Giovanni Arrighi: finance capital's 600 year old playbook

In Arrighi's The Long Twentieth Century, the features that allowed the capitalist state, as pioneered by fifteenth century Venice and Genoa, to grow out of and transform medieval Europe read like the elements of a playbook still in use today:

1) Profits determine all. Apply cost-benefit analysis to all uses of state power, which is deployed to serve the financial interests that control the state.

2) Increase banking profits by delaying the settlement of debts, expanding the amount of credit issued by making deferred repayments overlap one another, a system which collapses if all accounts are cleared simultaneously. When periodic financial crises force counter parties to clear accounts simultaneously, shift the losses onto clients and competitors.

3)  Use sound money as a store of value to reliably measure profits and losses from far flung deals, and profit from the monetary ignorance of trading and financial partners who use less stable currencies that vary in value geographically and over time.

4) Create a central bank for the control of public finances by private creditors. Inflate the pubic debt to strengthen the hand of creditors and progressively empower the central bank to take over the administration of government revenues for the benefit of financial interests.

5) Protect financial interests by limiting the amount the state spends on warfare. Maintain a balance of power among rivals and manipulate it in your favour, for example by having other states fight your wars for you for as little financial cost to yourself.

6)  Run an extensive diplomatic and espionage network to gather intelligence about the ambitions and capabilities of rivals in order to manipulate the balance of power, reduce the amount spent on warfare and increase the military costs borne by others.

7) When conflict is necessary generate revenues from wars to make them pay for themselves. For example, through having military spending boost the incomes of citizens, thereby increasing tax revenues and the capacity of the state to finance more military expenditure.

China, the Global South and Progressive Politics: Giovanni Arrighi and David Harvey

Giovanni Arrighi (The Long Twentieth Century) writes from Marxist tradition but takes an empirical approach and talks common sense. In this symposium on Arrighi's Adam Smith in Beijing, David Harvey by contrast looks to be a Marxist who lauds Mao while demonizing present day China as brutally neoliberal. What the views of Arrighi and Harvey point to is a divide in left politics between those who see the lifting out of poverty of hundred of millions in the 'global south' as a progressive trend for the 21st century and those eager to cast the developing world as the problem - for global security, the environment and human rights - in effect giving left cover to the reactionary project of conserving power in the west. Arrighi provisionally sides with the 'global south', saying it's too early to tell how China will develop, while seeing in her history of mostly peaceful interstate relations a potentially different sort of rise than that of western capitalist states, which was inextricably linked to militarism and territorial expansion (see Capitalism's 600 year old playbook).