Volume 44, Number 174,
July-September 2013
The Decline of the United States:
Global Historical Context
Alejandro Dabat and Paulo Leal
INTRODUCTION ( ...continuation )

This did not lead to the standardization of the world, as is often stated, but rather to new types of relationships among different sorts of national capitalism (Anderson, 2003; Porter, 1998; Albert, 1981), derived from diverse combinations of neoliberalism, privatization, free trade, companies, public economies, social institutions and financial systems. In developed countries,2 these differences especially distinguished the more neoliberal Anglo-Saxon capitalism (Anderson, 2003) from others such as German, Scandinavian or even Japanese capitalism, as well as a multitude of hybrid intermediate forms.

Among the most dynamic developing countries, alongside late Asian capitalistic versions that follow the Japanese model, such as South Korea or Singapore (Amsden, 1989) and members of asean, are others mixed economies,3 like China (Arrighi, 2007; The Economist, 2007) or Vietnam. However, there are other complex cases such as India, Russia, as recovered by Putin, or many other South American countries (Dabat, 2010) that have combined one or more new trends with innovative national forms of activist state development and national sociopolitical conformation.

Activities linked to knowledge and information (science and technology, education, innovation, communication, etc.) predominate in the productive base of the most dynamic countries, but in different ways. In the US and other developed countries, the system is defined by cutting-edge innovation and technology revenue (Kaplinsky, 1998) resulting from multinational companies and the exportation of jobs to developing countries (Davos, 2012). In the most dynamic developing countries, scientific-technological development has been more based on social learning and income derived from that (Dabat, Rivera and Sztulwark, 2009)4, giving rise to much more rapid and stable growth in countries such as China or India.

But what happened to the techno-productive base of globalization occurred on a much more limited and localized scale for other key factors, such as neoliberalism, the new speculative financial system or the global hegemony of the United States, where the contrary actually took place. Access to knowledge and economic development in the most successful developing countries came to be through political-institutional means and international insertion, unlike neoliberal policies, with state intervention, control of the financial system, a focus on internal markets and higher levels of social inclusion.

In the context of international competition in globalization, these differences in the territorial diffusion and concentration of various aspects of new economics tended to deepen rather than be ameliorated, with global specialization. China, for example, surpassed other developing countries5 as the grand new industrial workshop of the world, through productive upgrading that went far in receiving investments and foreign technology and an export economy. Something similar happened in the oil and agromineral countries based on modern technology, in large part driven by China (Dabat, Rivera and Sztulwark, 2009).

This trend towards international specialization also occurred in the United States, and even more so in the United Kingdom (Dabat, Leal and Romo, 2012), and to a certain extent in Canada, given its growing financial specialization (see Section 1), like Switzerland in the past or, more currently, the small tax havens.6 That is why it does not seem valid to call “financialization” (predominance of finance over production) on the world stage the fundamental feature of current global capitalism, except perhaps in the United States and other Anglo-Saxon countries, but not with the unilateral attributes generally assigned to them.7

As seen in other works (for example, Dabat, Leal and Romo, 2012), the overall phenomenon is of decline and the parasitic nature of neoliberal capitalism centered in the United States. This leads directly to the study of the US financial system and more profound issues at the heart of this topic.

2 The classification of countries as either developed or developing, as well as other labels, are nowadays much less clear for some nations, such as the oil-rich countries of the Middle East or tax havens or tourist enclaves, due to a lack of correlation between product, national income or scientific-technological indicators with industrial, financial-commercial or sociocultural scores. However, we continue to use this classification because it is still valid for major aspects, such as scientific-educational, technical-economic and business.

3 Whatever the currently used denominations may be (market socialism, State capitalism, mixed economy, etc.), countries such as China or Vietnam control the banking and financial sectors in fundamental ways, as well as public service infrastructure (telecommunications, energy, major modes of transportation), social services (education, health) and have shared participation in the majority of high technology companies, while regulating the overall national economy. In China, the Shanghai stock market is highly controlled by the State, and nearly 50% of the stocks trading there are public.

4 Innovations in learning are new knowledge for the country that generates them, by granting access to higher levels of technological or productive development, or access to global productive chains (upgrading, according to Gereffy, 2009). Dabat and Ordóñez, 2009; Dabat, Rivera and Sztulwark, 2009.

5 Countries such as Mexico, Malaysia, other asean members, Hungary or Poland may also be considered new “workshops of the world.” But Mexico is far different from China due to its almost entire subordination to the United States, and the centrifugal nature of the maquiladora export industry, which tends to be more disintegrative than integrative for the national economy in the long term (see footnote 22 and Dabat, Leal and Romo, 2012, section on Mexico) as a result of the very different industrial policies of the countries.

6 The new global division of labor in the Information Revolution and globalization, transfers not only jobs, but also industrial and scientific-technological activities to peripheral nations, especially in beneficiary countries with active policies. But something similar may also happen due to modernization and computerization of oil or agromineral production in these countries.

7 Palazuelos defines “financialization” with three features: a) the enormous size acquired by the financial sector; b) the dominance of finance over growth dynamics; c) the structural conditions and/or affinity of interests with non-financial agents (intensification of financial activities by companies, homes and the government). The first feature is correct for the methods expressed in this article, as well as the second and third, but not fundamentally. The second (relationship between financial and productive sectors, even in the United States) cannot be demonstrated in terms of greater average profitability of the former to the latter (Astarita, 2008), because there are strong oscillations in financial profitability that depend on the economic cycle. With regards to the third feature (the financialization of revenue), it is useful to distinguish between personal medium-high income (including upper layers of knowledge employees), where this phenomenon is increasingly apparent, from income related to productive companies and governments. Productive business obtains its fundamental earnings from production, while financial revenue is merely complementary, derived from financial investment of sinking funds and appreciation funds, temporary immobilized in the productive sphere until reaching the necessary level to acquire or replace equipment or productive assets. Regarding governments, this article provides sufficient information about successful developing countries.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 195 October-December 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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