Skip to main content
×
×
Home

Perpetual decline or persistent dominance? Uncovering Anglo-America’s true structural power in global finance

  • Jan Fichtner (a1)
Abstract

The prediction of America’s decline is a regularly recurring phenomenon; this also pertains to the pivotal field of global finance. This article argues that, first we have to consider the United States together with the other Anglophone countries. The English-speaking countries and territories – Anglo-America – have deep common political and socioeconomic roots, of which the unique global Five Eyes intelligence cooperation is merely one manifestation. In finance, New York and London (NY-LON) constitute the decision-making core of this transnational formation. Second, to analyse the highly complex phenomenon of structural power in the globalised international political economy we have to dig deeper to uncover truly meaningful data. Thus, this article evaluates data for nine central segments of global finance from around the year 2000 to 2014. Contrary to the assertions of many declinists, these data show that Anglo-America’s dominant structural power has been persistent during this period. Moreover, four novel visualisations show that the US-UK axis is the fulcrum of the international financial system. However, contemporary global finance is characterised by a high degree of latent fragility; significant imbalances, inequalities and contradictions persist and are even likely to grow, potentially undermining the legitimacy and the stability of the whole system.

Copyright
Corresponding author
*Correspondence to: Jan Fichtner, University of Amsterdam, Department of Political Science, CORPNET Project, P. O. Box 15578, 1001 NB, Amsterdam, NL. Author’s email: J.R.Fichtner@uva.nl
References
Hide All

1 Calleo, David, Beyond American Hegemony: The Future of the Western Alliance (New York: Basic Books, 1987); Keohane, Robert O., After Hegemony: Cooperation and Discord in the World Political Economy (Princeton: Princeton University Press, 1984).

2 Immanuel Wallerstein, ‘The World Consequences of U.S. Decline’, available at: {http://iwallerstein.com/world-consequences-decline/} accessed 1 April 2016.

3 Strange, Susan, ‘The persistent myth of lost hegemony’, International Organization, 41:4 (1987), pp. 551574 ; Gowan, Peter, The Global Gamble: Washington’s Faustian Bid for World Dominance (London: Verso, 1999); Seabrooke, Leonard, US Power in International Finance: The Victory of Dividends (London: Palgrave, 2001).

4 Zakaria, Fareed, The Post-American World: Release 2.0 (New York: W. W. Norton & Company, 2012).

5 Kirshner, Jonathan, American Power after the Financial Crisis (Ithaca: Cornell University Press, 2014).

6 Nye, Joseph, ‘The twenty-first century will not be a “post-American” world’, International Studies Quarterly, 56:1 (2012), pp. 215217 ; Panitch, Leo and Gindin, Sam, The Making Of Global Capitalism: The Political Economy Of American Empire (London: Verso, 2013).

7 Pei, Minxin, ‘How the U.S. should counter China’s economic power play’, Fortune, available at: {http://fortune.com/2015/04/03/china-us-economic-power/} accessed 1 April 2016.

8 Anderlini, Jamil, ‘UK move to join China-led bank a surprise even to Beijing’, Financial Times, available at: {http://www.ft.com/intl/cms/s/0/d33fed8a-d3a1-11e4-a9d3-00144feab7de.html} accessed 1 April 2016.

9 Summers, Larry, ‘Time US leadership woke up to new economic era’, available at: {http://larrysummers.com/2015/04/05/time-us-leadership-woke-up-to-new-economic-era/} accessed 1 April 2016.

10 The Bank for International Settlements (BIS), ‘Locational Banking Statistics’ (2015a), available at: {http://www.bis.org/statistics/bankstats.htm} accessed 1 April 2016.

11 Note that this article focuses only on finance, excluding power indicators in the fields of manufacturing, knowledge, or military.

12 Starrs, Sean, ‘American economic power hasn’t declined – it globalized! Summoning the data and taking globalization seriously’, International Studies Quarterly, 57:4 (2013), pp. 817830 .

13 Germain, Randall, ‘The political economy of global transformation: Susan Strange, E. H. Carr and the dynamics of structural change’, in Randall Germain (ed.), Susan Strange and the Future of Global Political Economy (Abingdon: Routledge, 2016).

14 Schwartz, Herman M., Subprime Nation: American Power, Global Capital, and the Housing Bubble (Ithaca: Cornell University Press, 2009).

15 Hendry, Ian and Dickson, Susan, British Overseas Territories Law (Oxford: Hart Publishing, 2011).

16 Vucetic, Srdjan, The Anglosphere: A Genealogy of a Racialized Identity in International Relations (Stanford: Stanford University Press, 2011), p. 7 .

17 Ibid., p. 20.

18 Pijl, Kees van der, Transnational Classes and International Relations (London: Routledge, 1998); Pijl, Kees van der, Global Rivalries: From the Cold War to Iraq (London: Pluto Press, 2006).

19 Pijl, Van der, Transnational Classes and International Relations, p. 64 .

20 Ibid., p. 70.

21 Pijl, Kees van der, ‘Is the East still Red? The contender state and class struggles in China’, Globalizations, 9:4 (2012), pp. 503516 ; see also Arrighi, Giovanni, Adam Smith in Beijing: Lineages of the 21st Century (London: Verso, 2007).

22 Gamble, Andrew, ‘The Anglo-American hegemony: From Greater Britain to the Anglosphere’, PAIS Graduate Working Papers Number 05/06, available at: {http://www2.warwick.ac.uk/fac/soc/pais/currentstudents/phd/crips/working_papers/2006/working_paper_5_gamble.pdf} accessed 1 April 2016, p. 9.

23 Gamble, Andrew, Between Europe and America: The Future of British Politics (Basingstoke: Palgrave Macmillan, 2003), p. 86 .

24 Katzenstein, Peter J. (ed.), Anglo-America and its Discontents: Civilizational Identities beyond West and East (London: Routledge, 2012), p. 1 .

25 Gamble, Between Europe and America, p. 88.

26 Hall, Peter A. and Soskice, David (eds), Varieties of Capitalism: the Institutional Foundations of Comparative Advantage (Oxford: Oxford University Press, 2001); Amable, Bruno, The Diversity of Modern Capitalism (Oxford: Oxford University Press, 2003).

27 Nölke, Andreas, Brink, Tobias ten, Claar, Simone, and May, Christian, ‘Domestic structures, foreign economic policies and global economic order: Implications from the rise of large emerging economies’, European Journal of International Relations, 21:3 (2015), pp. 538567 .

28 Schwartz, Subprime Nation.

29 US Bureau of Economic Analysis (BEA), ‘Foreign Direct Investment Position in the United States on a Historical-Cost Basis, by Country of Ultimate Beneficial Owner, 2008–2014’, available at: {http://www.bea.gov/international/di1fdibal.htm} accessed 1 April 2016.

30 US Treasury, ‘Treasury International Capital (TIC) System’ (2015), available at: {http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/index.aspx} accessed 1 April 2016.

31 Wójcik, Dariusz, ‘The dark side of NY-LON: Financial centres and the global financial crisis’, Urban Studies, 50:13 (2013), pp. 27362752 .

32 Green, Jeremy, ‘Anglo-American development, the Euromarkets and the deeper origins of neoliberal deregulation’, Review of International Studies, FirstView.

33 Ibid.

34 Vucetic, The Anglosphere.

35 MacAskill, Ewan, Borger, Julian, Hopkins, Nick, Davies, Nick, and Ball, James, ‘GCHQ taps fibre-optic cables for secret access to world’s communications’, The Guardian, available at: {http://www.theguardian.com/uk/2013/jun/21/gchq-cables-secret-world-communications-nsa} accessed 1 April 2016.

36 McGregor, Richard, ‘Intelligence: the all-seeing eyes – the ‘Five Eyes’ will remain the most powerful espionage alliance’, Financial Times, available at: {http://www.ft.com/intl/cms/s/0/719f86bc-63ea-11e3-98e2-00144feabdc0.html} accessed 1 April 2016.

37 Ibid.

38 Chu, Ben, ‘How hedge fund super-rich donated £19m to Tory Party’, The Independent, available at: {http://www.independent.co.uk/news/uk/politics/how-hedge-fund-super-rich-donated-19m-to-tory-party-10024548.html} accessed 1 April 2016.

39 International Monetary Fund (IMF), ‘World Economic Outlook Database’, available at: {https://www.imf.org/external/pubs/ft/weo/2015/01/weodata/index.aspx} accessed 1 April 2016.

40 Cohen, Cf. Benjamin J., ‘Money, power, authority’, in Germain (ed.), Susan Strange and the Future of Global Political Economy. Cohen discusses two other important dimensions of power: influence and autonomy.

41 Strange, Susan, States and Markets (London: Pinter, 1994 [orig. pub. 1988]), p. 24 .

42 Strange, ‘The persistent myth of lost hegemony’, p. 565.

43 Germain, ‘The political economy of global transformation’, in Germain (ed.), Susan Strange and the Future of Global Political Economy.

44 Konings, Martijn, ‘The institutional foundations of US structural power in international finance: From the re-emergence of global finance to the monetarist turn’, Review of International Political Economy, 15:1 (2008), pp. 3561 .

45 Green, ‘Anglo-American development’.

46 Helleiner, Eric, ‘Still an extraordinary power after all these years: the US and the global financial crisis of 2008’, in Germain (ed.), Susan Strange and the Future of Global Political Economy .

47 Schwartz, Herman M., ‘Strange power over credit; or the enduring strength of US structural power’, in Germain (ed.), Susan Strange and the Future of Global Political Economy .

48 Strange, States and Markets, p. 90.

49 Necessarily, a broad study such as this one cannot provide a deep analysis of every segment – future studies need to uncover Anglo-America’s specific power positions in more detail.

50 See Wójcik, Dariusz, ‘The International Finance Index and its derivatives’, Working Papers in Employment, Work and Finance 07-12, Oxford University, available at: {http://www.geog.ox.ac.uk/research/transformations/wpapers/wpg07-12.pdf} accessed 1 April 2016.

51 Nitzan, Jonathan, ‘Differential accumulation: Towards a new political economy of capital’, Review of International Political Economy, 5:2 (1998), pp. 169216 ; Nitzan, Jonathan and Bichler, Shimshon, Capital as Power: A Study of Order and Creorder (London: Routledge, 2009).

52 Bryan, Dick and Rafferty, Michael, Capitalism with Derivatives: A Political Economy of Financial Derivatives, Capital and Class (Basingstoke: Palgrave Macmillan, 2006).

53 Wigan, Duncan, ‘Financialisation and derivatives: Constructing an artifice of indifference’, Competition & Change, 13:2 (2009), p. 159 .

54 Office of the Comptroller of the Currency (OCC), ‘Quarterly Report on Bank Trading and Derivatives Activities Second Quarter 2013’, available at: {http://www.occ.gov/topics/capital-markets/financial-markets/trading/derivatives/dq213.pdf} accessed 1 April 2016.

55 BIS, ‘Statistical Release – OTC Derivatives Statistics at End-June 2013’ (2013a), available at: {http://www.bis.org/publ/otc_hy1311.pdf} accessed 1 April 2016.

56 Ibid.; BIS, ‘Triennial Central Bank Survey – OTC Interest Rate Derivatives Turnover in April 2013: Preliminary Global Results’ (2013b), available at: {http://www.bis.org/publ/rpfx13ir.pdf} accessed 1 April 2016.

57 Gyntelberg, Jacob and Upper, Christian, ‘The OTC Interest Rate Derivatives Market in 2013’, available at: {http://www.bis.org/publ/qtrpdf/r_qt1312h.pdf} accessed 1 April 2016, p. 75.

58 BIS, ‘Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity 1995 – Final results’, available at: {http://www.bis.org/publ/r_fx96.pdf} accessed 1 April 2016; BIS, ‘Triennial Central Bank Survey – Foreign Exchange Turnover in April 2013: Preliminary Global Results’, available at: {http://www.bis.org/publ/rpfx13fx.pdf} accessed 1 April 2016.

59 Cf. Wójcik, ‘The dark side of NY-LON’.

60 IMF, ‘Currency Composition of Official Foreign Exchange Reserves (COFER)’ (2013a), available at: {http://www.imf.org/External/np/sta/cofer/eng/index.htm} accessed 1 April 2016.

61 Society for Worldwide Interbank Financial Telecommunication (SWIFT), ‘RMB Now 2nd Most Used Currency in Trade Finance, Overtaking the Euro’, available at: {http://www.swift.com/about_swift/shownews?param_dcr=news.data/en/swift_com/2013/PR_RMB_nov.xml} accessed 1 April 2016.

62 SWIFT, ‘RMB Breaks Into the Top Five as a World Payments Currency’, available at: {http://www.swift.com/about_swift/shownews?param_dcr=news.data/en/swift_com/2015/PR_RMB_into_the_top_five.xml} accessed 1 April 2016.

63 Cf. Helleiner, Eric and Kirshner, Jonathan (eds), The Future of the Dollar (Ithaca: Cornell University Press, 2009); Eichengreen, Barry, Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System (Oxford: Oxford University Press, 2011).

64 Sarai, David, ‘US structural power and the internationalization of the US treasury’, in Leo Panitch and Martijn Konings (eds), American Empire and the Political Economy of Global Finance (New York: Palgrave Macmillan, 2009), pp. 7189 .

65 Prasad, Eswar S., The Dollar Trap: How the U.S. Dollar Tightened its Grip on Global Finance (Princeton: Princeton University Press, 2015).

66 Otero-Iglesias, Miguel and Vermeiren, Mattias, ‘China’s state-permeated market economy and its constraints to the internationalization of the renminbi’, International Politics, 52:6 (2015), pp. 684703 .

67 Heemskerk, Eelke and Takes, Frank, ‘The corporate elite community structure of global capitalism’, New Political Economy, 21:1 (2016), pp. 90118 .

68 Haberly, Daniel and Wójcik, Dariusz, ‘Regional blocks and imperial legacies: Mapping the global offshore FDI network’, Economic Geography, 91:3 (2015), pp. 251320 .

69 Nitzan and Bichler, Capital as Power, p. 153, emphases in original.

70 Ibid., p. 182, emphasis in original.

71 Ibid., p. 312, emphases in original.

72 Wildau, Gabriel, ‘China’s “national team” owns 6% of stock market’, Financial Times, available at: {http://www.ft.com/intl/cms/s/0/7515f06c-939d-11e5-9e3e-eb48769cecab.html} accessed 1 April 2016.

73 PricewaterhouseCoopers (PwC), ‘Equity Sans Frontiers: Trends in Cross‑Border IPOs and an Outlook for the Future’, available at: {https://www.pwc.com/gx/en/audit-services/ipo-centre/assets/pwc-cross-border-ipo-trends.pdf} accessed 1 April 2016.

74 Pinelli, Maria, ‘EY Global IPO Trends, Q4 2014’, available at: {http://www.ey.com/Publication/vwLUAssets/ey-q4-14-global-ipo-trends-report/$FILE/ey-q4-14-global-ipo-trends-report.pdf} accessed 1 April 2016.

75 BIS, ‘Debt Securities Statistics’ (2016), available at: {http://www.bis.org/statistics/secstats_to1509.htm} accessed at 1 April 2016.

76 BIS, ‘Locational banking statistics’.

77 Note that in the cross-border segments of banking, direct investment, and portfolio investment, the shares of Anglo-America, the eurozone, and China & HK always involve a degree of intraregional holdings, for example, US bank deposits in the Cayman Islands or direct investment from HK into China.

78 BIS, ‘Consolidated Banking Statistics’ (2015b), available at: {http://www.bis.org/statistics/consstats.htm} accessed 1 April 2016.

79 Winecoff, William Kindred, ‘Structural power and the global financial crisis: a network analytical approach’, Business and Politics, 17:3 (2015), pp. 495526 .

80 Oatley, Thomas, Winecoff, William Kindred, Danzman, Sarah Bauerle, and Pennock, Andrew, ‘The political economy of global finance: a network model’, Perspectives on Politics, 11:1 (2013), pp. 133153 .

81 IMF, ‘Where investment goes’, Finance & Development, 48:3 (2011), available at: {https://www.imf.org/external/pubs/ft/fandd/2011/09/dataspot.htm} accessed 1 April 2016.

82 IMF, ‘Coordinated Direct Investment Survey’ (2013b), available at: {http://cdis.imf.org} accessed 1 April 2016.

83 The US is one of the few countries that publishes inward direct investment data both by country of foreign parent and by country of ultimate beneficial owner. Measured in the latter way the value of the Netherlands drops by half while the value of Luxembourg decreases by almost 90 per cent (BEA 2014). This extreme discrepancy supports the argument that these two conduits seriously distort IMF direct investment data and thus can be excluded from this analysis.

84 Schwartz, Subprime Nation.

85 US Treasury, ‘Treasury International Capital (TIC) System’.

86 Prasad, The Dollar Trap; Hager, Sandy Brian, Public Debt, Inequality, and Power: The Making of a Modern Debt State (Berkeley: University of California Press, 2016).

87 Starrs, ‘American economic power hasn’t declined’.

88 Schwartz, Subprime Nation.

89 IMF, ‘CPIS Notes and Definitions’ (2013c), available at: {http://cpis.imf.org/notes.aspx} accessed 1 April 2016.

90 Shorrocks, Anthony, Davies, James, and Lluberas, Rodrigo, ‘Global wealth databook 2014’, Credit Suisse, available at: {https://publications.credit-suisse.com/tasks/render/file/?fileID=5521F296-D460-2B88-081889DB12817E02} accessed 1 April 2016.

91 Ibid.

92 Starrs, ‘American economic power hasn’t declined’.

93 Schwartz, Subprime Nation.

94 Heemskerk and Takes, ‘The corporate elite community structure of global capitalism’; Haberly and Wójcik, ‘Regional blocks and imperial legacies’.

95 Kirshner, American Power after the Financial Crisis.

96 Mead, Walter Russell, ‘America’s sticky power’, Foreign Policy, 141:3/4 (2004).

97 Helleiner, Eric, The Status Quo Crisis: Global Financial Governance After the 2008 Meltdown (Oxford: Oxford University Press, 2014).

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Review of International Studies
  • ISSN: 0260-2105
  • EISSN: 1469-9044
  • URL: /core/journals/review-of-international-studies
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed