Marcelo Milan I

Giovanni Arrighi (1999) advances another argument that explains the decline
of the dollar and of the U .S. economy. In his interpretation, history suggests the
existence of systemic cycles of accumulation, where national states take a leadership
role in conducting the global economy from a hegemonic center. The cycle has an
ascending stage characterized by the expansion of production and a declining stage
where finances become dominant. The cycle explains the succession of hegemonic
powers in the global economy: Netherlands, Great Britain, US and Asia. In other
words, the decline of the U.S. hegemonic cycle, after a period of productive
expansion, would go through a financiai crisis at the same time as a new center arises
in an ascending stage of material expansion of its production. China' s rise as a
dynamic center of the global economy and the challenges to the U.S. dominance
after the 2007 crisis strengthened Arrighi's arguments, even if history does not have lll
a pattern of regular and linear repetition as precise as the one suggested by his z
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interpretation. And the recent Chinese pressure to substitute the dollar as an
international reserve is another aspect to be considered. w
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The impacts on the countries of the South
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The empirical evidence about production and trade patterns suggests that the w
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dynamic center of the world economy seems to be moving increasingly towards Asia,
despite the relative J apanese economic stagnation. The economies of the countries of
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the South are still more dynamic, highlighting the relative stagnation of advanced ~
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countries, even if fmancial instability in the center has had real repercussions in the
periphery. For example, the Brazilian economy shrunk in 2009 and the rhythm of ~
growth in the periphery as a whole has diminished. However, from a geo-strategic
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point of view, Fiori (2008) argues that the crisis will intensify competition between o
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Brazil and the US in South America. Another factor that suggests a relative <
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weakening of the American position is the growing rejection, by many peripheral ClJl!
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countries, of the adjustment programs of the IMF and the W orld Bank. 2

An additional change happened to global capital flows. According to

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Vasudevan (2009a), there were three waves of private capital flows to developing
countries: in the 1960's with the growing of the Euromarkets and the recycling of
petrodollars, until the debt crisis in 1980. The second one happened under the
neoliberal reforms of liheralization and deregulation in the 1990's, until the Asian
crisis in 1997-98, and the third one took place on the period that began in 2002. On
the first two waves, capital flows were compatible with net capital outflows from the

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But unlike what happened in the immediate post-War with respect to debtor countries, primarily
peripheral, a similar adjustment, with contraction and austerity, was not required of the US.

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