Polanyi’s double movement and imperial hegemony: A review of Arrighi and Silver

Posted on May 8, 2013

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SilverArrighi

This review was written for the Observatório das Metrópoles, Universidade Federal do Rio de Janeiro, as Polanyi: A hegemonia do Reino Unido e dos EUA no sistema mundo

In their article ‘Polanyi’s Double Movement: The Belle Époques of British and U.S. Hegemony Compared‘ (2003)Beverly Silver and Giovanni Arrighi compare the hegemonic eras of the United Kingdom at the end of the 19th century and of the United States at the end of the 20th using the theoretical framework of Karl Polanyi.

Polanyi argues that the development of modern societies unfolds with a ‘double movement’, in which the social instability generated by liberal economic policies provokes the emergence of protective counter-movements. Sometimes these counter-movements appear from below, for example through trade union, socialist or popular-nationalist movements. However, protective policies are more frequently implemented from above by political and economic elites, based on a sense of paternalistic solidarity or simply due to a realization that rule by force is ‘an unstable form of government’ (p. 327). Exceptions to this rule, and central to the analysis of the British and American empires, are ‘non-sovereign’ colonies, where colonial overlords often do not adopt a protective role for their subjects. In this context only anti-colonial revolts and geopolitical rivalries can oppose the market-liberal movement.

British hegemony

The period of British dominance began with the Industrial Revolution in the first half of the 19th century, which gave Britain an enduring advantage within the global economy. This economic leap led to military strengthening, allowing an expansion of the formal and informal spheres of the British empire and an intensified exploitation of the material and human resources of its colonies. As Britain had a greater capacity to ‘internalise the benefits and externalize the costs of an international free market’ (p. 336), the country adopted the ideology of free trade, sacrificing its self-sufficieny in food production in the process. To defend its position as the ‘factory’ and ‘bank’ of the world, Britain used its financial, commercial and, at times, military strength to enforce the impose the gold standard on weaker nations.

Paradoxically, it was with the rise of the economic challenge of Germany and the United States (marked by the financial panic of 1873), and of Britain’s relative industrial decline, that the country reached its imperial zenith. With the industrialization of other countries, Britain began to specialize in high value-added areas, and undergo a process of economic financialisation. British hegemony only ended in the inter-war period with the acceleration of relative economic and geopolitical decline and the rise in the costs of empire caused by growing colonial resistance. For Polanyi, the rejection in the 1930s of free trade and British hegemony by the other advanced countries represented a ‘world revolution’ against the market-liberal movement.

American hegemony

The era of American hegemony that began with the end of the Second World War unfolded in a quite different way. The post-War international architecture within the capitalist bloc was built on Keynesian precepts that originated with the counter-movements of the 1930s. The result was a ‘social capitalism’ in the industrial countries and a ‘developmentalist capitalism’ in the post-colonial ‘Third World’, which to some extent constrained the force of the market-liberal movement. Unlike the British empire, the United States did not become the central co-ordinator of the global economy, instead acting an almost self-sufficient continent-sized economy that depended more on its domestic market than on exports. Nonetheless, bilateral and multilateral military-economic alliances enabled American companies to operate profitably in foreign markets despite the widespread presence of trade barriers.

A double-crisis at the end of the 1960s finally provoked a restoration of the ‘utopian belief in the free market’ within the United States itself. The first of these was a crisis of profitability brought about by the intensification of economic competition from countries like Germany and Japan. This led to a depressed global rate of economic growth and an ‘international inflationary spiral’, reminiscent of the era of Britain’s relative decline a century earlier. The second crisis was a crisis of legitimacy with began with domestic and international opposition to the Vietnam War in the 1960s and culminated with the Iranian Revolution in 1979. In response to the crises the United States gradually began to compete more aggressively for global capital flows in order to finance its growing deficit. Belatedly the country became the co-ordinator of international finance, sending the excess liquidity of its banks to the Third World in the form of debts and demanding repayment with the attached policy prescriptions of the ‘Washington Consensus’. Throughout the period, and despite its transformation into global (neo)liberal proselytiser, the United States (unlike Britain previously) never abandoned protectionist policies like agricultural subsidies.

Analysis: A new collapse?

Silver and Arrighi, writing in 2003 – and thus before the escalation of the Iraq War, the emergence of China as a true economic rival of the US, and the global financial crisis – offered predictions which, in general, seem to have come true.  The rise of China has not (yet) led to aggressive geopolitical competition, owing to US military superiority and the economic interdependence of the two countries (and other regional actors like Japan). Furthermore, the collective memory of the 1930s prevented both a return to true free trade in the advanced world before the financial crisis of 2008 and of a flight to autarchic protectionism since. Meanwhile the hypocrisy of these countries protecting their own key sectors (including, now, the financial sector), whilst imposing structural adjustment policies on weaker economies, has contributed to a rejection of the Washington Consensus by members of the ‘BRIC’ grouping and the countries of Latin America’s ‘pink tide’. These counter-movements in the economically peripheral countries have, with the unique exception of the Middle East, so far occurred without a ‘plunge into utter destruction’ – as Polanyi suggested they could.

By contrast, the financial crisis of the last five years has ‘centralised’ the impacts of the market-liberal movement with economic austerity in Europe and to a lesser degree in the USA. Or perhaps it would be more accurate to describe it as a ‘peripheralisation’ of the poor segments of the rich countries, and even entire countries like Greece. The advanced countries, long accustomed to prosperity, have lost their ability internalise the benefits and externalise the costs of a partially free global market. Accordingly, it seems to be in these countries that the new counter-movement is now appearing, although it is not yet clear in which direction this will develop. Will it be movements of the left or the right that gain in strength? Will these movements gain the support of national elites in their traditional role as protectors of the social order? And will the counter-movement, in one or more of the rich countries, be accompanied by a ‘plunge into utter destruction’?

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