A study of Adam Smith in Beijing by Giovanni Arrighi, offering an analysis of the consequences of China’s rise within the framework of the historical transformation of capitalism and contemporary international relations.
Adam Smith in Beijing, written by Giovanni Arrighi, is a profound exploration of power dynamics in today’s world, with a particular focus on China’s rise within the framework of historical capitalism. The author presents a compelling narrative that traces the evolution of capitalist systems from the Western world to the emerging Eastern powers. By intertwining Adam Smith’s classical economic theories with China’s modern developments, Arrighi argues that China’s market-based development, characterized by significant state intervention and strategic management of capitalist interests, represents a distinct departure from Western capitalist models. The book offers an in-depth analysis of China’s economic growth, social changes, and geopolitical strategies, suggesting that China might redefine the global economic order in the 21st century. Arrighi’s work is not only a detailed historical account but also a provocative interpretation of the future of international relations and economic power structures, appealing to anyone interested in global economics and political science.
Table of Contents
Introduction
The book Adam Smith in Beijing: Lineages of the Twenty-First Century provides a comprehensive analysis of the nature and implications of China’s rise within the framework of the historical evolution of capitalism and contemporary international relations. It presents a groundbreaking perspective that is rich in analytical depth and broad in scope, carving a unique place among works employing similar methodologies. The author, Giovanni Arrighi, published the book through Verso Books in 2007. It has been translated into multiple languages, including Persian, with the Iranian edition translated by Seyed Rahim Teymoori and published by Akhtaran. Though written and released 17 years ago, the book remains relevant. With the passage of time, the accuracy of Arrighi’s observations becomes even clearer. Even if some analyses may now seem outdated, the precision and methodology of the author’s reflections continue to provide valuable insights.
The book is organized into four sections and twelve chapters, following a historical and comparative approach. The first section examines Adam Smith’s theories and the modern Asian era. The second section delves into the complexities and upheavals of the current century. The third section focuses on the concept of hegemony and its redefinition, while the final section scrutinizes the genealogies and transformations of contemporary East Asia.
About the Author
Giovanni Arrighi, economist, sociologist, and university professor, was born on July 7, 1937, in Milan, Italy, just before the onset of World War II. He passed away at the age of 71 in the United States in 2009. He pursued his education in Italy and began teaching sociology, history, and economics in his homeland. Later, he moved to the United States, where he became a professor at Johns Hopkins University and Binghamton University. Arrighi conducted extensive research and taught about political economy, historical sociology, and international relations. His work was deeply influenced by a diverse range of thinkers, including Adam Smith, Max Weber, Karl Marx, Antonio Gramsci, and Karl Polanyi. He left behind numerous scholarly articles and books.
About the Book
As industrial production rooted in capitalism—highlighted by Karl Marx—emerged not in Berlin but in Detroit. Similarly, the non-capitalist market economy theorized by Adam Smith flourished not in Britain but in China. Thus, it seems that “Marx in Detroit” and “Adam Smith in Beijing” have found their respective domains. Before discussing the unique characteristics and impacts of China’s Smithian growth, Arrighi examines the cyclical rise and fall of Western powers, spanning from Italian city-states like Genoa to the Dutch, British, and ultimately, the American cycles of accumulation. He references the “Four-Cycle Thesis,” which outlines the extended trajectory of Western capitalist development throughout the long 20th century. Arrighi argues that Western capitalist dominance is built on endless capital accumulation fueled by the interplay of industry, militarism, and territorialism. However, this hegemony is now in decline. The United States, in its bid to maintain its position as the world’s leading economic power, has faced imminent threats like the “Signal Crisis” and “Terminal Crisis,” both of which undermine its ambitions. These crises stem both from the intrinsic mechanisms of capitalist production and from government mismanagement of the economy.
The book illustrates how the U.S. and other capitalist nations grapple with a “Double Squeeze” on profitability caused by horizontal competition among capitalists and vertical competition between workers and capitalists.
The welfare strategies that succeeded during the Cold War have faltered in the 21st century within the framework of the “War on Terror.” The catastrophic response of the George Bush administration to the 9/11 attacks, for instance, led to a “Signal Crisis” of hegemony. Financial expansion driven by adverse economic, political, and social outcomes has further destabilized the existing order.
Arrighi discusses the declining hegemony of the United States and highlights the weakening of the dollar’s position in the global economy, which could symbolically and practically signal the erosion of American power. He argues that this reflects the failure of neoconservative imperialist projects, paving the way for China’s emergence as the new global center of power.
Focusing on China’s “Peaceful Ascent,” Arrighi examines the structural and geopolitical factors enabling it to become a superpower. He points out how the 2003 Iraq War significantly weakened the U.S. economically, politically, and militarily, allowing China to emerge as the primary beneficiary of the conflict.
Beyond external factors, The Smithian model of growth in China, coupled with its astute foreign policies, supported by its economic and financial power, has propelled it to the forefront of the global economy. This shift has profound implications not only for China but for the entire world. The author believes China is prepared to lead the emergence of “a civilizational commonwealth that genuinely respects cultural differences.” This is because its vast population and limited natural resources prevent it from following the path of dominance and high living standards pursued by the United States and other global powers.
Throughout his presented narratives, Arrighi meticulously addresses each detail, striving to use appropriate references. However, critiques of his analysis remain. It should be noted that financialization acts as a double-edged sword for capitalism. On the one hand, it provides a temporary solution to issues surrounding capital overaccumulation and production, granting the United States and other countries the approach time to benefit from the intellectual and physical labor innovations of other nations. On the other hand, it weakens the productive aspect of the economy and exacerbates the inherent instability of the capitalist system. Nevertheless, Arrighi seems more focused on the negative effects of this evaluation. Consequently, he argues that the foreign borrowing and rising debt of the United States—partly due to the economic costs of the Iraq war—were unnecessary and harmed its economy, weakening its currency.
Arrighi also suggests that East Asian countries might withdraw their support for North American dominance by ceasing to use their balance-of-payments surplus to finance the U.S. current account deficit. Doing so could open multiple opportunities for other economies. However, it is important to note that unless these countries transition to a growth model based on domestic demand, they will continue financing the U.S. trade deficit to meet foreign demand, as it remains profitable and ensures their survival in global economic trends. In other words, dumping U.S. assets is not in the interest of these countries, which have accumulated significant dollar reserves.
In the preface, Arrighi acknowledges that the decline of U.S. hegemony does not immediately lead to the collapse of the dollar’s dominance. The inertia and rigidity of reserve currency transitions, coupled with a lack of viable alternatives, make this process difficult. For example, the European Union’s reluctance to promote the euro as a global currency and Japan’s current account deficit and liquidity issues make these currencies unsuitable as reserve options.
If East Asian countries stop “lending” their surpluses to finance the U.S. trade deficit, the United States will lose its import capacity, which could eventually lead to the decline of Southeast Asia’s overall productive, export, and economic power. Until these countries find alternative export destinations or are willing to forgo their trade surpluses, they have little choice but to continue financing U.S. imports.
The idea of “the decline of the West and the rise of the East” is not new, but Arrighi elevates the argument to a more complex analytical level. However, it remains unclear why China, instead of India, Germany, the European Union, or any other competitor, should become the global center of power. Arrighi emphasizes that China was the real beneficiary of the U.S. war in Iraq, but he does not fully explain how China emerged victorious.
If the United States’ entanglement in Iraq provided China with breathing space, it implies that without this engagement, China might have been targeted, or any country competing with the U.S. could be considered a “real winner.” Thus, additional explanations and data are needed to clarify why China specifically benefited from this situation and how these advantages uniquely positioned it to ascend to the top.
From this point, Arrighi proceeds to the next stage of China’s growth. He argues that China’s development is market-based and characterized by social division of labor, expanded education, prioritization of capitalist interests over national interests, and active encouragement of competition among capitalists. This clearly contrasts with the Marxist concept of capitalist development, where the state typically acts in favor of the bourgeoisie, separates the means of production from direct producers, and shifts competitive pressures from capitalists to workers.
However, Arrighi’s thoughts remain ambiguous regarding two important questions: Does market reform, especially privatization, lead to the formation of a capitalist class? And if a capitalist class exists, does it dominate China’s economy and society? His reluctance to provide answers laden with negative implications or critical perspectives undermines his arguments.
China’s situation may be so complex that it defies categorization as either socialist or capitalist. Nonetheless, Arrighi’s analysis of China reveals a series of contradictions and overlooked dimensions. On one hand, he describes China’s growth as “accumulation without dispossession.” On the other hand, he also acknowledges rising social unrest due to various injustices and exploitative practices. Destructive competition among businesses and investors, which the author occasionally overemphasizes, is presented as a positive consequence of capitalist competition. In fact, Arrighi views this mechanism as a government strategy aimed at reducing profit rates to near zero. Furthermore, while praising China’s effective bargaining with foreign investors, Arrighi downplays the impact of foreign capital, even though considerable evidence contradicts this view. He dismisses claims by specialists about China’s acceptance of neoliberalism and seems to ignore some critical studies of China’s economy. It is fair to expect Arrighi to have adopted a broader perspective and incorporated more diverse viewpoints.
Despite its ups and downs and the criticisms it faces, Arrighi’s book is undoubtedly a masterpiece that scrutinizes the evolution of the global capitalist system and contemporary international relations. Its depth, breadth, and precision in historical narratives not only illuminate how the current system operates but also offer insights that sketch a plausible near future. This book has provoked extensive discussions and debates and, despite being published 17 years ago, seems poised to remain enlightening and inspiring for specialists for many years to come.
