Section III: IIIHistorical Echoes

The reaches are themselves different types of evidence for the argument. Financialization is a core, repeated pattern: the incumbent hegemons each made it in their last decades, and each time financialization ended up hollowing the incumbent and inadvertently building the successor.

Financial expansion itself is a simulation of a productive expansion. When the returns on production fall in the hegemon’s own economic base, capital withdraws from trade and manufacture into lending, and the lending essentially flows to whatever or whomever is expanding and profitable, which typically ends up being the successor itself.

In the first transition, the financialization feeding a successor was notably indirect. The Genoese/Spanish did not lend primarily to the growing successor of the Dutch. They instead financed the Spanish crown’s wars and expansions, took the silver of the Americas as interest, and the Genoese were defaulted on four times in 40 years. Money reached the Dutch anyway, as the pay the Habsburg Army of Flanders spent in the Dutch provinces it was fighting in, as the grain and naval stores the Dutch sold to both sides, as the merchants that left Antwerp, Belgium for Amsterdam when Antwerp fell in 1585, and as the silver that finally settled in the Bank of Amsterdam. The financier fed an incumbent’s war, and the war itself fed the successor.⁷

Dutch capital, once Amsterdam’s trade had finally stopped growing, then bought British debt through the 18th century and provided significant funding for the industrial expansion that made London the next large developmental center. Again, once British industry had stopped growing relative to American and German rivals, British capital poured into the American railroads and financed the American century. The City of London lived on the interest until the conflagration of 1914 forced it to sell its imperial portfolio to pay for the first “Great War” against the German rivals.

In more modern transitions, the financialization fed the successor directly: Amsterdam bought London’s debt and London built America’s railroads. The Chinese-American case acts as its present tense, and this is why the historical background we will explore next in detail is directly relevant.

The reach for economic chokepoints and trading straits is a longer “Western hegemony” bookend to these transitions: Hormuz and the Americas are arguably where “Western global centrality” opened in the early 1500s. The Suez Canal chokepoint itself is where the last hegemon’s empire broke for all time in 1956, and the Hormuz Strait is where the current incumbent’s empire is breaking now.

Read without historical background, the strikes on Iran seem like just another war, and the AI capital expenditures are just another railroad or dot-com boom-and-bust investment cycle. The failure of each is a correction or policy error awaiting a better policy.

Read with the history, the echoes become so clear and loud as to be deafening. They also represent a test. The earlier transitions show a leading power losing its foundations while capitalism reorganized around its successor. We can explain how American hegemony ends without yet explaining why Western primacy or capitalism must end with it, and the present has to show what now prevents another renewal of each thing.

Let us first return to a thorough review of the historical transitions, to train your eyes and ears for the historical echoes, before we examine the evidence in the modern day for whether or not US hegemony, capitalism as we know it, and Western centrality are collectively or individually ending.