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Debt, Hegemony and Globalisation

highlights certain important differences in the two periods of globalisation. Hege- Debt, Hegemony mony in the earlier phase was exercised through


highlights certain important differences in the two periods of globalisation. Hege-

Debt, Hegemony

mony in the earlier phase was exercised through “imperial nation states” but in the recent period it is transnational corpora

and Globalisation

Globalisation under Hegemony: The Changing World Economy

edited by Jomo K S; Oxford University Press, New Delhi, 2006; pp 311, Rs 625.

The Great Divergence: Hegemony, Uneven Development and Global Inequality

edited by Jomo K S; Oxford University Press, New Delhi, 2006; pp 262, Rs 595.


hese two companion volumes edited by Jomo K S arose from a Sephis project – ‘The Long Twentieth Century’ – conceived in response to the resurgence of debates around imperialism after the September 11 attack and the war on Iraq. The essays in these two volumes adopt the historical perspective of the long 20th century, dating broadly from the middle of the 20th century, to inform the analysis of current conjecture of globalisation under American hegemony.

Arrighi had elaborated the history of capitalism as a succession of “long centuries” which were dominated by the coercive hegemonic power of state and finance capital. In a way, the sweep of the papers collected in these two volumes, while reaffirming the powerful imprint of hegemony on the developmental trajectories of the global economy, also brings into sharp focus the manner in which the structures, institutions and class forces in the developing world shaped this unfolding dynamic. Instead of a focus on the “top layer” that characterised Arrighi’s Braudelian narrative, these essays illuminate aspects of the historical and empirical specificities, and the complex interplay of the external hegemony and domestic structure through the period. The contributions range from theoretical and analytical to empirical, from those which are global in their sweep to more regionally focused discussions.

The first volume, Globalisation under Hegemony, is concerned with the international flows of goods, capital and labour that underpin and sustain global inequality and “hegemonic” economic relations. The second volume entitled Global Divergence explores the uneven consequences of integration into the global economy and the manner in which economic globalisation changed international relations “in ways which either undermine or that strengthen international dominance or exploitation”. Together the two volumes are a welcome addition to the scholarship on imperialism, in that they temper the current debates around military power and financial hegemony with concrete analysis of the manner in which development in the periphery was conditioned by the exercise of imperialist hegemony. With the plea that it is difficult to do justice to all the essays collected in these two volumes within the space of this review, I will confine this discussion to an overview of what I consider to be some of the critical issues.

Globalisation under Hegemony: Then and Now

The long century spans two phases of globalisation; the first under the hegemony of the British empire before the first world war and the second the recent period of globalisation under the aegis of the “dollar-Wall Street nexus”. The contributions of Deepak Nayyar and Richard Kozul-Wright draw parallels between these two phases and bring into sharp relief the significant divergence and inequality fostered during the two periods of “globalisation”.

In ‘Globalisation and Development in the Long Twentieth Century’, Nayyar tions and international financial institutions that are the principal players enforcing asymmetrical rules and perpetuating uneven development. The autonomy of nation states in developing countries is being eroded in the present context, even without overt colonial rule by the enforcement of these “new rules”, but even more starkly through the instrumentality of debt and related conditionalities.

In ‘The Free Lunch’, Utsa Patnaik looks at the role of “free trade imperialism” during the early 19th century, specifically arguing that trade surpluses and capital transfers from tropical colonies like India and the West Indies were fuelling capital accumulation even before Britain became a capital exporter. In “the looking glass world” of British colonialism, the trade surplus colonies were obliged to borrow capital from trade deficit ridden Britain, through fiscal and administrative mechanisms. These colonial transfers in effect constituted a “free lunch” for Britain. The analytical argument suggests the need to go beyond the formulation of imperialism solely in terms of “capital exports” in order to encompass the profound role of trade and monetary relations under the British empire. This argument would have implications which are worth exploring, for the way one approaches the vexed issue of global imbalances arising from growing US deficits today.

Hopehayn and Vanoli identify hegemony as the defining feature of the international monetary system and global flows of capital, in their contribution, ‘Capital Flows in the Twentieth Century’. The greater stability of the pre-war gold standard and the Bretton Woods regime is related, in their account, to the dominance of a clear hegemonic power. However, stability in the pre-war decades of globalisation was predominantly restricted to the core while the countries in the periphery were more susceptible to financial crisis. More recently, the 1980s and 1990s were marked by a series of financial crisis affecting emerging markets in the periphery on the one hand, and the

Economic and Political Weekly February 25, 2006

growing deficits of the hegemonic country

– the US on the other. The analytically relevant analogy might more appropriately be drawn with the pre-war period rather than the instability of the inter-war years. Their empirical account would seem to suggest that the mechanisms of international adjustments under a hegemon have an asymmetric impact on the periphery. The implication is that any agenda for the overhaul of the international financial architecture that seeks to defend the interests of developing countries needs to address the core – periphery imbalances and asymmetries that underpin capital flows.

In ‘International Flows of Unfree Labour’, Sabyasachi Bhattacharya traces the different forms of “unfreedom” that characterised the patterns of labour migration over the long 20th century – from slavery, through the system of indenture, coercive contract and debt peonage during the 19th century, to the restrictions on civic and citizenship rights of immigrant labour in the late 20th century. Bhattacharya argues for the analytical relevance of the distinction between free and unfree labour in comprehending the diverse forms of labour. A problem with the analysis however is that it discusses capital’s appropriation of the “unfree labour” of the south solely in the context of migration. A significant difference between globalisation “then” and globalisation “now” that both Nayyar and Kozul-Wright highlight in their essays in the volume, is the limited mobility of labour in the present period. In fact, the relocation of segments of the labour process globally, facilitates transnational capital’s ability to exploit the unfree labour in the sweat shops and maquilas of the south. The global assembly line and global commodity chains of today have fashioned a new international division of labour without the degree of labour mobility that characterised the earlier phase.

State Intervention and Liberalisation

José A Ocampo and Maria-Angela Parra focus on a different asymmetric response in their contribution, ‘The Commodity Terms of Trade and Their Strategic Implications for Development’, which revisits the empirical and theoretical debates around the declining commodity terms of trade. They identify two major downward shifts – one after the first world war and the second during the early 1980s – which reflected delayed responses to sharp slowdowns in the world economy. However, the golden age of accelerated growth in the 1950s and 1960s did not witness favourable movements of terms of trade. More disconcerting, especially in the context of the linking of the advocacy of strategies of industrialisation to the declining terms of trade for primary goods, is the empirical evidence of a deteriorating trend for generic manufactures. This suggests that a state push to industrialisation needs to focus on developing technological capabilities and technology intensive sectors.

Kozul-Wright seeks in ‘Globalisation Now and Again’, to understand why some countries are more successful in harnessing international economic forces in the process of catching up. Paradoxically, protectionism fostered growth of both output and trade in the last two decades of the 19th century. The answer lies in the strategic integration into the world economy through state intervention and institutional reforms. This theme is the focus of ‘Trade and Industrial Policies during the Age of Imperialism’ where Ha-Joon Chang debunks the official history of capitalism as the triumph of the market and laissez-faire. He sets out the role of protectionism in the rise to dominance of countries in the advanced capitalist world, in particular the aggressive use of tariff protection by England and US, to argue that the imposition of the doctrine of “free trade” by imperialist countries on the rest of the developing world is in effect to “kick away the ladder” that was instrumental in the ascent of advanced capitalist countries.

While these two contributions make the case for strategic state intervention quite powerfully, a question that remains to be addressed is what concrete structural and institutional conditions and what balance of class forces enabled or propelled effective strategic interventions. Faced with the empirical record of the 1990s even the IMF in its own reports is being forced to concede the failure of the “market” model, but the critiques of the eclipsed “state model” have not been confined to neoliberal ideologues alone. The parameters, constraints and possibilities of state intervention and the scope for democratic intervention in the developmental process remains the critical issue.

This question does get addressed by Amiya Bagchi in ‘The Developmental State under Imperialism’ where he ascribes the failure of the development state in the third world, both to internal social structures and geopolitical constraints. The broad historical compass of his contribution ranges from the experience of the northern provinces of Spanish Netherlands, following its overthrow of Spanish rule and Britain, to that of Germany, Japan, China and the Soviet Union, and more recently Korea. The accounts of the changing role of the state under the neoliberal resurgence of the last two decades raise the question of the scope and shape of a future developmental state. The rise of popular-democratic governments in Latin America in recent years signals both the possibilities and limits of forging new developmental paradigms in a world dominated by speculative capital flows.

Hegemony and Global Inequality

A startling aspect of the empirical accounts brought together in the second volume is how the current phase of globalisation has in some ways re-established structural patterns of the pre-war period. Thus José A Ocampo’s nuanced account of the history of Latin America’s integration in ‘Latin America and the World Economy in the Long Twentieth Century’ delineates how Latin America’s “export age” from around 1870 to 1920, was linked to unsustainable volatile financial flows that left these countries vulnerable to the debt-deflation spiral precipitated by a reversal of capital flows. The relatively successful inter-war experience of the region saw the beginnings of state led industrialisation within the rubric of import substitution strategies. However, once the structural constraints and contradictions of this path of state led industrialisation came to the fore, the debt crisis of the 1980s provided the crucial wedge for the imposition of the externally driven dynamics of the neoliberal order, and a return to the boom bust financial cycles of the turn of the last century.

Again, the long 20th century for Africa was a lost one, with the revival of primary export economies of the British empire in the new phase of globalisation. The failure of the first wave of decolonisation left the region vulnerable to new market fundamentalism because of the debt and triage policies imposed by IMF. The ratcheted conditionalities and neoliberal orthodoxy of the new PRSP programmes do not promise much relief from this dismal path. The chapters by Bill Freund and Lance van Sittert explore the workings of imperial

Economic and Political Weekly February 25, 2006 hegemony in the historical development of countries in sub-Saharan Africa. Freund in ‘Africa in the Long Twentieth Century’ highlights the prehistory of colonial conquest of the continent – the period of European commercial exploitation of the region and the African precursors of colonialism, which were thwarted by the onset of colonial rule. What is less clear from the historical account is the specific manner in which this prehistory shaped the unfolding of the long century of imperialist subjugation. Van Sittert’s account ‘Imperialism in Africa’ focuses on precisely the dialectic of foreign and indigenous agency.

The specificities of the incorporation of the Middle East into the global economy make an interesting counterpoint to the experience of the sub-Saharan Africa. From Faruk Tabak’s account ‘The Middle East in the Long Twentieth Century’ it would appear that the end of 20th century witnessed developments remarkably similar to those that unfolded at its beginning. Oil wealth in the region functioned in a manner similar to the inflow of funds that accompanied imperial rivalry earlier. In the earlier phase, public debt administration enforced the rule of the market, now intricate webs of dependence around oil have conditioned the development of the region. Tabak argues that the region never became an integral component of the space of capital flows fashioned by American rule. The paradox of course is that this “insularity” might have played a role in propelling the region into the arena of military conflict and formal occupation by imperial forces. Maria Serena I Diokno’s chronicles a history of a region shaped by the presence of almost every European power – Portugal, Spain, Holland, Britain, France and US – in ‘South East Asia: Imperial Possession and Dispossession in the Long Twentieth Century’. Missing from the account is the manner in which the region’s development was shaped by the webs of dependence and interdependence in relation to Japan and the newly industrialised countries of the region – the flying geese model of hegemony. Finally, Sumit Sarkar traces the complex and often paradoxical, historical and political developments in the Indian subcontinent in ‘India in the Long Twentieth Century’.

The task of chronicling the long 20th century from “below”, with empirically grounded accounts of the diverse experiences of different regions is a formidable challenge and the collection in this volume fills a void in this respect. The problem, of course, is that the ambitious scope of the venture would leave it open to charges of missing out elements of the big picture. Inadequately integrated into the account of the long 20th century is, in a sense, Hobsbawm’s “short 20th century”, from the emergence of the first socialist state after the first world war till its collapse before the end of the century. The transition economies of central Asia and eastern Europe that emerged in the aftermath of the “collapse” of socialist states have raised new developmental concerns. What are the implications of integration into the global economy under US hegemony for these transition economies? What is distinctive in the current developmental trajectories of these former socialist bloc states when compared to other developing countries?

Imperialism at the Turn of the Century

The two contributions by Prabhat Patnaik address theoretical and analytical challenges posed by the current conjuncture of imperialism. In ‘The Concept of the Mode of Production and the Theory of Imperialism’ Patnaik interrogates the relation between the concept of the mode of production and the theory of imperialism. Seeking to move beyond the analysis in terms of “primitive accumulation”, Patnaik explains this relation by theorising capitalism’s functioning within a complex environment constituted by the noncapitalist clusters that it continually transforms and subsumes. It is not a characteristic of a “distinct” phase of monopoly capital but the reflection of the competitive logic of centralisation of capital. Central to this explanation is the role of the international reserve army of labour in the smooth functioning of capitalism.

Highlighting the distinctive features of contemporary imperialism in ‘Lenin’s Theory of Imperialism Today’, Patnaik argues that capital flows have become detached from current account balances and are associated with relatively small current account surpluses by leading capital exporters like Japan. Rather than being associated with significant long-term capital flows, globalisation is linked to a proliferation of unregulated speculative hot money flows. There is an implicit connection between the arguments elaborated in Patnaik’s two analytical essays. The hegemony of finance capital that is analysed in the latter essay, is the instrument through

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which the dispossession and continual recreation of an international reserve army of labour is being effected in contemporary imperialism.

The perverse character of imperialism today is perhaps reflected most starkly in the growing imbalances caused by the burgeoning external debt of the leading hegemon – the US. Whether these deficits reflect the increasing vulnerability or unprecedented dominance of the US is subject to debate. The challenge is to provide a coherent analytical account that explains this contradiction. The perspective of the long century does provide evidence for analytically linking the loss of competitiveness of the leading hegemon, with the promotion of unregulated speculative capital flows as a means of preserving the dominance of the currency of the hegemon in the settlement of international payments. This was the case both in the heyday of the gold standard and after the collapse of the Bretton Woods system.

The increasing recourse by the US to unilateralism, and the new alliances being forged in Latin America, in particular, point to the growing strains in the post-Bretton Woods “new international economic order”. How the contradictions are resolved remains to be seen. The importance of the enquiry into debt, hegemony and uneven development in long 20th century in these two volumes is precisely for the lessons that can be gleaned for the possibilities of the new century.



Economic and Political Weekly February 25, 2006

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