Back to the Future

• DOI: https://doi.org/10.13169/jglobfaul.6.1.0003
• Pages: 3-5
• Published date: 01 August 2019
• Date: 01 August 2019

Journal of Global Faultlines, 2019

Vol. 6, No. 1, 3–5.

3

Editorial

Back to the Future

As US President Trump’s trade war with China shows no sign of easing, the bond markets are

sending a clear message that significant sections of the world economy are moving into a

recession, if they are not already in one. Every national economy, whether big or small, seems

to be locked in a perpetually escalating cycle of economic warfare – US sanctions against Iran,

Russia, Turkey, and Venezuela; and US trade wars with China, the EU, Canada, and Mexico.

These acts of economic warfare, reminiscent of the inter-war period, are not only affecting

the countries directly targeted, but indirectly also affect a long list of other countries that

have close economic links with these targeted countries. For instance, Chinese producers buy

iron ore for steel from Australia, Brazil, India, Iran, South Africa, and Ukraine, and bauxite for

aluminium from Australia, Brazil, and the poor West African nation of Guinea. All are being

affected, some very seriously.

“Five of the world’s biggest economies are now at risk of a recession – and the spillover

effect could eventually drag the US economy down, too”, reported CNN on 14 August 2019.

Germany, the world’s fifth largest economy, reported that its economy shrank in the second

quarter. The United Kingdom economy too contracted in the second quarter for the first since

2012. Italy, Brazil, and Mexico all slipped into recession in the second quarter (BBC News,

4 September 2019, https://www.bbc.co.uk/news/business-49578410; CNN Business, 14 August

2019, https://edition.cnn.com/2019/08/14/economy/recession-risk-economies/index.html).

The US’s “aggressive unilateralism”, which first emerged in the 1980s under Reagan,

is now pushed to its limits. Trump is not some bizarre abnormality, but rather the genuine

face of the vital interests of a declining superpower that is prepared to initiate a major crisis

and huge devastation worldwide in order to stop its eventual decline. Trump’s coming to

power itself is but an epiphenomenon of the deeply embedded structural and historical

changes and trends taking place in international political economy and the global system

of power.

“Hegemonic Transition”

All such shifts are the results of an increasingly more volatile and chaotic international situa-

tion, which is the direct consequence of a process that Giovanni Arrighi, drawing from Gramsci,

called hegemonic transition. During that period, systemic chaos is rather unavoidable. The

late twentieth century saw renewed great power rivalry, system-wide financial excesses, and

bursting bubbles centred on the declining superpower, the United States, and the emergence

of new loci of power in Eurasia, in particular China and India. So, the core logic of this shift can

be analysed properly within the context of major global structural changes and re-distribution

of power, which have been affecting the world system for the last 30 years or so.

When the authority of a global superpower is on the wane, this affects the entire

world order and leads to instability. Even though the United States still represents the larg-

est and strongest economic and military power in the world, it is nevertheless struggling

with severe weaknesses resulting from low economic growth and the protracted decline of

its industry. The most important structural transformation that took place in the US-led

global economic system after WWII was a massive crisis in manufacturing manifesting itself

as stagflation. Falling profitability and weakening competitiveness led to the erosion of the