Section II: IIThesis

The first of the two reaches, the AI build-out, is a speculative bubble of capital expansion at colossal scale. It is “fictitious,” because the valuations and the expenditures cannot be validated by actual profits, and the build-out itself, if successful, is also promising to in essence abolish the very concept of “profits.”

The second, the Iran War punitive expedition, is publicly and observably failing against an Iranian deterrent that has been pre-positioned for decades. US military “dominance” can degrade but now no longer break this state at proportionate and reasonable cost, with the entire rest of the world aware, watching closely, and taking notes for themselves.

Both projects for hegemonic victory are tied up in a requirement of the continuance of the system of the “global petrodollar” to succeed, and both projects are destroying said system.

This destruction is creating a terminal systemic cascade which is now growing both for the United States, possibly for global capitalism as we’ve known it for at least the past 100 years, and also so-called “Western Hegemony” writ large that has itself lasted for 500 years.

These are grandiose claims which go against the consensus reading in the popular scholarship of both liberal and Marxist schools of thought in two main ways:

The current crisis for the US, capitalism, and “western dominance” is not another recurring crisis nor in a phase that conventional economic, diplomatic or military toolkits can address. The recovery mechanisms and technological or economic advantages that worked to recover these institutions in prior crises have been hollowed out and rendered ineffective by cumulative damage caused by prior “treatments” themselves. The political legitimacy and authority required to continually authorize damaging rescues itself has been spent down through the same 50, 100 and 500 years that produced this doddering architecture now finding itself in the position of potentially terminal crisis.

The People’s Republic of China, on the other hand, is constructing an alternative global economic and governance architecture on an actually semi-socialist basis, potentially not even fully consciously. This does not represent another iteration of the capitalist hegemonic transition, nor the “trapped” endless-transition-to-socialism trajectory the Soviet experience itself exhausted. This means China is not simply a “state capitalism” in disguise nor the next bureaucratic ossification of socialism, but a project that has spent the years since 1949, both by design and by drift, building productive forces and economic weaponry required for explicitly socialist construction. It has largely completed the first task, the building of the productive forces under its primary-stage doctrine, and is attempting the second, its phase two, which this work calls consolidation: capital subordinated, the social wage raised, and a general economic-diplomatic offensive. Through these actions, it is laying the groundwork for global social-economic transformation, without that transformation needing to come at the point of a Chinese bayonet.

The incumbent hegemon’s architecture that is unraveling is doing so due to a fundamental law of profit which holds everywhere commodities are produced for exchange with private ownership of the means of production. China also has this issue, and yet, it is far better equipped to weather this transition away from the blindness of profit-seeking. The formation that next inherits the world is likely the one that does not require a profit-based system to reproduce itself.

History is littered with fools making exactly such failed proclamations of exact dates of the final crisis of capitalism, and incorrectly crowning who and what the successor will be. The Soviet case was exactly nearly 100 years of such behavior.

Regardless, I willingly join their ranks, and attempt to evidence these arguments in the following work.

These readings are asymmetric in evidentiary weight: the existing US-led global architecture being in a terminal cascade rests on directly observable empirical material: capital expenditure, depreciation schedules, household balance sheets, chokepoint flows, sovereign-debt mechanics. The arguments regarding the People’s Republic of China rests on more contested ground: historical-institutional comparisons, doctrinal interpretations, and judgments about development trajectories that haven’t yet been fully completed.

The ranks of such brilliant fools have a senior member whose framework this work borrows heavily from and owes much to. Giovanni Arrighi, the world-systems historian who traced the development of capitalism as a 500-year sequence of hegemonic transition cycles in his work The Long Twentieth Century. He spent his last two decades of life investigating whether the US hegemonic cycle could be the final one for capitalism, and he dated the onset of its crisis before he died: just as Vietnam had precipitated a signal crisis of American hegemony, he wrote in Adam Smith in Beijing (2007) that the difficulties in Iraq would in retrospect be seen as having precipitated a terminal crisis for US empire.

A “signal crisis,” in his terms, is the point at which a hegemon’s capital is forced from production to finance, and the subsequent terminal crisis is the point at which such a turn can no longer be reversed. A posthumous assessment with Beverly Silver, his closest collaborator, read the 2008 meltdown as confirmation, “one of the latest indicators” that the end of the long twentieth century had arrived.⁶ My argument here takes this dating, terminal onset at Iraq and confirmation in 2008, and dates a completion to the current chokepoint wars and to the financial crash it forecasts from them; an attempt to score his prediction against contemporary events, 19 years later.

There are two important errors that we must clear first which color most popular misunderstandings of the present moment, and terminal systemic changes more generally.

The first error is treating the end of an existing hegemon as a specific event with a single date attached that is findable-in-advance. It is instead always a process that has been underway for decades, accelerating in moments of crisis. The consequences of the 30 Years War weren’t immediately visible to all participants at the moment of the Defenestration of Prague. The 1914-1945 hegemonic transition did not suddenly happen on the day Princip shot the Archduke of Austria. It too ran approximately 30 years, coming out of the first era of “globalization” and through the First World War, the Russian Revolution, global depression, the Manchurian invasion, the Spanish Civil War, the Anschluss, the Nazi-Soviet pact, Operation Barbarossa, US-British bases-for-destroyers, the Pacific war, the Holocaust, the Soviet entry against Japan, and the dropping of the atomic bomb. None of those events alone was the single moment of hegemonic transition, rather it was the entire sequence over the full series.

The second error is treating a visible symptom as a central one for “terminality.” In our case, an AI economic bubble alone is not the cause of a terminal cascade. The Hormuz crisis alone is not the cause. The “K-shaped” economy and consumer collapse alone is not the cause. These are individual elements of a larger underlying structural condition I am attempting to highlight.

I will use three historical transitions as case studies, and evidence and identify elements that recurred in them to compare with the present crisis. I will use analysis of current events to test what is recurring from prior transitions.

Whatever you think of him, Mao in 1937 wrote On Contradiction which established the principle that in any complex system at any historical moment, multiple contradictions are simultaneously in motion, but a single contradiction is at least principal among the others. He argued that such a “principal contradiction” determines and influences the development of the others. In my view, the “principal contradiction” in the current world system is exactly the transition from the US hegemonic system to a new productive base and system of international governance growing in China. Sub-contradictions in finance, in energy, in technology, in wars, in political articulation and in institutional decay are subordinate to this principal one, and find their motion within it. Treating them as independent, separable crises produces analytical paralysis because each crisis is incomplete as an isolated problem when they are each actually expressions of the same structural transformation.

Every Marxist dating of this system’s end has been early, Marx’s and Engels’s in 1848 and Plekhanov’s half a century later, and the founders said so themselves. This work’s claim is that the reasons they were early, the room the system still had for its productive forces and the old regime’s habit of outliving its base, are both running out: the room is spent, and the regime that has outlived its base is meeting the kind of crucible such regimes end in.