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Economic History and the ‘East Wind’

Challenges to Eurocentrism

"The Chinese Factory in the Street of Teng-chan at Nagasaki, founded in 1688"

"The Chinese Factory in the Street of Teng-chan at Nagasaki, founded in 1688" (1822). Perry-Castañeda Library Map Collection, University of Texas at Austin.

Johannes Dragsbaek Schmidt is an associate professor of political science at Aalborg University in Denmark and a senior expert at the Nordic Institute of Asian Studies. Jacques Hersh is a professor emeritus of international development studies at Aalborg University.

Given the breathtaking speed of contemporary geopolitical and geoeconomic turmoil and strategic realignments, the task is to understand the process and to project the contours of the future world structure.1 This is especially difficult, as global neoliberalism and rentier capitalism have gained a monopoly position in the realm of economic thought and implementation.

Playing a significant role in this evolution were the demise of the Soviet Union and the transition to “socialism with Chinese characteristics” following the death of Mao Zedong. Former ways of interpreting capitalism, imperialism, and socialist construction have not yet recovered from the “victory” of neoliberalism. Nevertheless, the way we frame the existing world order/disorder determines our understanding of the ongoing transformations that are bound to shape the future global landscape.

Methodologically, such an assessment cannot be a neutral endeavor, since scholars are products of specific intellectual environments and sociopolitical norms. The attempt by the German sociologist Max Weber to establish “value-free” (Wertfreiheit) social science was duly deconstructed in the 1960s by the Swedish development economist Gunnar Myrdal, who argued that neutrality in social sciences is impossible, and that researchers should acknowledge as much.

Economic history, like other social sciences, is dominated by competing ideological agendas that in turn reflect power relations. History evolves as an objective process, but is necessarily interpreted in an ideological and normative manner.

The ongoing historical process that points to a decline of Western dominance over the capitalist world system and the concurrent rise of Asia demands a deconstruction of the accepted wisdom concerning “historical capitalism” as the product of the “European miracle.” The competing narrative to this hegemonic discourse concerning the trajectory of Western capitalism is still in its early stages, but has regained heuristic validity with the evolution of the Asian challenge in recent decades.

The Historical Ascendency of Western Capitalism

In our view, any analysis of the rise of “historical capitalism” has to begin with the dialectical relationship between the “West” and the “rest” that took shape from the very beginning of capitalism. Even though this assumption has found few adherents in the European cultural sphere, it is crucial to establishing an epistemology of contemporary global political economy.

Here it is worth remembering that no less a figure than Adam Smith acknowledged, in The Wealth of Nations (1776), that Europe had been a latecomer in social development compared to the Middle Kingdom in China, and that both had been moving along a similar trajectory. Smith also realized that contact with the non-European world had driven the early development of the capitalist world system: “The discovery of America, and that of the passage to the East Indies by the Cape of Good Hope, are the greatest events recorded in the history of mankind.”2 At the same time, he expressed skepticism with regard to the rewards this contact would bring to the non-European peoples. Modern economic history has not invalidated this insight: “To the natives, however, both of the East and the West Indies, all the commercial benefits, which can have resulted from these events have been sunk and lost in the dreadful misfortunes which they have occasioned…. What benefits, or what misfortunes may hereafter result from these great events, no human wisdom can foresee.”3

At the opposite end of the ideological spectrum and almost a century later, Karl Marx and Frederick Engels considered capitalism as capable of releasing productive forces on a scale never seen before that would incorporate the entire globe. This is clearly expressed in The Communist Manifesto.

Nevertheless, both authors of The Communist Manifesto, as anticapitalist scholars, also expressed the dialectical notion that the inclusion and development of the Chinese nation, while reinforcing capitalism in the short term, would threaten it in the longer term. Writing in 1853, Marx made the point that “now, England having brought the revolution of China [transition to capitalism, our addition], the question is how that revolution will react on England, and through England on Europe.”4 And as a revolutionary, Marx famously conceived the task as not only to describe reality, but to transform it.

This perspective opened the way for changes in Marx’s understanding of the expansion of capitalism and the fate of the non-European societies. The first position, in the Manifesto, represents a positive win-win narrative concerning their incorporation in the world system.5 Later, having concluded that colonialism not only did not contribute to the development of the productive forces of the colonies but actually inhibited their development, Marx argued that colonial societies had to liberate themselves from this dependency. As Hélène Carrère d’Encausse and Stuart Schram point out, Marx in effect pioneered the principles of dependency theory, which called for independence and self-reliance among colonial and peripheral nations.6 That strategy came to be called “delinking,” as formulated and promoted by the mid-twentieth-century “dependentistas,” against the advice of modernization theory, which considered a closer relationship to the capitalist core nations as the remedy for underdevelopment.7

The point to keep in mind, in the Marxian context, is that Marx himself underwent an evolution, from originally embracing the expansion of European capitalism on a world scale toward advocating for the emancipation of peripheral societies from core metropoles.8

Europe as Latecomer

Understanding the legacy of European ethnocentrism in the emergence of capitalism is necessary if we are to challenge the dominant discourse and ideological assumptions of the so-called European miracle. This perspective, which implicitly and explicitly ascribes cultural superiority to Europe, degenerated into a chauvinistic approach that critics have defined as Eurocentrism and Orientalism. In other words, concepts developed in the description of the European colonialist mentality further encapsulate an assumption of European “exceptionalism” that has characterized Western interpretations of the history of non-European societies.9

Unfortunately, European socialists, Marxists included, were not immune to this approach. While Max Weber focused on a supposedly superior European rationality, Marx emphasized differences in the state of development among existing pre-capitalist societal structures. Early in his analysis of the origins of capitalism in Europe, Marx concluded that decentralized European feudalism had been better suited to effect the transition than were the state-centralized societal formations and their property relations, which he termed the “Asiatic mode of production.”10

Critics of Western colonial oppression and exploitation argued that both Europeans and non-Europeans were subjected to an ideological framework that assigned the role of mover and shaker of modernity to Westerners, while casting peoples outside Europe as passive recipients of the West’s innovations. In this worldview, it was the survival of traditionalism that caused the “rest” of the world’s societies to stagnate while western Europe progressed. Under these circumstances, the mission civilisatrice became the “White Man’s Burden.”

This outlook evolved into what J. M. Blaut names “diffusionism,” or more precisely “Eurocentric diffusionism,” whose main tenet “is the theory of ‘the autonomous rise of Europe,’ and sometimes (rather more grandly) the idea of ‘the European Miracle.’ It is the idea that Europe was more advanced and more progressive than all other regions prior to 1492, prior, that is, to the beginning of the period of colonialism, the period in which Europe and non-Europe came into intense interaction.”11

It would not be an exaggeration to affirm that the dominant contemporary mindset in the West is influenced by a similar arrogance that considers the spread of Western modernity as a universal good. Among the consequences are the present instrumentalization of Western values and ideals in the implementation of benevolent dominance over the non-Western world: regime change, export of “democracy,” liberal interventionism, and so on are all part of the strategy of upholding a unipolar world order under the leadership of the United States. The ideology of human rights has served some of Washington’s deepest ideological needs: as Harold Lasswell showed in his 1927 study Propaganda Techniques in the World War, “more can be won by illusion than coercion.”12

But while Eurocentric diffusionism has become central to the Western narrative of moral superiority, Samuel Huntington offered in The Clash of Civilizations a more realistic account of Western hegemony: “The West won the world not by the superiority of its ideas or values or religion (to which few members of other civilizations were converted) but rather by its superiority in applying organized violence. Westerners often forget this fact; non-Westerners never do.”13

Because the European transition to capitalism was largely made possible by relations established with the rest of the world, especially after 1492, it is important to point out the complex and unequal connectivity of international political economy that this involved. The “discovery of America” marked the beginning of the gradual process of European expansion and exploitation, especially in the Americas and Africa.

From the latter part of the sixteenth to the beginning of the nineteenth century, a transatlantic triangular trading pattern was established, founded on the slave trade and tying three geographical regions organically together. With time, African slave labor in North and South America, plantation agriculture, and mining, as well as shipbuilding and transport, contributed to the formation and accumulation of merchant capital and the weakening of European feudalism. At the same time, the surplus derived from transatlantic trade enabled Europe to expand its economic relations with Asia. As Paul Baran noted, the paradox was that prior to the Industrial Revolution in Britain, Western Europe had been poorer in natural resources and less developed economically than either China or India:

Hence the drive to procure tropical produce of all kinds (spices, tea, ivory, indigo, etc.) that could not be obtained nearby, hence also the effort to import valuable products of Oriental skills (high quality cloth, ornaments, pottery and the like), and hence finally the wild scramble to bring back precious metals and stones that were in short supply at home. The resulting far-flung trade, combined with piracy, outright plunder, slave traffic, and discovery of gold, led to a rapid formation of vast fortunes in the hands of Western European merchants.14

This emerging international division of labor, based on contact between the transatlantic regions and deficit trading with China and India, eventually led to the expansion of European “modernization.” However, against the Eurocentric interpretation of world history, Europe was a latecomer compared to the then more advanced “Asiacentric” economic powers. (Thus, China’s and India’s growth in recent years is not a catching-up, but a comeback. After periods of self-centered development, these countries are gradually restoring their economies to the dominant status they held in the world before the eighteenth century, when they represented approximately half of global GDP.)15

Trade relations between China and India and Western Europe in the centuries before the Industrial Revolution were determined by the fact that Europe at the time lacked the capacity to increase exports of goods to cover its balance-of-payments deficits. This is where silver as a means of payment gave Europe an advantage. Nevertheless, as Andre Gunder Frank points out, “despite their access to American money to buy themselves into the world economy in Asia, for the three centuries after 1500 the Europeans still remained a small player who had to adapt to –and not make!—the world economic rules of the game in Asia.”16

Western Europe thus gained momentum by transforming its socioeconomic backwardness into a geoeconomic advantage, permitting the use of economic surpluses generated in the Americas and Africa as a means of payment to cover the commercial deficit with Asia. As Frank writes: “In terms of world historical reality and development, really (only) American money permitted the Europeans to increase their participation in this mostly Asian-based productive expansion of the world economy.”17

Britain’s socioeconomic and political conquest of India should not be underestimated as a basic element of both the miscarriage of modernization on the Indian subcontinent and the subjugation of China’s economy by extra-economic means. The transition from merchant capitalism—which depended on colonialism—to industrial capitalism, first in England and then in Western Europe, depended on sabotaging the competition of more advanced producers, especially of textile manufactures and other wares.

Indeed, until the middle of the eighteenth century, India was the world’s biggest exporter of textile manufactures. Similarly, China had since antiquity produced and exported high-quality manufactures (chiefly silk and porcelain), serving markets in different regions of the world. The Silk Road remained a major trade route for more than two thousand years.18 (These observations by Amiya Kumar Bagchi weaken Karl Polanyi’s argument that prior to the “great transformation” in Europe during the nineteenth century, there had been no market relations or division of labor over long distances.19 In fact, from the beginning of British rule in India, “trade was used as the chief conveyor belt for the remittance of the tribute extracted from the Indian empire to Britain.”)20

Before the growth of machine-based manufactures in Britain, China and India were the world’s leading suppliers of manufactured goods. To further the nascent Industrial Revolution in England, it was essential to neutralize competitors’ assets to the extent possible. Just as enslaved Africans and the native populations of the Americas paid a high price for the accumulation of merchant capital and the weakening of feudalism in Europe, so the sabotage of the industrial potential of China and India was part of the price paid for the rise of British industrialization.21

The deindustrialization of the two great Asian economies followed the imposition of tariffs on Indian exports to England and the coercion of the Chinese government into importing opium to cover the British deficit in its balance of payments. In other words, Britain implemented a variant of economic nationalism through import substitution and export promotion, in the best style of Friedrich List’s “latecomer” strategy: “The decimation of much of local Indian businesses…combined with the deindustrialization of major regions of British India was turned into the biggest consumer of the British cotton mills, which for a long time remained the industry employing the largest numbers of British workers. China after the first Opium War was also rapidly deindustrialized.”22

The German economist accused Britain of hypocrisy for having followed a strategy of protectionism when it was “catching up,” only to promote liberalism and free trade once it came to dominate the international capitalist economy as the “workshop of the world.”23 Likewise, the major industrializing nations of the nineteenth century—including the United States, Germany, and Japan—notably rejected the British-prescribed free-trade model during their own take-off phases of economic development. Indeed, the Japanese in this period coined the phrase “free trade is the protectionism of the strong”!

The reasons for the demise of the so-called Asiatic mode of production, or in Samir Amin’s preferable term, the “tributary system,” are various.24 The causes ranged from internal problems of surplus production, surplus division, and class contradictions to Western interference and invasion. Frank argues that by the nineteenth century, the Kondratiev “long wave” of economic expansion in Asia had run its course and given way to stagnation—a development the latecomer Europeans could exploit: “The long ‘A’ phase of expansion that came to an end in Asia in the late eighteenth century and its subsequent (cyclical?) decline offered the still marginal West its first real opportunity to improve its relative and absolute position within the world economy and system. Only then could the West go on to achieve a (temporary) period of dominance.”25

The period of Western hegemony over most of the world did not, however, promote the progressive development of societies in Africa, South America, and Asia. This was not only because Western intervention had left the internal political conditions of colonial areas in disarray, but also because the European powers had discovered the advantages to be obtained from overseas colonies. The consequent competition for extra-territorial control led to the growth of imperialism and wars of redivision.

In the twentieth century, dependency theorists took the experience of imperialism’s victims as one of their main subjects of study. Baran expressed their historical dilemma: “the peoples who came into the orbit of Western Capitalist expansion found themselves in the twilight of feudalism enduring the worst features of both worlds, and the entire impact of imperialist subjugation to boot.”26

The Rise of the East

It is worth noting here that Japan, the only Asian country to industrialize and develop during the period of Western conquest, benefitted from its relative lack of natural resources, thus avoiding being colonized. This allowed the country a breathing space to build a strong economy and military, to defend its territory, and later to grow into an imperialist power itself. Japan was proof indeed that, contrary to Max Weber’s thesis on the importance of the “Protestant ethic” to the development of capitalism, a non-Western society could reach core status in the capitalist world system.

The rise of Japan as both a latecomer to economic development and a player in the inter-imperialist world order was the single most significant development in East Asia from the late nineteenth through the early twentieth century. The defeat of the Russian imperialist power by non-European Japan in their war of 1903–05 encouraged the cause of emancipation from European dominance throughout the region. Pan-Asianism and the idea of a “Greater Asian prosperity sphere” under Japanese leadership appealed to several Asian leaders motivated by resistance to European colonialism.27 Even nationalists such as Sun Yat-sen in China, Subhas Chandra Bose in India, and others expressed support for this project.

Japan’s victory over the Russian fleet in May 1905 inspired a generation of nationalist leaders, from Kemal Atatürk in Turkey to Mohandas Gandhi (then in South Africa) to Jawaharlal Nehru in India. Each saw this battle as the first time in centuries that a non-European country defeated a major European power. A spirit of revolt and anti-Western ethos was born, and the hope of national self-determination and independence spurred the incipient anti-colonial movements. This is well captured by historian Pankaj Mishra: “It mattered little to which class or race they belonged; the subordinate peoples of the world keenly absorbed the deeper implications – moral and psychological – of Japan’s triumph.”28

Likewise, the Bolshevik Revolution of 1917 and the Soviet attempt to implement a project of non-Western socialist construction resonated among politically aware anti-imperialists in Asia. Although the USSR came to develop a strategy of building “socialism in one country,” links were created in a worldwide movement nurturing and encouraging resistance against both Western and Japanese imperialisms prior to the Second World War.

Japan’s attempt to balance its ambition of competing with Western imperialist powers while also imposing itself as the leader of Pan-Asianism was always unlikely to succeed, as Japanese imperialism ruthlessly sought to sponsor economic growth in the region only insofar as it served its own interests. Consequently, the Chinese Communist Party’s resistance to imperial Japan was a decisive factor in its victory in the civil war with Chiang Kai Shek.

Nevertheless, in contrast to Western imperialist strategy in the colonies and dependencies, the Japanese exploited their economies while nurturing industrialization in some of the countries that had come under their control, such as Manchuria and northern Korea. In the 1930s, the official policy of imperialist Japan followed the “flying geese” paradigm, in which the industrializing economies of East Asia were ordered into a hierarchy of different levels of development, led by Japan. These ideas gained renewed currency in the 1960s, in analyses of the phenomenon of the “capitalist developmental state” as part of the export-oriented model of the Newly Industrializing Countries (NICs) in East Asia.

It is undeniable that economic development and industrialization in East Asia from the 1960s on followed the Japanese model of the capitalist developmental state. While modernization theory encouraged former colonies to follow the path of liberal U.S. development, the countries of Asia began “looking East,” i.e., to the statist sociopolitical pattern that Japan had originated. The results on the regional level were impressive.

To succeed, however, the capitalist developmental state’s export-oriented strategy needs markets. It was thus access to the U.S. market that made this East Asian “miracle” possible. The reasons for the opening of the U.S. market were both economic and political. Politically, giving the NICs access to U.S. consumer markets was meant to create a counter-model to the Maoist self-centered development strategy, and with it contain the spread of socialism. The economic motivation was, in part, to limit rising production costs in the United States, which had contributed to the inflation that beset the country’s economy in the 1970s. U.S. corporations and government officials accepted that these countries were hardly liberal as far as foreign direct investment (FDI) was concerned, each having institutionalized some form of capital controls.29

In a sense, then, already during the Mao era, China’s socialist construction was dictating both U.S. economic strategy and geopolitical engagement in East Asia, from its containment of China to its wars in Korea and Vietnam to its support of the anti-Communist bloodbath in Indonesia and counterinsurgency warfare throughout the region.

From Washington’s perspective, the Second World War had created dangers and opportunities alike for the establishment of U.S. supremacy over the other nations of the West, of which Japan was by then effectively a part. On the Eurasian landmass, the Soviet Union had survived the onslaught of Nazism and together with the Western powers had defeated the German geopolitical challenge. After 1945, socialism as an alternative to capitalism was put on the agenda. The social contract in most of Western Europe was in turmoil after the combined onslaught of two world wars and a global economic depression. Keynesian economic policies and Europe’s U.S.-sponsored recovery gave Washington the advantage of access to European markets. At the same time, the United States tried to contain Soviet influence by excluding the USSR from the war recovery program.

U.S. Containment of Socialism in Asia

In Asia, the defeat of Japan and the victory of the Chinese Revolution transformed the region and helped shape U.S. foreign policy. Reconstruction of the Japanese economy and U.S. acceptance of the industrialization of East Asian NICs strengthened the political regimes that had arisen in these former colonies. The attempt to contain socialism in the region was at least partially successful, particularly through the U.S. wars in Korea and Vietnam. Although neither conflict ended in U.S. victory, these military defeats were transformed into a geostrategic advantage, boosting a militarized U.S. capitalism and contributing to the Sino-Soviet split.

The potential alliance between the USSR and China did not materialize. Mao Zedong addressed the expectation that the forces of socialism could challenge the Western powers during a visit to Moscow in 1957: “In the struggle between the socialist and capitalist camps, it was no longer the West wind that prevailed over the East wind, but the East wind that prevailed over the West wind.”30

The split between the two countries concerned the feasibility, strategy, and ideology of their respective modes of socialist construction, but also geopolitical differences. Moscow’s attempt to establish a kind of U.S.-USSR “bipolarity” through the policy of “peaceful coexistence” largely ignored the interests of other socialist countries. From the Chinese perspective, the Sino-Soviet ideological dispute revolved around the strategic project of blocking “bipolarity” and replacing the exclusive U.S.-USSR relationship with a “multipolarity” that would include China.

The rift between the two socialist powers gave the United States a geopolitical opening too good to pass up. The Soviet Union fell into a big-power trap when Henry Kissinger arranged the Nixon-Mao meeting in Beijing, which contributed to a normalization of U.S.-China relations and the recognition the People’s Republic as one country, to the dismay of Taiwan. The Soviet Union suffered a further setback several years later, when it intervened in Afghanistan to protect a secular regime against an ultra-religious movement backed by the United States, Saudi Arabia, and Pakistan. These anti-Soviet initiatives led to a rapprochement between Beijing and Washington. Playing the Chinese card not only hastened the breakdown of Sino-Soviet relations, but also led to an overhaul of China’s development strategy and its reentry into the capitalist world economy.

In India, these and other developments had inspired a national quest for self-rule (swaraj), from which a struggle for independence and socialism emerged. India became an independent state in 1947, after generations of resistance to the British colonial power that had exploited the country and drained its wealth for centuries. Gandhi personally rejected industrialization, centralization, bureaucratization, and production for profit but praised the peasantry, “villageism,” and local self-reliance.31 With the sidelining of Gandhi, Nehru’s policy prevailed, emphasizing planning, centralization, and nation-building, with a considerable state-owned sector.

During decolonization, the term “third world” defined India, China, and the developing countries, while the socialist Soviet bloc occupied the “second world” category and the Western capitalist world the “first.” Third-worldism sought to displace the East-West conflict with a North-South divide and to establish a progressive and in many cases socialist agenda for national liberation and the emancipation of oppressed peoples. Born in Bandung, the Non-Aligned Movement declined to take a firm position during the Cold War.32 These anticapitalist movements and events took place during the “golden age” of postwar capitalism—characterized by sustained high rates of growth and employment in the West under Keynesian economics—which lasted fitfully into the 1970s before falling to the neoliberal counterrevolution that began in the early 1980s.33

In the neoliberal era, it is often forgotten that these third world socialist experiments had built on conditions inherited from previous historical periods of their societies. Their attempts to transform production relations in the direction of increased economic surplus and equitable distribution found inspiration in societies and ideologies that challenged capitalism. This tendency could be observed in China during the Mao era. As a Chinese scholar reflects: “It was in their ability to meet the ‘basic needs’ of the greatest majority of the population that China and other historical socialist states distinguished themselves from the rest of the peripheral and semi-peripheral states in the capitalist world-economy.”34

The Debacle of Socialism and the New World Order

The dissolution of the Soviet Union and the introduction of capitalism in China led to a historic rollback of socialism, however imperfect, as both ideology and praxis. Simultaneously, the apparent victory of “actually existing capitalism” with the imposition of neoliberalism on a world scale contained the seeds of future contradictions.

Geopolitically, the West’s refusal to accept post-Soviet Russia as an equal partner in the U.S.-led world political order helped revive nationalist forces in that country. The expectation that a pro-Western neoliberal Russian oligarchy led by Boris Yeltsin would be able to impose itself without resistance was pure American hubris. Instead of working toward the project of a strong and unified Europe, from Lisbon to Vladivostok, U.S. foreign policy came to be dominated by the neoconservative dream of American “full spectrum dominance.” By the end of the 1990s, the sight of the former Soviet superpower transformed into an impotent giant contributed to the resurgence of Russian nationalism. The dismantlement of the Yugoslav Federation and regime change in Belgrade were wake-up calls for an important segment of the Russian elite, forcing a strategic rethink within the Kremlin led by Vladimir Putin. It is within this paradigm that the recent Russian strategy of resistance to U.S. dominance should be understood, whether in Eastern Europe (Georgia, Ukraine), the Middle East (Syria), or in the renewal of the Sino-Russian partnership.

Geoeconomically, the strategy of neoliberal globalization aided U.S. financial and economic expansion. The convergence of U.S. economic interests and Chinese pragmatic considerations helped transform a large economy previously based on socialist production into the world’s workshop. China’s market potential, huge labor force, and low production costs made it an attractive destination for U.S. manufacturing and investment. Coupled with the influx of global finance capital, the outsourcing of U.S. production to China has turned the country into the world’s second economic power.

The former exclusion of China from the world economy, most strongly promoted by the United States, broke down amid internal pressures and the demands of neoliberal globalization. Accordingly, U.S. policy and capital underwrote China’s return as a global power. In other words, globalized neoliberalism opened a window of opportunity for export-led economic growth that was not exclusively “Made in China.” As David Harvey writes, “the spectacular emergence of China as a global economic power after 1980 was in part an unintended consequence of the liberal turn in the advanced capitalist world.”35

China was hardly the only beneficiary of the turn toward neoliberalism, export-oriented development, and FDI in East Asia. Nevertheless, the country, which became a major creditor of U.S. debt, was an anomaly in the degree of its importance to the normal functioning of the global economy. China’s integration into the international division of labor contributed to the viability of neoliberal globalization. In the words of Minqi Li, “China’s transition to capitalism has played an indispensable role in the global triumph of neoliberalism.”36

Both the U.S. elite and, to an extent, the Chinese Communist Party leadership overlooked a problem that was bound to arise with the inclusion of such a big economy in the capitalist world. Even during the Obama administration, China’s rise and the geoeconomic implications of its attempt to lead regional economic and trading relations in East and Southeast Asia became causes of increasing concern. The presidency of Donald Trump, a spokesman for economic nationalism who aspires to “Make America Great Again” and who has often vilified China, may represent a retrenchment for neoliberal globalization.

Although the Obama administration’s geopolitical strategy focused on Russia—which it sought to contain on the “grand chessboard” by punishing the Kremlin with sanctions and diplomatic opprobrium for its policies in Ukraine and the Middle East—Washington also took an aggressive stance toward China’s attempt to integrate the economies of East Asia. In addition, Russia and China seem united in the project of consolidating a Eurasian power bloc, which could include European countries who want to join and challenge U.S. unipolarity.

The Obama administration’s dual strategy of waging wars in the Middle East while posturing against Russia and China only served to strengthen their tacit alliance. There is a historical irony in the fact that the two nations that failed to form a viable front against imperialism as socialist states are now doing so following their integration into the global capitalist system, in order to resist Western pressures. And as mentioned above, where the previous administration opened a two-front confrontation with China and Russia, the Trump administration seemed to be focusing on China while playing the “Russian card” in order to test and weaken the Sino-Russian alliance.

Concluding Remarks

The capitalist world system emerged historically as European trade and colonial conquest expanded in the world after the “discovery” of the Americas and the passage to the East Indies via the Cape of Good Hope. Western historiography has traditionally interpreted this “European miracle” through the prism of Eurocentrism. The critique of this Eurocentric approach has made great inroads in problematizing the ideology that had long assigned superiority to the European experience.

As discussed above, recent research has revealed that Asia (principally India and China) and other civilizations were not lagging behind Europe at the time of “discovery” of the Americas. The gap between Europe and Asia grew first as a result of the Industrial Revolution in England and the British-led extra-economic deindustrialization of India and China through political measures and protectionism. Prior to the Industrial Revolution, Asian products were very much in demand, while European goods struggled to find markets in Asia.

The tribute of Africa and the Americas to Europe was imposed and institutionalized through the triangular trade patterns founded on African slave labor in the Americas and the genocide of native populations. The economic surplus thus created was in part used to pay for the balance-of-payments deficit that England had incurred with China. Silver imported to Europe from the Americas was thus paid to China, and the Opium Wars were intended to force China to accept opium as payment for England’s deficit. The downturn of Asian economic development was thus caused by both internal and external factors. The weakening of the Asian economies was arguably also due to the Kondratiev long wave downturn, which occurred as England was gaining access to Asia and colonizing India.

The development of Japan can likewise be considered as counterproof of the Eurocentrist thesis. The Japanese empire escaped colonialization and built its strategic industrialization by delinking from the Western-dominated world economy, before becoming itself a member of the imperialist group of nations. Following the Second World War, the reconstruction of Japan’s economy was based on a combined strategy of protectionism and access to foreign markets, mainly in the United States. The implementation of variants of this “capitalist developmental state” drove the industrialization of the NICs. American East Asian policy accepted these strategies as a counterforce to socialist construction in China and elsewhere.

The victory of the Communist Party in the Chinese civil war strengthened the prospects of socialism in the Soviet Union and China, but did not lead to a common front against Western interventions and wars in Asia. The Sino-Soviet split opened a window of opportunity for Washington in its confrontation with socialism. By playing the “China card,” the United States won a strategic victory against the Soviet Union. The Soviet intervention in the Afghan civil war, provoked and prolonged by the United States, further weakened the USSR and hastened its dissolution.

Ostensibly, China’s reentry into the world economy gave the United States geopolitical advantages in its attempt to realize the neoconservative vision of “full spectrum dominance,” and the opening of the Chinese and Russian economies enabled the spread of neoliberal globalization. The rapid privatization of state assets in Russia led to a calamitous economic downturn and fall in living standards. In China, neoliberalism was accompanied by FDI and access to U.S. markets for Chinese exports.

The subsequent revival of Russian nationalism and the country’s return on the world scene as a political and military power offers some resistance to U.S. hegemony. Simultaneously, the United States has grown wary of the Chinese economic miracle and is now seeking to block China’s further growth as a geoeconomic power and its efforts to build trade and development ties with other nations outside, or within, the sphere of U.S. economic hegemony.

Postscript: The Eclipse of the U.S.-Dominated World Order

The age of Atlanticism is drawing to a close, and a new multipolar order is emerging. The self-perception among the political classes in Delhi, Beijing, and Moscow ultimately emphasizes not only their position as great economic powers but as global leaders in international affairs. This evolution suggests the prospect of a different future world order. Not that national egoism no longer is a potential factor of interstate contradictions.

Some commentators argue that the beginning of the twenty-first century will be remembered for the rapid decline of U.S. unilateralism and the reemergence of a multipolar world. If these tendencies continue, it ultimately spells the end of centuries of global domination by the Atlantic powers. How such a process will occur is one of the most important questions for the current and future world system. Although suffering from “imperial overstretch,” the United States remains the world’s hegemonic military superpower, but its options have grown more and more limited with the shift in economic gravity to Asia and its concomitant challenges.

The integration of ever-larger areas of the world into the sphere of international capitalist relations is a problematic that has not been entirely grasped by social scientists, including those working in the socialist tradition. Applied to the rise of China, and in the context of the present crisis of capitalism, we can see the contours of a possible future perspective that further counters the Eurocentric approach. Although not the direct cause of the crisis of the global system, the growth and development of China, India, Russia, and other economies reflects a historical shift within that system, one that will shape any possible resolution. Seen in this light, Engels’s insight in an 1894 letter to Karl Kautsky appears even more topical today than it was then: “It is again the wonderful irony of history: China alone is still to be conquered for capitalist production, and in so doing at long last the latter makes its own existence at home impossible.”37

We do not intend to engage in an intense theoretical discussion of this important dialectical process of the integration of non-capitalist or peripheral societies into the capitalist world system. Nevertheless, because of their spatial and demographic dimensions, the participation of China, India, and Russia in the global capital accumulation process cannot but raise questions regarding their implications for U.S. domination of the system.

This evolution holds an earth-shaking potential which the contemporary world will have to come to grips with. Minqi Li poses the question this way: “With the ‘rise of China’ and the ‘rise of India,’ the semi-periphery will become a geopolitical bloc that includes the world’s majority population as well as the bulk of the world’s economic output. The rise of the semi-periphery, by undermining the traditional three-layered structure, is likely to prove to be fundamentally destabilizing for the existing world-system.”38

This possible outcome of the “great transformation” in world capitalism appears to reinforce the theoretical position of Rosa Luxemburg, contra Marx, regarding the modus vivendi of the global system: the survival and expansion of capitalism, she argued, had always depended on access to the labor force and natural resources, as well as to markets in non-capitalist formations. In other words, the exploitation and inclusion of peripheral areas satisfied the needs of the core nations while simultaneously leading to a blind alley for capitalism itself: “The general tendency and final result of this process is the exclusive world role of capitalist production. Once this is reached, Marx’s model becomes valid: i.e. further expansion of capital becomes impossible. Capitalism comes to a dead end, it cannot function any more as the historical vehicle for the unfolding of the productive forces, it reaches its objective economic limit.”39

While this article has argued that the Eurocentric world system is not being challenged by a direct anticapitalist transformation, it would be foolhardy to predict the future. Far too many elements (“unknown knowns”) have still to be factored into the equation. Historical development is not preordained, and much depends on class struggles in each country and the choices of ruling elites in the governance of the emerging world order.

This applies, of course, to the ascension of China to the position of second economy in the world system. Although it is obvious that this rise has affected the domestic Chinese society as well as the workings of the international economy, it would be wise to keep in mind that huge problems remain. We can conclude this analysis by quoting George Aseniero:

If China succeeds in dealing with (its) problems, the world will have to deal with the enormity of that success. The global economy has accommodated the NICs by and large, but the full-scale industrialization of the dragon economy will be certain to destabilize the global balance of power. If China fails and plunges into chaos instead, the world will have to deal with the horror of that failure. Either way, it is the dragon—not the East Asian tigers or the Japanese flying goose or the American eagle—that will spell the future of the Pacific Rim.40

Add to this evolution the emergence of the Russian bear and the Indian elephant as actors on the world scene, and the challenges to the dominant Western international order only increase.


  1. The authors appreciate the critical comments on an earlier version of this article by participants at the conference The Third World Studies Center in Its 40th Year, held at the University of the Philippines, Manila, February 9–10, 2017.
  2. Quoted in Andre Gunder Frank, ReOrient: Global Economy in the Asian Age (Berkeley: University of California Press, 1998),13.
  3. Ibid.
  4. Karl Marx and Frederick Engels, ”Manifesto of the Communist Party,” in Selected Works in Two Volumes, vol.1 (Moscow: Foreign Languages Publishing House, 1958), 35.
  5. Ibid, p.38.
  6. See Hélène Carrère d’Encausse and Stuart Schram, Le marxisme et l’Asie 1853–1964 (Paris: Armand Colin, 1965).
  7. Walt W. Rostow, The Stages of Economic Growth: A Non-Communist Manifesto (Cambridge: Cambridge University Press, 1961).
  8. Kevin B. Anderson arrives at the following interpretation: ”Over the years, I will argue, his (Marx’s) perspectives on these societies evolved. In the 1840s, he held to an implicitly unilinear perspective, sometimes tinged with ethnocentrism, according to which non-Western societies would necessarily be absorbed into capitalism and then modernized via colonialism and the world market. But over time, his perspective evolved toward one that was more multilinear, leaving the future development of these societies as an open question” (Marx at the Margins: On Nationalism, Ethnicity, and Non-Western Societies [Chicago: University of Chicago Press, 2010], 2). See also, Horace B. Davis, Nationalism and Socialism (New York: Monthly Review Press, 1967), 59–73; Kenzo Mohri, “Marx and ‘Underdevelopment’,” Monthly Review 30, no. 11 (April 1979): 32–42; Suniti Kumar Ghosh, “Marx on India,” Monthly Review 35, no. 8 (January 1984): 39–53; Theodor Shanin, Late Marx and the Russian Road: Marx and the Peripheries of Capitalism (New York: Monthly Review Press, 1983); and John Bellamy Foster, “Marx and Internationalism,” Monthly Review 52, no. 3 (July–August 2000): 11–20.
  9. On Eurocentrism, see for instance Samir Amin, Eurocentrism (New York: Monthly Review Press 1989); and J. M. Blaut, Eight Eurocentric Historians (New York: Guilford, 2000). On orientalism, see Edward W. Said, Orientalism (New York: Pantheon, 1978).
  10. See d’Encausse and Schram, Le marxisme et l’Asie.
  11. J. M. Blaut, The Colonizer’s Model of the World (New York: Guilford, 1993), 1–2.
  12. Harold D. Lasswell, Propaganda Techniques in the World War (New York: Smith, 1927), 222. Quoted in James Peck, Ideal Illusions: How the U.S. Government Co-opted Human Rights (New York: Metropolitan, 2010), 3.
  13. Samuel P. Huntington, The Clash of Civilizations and the Remaking of World Order (London: Touchstone, 1998), 51.
  14. Paul A. Baran, The Political Economy of Growth (New York: Monthly Review Press, 1957),138–39.
  15. Angus Maddison, The World Economy: A Millennial Perspective (Paris: OECD, 2001).
  16. Frank, ReOrient, 185.
  17. Ibid., 262–63.
  18. Amiya Kumar Bagchi, Perilous Passage: Mankind and the Global Ascendancy of Capital (Lanham, MD: Rowman and Littlefield, 2005), 136–37.
  19. Frank, ReOrient,18.
  20. Amiya Kumar Bagchi, “Globalizing India: A Critique of an Agenda for Financiers and Speculators,” in Johannes Dragsbaek Schmidt and Jacques Hersh, eds., Globalization and Social Change (London: Routledge, 2000), 122.
  21. Jacques Hersh, ”The Eastern Wind Will Not Subside—China’s Long March Back to the Future?” in Li Xing, ed., The Rise of China and the Capitalist World Order (Surrey: Ashgate, 2010), 31.
  22. Kumar Bagchi, “Globalizing India,” 176.
  23. Friedriech List, The National System of Political Economy (Fairfield, CT: Kelley, 1977), chapter 4.
  24. Samir Amin, “Modes of Production: History and Unequal Development,” Science and Society 49, no. 2 (1985): 194–207.
  25. Frank. ReOrient, 263.
  26. Baran, The Political Economy of Growth,144.
  27. The concepts of the “Greater East Asia Co-Prosperity Sphere” and “flying geese” were introduced by Akamatsu Kaname, “Wagakuni yomo kogyohin no susei” (Trend of Japanese Trade in Woolen Goods), Journal of Nagoya Higher Commercial School 13 (1935), 129–212. See also Kioshi Kojima, Japan and the New World Economic Order (Tokyo: Tuttle, 1977).
  28. Pankaj Misrah, From Ruins to Empire: The Revolt against the West and the Remaking of Asia (London: Allen Lane, 2012), 3.
  29. Jacques Hersh, The USA and the Rise of East Asia Since 1945 (Basingstoke: Macmillan, 1993).
  30. Mao Zedong, “The East Wind Prevails Over the West Wind,” November 17, 1957, available at
  31. It is interesting to note that India’s Communist parties did not share this vision. On the contrary, they were more oriented towards the emerging working class, in favor of planning and a centralized state. See the discussion in Gale Omvedt, Reinventing Revolution: New Social Movements and the Socialist Tradition in India (Armonk, NY: M. E. Sharpe, 1993), 12.
  32. Xiaoming Huang, “Introduction: Development Experiences and Development Models,” in Xiaoming Huang, Alex C. Tan, and Sekhar Bandyopadhyay, eds., China, India and the End of Development Models (London: Palgrave Macmillan, 2012).
  33. John Toye, Dilemmas of Development: Reflections on the Counter-revolution in Development Economics (Oxford: Blackwell, 1987).
  34. Minqi Li, The Rise of China and the Demise of the Capitalist World Economy (New York: Monthly Review Press, 2008), 31.
  35. David Harvey, A Brief History of Neoliberalism (New York: Oxford University Press, 2005, p.121)
  36. Li, The Rise of China, 91.
  37. Frederick Engels, ”Engels to Kautsky,” in Karl Marx and Frederick Engels, On Colonialism (Moscow: Foreign Languages Publishing House, n.d.), 346.
  38. Li, The Rise of China, 176.
  39. Rosa Luxemburg, The Accumulation of Capital (New York: Monthly Review Press, 1972), 145–46.
  40. George Aseniero, “Asia in the World-System,” in Sing C. Chew and Robert A. Denemark, eds., The Underdevelopment of Development (Thousand Oaks, CA: Sage, 1999), 193.
2018, Volume 69, Issue 09 (February 2018)
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