Arrighi and Beverly Silver assert that, if we 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 that when 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 the world economy to finance its own economic growth, doing so in a

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 the world economy. Consider the case of Britain. We are all aware of the breakdown of this state's hege

mony between 1870 and 1913. Its erosion did not occur uniformly, however. For 17

years?that is, between 1880 and 1896?Britain reversed the loss of relative power that had begun in the 1870s. In that decade, the per capita GDP of the British economy had

increased by 0.9 percent while that of the United States had increased by 2.7 percent. But during the 17 years in which it embraced a system of financial accumulation,


31

2.5-'--^--7

0.5

0 -I-1-1

1870-1880 1880-1896 1897-1913

Figure 5. Per Capita GDP: United States (upper line) and Britain (lower line), 1870-1913. Source: Maddison (1997).

1.6 T

Figure 6. Annual Variation in per Capita GDP of the World Economy, 1870-1913. Source: Maddison (1997).

Britain's growth exceeded both the world average and that of the U.S. economy. Against the 1.1 percent attained by the United States and the world economy, its per capita GDP

expanded by 1.4 percent. Notwithstanding, the A-phase of a new Kondratieff that began in 1897 overturned the British 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 the world economy or the United States (Figs. 5 and 6). We can outline a similar scenario for the U.S. economy in the past 30 years.

Between 1967 and 1982, U.S. growth trailed the world-economic average. Between

1983 and 2000, it once again exceeded the average (Fig. 7). But for how much longer? As with Britain between 1880 and 1896, the United States, in its reliance on finan

cialization between 1983 and 2000, has managed to retain its prominence in the world

economy, but it no longer leads the world in economic growth. Although Britain,

during its period of financialization, temporarily surpassed the United States, it still


1967-1982 1983-2000 Periods

Figure 7. Annual Variation in per Capita GDP of the United States (left) and the World Economy (right), 1967-2000. 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).

trailed Germany in terms of economic vitality: during this period Germany's per capita GDP grew by 1.8 percent. For its part, the United States, though it has surpassed Japan, has not managed to surpass the East Asian bloc, which has been propelled by the eco

nomic vitality of China and India (Fig. 8). The appreciation of the exchange rate and the liberalization of trade and investment

have formed the basis of the strategy (established between 1967 and 1982) to reverse U.S.

hegemonic decline. Through the appreciation of assets, the bourgeoisie and the govern ment of the United 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

obstacle in the unbridled expansion of the debt, which began to threaten social security and the welfare system. In the 1990s they sought to restructure and expand the produc tive sector, but by 1998 their strategy was showing signs of exhaustion.

In spite of impressing many analysts at its zenith, the U.S. growth strategy, even

in its apparent solidity, demonstrated striking imbalances, the first of which was the current-account deficit. The deficit was the flip side of the acquisition of international

liquidity, and it meant that U.S. big capital had lost its wager, above all to East Asia, in attempting to recover competitiveness through competition.


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 instruments were concentrated in the military sec

tor, which, based on secretiveness and hierarchy, proved too obsolete for leadership in a microelectronic paradigm. Between 1990 and 1993, lower interest rates, restraint in

military spending, and a cheaper work-hour?all of which were made possible by the recession at the start of the decade?increased the rate of profit and allowed the stock

market and the productive sector to serve as instruments of external funding. The cri sis of 1990-1991 and the external financing of the Gulf 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 annum until it reached 4.5 percent of the GDP (Council of Economic Advisers,

2005a). Beginning in the second half of 2000, the economy decelerated into a state of crisis and stagnation. Its regaining its accelerated growth seems to me improbable.

Analysis of the crisis that began in 2000 sheds light on the model of development with which the United States entered the A-phase of the new Kondratieff. The princi pal determinants of the U.S. crisis are the deficit in the balance of payments and an

increase in wages, both of which were provoked by accelerated growth. The decline of U.S. commercial and productive power provokes a trend toward cur

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

obtained via the national debt. In the 1990s, financing shifted to the productive sector

through mergers, acquisitions, and stock-market indexation. Meanwhile, the deficit grew more than profits and threatened the inflow of foreign capital, since the capacity of the

productive sector to absorb this mass of capital was limited. To keep the threat under con

trol, assets were appreciated through a new movement to increase the exchange rate, which began in 1996 and relied on interest rates. This movement was contradictory: while on the one hand it provisionally maintained the flow of capital to the productive sector

through speculative mechanisms, on the other hand it contributed to limiting the growth of the rate of profit.4

An overvalued dollar has made the U.S. economy highly sensitive to external com

petition. This has resulted in low rates of inflation, principally for producers, and shrink

age of the margin of negotiation in the face of wage pressures. The leading sectors of the U.S. economy have been unable to accommodate an increase in wages by simply rais

ing prices, and this represents a great obstacle to the expansion of the economy. In spite of the fact that average wages in the United States are lower than they were in 1962, their increase since 1996 was responsible for 66 percent of the decline in the rate of profit between 1997 and 2001 that caused the crisis of 2001-2002 (Figs. 9-12).

What does all of this add up to? It means that, within this pattern of development, the U.S. economy will no longer perform in the middle or long term at high rates of

growth. Exposed to external competition, it will not be able to accommodate the trend toward rising wages encouraged by the decline in unemployment without significantly affecting the rate of profit. According to this model of development, to regain growth the United States will need to increase unemployment and enact wage reductions.5 This state of affairs constitutes a formidable obstacle that will continue to work against U.S. development as long as its bourgeoisie refuses to accept a readjustment in the value of its wealth in relation to the world economy.


$340.00

$320.00

$300.00

? $280.00

g $260.00

$240.00

$220.00

$200,

Years

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

$10.00

Years

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

Figure 11. U.S. Inflation, 1997-2001: Solid line, Capital goods; broken line, Producer; line with triangles, Consumer. Source: Council of Economic Advisers (2005b).

Tax cuts, interest rate cuts, and increases in military 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

application, though it may 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

Martins / IMPASSES OF U.S. HEGEMONY

Wages Fixed Capital Interest

Figure 12. Determinants of Decline in the U.S. Rate of Profit, 1997-2001. Source: Council of Economic Advisers (2005b).

1900-1913

(A-1)

1913-1938

(B-1)

1938-1973

(A-2)

1974-1993

(B-2)

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

waste because of the sector's technological stagnation. Any such recovery will limit

exports for the sake of national security and aggravate government deficits by being tied economically to the state.

In fact, since 2000, U.S. growth has trailed that of the world economy. Its per capita growth rates in the period of 2000-2002 reached a yearly average of 1.5 percent. In

2003-2004, influenced by an initial push from global recovery, they attained a rate of 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 the world 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 the A-phase

of the new Kondratieff, we have observed a number of patterns occurring between

1900 and today. Within each Kondratieff, the A-phases duplicate, approximately, the

growth of the B-phases (Fig. 13). It is possible that there may 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


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

expansion of the period of 1974-1993. It is possible, however, that modern techno

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 the modern 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 the world-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). 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

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 the maintenance of a hegemonic situation (on the contrary, it may generate externalities for the world economy) and that peripheral countries can

compete for the center of the world economy insofar as they are internally and exter

nally organized to do so.7

Second, the transfer of 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 cent and 0.6 percent of humanity, which makes it impossible for the majority to

exercise any control over the transfer of wealth. The inversion now taking place points toward strong social control over produced wealth and toward the dissolution of asym

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 interest between the working classes and the nation-states in which 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 the world-system since the 1990s. As mentioned above, it is driven by the organization of social movements on a planetary scale, and it has

recently been joined by forces that had 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

example of this is the conversion of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the central U.S. labor union, which played a

major role in the organization of protests against social and ecological "dumping" at the third ministerial conference of the World Trade Organization (WTO) in Seattle and is a

contributor to the World Social Forum.9 These three indicators point to the possibility of constructing a complex of antioli

garchic forces that would unite periphery and center, East and West, in the pursuit of a


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 the military power of the hegemon. In closing, I would like to offer a few words about Latin America in the world-sys

tem. The old world that is passing away reserves one of its worst assignments for Latin America. As 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

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.

NOTES

1.1 draw a distinction between hegemony and imperialism. The former refers to the world-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. 2. The rate of profit corresponds to the percentage of profits in relation to the gross product of nonfi

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 the world economy than for the United States,

running from 1939 to 1973. For the United States it ended around 1967, reflecting the transfer of world

economic dynamism to other regions. 4. This is one of the factors explaining why the rate of profit during this period, though it entered a new

upturn, did not regain the heights of the postwar years of expansion. Between 1959 and 1966 interest

absorbed 1.4 percent of the gross product of nonfmancial corporate businesses, and between 1994 and

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.

6. If we consider the period of 1994-2002, in which the development and crisis of the prosperity phase of the new Kondratieff are situated, we can observe a yearly per capita growth of approximately 1.9 per

cent, which serves as an indicator of the potential for expansion of the cyclical phase that we are currently

experiencing. 7. One expression of greater technological dynamism in East Asian countries is the reduction, in rela

tion to the United States, in the differentials of per capita aggregate value in manufacturing. In Japan, per

capita aggregate value in manufacturing corresponded, in 1967, to 47.6 percent of the U.S. value, a pro

portion that rose to 86.3 percent in 1991 and fell to 72.3 percent in 2000. In South Korea it was equivalent 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, per capita aggregate value in manufacturing corresponded to 4.5 percent in 1987 in relation to U.S.

value, but this index reached 7.9 percent in 1998. In India it corresponded to 7.5 percent in 1981 but rose

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,

representing 41.2 percent of humanity. Their per capita GDP, according to Maddison's indicators, was then

equal to US$3,871 in 1990 Geary-Khamis dollars. Their annual growth since 1967 has been 3.6 percent, while that of the United States has been 1.9 percent. The disparity between the rates of growth of these coun

tries, above all China and India, and those of the United States increased greatly beginning in the 1980s.


9. The AFL-CIO proposes a complex of transformations not only in international trade but also in inter

national financing and investment. It takes aim at the WTO, the International Monetary Fund (IMF), and

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

workplace discrimination. Along with these aims, it proposes a reconsideration of the conditions imposed on loans made to developing countries by the IMF and World Bank. It argues that these loans should

emphasize, above all, economic growth, democratic institutions, basic workers' rights, and environmental

protections. The AFL-CIO calls attention to the necessity for developing countries to have the resources to

increase living standards and implement appropriate workplace and environmental regulations. In this

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

itored for the establishment of minimum workplace and environmental regulations and should suffer

sanctions and possible exclusion from these international institutions in the event of violations.

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