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1 the HEGEMONY of RIVALRY: Mercantilism As the Political

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1 the HEGEMONY of RIVALRY: Mercantilism As the Political THE HEGEMONY OF RIVALRY: Mercantilism as the Political Economy of the Rivalry Phase of the Hegemony/Rivalry Cycle Robert A. Denemark1 Visiting Scholar, Arrighi Center for Global Studies, Johns Hopkins University [email protected] Prepared for the Annual Meeting of the International Studies Association, April 2021. KEYWORDS: Gains, Hegemony, Mercantilism, Political Economy, Rivalry INTRODUCTION/ABSTRACT The shift from a period of hegemony to a period of rivalry signals the advance of very different analytical foundations for interaction. We move away from an interval in which powerful actors assure relatively stable rules, seek to benefit from the ensuing cooperative interactions, and allow others to do so as well, albeit unevenly. Actors seek ‘absolute’ gains, which means that each actor should seek to get ahead by taking actions that will allow them to do so without concern for how those actions might also allow others to get ahead. As hegemony declines, we move toward an interval when major actors engage in unfettered competition, using the full range of their resources to acquire the wealth and power necessary to re-organize global processes to suit their interests. During this essentially zero-sum competition, individual states or alliances advance to the degree that others decline. Actors seek ‘relative’ gains. Cooperation and joint benefits should therefore be rare and fragile. In the economic realm, this is generally associated with ‘mercantilism’. Mercantilism is the contentious process that arises among political units of different sizes and scales as they contend for dominance. This contest has a critical internal as well as external focus. Larger scaled units tend to prevail, albeit amid much conflict. Mercantilist ideas about the nature of the state, wealth, specie inflow, and the relevant economic policy toolbox are identified and considered. HEGEMONY AND RIVALRY In 1973 Charles Kindleberger outlined the important role a uniquely powerful lead state could have in keeping the global economy stable and open. Hegemony, not just dominance, was adopted as a topic of concern by scholars from multiple perspectives. Realists (Gilpin 1981; Krasner 1976), neo-liberal institutionalists (Keohane 1984), and world-systems analysis (Wallerstein 1983) all offered arguments. Wallerstein identified hegemony in its recent 1 I am grateful to Kwanok Kim of Keimyung University, Daegu, South Korea, for including me in his research project on 'absolute vs. relative' gains, and Hasan Yonten who is working with us on that project. 1 historical context as the relatively rare outcome of coterminous agricultural, industrial, and financial dominance. This condition allows a single state to acquire sufficient resources to unilaterally establish the rules of the global game. Hegemony contrasts with rivalry. Periods of rivalry are defined by competition among actors to establish rules or norms that serve their interests. Rivalry is not simply the absence of hegemony, in the same way that peace is not just the absence of war. The rise and decline of hegemony are relatively well understood in the world-systems literature, but the logic of rivalry tends to be ignored. Giovanni Arrighi and his colleagues even offered an alternative conception of this cycle that focuses on hegemony alone. The process includes Hegemony: Hegemonic Crisis; Hegemonic Breakdown: New Hegemon (Arrighi and Silver 1999: 122; 180). For Silver and Slater (1999), hegemony re-emerges when new solutions to problems of social disorder are successful. Systemic disorder arises when the dominance of trade and production in the hegemonic state, which tends to widen social and political opportunities as mass employment and growth increase, evolves into a system more dominated by financial interactions. Financial dominance is highly polarizing. Class tensions increase as opportunities dissolve. The virtuous cycle of expansion, increasing wealth, stability, and peace, and further expansion, breaks down. In its place we find a vicious cycle of intra- and inter-state conflict, well-orchestrated hypernationalism, and military tension. Mobilization increases the importance of labor in security-related industries, which contradicts the increased competition for capital. Silver and Slater suggest: “… past hegemonic transitions appear to be moments of escalating social conflict aimed at reaffirming or challenging established status and class hierarchies – an escalation that is intertwined with intensifying interstate and interenterprise competition. In both transitions, social conflict played a double role. On the one hand, it fed into the escalation of interstate and interenterprise competition, speeding the transition from hegemonic crisis to hegemonic breakdown. On the other hand, the intensity and form of social conflict was decisive in shaping the social compacts that emerged in the midst and aftermath of the hegemonic breakdown, and on which the new hegemony would be based” (Silver and Slater 1999:211). This tracing of the rise and decline of hegemonic systems is particularly insightful, but it does not afford the same depth of analysis to the periods and processes of rivalry. First, this conceptualization speaks primarily to great power contenders and thus ignores the vast majority of states. Even some great powers lack any real chance of attaining, or the desire to contest hegemony. Certainly the states of the semi-periphery might play a role in Arrighi’s hegemonic cycle, but they are not usually themselves contenders, nor are the peripheral states. Together these non-contenders constitute a great majority of the world. Second, the socio-political and economic context of these non-contenders is essentially ignored by such a perspective. I argue that with the demise of hegemony and the rise of rivalry the global system itself is altered such that prior rules, expectations, and predicted behaviors no longer obtain. This new environment generates different systemic forces and incentives that the Wallersteinian Hegemony/Rivalry cycle is well placed to address. How has this context has changed? 2 ABSOLUTE vs. RELATIVE GAINS In this paper I will contend that periods of hegemony and periods of rivalry are animated by different concepts of advantage and gain. An understanding of motivations for state action based on perceptions of the value of ‘absolute’ vs. ‘relative’ gains is not new, but this literature has become unproductive and requires some reconceptualization. I tie the ‘gains’ debate to the hegemony/rivalry cycle. I argue that periods of hegemony that are generally understood to facilitate greater cooperation will do so in part because they bring forward a preference for absolute gains. Periods of rivalry that are generally understood to engender greater levels of large-scale conflict will do so in part because they bring forward a preference for relative gains. From this perspective, placement in the hegemony/rivalry cycle will determine perceptions of the value of absolute vs. relative gains, enriching our understanding of both. Students of global politics have long considered the nature of cooperation in the state system. One of the major strands in this discussion is poised as a debate between those who believe that states are rational value maximizers who use cooperative mechanisms to aid in gaining as much absolute wealth and power as they can, and those who believe that states seek relative advantages that allow them to get ahead of erstwhile competitors (basically all other states in the system), even if that means a reduction in absolute levels of well-being. From this perspective, cooperation is generally avoided because states fear that superior gains may accrue to others and be used to support aggression against them (Powell 1991; Grieco et al. 1993:739). Scholars associated with the Realist School of international relations focus on systemic anarchy – a state of governancelessness - as the salient (and fixed) global environmental variable, and the utility of force as the final arbiter of international contention. Realists argue that states must and do seek relative gains – gains that afford them an advantage over others -- even at the cost of reduced overall wealth and/or power. Any alterations that widen the gap in power resources in their favor will be viewed in a positive light. Any alterations that alter a gap that is not in their favor will be viewed negatively. It is not ‘getting ahead’ that matters, but getting relatively farther ahead. Hence actions that reduce one’s own power resources are rational if they reduce the power resources of others by a greater degree. Cooperation, often to reduce transaction costs and allow multiple actors in a system to benefit from various forms of interaction, is viewed with suspicion from a relative gains perspective. If others might be enjoying greater relative gains from a given cooperative interaction, which will be difficult to predict beforehand, then they may eventually use their power to do you harm. Cooperation is therefore tantamount to arming potential future opponents. Fear that others will be advantaged to a greater extent by any cooperative interactions makes cooperation dangerous and less likely. Scholars associated with Neoliberal Institutionalism also accept the essentially anarchic nature of the global system, but view cooperation as both likely and consequential. From this perspective, the wealth of a population is just as important to states as is military security (and wealth and power may be impossible
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