Braudel in New York

The Long Twentieth Century: Money, Power, and the Origins of Our Times, Giovanni Arrighi, 1994.

New York - an Abstraction, C.R Nevinson, 1920.

With the last post, I finally wrapped up my review of Civilisation & Capitalism, Fernand Braudel’s magnificent history of the world economy from the 15th to the 18th century. The final volume of the series tells the narrative of capitalist development through the series of states which pushed the process of capital accumulation forward: first Genoa, then Holland, and finally Britain. The book makes for a wonderful vista through economic history, peppered with insight and wit. But it is also flabby, meandering, and at times, unsure of itself. There is (the crutch of Wallerstein’s world-system analysis excepted) no tight model drawing together the crises, transitions and evolutions that Braudel describes so elegantly. You might even wonder if such a model even exists.

In The Long Twentieth Century, Giovanni Arrighi takes Braudel’s virtuosic-if-nebulous history of capitalist development and hammers it into a lean, mean model of historical capitalism; one supposedly capable not only of explaining early-modern history, but also the eponymous ‘long twentieth century’ — the period of United States hegemony that runs from the late nineteenth century until the present. It is a truly grand synthesis reminiscent of Perry Anderson’s books, insofar as Arrighi engages with (and is also dependent on) a very broad secondary literature, but without any primary research or data analysis of his own. This can be a little tiring — Arrighi’s insistence on arguing through block quotes, with whole paragraphs from other authors appearing on almost every page, is borderline insufferable. Nonetheless, Arrighi’s successful recasting of Braudel into a genuine model of global capitalist development is undoubtedly an achievement. But is there a baby worth saving in Braudel’s bathwater? And more importantly, is a model cast from early-modern Europe even capable of explaining the twentieth century?

The essence of Arrighi’s historical model are his so-called “systemic cycles of accumulation”. Although Arrighi develops his theory from Braudel’s Genoese-Dutch-English narrative of capitalist development, he dresses these cycles of accumulation with a overlay of Marxism; in particular, the (in)famous M-C-M` circuit of Marx’s Capital. For Marx, this ‘formula’ represents the difference in purpose of capitalist and non-capitalist production. While we might produce commodities (C) to acquire money (M) with which to buy more commodities, the capitalist uses M to hire labour to produce C and (hopefully) profit on the sale to acquire M` (where M`>M). I do not want to get into this further: suffice to say, I think this venerable circuit is among the least insightful formulations from Capital. But what matters for us is that Arrighi believes this process can be generalised from the level of day-to-day capitalist operations to the grand sweep of world history itself. Specifically, Arrighi argues that each of the eras Braudel defines — the ages of the Genoese, Dutch, and English — correspond to a long-run M-C-M` circuit split into two phases: an M-C era of commercial expansion, where the new power expands its trades to spectacular profit; and a C-M` phase, during which the now-declining power, faced by surplus capital and diminishing returns in commerce, becomes increasingly dependent upon finance and foreign investment. This cycle is defined by crises: a ‘signal crisis’, revealing the switch from the first phase to the second, and a ‘terminal crisis’ which fatally undermines the financial economy of the reigning hegemon and allows the commercial ascension of its successor.

I honestly think that if Braudel had lived to read The Long Twentieth Century, he would have recognised Arrighi’s model of systemic cycles of accumulation as a faithful distillation of Capitalism & Civilisation, even if he would perhaps have framed it with less Marx in the foreground. But the real issue at stake is whether Arrighi has captured an actual historical phenomenon and modelled it in a useful way. On the one hand, understanding financialisation as cyclical in the very-long-run is, I believe, genuinely insightful. It is certainly plausible that there is a dynamic relationship between financial development and geo-politics which, far from being a modern phenomenon, is as old as capitalism itself — however, whether that relationship is uninterruptedly cyclical across time is less so (more on this later). But I find the M-C-M` ‘framework’, even if read metaphorically, actively frustrates this vision. Collapsing the process of trade expansion to M-C is nonsensical: it is a Marxist parody of trying to use a two-period representative agent neoclassical model for a macroeconomic, long-run growth problem — but worse. It flattens financialisation to a result, not a process that grows with, even if it supersedes, mercantile expansion. In the end, it does not add much value to Arrighi’s model, leaving me wondering whether it was there simply to make a classless Braudelian narrative sound a little more Marxist.

So what about the so-called long twentieth century? As Arrighi says, his book “began… as a study of the world economic crisis of the 1970’s”. Like Braudel, it is to this tumultuous decade that Arrighi’s efforts are ultimately directed. The long twentieth century accumulation cycle is framed by two crises, as per the previous cycles: the aftermath of the Great Depression (the terminal crisis for Britain) and the 70’s (the signal crisis for the United States). But it begins with that other ‘Great Depression’ of 1873-96. In this period, Arrighi argues, British industrial dominance was challenged by the new German Empire and the US simultaneously. As the Dutch had done back when Britain had played the role of challenger about a century earlier, Britain responded by “consolidating” its role as an entrepôt and financial hub. But industry flowed into the competing variants of corporate capitalism in Germany and the US — the latter of which was ultimately far more successful. This proceeded until the long global crisis of 1929-1945; which, by the end, rendered the US a true hegemon.

There is one event absent from this narrative, however: The First World War. Arrighi touches on the Great War only very briefly; arguing, in fact, that “the extent of this first reversal in the financial fortunes of the United States and Britain… should not be exaggerated”. For Arrighi, British financial leadership continued until the Great Depression. Thus the war was an accelerant, not a pivot. I struggle with this framing. If the twentieth century is worth defining, surely the Great War needs to be at the centre of it, as many have made clear. So why does Arrighi tiptoe past it? I believe the issue is that the Great War is not endogenous to Arrighi’s model. It does not fit well in the story of cyclical trade expansion and financialisation which underpins his theory. As a result, Arrighi is compelled to minimise the War in relation to the Great Depression of 1929 — a crisis more comparable to the Braudelian early-modern financial crises Arrighi trained his model on.

Moving forwards, however, Arrighi is aware that the US economic dominance from 1945-70 was “exceptional by historical standards”. He is not blind to the unprecedented scale of the “rate of expansion”. But Arrighi finds the period is still well described by his model:

“…the 1950s and 1960s resembled all the others [‘MC’ periods of expansion] in one key respect: its very unfolding resulted in a major intensification of competitive pressures… and in a consequent massive withdrawal of money capital from trade and production.”

On this basis Arrighi argues that 1968-73 marked the signal crisis of the cycle of US economic domination. As with the Genoese, Dutch, and British cycles, financial growth is a response to competitive pressures in industry and trade. It marks the downward spiral of a regime approaching eventual supercession. Arrighi goes into detail about this spiral: the growth of the Eurodollar market, the impact of the end of Bretton Woods, Vietnam, and even the Volcker shock and the collapse of the USSR. But his conviction that the US global economic order is approaching its terminus is unwavering. Its ostensible triumph in the early 90’s, Arrighi argues, is in reality a belle époque, a calm before the storm.

I am now compelled to consider Adam Tooze’s recent critique of Arrighi and The Long Twentieth Century in particular. Tooze describes Arrighi’s model as “dangerously simplistic”, arguing that any “kind of cyclical or sequential view of history is misplaced”. The twentieth and twenty-first centuries — the ‘long twentieth century’, that is — are above all else determined by epochal trends, not cycles: the explosions of GDP and CO2 emissions in particular. US power fundamentally is ‘oil power’, insofar as it is revolutionary, unprecedented, and poorly analogised to the commercial cycles of the early-modern world.

I believe Tooze has a point — but it could have been made better. Certainly, in The Long Twentieth Century the emphasis on long-run cyclicality is much too strong, but Arrighi is not blind to the great trends. Despite what Tooze might argue, I doubt Arrighi would take issue with the claim that “global hegemony [is] a 20th-century problem” — this is, in fact, one of the key developments of the US cycle as he sees it. Arrighi does not, as Tooze argues, produce a “neat sequence of substitutions in which one hegemon displaces another” — there is, within each of his cycles, a “piling on” of characteristics, including (but not limited to) geographic scope. The point of disagreement, however, is whether the new problem of global hegemony has arisen because of “the continuation of a well-established tendency of the longue durée”, as Arrighi believes, or if it has arisen because systemic changes in the early twentieth century rendered models trained from before time t = 1917 poor forecasting tools, as Tooze says. While I am sympathetic to Tooze’s argument, making this point involves more than observing that dramatic underlying trends are present — Arrighi is fully aware of this. To stretch a metaphor, it requires revealing that if you detrend the ‘world-historical’ time-series there is a structural break, tied to the Great Acceleration, that demands different models for explaining the cycles. Doing this is perhaps the key historical task in explaining the origins of our times. It demands more, however, than pulling up a hockey stick graph.

In a way, The Long Twentieth Century was obsolete upon its release. Dreamed up in the 80’s to explain the 70’s, Arrighi’s book concludes by speculating that Japan may wind up the core of the next systemic cycle of accumulation — an epilogue which has not aged well. Interestingly, this is not just a usual case of 1980’s brain: the book was published years after the Japanese bubble burst in 1990. But Arrighi is too close to events not to read that crisis as temporary. A decade later, he would try to amend this in Adam Smith in Beijing — the next book I will review. But for now it is enough to observe that Arrighi’s choice to stick with Japan reveals that Tooze may have a point: for who, unless they are convinced that the same economic logic applies now as applied to tiny Genoa and Holland, could be so convinced that Japan — a large ‘small’ country in the grand scheme of things — could have been the hegemon of the 21st century?

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Supplemental: Braudel in New York