Placement of the Theoretical Discussion
The year 2018 will mark the 170th anniversary of Marx and Engels’ masterpiece, Manifesto of The Communist Party (1848). Perhaps this booklet can only be found in secondhand bookstores today. However, if we read it again, we will be astonished to find that the manifesto can transcend space and time and continue to yield itself to our reading in a new light, despite the demise of the USSR and despite the end of the Cold War. The manifesto is of immense historical and contemporary importance with its enduring insights into capitalism and the endless expansion of this. It provides us with a profound analysis and explanation of the most fundamental phenomena on a global scale in the current era, that is, globalization and transnational capitalism.
Seen from the global developments of the past decades and the direction toward which the world is moving, this is a historical moment in which it is most appropriate to bring back Marx. As one prominent scholar points out:
We’re living in a moment when, for the first time, capitalism has become a truly universal system. It’s universal not only in the sense that it’s global, not only in the sense that just about every economic actor in the world today is operating according to the logic of capitalism, and even those on the outermost periphery of the capitalist economy are, in one way or another, subject to that logic. Capitalism is universal also in the sense that its logic – the logic of accumulation, commodification, profit-maximization, competition – has penetrated just about every aspect of human life and nature itself…. (Wood 1997: 1)
In line with culturalist and sociological studies (Weber 1958), the historical advancement of market capitalism and its overseas expansion is a historical process which includes cultural and religious dimensions (historical, divine, spiritual, miraculous). However, as many scholars, including this author, rigorously argue, the establishment of capitalism is not so much the result of cultural and religious dynamism, but rather the outcome of a political economy project (Li and Hersh 2004). The capitalist mode of production was born in Europe, and its starting point was the imposition of ruthless coercion through the compulsory enclosure and enforced formation of new property relations and legal systems. With the restrictive access to land accompanying industrial transformation began a new form of production relations based on primitive capitalist accumulation. Simultaneously, Europe’s expansion overseas, which began with conquests and trading relationships, resulted in the extension of the capitalist system of production. The globalization of the capitalist world system was realized through three historical development phases: a merchant phase of trade, a phase of industrial expansion and an expansive period of financial capitalism. Is China’s One Belt One Road (OBOR) initiative perhaps the contemporary expansion of the capitalist world system encompassing the three phases at the same time?
Through slave trade, colonialization, “free trade”, and World Wars, the capitalist world system has successfully absorbed multiple cultural systems into a single integrated economic system and has incorporated various parts of the world into its division of labor (Wallerstein 1976). Historically, the system has been safeguarded by successive hegemonic system guarantors and has been maintained through fixed “social, political, and economic arrangements” (Strange 1988). These arrangements are what we know as the “world order”. Since “those arrangements are not divinely ordained, nor are they outcome of blind chance”, and since “they are the result of human decisions taken in the context of man made institutions and sets of self set rules and customs” (Strange 1988: 18), the international political economy (IPE) provides the framework for understanding the global “structural power” that preserves those arrangements. In this context, structural power refers to “the power to decide how things shall be done, the power to shape frameworks within which states relate to each other, relate to people, or relate to corporate enterprises” (Strange 1988: 25). Fundamentally, the hegemony of the existing powers is based on the possession of structural power.
Strange’s analysis on the imperative of maintaining “structural power” and “global arrangements” was expressed clearly by George Kennan1 in the aftermath of the Second World War. Kennan advised the US to uphold its hegemonic power and maintain the patterns of global relationships that had been playing the role of maintaining the gross inequalities in the international order and the tremendous privilege and power this global disparity of wealth had brought for the US. This is why the US is watching carefully how the rising states, particularly China, are applying their power in the existing world order; the historical lessons suggest that emerging powers can generate a dramatic and even violent impact on the established order.
The economic rise of China is an integral part of the continuously historical process of the global expansion of capitalism, and such a phenomenon must be understood within the capitalist world system rather than outside of this. This study of IPE calls attention to the historical formation of global social, political and economic arrangements and emphasizes that IPE does not only study global power relations underneath institutions or organizations but also the ideas, norms and values they reflect. The premise of IPE shows that all states and markets are connected in global systems of production, exchange and distribution, and IPE investigates the ways in which states and markets of the world are connected to one another and the arrangements or structures that have evolved to connect them. The rise of China and other emerging powers have indeed “disturbed” the conventional distribution of power and the ways in which states and markets are interrelated with each other.
The existing global arrangements were shaped by power and politics, but also by history, culture and values. These are changing and will continue to change in the future. The end of the Cold War, the fall of the Soviet Union, the triumph of economic liberalism, the decline of the US unilateralism, the world financial crises and the rise of emerging powers in general and the rise of China in particular have been influencing almost every aspect of international affairs. Currently, these arrangements are continuously changing as a result of the “emerging powers”, t that is, “emerging states”, “emerging markets” and “emerging societies”. Is the world witnessing the end of Western hegemony? Is the world order transforming into more horizontal relationships? Will the rejuvenation of China lead to the emergence of an alternative conception of development, resulting in a stronger role for the state in the organization of local, national and world economies; a horizontal system of South-South relations; and a new type of East-West major power relations?
Today we are witnessing movements toward new patterns of IPE in terms of new alliance formations resulting from global responses to the new situations (Christensen and Li 2016) as well as from a new type of hegemonic relations between the existing and the emerging powers (Li 2016). The “BRICS” and “Second World”, “Belt and Road”, “Silk Road”, “BRICS Bank” and “AIIB” are now part of international relations and international political economy vocabularies, symbolizing a growing phenomenon of the changing world order in which the system is no longer ruled and governed by the US-led postwar treaties.
Seen from the perspective of realism, the rise of emerging powers in general, and the rise of China in particular, is perceived as a serious threat to the maintenance of Strange’s “structural power” and Kennan’s “patterns of global relationships”. Viewing the world as an anarchical state of affairs and all international relations as a zero-sum game, realist scholars tend to foresee the eventual conflict between the rise of China and the existing powers (Krauthammer 1995; Mearsheimer 2006, 2010). China’s ascent is seen as the repetition of a hegemonic transition during which a rising power would ultimately become discontent with the rules and institutions defined and set by the existing hegemon. Consequently, Chinese production and outward capital expansion would unavoidably challenge the geopolitical and geoeconomic status quo of the patterns of global relationships.
However, emphasizing the interdependence of states through economic exchange and international institutions, and believing in positive-sum international relations (Keohane and Nye 2012), liberal scholars tend to acknowledge the fact that China’s economic rise is achieved on the basis of its expanding and intensifying integration within the international system. Hence, it is seemingly impossible for China to take a revolutionary departure from the existing capitalist world order. Liberalism tends to emphasize the fact that China’s national interests and foreign policy behavior increasingly reflect and embrace the status quo of the world order because its economic growth and wealth accumulation are generated from within and not without the capitalist world system (Ikenberry 2008, 2013).
The world system theory (Wallerstein 1979, 2004) sees the rise of emerging powers from a long historical perspective. The modern world system is conceptualized as a capitalist world economy, which is governed by the drive for the endless accumulation of capital, also referred to as the “law of value”. This world system has been expanding over centuries, successively incorporating other parts of the world into its division of labor. Capital mobility and production relocation result in geographical shifts in accumulation and power, without changing the fundamental relations of inequality within the system. The world economy today is characterized by capital mobility, globally integrated circuits of wealth accumulation, regional and international segmentation of production and merger of national and global capital and investment. The emergence of a new global economic geography and the changing pattern of economic interdependence, as well as a new international division of labor...