The Myth of the Crisis of Hegemony and the Rise of US Global Power

1. Introduction

According to its etymological roots, the word “crisis” denotes a decisive turning point, a rupture in continuity or routine that could possibly lead to a transformation process or generate a state of disequilibrium capable of reconfiguring existing relationships (Stevenson and Lindberg 2010: 414). ¹ In socioeconomic terms, the word “crisis” typically serves to highlight two types of interrelated phenomena: (1) disruptions in the rhythm of economic activity that precipitate stagnation or depression, and (2) the intensification of geopolitical tensions stemming from conflicting antagonistic interests (Rutherford 2002: 146; Bobbio et al. 1998: 303–5).

The 1970s emerged as a particularly fertile period for critical engagements with the concept of “crisis,” a conceptual framework widely employed to scrutinize, analyze, and evaluate the distinctive socioeconomic formations observed during a certain era or period. After approximately twenty-five years of high economic growth, the world economy experienced serious macroeconomic and geopolitical disturbances during the 1970s. The average world growth rate, which was approximately 5 percent per year between 1950 and 1973, fell to around 3 percent per year in the following twenty-five years—2.1 percent per year in Western Europe. The inflation rate, which remained below 3 percent in the United States and major Western European countries in 1967 (England, France, Germany, and Italy), surpassed the double-digit mark in 1979. The average unemployment rate, which in the 1950s and 1960s remained below 2.5 percent in Western Europe and 5 percent in the United States, exceeded double digits in several European countries and was very close to 7 percent in the United States during the 1970s (Maddison 2001: 126; Cairncross and Cairncross 1992: 33, 160).

The accumulation crisis and the related instabilities of key economic variables—price, exchange rate, interest rates, profits, and wages—were directly associated, by much of the literature, with the hegemonic crisis of the global economic stabilizer: the United States of America. As we see, among the arguments raised by traditional literature in defense of this hypothesis, the following stand out: the high economic growth of Japan and Western European countries, their greater participation in exports and world gross domestic product (GDP), the speculative attacks against the dollar, and the intensification of what became known as the Second Cold War. ²

This essay challenges the notion that there was a period in which US global power entered into a crisis—in the sense of an imminent breakdown of the structural framework established in the immediate postwar period and solidified during the 1970s crisis. In addition, we contend that this crisis represented one of the multiple manifestations of the United States consolidating global power—characterized by the strengthening of its structural power in (1) the world monetary system, (2) financial markets, (3) technological dominance, (4) cultural influence, and (5) military supremacy. Put differently, although the crisis of the period arose from the contradictions between the economic constraints of nation-states and the rise of a transnational order, the pattern of multilateral and selectively liberal integration underlying this new order rested upon US structural power. To this end, we analyze the political, economic, and military strategies involved in the construction of US hegemony in the postwar period, as well as its consequences from the 1970s onward. We do not, however, undertake an analysis of the contradictions of this global power, but instead concentrates on its genesis and its constitutive characteristics.

In methodological terms, this study adopted a historical-analytical approach. It sought to develop a synthesis of authors from the fields of International Relations, International Political Economy, and contemporary heterodox political economy. We privileged works that placed the United States at the center of the analytical framework for understanding the international order that emerged after World War II, as well as authors who examined the characteristics of structural power at the level of interstate relations and those who described the qualitative transformations of the capitalist mode of production throughout the second half of the twentieth century. Among the principal references, we highlight Lens (1971), Block (1983), Hudson (2003), Moffit (1984), Holsti (1991), Kolko (1972), Magdoff (1969), Barnet and Muller (1974), Fatemi and Williams (1975), Furtado (1990), Fernandes (1973), Mészáros (2002), Panitch and Gindin (2012), Strange (1987), and Wood (2005).

The concept of hegemony employed herein posits that a state possesses the capacity to organize the international order—encompassing economic, political, and security dimensions—in a manner conducive to its own interests (Gilpin 1987; Mearsheimer 2001; Krasner 1985) ³ . This definition aligns with Strange’s (1987) conceptualization of structural power and Panitch and Gindin’s (2012) notion of global power. ⁴ In this sense, hegemony is fundamentally defined by a nation’s ability to impose its terms and conditions upon others, regardless of their consent. Regarding the United States, this imposition was manifested—at least until the end of the twentieth century—through the enforcement of the unbacked dollar upon the rest of the world, the centrality of its financial system, and the economic, technological, and cultural power of its corporations. Furthermore, it was characterized by the imposition of liberalizing reforms, the ideology of the minimal state, its formidable military potential, and the capacity to intervene in and neutralize global threats and adversarial leadership. ⁵

In the first section of this study, we critically examine the debate surrounding the crisis of hegemony, highlighting the limitations inherent in the predominant approaches to the topic. The second section explores the relationship between US foreign policy and the initial stages of its global power formation. In the third section, we challenge the notion of a hegemonic crisis by linking the consolidation of US global power to the rise of economic transnationalization ⁶ and the weakening of nation-states. Finally, in our concluding remarks, we summarize the central arguments developed throughout this article.

2. Criticism of the Debate

The theory of hegemonic stability stands as one of the most significant contributions to twentieth-century international political economy. As an analytical framework, it provides deeper insight into the functioning of international and geopolitical relations. Key scholars, including Kindleberger (2013), Arrighi (1994), Cox (1981), and Gilpin (1987), systematically developed this paradigm, demonstrating hegemony’s central role in shaping the international economic order through its dual impacts on geopolitical stability and economic growth.

Although the term “hegemony” admits multiple interpretations, the aforementioned scholars converge on two fundamental components. First, a hegemonic state possesses sufficient power to safeguard its geopolitical and economic endeavors from external threats. Second, to a certain extent and degree, this hegemonic project incorporates the socioeconomic objectives and foreign policy aims of subordinate states (Arrighi 1994; Gilpin 1987; Fiori 2005). ⁷

From an economic standpoint, the hegemonic state plays a fundamental role in developing the international monetary and financial systems required to sustain global trade and capital flows. Functioning as both world banker and spender of last resort, the hegemonic state performs two critical functions: (1) generating liquidity through international capital flows and (2) creating autonomous global spend, thereby stimulating production and international trade through external deficits (Kindleberger 2013; Minsky 2008).

Historical observations of international economic relations from the nineteenth century until the last quarter of the twentieth century substantiate this theoretical perspective. Between 1830 and 1870, Britain exercised an indisputable hegemonic leadership in global economic dynamics. Similarly, from the late 1940s to 1975, US foreign investments, loans, financial aid programs, and military expenditures proved equally transformative. These hegemonic periods coincided with unprecedented growth rates in both GDP and international trade within modern capitalism’s trajectory (Maddison 2001).

If economic growth and geopolitical stability during these periods were associated with the existence of a “hegemon,” the crises observed in subsequent periods—for example, between the Great Depression of the nineteenth century and the great wars of the twentieth century, as well as during the 1970s—were linked to its decline.

The correlation between systemic economic crisis and hegemonic decline features prominently in analyses of the 1970s crisis. The overarching narrative posits that the period’s economic and geopolitical instabilities stemmed from two interrelated developments: (1) the economic ascent of advanced capitalist countries—particularly Western Europe and Japan—and (2) the relative decline of US economic dominance.

This dynamic operated through two main mechanisms. First, the rapid economic growth of these nations and their consequent expanding share in global trade exports (via catching up) diminished the relative weight of the US economy in the world. Second, the costs of unilaterally upholding the capitalist world order progressively eroded the capacity of the United States to maintain systemic cohesion.

For scholars such as Glyn et al. (1990), Epstein and Schor (1990), Boltho (1982), Hobsbawm (1994), Tavares (1985), Mazzucchieli (2011), Armstrong et al. (1991), Van der Wee (1986), Gilpin (1975), Mandel (1982), Mattick (2009), and Kidron (1971), the intensification of intercapitalist competition was the direct outcome of this antagonism. In Hobsbawm’s (1994) words, between 1950 and 1975, the United States:

grew more slowly than any other country except Britain. . . . In fact, for the United States, this [the “Golden Age”] was, economically and technologically, a period of relative backwardness rather than progress. The gap between them and other countries, measured in output per man hour, narrowed. While in 1950 they enjoyed a per capita national wealth twice that of France and Germany, over five times that of Japan, and at least 50 percent higher than Britain’s, other states were catching up rapidly—and continued to do so through the 1970s and 1980s. (Hobsbawm 1994: 254) ⁸

The cataclysmic approach is evident in Marxist interpretations. Kidron (1971: 52) had argued that “oligopolistic competition among entire economies is an alarming prospect, especially as a growing number of them are armed with nuclear weapons.” In Mattick’s (2009) terms:

European expansion is inextricably linked to the world market; the continuation of its profitability depends on successful penetration of both North American and non-North American markets. European capital must compete with American capital and with the Eastern power bloc, whose very existence places new limits on the external expansion of both European and American capitalism. With growing competition from Europe and the East, the exceptional position of the United States during the first half of the twentieth century appears to be reaching its end. (Mattick 2009: 133)

The consequence would be the collapse of the international monetary and financial system—which amplified the 1970s global crisis—given its dependence on hegemonic power. A significant portion of these authors attributed the weakening of US power—and the ensuing Bretton Woods crisis—to the burden of managing the international order. These scholars posited a direct link between the need for external deficits, excess international liquidity, speculative capital flows, monetary and exchange rate instabilities, the flight from the dollar, and the crisis of US hegemony. The following illustrate this relationship:

In our view the system was flawed for more fundamental reasons, namely the decline in US dominance due to the uneven development of the productive potential, and hence, the economic and political power of the leading industrial countries. (Glyn et al. 1990: 102)

The second structural change involved the erosion of US hegemony and the subsequent collapse of Bretton Woods fixed exchange rate. . . . In most countries, the freedom of flexible rates was undermined by a high level of speculation international capital flows, which drove depreciation currencies into a vicious cycle of depreciation and inflation. (Epstein and Schor 1990: 140)

The current monetary crisis consists in the fact that the influence of all mechanisms that controlled the long postwar boom necessarily increased the difficulties of selling and valorizing capital in domestic markets, hence intensifying international rivalry. . . . The insecurity of the capitalist economy today expresses itself in heightened international competition, which in turn corresponds to the relative decline of United States preponderance. (Mandel 1982: 327)

The dollar crisis would represent the climax of the hegemonic crisis. Speculative attacks, capital flight from the United States, its currency devaluation, the strengthening of other financial centers worldwide, developed nations’ critiques of the “exorbitant privilege,” and negotiations regarding the adoption of an alternative international reserve currency were all perceived as heralding the imminent potential for a rupture in the international economic order (Eichengreen 2011). ⁹ The cataclysmic perspective of this possibility finds its most notable expression in an article by Latin American researcher Tavares (1985). In her words:

By that point, the competing interests at stake had become so visibly contradictory that global tendencies were polycentric, and it seemed impossible for the United States to reassert its hegemony—though it remained the dominant power. . . . In short, the existence of a world economy without a hegemonic core was leading to the disintegration of the postwar order and the decentralization of private and regional interests. (Tavares 1985: 5–6)

The emphasis on US monetary policy in the late 1970s as both crisis response and primary mechanism for hegemonic restoration represents the most analytically robust aspect in most of the aforementioned works. These studies illuminate the interconnected dynamics between (1) interest rate hikes, (2) liquidity contraction, (3) global economic recession, (4) massive capital inflows to Wall Street, (5) the expanding role of US public debt as collateral for dollar-denominated assets, and (6) the synchronous realignment of national economies to American economic policy. This framework demonstrates how the hegemonic crisis was ultimately resolved through the reassertion of US dominance via contractionary monetary policy—a strategy that systematically privileged hegemonic stabilization over global economic welfare (Armstrong et al. 1991; Glyn et al. 1990; Tavares 1985; Mazzucchieli 2011).

While Tavares (1985), Glyn et al. (1990), Armstrong et al. (1991), and Mazzucchieli (2011) convincingly demonstrate how US interest rate hikes triggered the 1979–81 global recession, this characterization of monetary tightening as an instrument of hegemonic reassertion exposes two main challenges. First, if truly comparable economic rivals to the United States had emerged—powerful enough to create an autonomously polycentric global economy—why did aggressively contractionary monetary policy alone suffice to destabilize the world economy? Why, for instance, were there no more assertive countermeasures, such as military threats, economic embargoes, trade retaliations, capital controls, or forced disinvestment? Second, since the “solution” was implemented through formal economic policy channels, can the 1970s crisis truly be considered a decisive crisis of US power—one severe enough to suggest the plausibility of a disruptive systemic alternative?

If these questions remain valid, our task is twofold: first, to expose the gaps, historical oversights, and temporal contradictions embedded in these dominant narratives; and second, to create conceptual space for alternative analyses and interpretations.

3. Foreign Policy and the Making of US Global Power

Contrary to prevailing interpretations, we argue that the systemic accumulation crisis of the 1970s reflected not a weakening of US hegemony but rather the consolidation of its global dominance through the reinforcement of its structural power.

This period witnessed the autonomy of nation-states entering on a collision course with an emerging transnational order, anchored by US interstate power. ¹⁰ This power was exercised through progressive trade integration mediated by the dollar, the global expansion of US multinationals, and the ideological and military diplomacy of the “free world.” These factors were essential to the postwar period, generating relative geopolitical stability, and effective global demand. Yet, while this framework established the conditions for capitalist nations—particularly advanced economies—to pursue autonomous and expansionary economic policies, such growth remained contingent upon the very pillars upholding US structural power.

The persistence of US hegemony through successive challenges stemmed from its postwar stewardship of an international and multilateral order—an order that was progressively integrated yet selectively liberal—anchored by its military supremacy, dollar dominance, and structural advantages such as cultural production, technological leadership, and productive preeminence (Pereira 2018).

Although many scholars argue that the postwar period granted nation-states greater autonomy to pursue expansionist and social distributive policies, it is also true that this era witnessed the gradual universalization of the American way of life ¹¹ —through progressive trade integration mediated by the dollar, the global expansion of US multinationals, and the ideological and military diplomacy of the “free world.”

The trade deficit, defense spending, financial external aids, technology transfer, foreign external investment, global liquidity shortage, dollar diplomacy, “Third World” ¹² attraction to its areas of influence, Soviet Union (USSR) containment strategies, the military-industrial-scientific complex, ¹³ and national security policy aimed at securing strategic natural resources were essential to the world economic growth observed in the postwar period, given that they generated relative geopolitical stability and effective global demand. But while this element generated the parameters for the implementation of autonomous and expansionary economic policy by capitalist countries—especially the advanced—these growths were grounded on the pillars that sustained US structural power.

The postwar period may be considered the beginning of US global power’s construction. Even though the United States was in surplus in external accounts and accumulated roughly three-quarters of all the gold in the world, and its GDP represented the majority stake of the world’s product at the end of World War II, its involvement in economic and geopolitical relationships covered almost exclusively the Americas and Southeast Asia (Lens 1971). Its economy and political structure were relatively independent from the current economic and geopolitical context. Thus, it did not yet possess structural power over interstate relations (Panitch and Gindin 2012: 45–46). ¹⁴

If the United States Congress rejected its country’s participation in global affairs after World War I—most notably by refusing to join the League of Nations ¹⁵ —by the time of World War II, the United States had emerged as the dominant force reshaping the international order. During the 1940s, American foreign policy strategists recognized the necessity of a multilateral system grounded in “free enterprise” to promote the flourishing of the “American system” ¹⁶ (Block 1983: 74; Hudson 2003: 27; United States Department of State, n.d.-a).

The rise of nationalist and anticapitalist movements, the strength of the Soviet Union (USSR), and the imperative need to expand its mode of production beyond national borders were some of the reasons that contributed to its international prominence. However, contrary to arguments portraying US hegemony as benevolent, an analysis of Cold War challenges reveals that US strategies and actions were primarily aimed at constructing an international order aligned with its economic interests and strategic aims. Although the economic costs, the strength of advanced economies, and the geopolitical burden of the “Cold War” might suggest the emergence of a complacent (or condescending) hegemony, a long-run analytical perspective reveals how US foreign policy has been integral to its global power projection (Pereira 2018).

Two interconnected frameworks—economic and national security—can be employed to analyze US foreign policy in the early postwar period. The Bretton Woods system established the dollar as the global reserve currency, positioning the United States at the center of international political and economic governance. As the largest quota holder and primary decision maker within the newly founded Bretton Woods institutions for multilateral finance assistance—the World Bank and the International Monetary Fund (IMF)—the United States wielded substantial international influence. Yet the international payment system became fully operational only in the late 1950s, delayed by postwar currency imbalances, structural economic bottlenecks, limited dollar liquidity, and the initial reluctance of American capital to internationalize (Hudson 2003: 27; Block 1983: 88–91; Moffitt 1984: 23–24).

National security policy was essential to reversing this framework. Its unfolding appeared in an entanglement of geopolitical facts noticed between the last years of World War II and the end of the Korean War. The geopolitical aggravation in the Yalta, Potsdam, and Tehran conferences, the Soviet geographical expansion toward Eastern Europe, the rise of communist organizations in the West, the revolutionary convulsions in Turkey and Greece, the Truman Doctrine and its ideological consequences, the Chinese Revolution, the Soviet success in building the atomic bomb, and the Korean War itself were some striking events at this time.

The direct dealing and hostility against the “communist threat” reached their climax during this war. There was a growing chance of an open war between Americans, Chinese, and Soviets. This context was the driving force behind the changes in US foreign policy since the crisis that led to MacArthur’s resignation. Even though the Marshall Plan ¹⁷ and foreign financial aid had mitigated the crisis in the early postwar period, these measures proved insufficient to generate the liquidity and security required to stimulate international trade and investment.

Direct confrontation against “communism” was superseded by a new strategy known as the “Containment Policy,” thoroughly outlined in a famous document called NSC-68 ¹⁸ that circulated among US staff during the 1950s. Even though the Marshall Plan and foreign financial aid had mitigated the crisis in the early postwar, these measures proved insufficient to generate the liquidity and security required to stimulate international trade and investment. This “containment strategy” anticipated subsequent developments, primarily focused on establishing economic and military barriers to Soviet expansion rather than direct engagement. The recommendations encompassed multiple dimensions, including (1) the projection of US moral and economic power, (2) increased military expenditures, (3) foreign aid programs directed toward lower-income countries, (4) enhanced economic integration between the United States and traditional Western powers through preferential agreements, (5) targeted technology transfers, (6) security guarantees through military and dollar diplomacy, and (7) guaranteed access to natural resources and strategic raw materials for advanced capitalist economies (Pereira 2018: 1149–53; United States National Security Council 1950).

Block (1983) and Hudson (2003) emphasize the centrality of US military spending since the Korean War as a prerequisite for international investment and trade. The resulting external deficit generated ripple effects, destabilizing currency reserves and balance of payments equilibria in Japan and much of Western Europe. Concurrently, the rise of the military-industrial-scientific complex energized both the global and US economies, accelerated technological innovation, and enabled the construction of an unparalleled international security architecture—thereby securing the geopolitical preconditions to US capital internationalization and access to raw materials vital to global economic growth. The conflicts and the international wars—Korea (1950), Lebanon (1985), Cuba (1961), Dominican Republic (1965), and Vietnam (1965)—the financing of coups and authoritarian regimes, the financial assistance and economic and military aid, the dollar diplomacy, the bilateral treaties, and the reciprocal assistance agreements were the fundamental instruments of pressure and negotiation for the integration of “Third World” countries into the economic and geopolitical parameters of the “free world” (Holsti 1991: 271–93; Lens 1971: 496–98, 523; Hudson 2003: 122–263; Kolko 1972: 116–44; Magdoff 1969: 117–18; Block 1983: 234; Schiller and Phillips 1972: 2–9; Perlo 1969: 28–29).

It is observable that the relationship between national security policy—encompassing the military-industrial-scientific complex, military expenditures, military and diplomatic agreements, the construction of military bases worldwide, and foreign policy strategies for securing access to natural resources and raw materials—and international economic strategies—including the activation of the Bretton Woods system through external deficit, policies aimed at reinforcing former powers, the establishment of General Agreement on Tariffs and Trade, the expansion of foreign direct investment since the 1950s, the consolidation of multinational corporations, the internationalization of the banking system in the 1960s, and the diplomatic, economic, and military mechanisms for integrating peripheral nations into the global commercial, monetary, and financial system—constitutes the foundation of US global hegemony (Table 1).

OPEN IN VIEWER

Table 1.

Average Annual Growth Rate of World Exports and US Foreign Direct Investment (percent).

Label	Period	Western Europe	World
Exports	1950–73	8.38	7.88
US FDI	1960–72	10.10	6.12

Source. Maddison (2001: 126), Fatemi and Williams (1975: 61).

As the world economy expanded, its structural incorporation of American norms intensified, spreading US technological standards globally. This consolidation of American corporate dominance and dollar primacy established an integrated, multilateral, and selectively liberal order anchored in US power.

4. Transnationalization and the US Global Power Consolidation

The crisis of the 1970s and the trajectory of US global power are intrinsically linked, constituting facets of the same historical process. Rather than signaling a crisis of hegemony, the 1970s upheaval was systemic in nature, rooted in fundamental transformations in the conditions and patterns of capital accumulation. These shifts encompassed changes in corporate scale, the scope of business operations, and the capacity of nation-states to steer economic growth in alignment with broader social objectives. This period witnessed the interplay of centrifugal forces—driven by transnationalization and the emergence of a Global Shopping Center ¹⁹ —and centripetal ²⁰ forces anchored in the diffusion of the US way of life and the internationalization of its command superstructure ²¹ (Barnet and Muller 1974; Panitch and Gindin 2012: 35). The latter was sustained by the defining parameters of its structural power: currency/finance, production/technology, culture/consumption, and security/military dominance. ²²

The interstate, macroeconomic, and currency instabilities observed during the 1970s constituted visible manifestations of the aforementioned structural transformations. It was not the Bretton Woods crisis per se that destabilized the international economic order, but rather the consolidation of a multilateral, integrated, and selectively liberal economic framework—underpinned by financial and productive internationalization—that ultimately eroded the payments system anchored in fixed exchange rates and capital controls. The delayed adoption of currency convertibility by states, the dollar glut emerging since the 1960s, the establishment of international institutions to supervise the US and global banking systems, and coordinated central bank interventions to stabilize exchange rates (evidenced by the Gold Pool, Roosa Bonds, restricted central bank swaps, and SDRs), alongside persistent capital controls, collectively revealed the inherently contradictory and unstable nature of Bretton Woods. These tensions were further exacerbated by the growing US external deficit, the Triffin Dilemma, ²³ and the expansion of Euromarkets (Block 1983: 204, 244–65; Panitch and Gindin 2012: 123–25; Moffitt 1984: 30–40; Hudson 2003: 298–307).

While the speculative spiral associated with the Euromarkets’ emergence destabilized interest and exchange rates—as well as the capitalist calculation horizons—the internationalization of US corporations during the Golden Age, their banking sector’s globalization since the 1960s, and the dollar’s dominance in financial transactions facilitated the global proliferation of American lifestyle and institutions. This process was underpinned by the worldwide validation and valorization of dollar-denominated wealth. Consequently, we must distinguish between challenges to US hegemony and speculative attacks on dollar parity during the 1970s, rather than conflating them with any purported crisis of hegemony or alleged dollar crisis.

Pereira (2018) provides substantial evidence demonstrating that the 1970s did not represent a weakening of the dollar, but rather its global diffusion and consolidation. This period saw both significant expansion of the Eurodollar market and growth in extraterritorial financing for US private capital. Nonresidents’ holdings of dollar-denominated US corporate stocks and government bonds also increased—both in absolute and relative terms. Foreign assets deposited in US banks grew between 1970 and 1979 (despite a slight decline from 1976 to 1979). The proportion of dollar-denominated assets and liabilities in European banks remained high, with positive real growth. Dollar-denominated loans to developing and socialist countries grew substantially, reinforcing financial-monetary subordination linkages. Structurally, the researcher emphasized that US financial markets—including commercial bank loans/investments and the volume of negotiable government securities—remained larger than the Eurodollar market during this period, as did its stock of foreign investment relative to external liabilities (Pereira 2018: 230–38). ²⁴

The sharp increase in interest rates by the United States in 1979 epitomized, therefore, not a resumption of lost hegemony but a demonstration of power through financial dissuasion, given the monetary instabilities and challenges to its authority. Such measures proved sufficient to bring the world to its knees. The consequences were, in the terms of Panitch and Gindin (2012) and Strange (1987), the consolidation of US global power occurred through reinforcing the defining parameters of its structural dominance at the international level: production, finance, technology, security, and military capability.

The United States consolidated its capacity to generate liquidity, thereby reinforcing its authority to regulate the pace of global credit expansion and contraction. By issuing government bonds, the United States established a dominant role in the international payment system without relying on reserve accumulation. This process institutionalized the US Treasury bill standard, fostering a debt-centric financial hegemony that channeled foreign savings into domestic financial markets—ultimately leading to the “hypertrophy” of Wall Street (Strange 1987: 35; Hudson 2003: 149). ²⁵

The United States maintained its role as both a creator and disseminator of cultural and technological standards through defense expenditures, research and development investments, space program funding, public health spending, and allocations to the military-industrial-scientific complex. The advancement of critical sectors—including semiconductors, nuclear energy, biotechnology, pharmaceuticals, deep-sea mining, microcomputers, telecommunications, factory automation, and data processing—was driven by sustained public investment across these domains (Strange 1987: 570; Panitch and Gindin 2012: 148). ²⁶

The scale of its economy established the domestic market as a primary locus for validating and assessing innovation and its diffusion. With transnational corporations as its core structure, the United States succeeded, through the internationalization of its technological and cultural paradigms, in imposing its lifestyle globally. ²⁷

Its substantial defense expenditures, the development of numerous lethal and mass destruction weapons, and the establishment of hundreds of military bases worldwide reinforced its military supremacy. This enabled the United States to assume a dominant role in global security, extending its institutional superstructure beyond territorial boundaries—encompassing legal and diplomatic frameworks, accountability mechanisms, and regulatory regimes (Wood 2005: 14; Ribas 2001: 45; Furtado 1990: 141; Fernandes 1973: 24). ²⁸

The crisis of the 1970s should not, therefore, be interpreted as a crisis of hegemony per se. From a more structural analytical perspective, this period instead reflects fundamental economic transformations that exposed inherent tensions between economic transnationalization and nation-states’ autonomy. The slow and gradual emergence of the postwar economic order—integrated, multilateral, and selectively liberal—was fundamentally underpinned by the homogenization of infrastructure, technical standards, and cultural norms that facilitated global economic integration and transnationalization processes.

The accelerated capital concentration and centralization processes characteristic of the Golden Age enhanced both economies of scale and productive internationalization, effectively transforming major corporations into primary managers and organizers of global material production. This comprehensive integration across trade, institutional, technological, and cultural dimensions facilitated what Barnet and Muller (1974: 33) conceptualized as the “Global Shopping Center—a system of global goods and resource markets operating continuously through transnational corporate mediation,” constituting what they described as “a bond that transcends race, geography, and traditions.”

The consequences were the weakening of nation-states as national economy systems and political-administrative territories with autonomy, capable to mediate means and ends (Furtado 1990). At the entrepreneur decision level, private rationality and the projections of capitalist calculus transcend the horizon of national planning, given costs, prices, management methods, and the bind to global oligopolist competition. At the state decision level, financialization ²⁹ and speculative flows reduced the capacities of central banks to establish active monetary policies without destabilizing the currency—generating inflation and exchange problems. The spatial mobility of corporations and capital flows challenged social and progressive tax policies, as well as expansionary policies, characterized, in the short run, by the rise in public debt. Lastly, trade integration and the reduction of trade barriers contributed to elevate the import coefficient and, thus, the external constraint to growth, subordinating the domestic market to the constant rise of exports (Furtado 1990: 36–37; Fatemi and Williams 1975: 60).

Two contradictory elements characterized US structural power within the framework of globalization. On one hand, economic transnationalization—supported by its structural power and the internationalization of its institutional superstructure (political, legal, cultural, and diplomatic)—created a system of domination where direct action (military intervention) was replaced, according to Wood (2005), by subtle mechanisms of coercion and exclusion. These operate through the imposition of new laws and institutional rules, structural reforms, diplomatic pressures, capital flight, and economic sanctions. Its power rests not necessarily on the absence of challenges to the established order by countries subordinate to the “empire of capital,” but rather on the extreme difficulty of surviving outside it (Wood 2005: 132; Pereira 2018: 246).

On the other hand, the internationalization of the US superstructure neither abolished the system of interstate competition nor pacified the contradictory, self-expansive, totalizing, and inexorable nature of capital. In the absence of a supranational state capable of guaranteeing a fully integrated geopolitical and economic system, transnational capital assumed, in Mészáros’s (2002) terms, an unrestrainable and inescapable nature. The transnationalization of capital has engendered a structural dissonance between political and economic systems within this mode of production.

This tension has precipitated the disintegration of historically synchronized relationships: between capital’s production and its control, between wealth generation and consumption patterns, and between productive processes and value circulation mechanisms. More precisely, while transnationalization structurally strengthened the United States within the interstate competition system, it simultaneously engendered a form of global capital devoid of adequate command unity and regulatory frameworks—fundamentally incapable of regulating and synchronizing its contradictory, inexorable, and self-expansive dynamics.

The consolidation of US global power since the late twentieth century has been achieved through a global economic structure whose inherent logic and operational dynamics—shaped by geopolitical and institutional constraints—drove limitless expansion while systematically eroding its own social and environmental foundations of reproduction. While the centripetal force of American structural power has contained the centrifugal tendencies of transnational capital, preventing immediate systemic collapse, it fails to avert the prolonged social march toward dystopian economic and environmental scenarios.

5. Final Remarks

One of the most fundamental questions in economic history concerns the problem of periodization. The analytical challenge stems from historical processes that simultaneously embody elements of rupture and continuity. Traditional narratives of the postwar era posit two distinct periods: (1) the “Golden Age” of capitalism, and (2) the subsequent neoliberalism/globalization phase. Similarly, conventional scholarship on US hegemony identifies three phases: (1) a period of benign (or indulgent) hegemony leadership extending through the 1970s, (2) the crisis of hegemony during that decade, and (3) the subsequent reconstitution of hegemony in unilateral form. However, a comprehensive examination of US foreign policy—both economic and geopolitical—since the postwar period, particularly the global repercussions of the 1979 Volcker shock, reveals fundamental contradictions inherent in this narrative.

During the Golden Age, economic growth and national sovereignty emerged through the gradual construction of transnational economic linkages that progressively anchored the world economy to US economic and national security structures. This process manifested through: (1) the dollar dominance in international payment systems, (2) selectively liberal and multilateral trade integration, (3) the global expansion of US corporations, (4) the worldwide dissemination of American consumer culture (way of life), (5) military-strategic supremacy, and (6) diplomatic-economic assurances for access to strategic resources.

Economic transnationalization and the consequent weakening of nation-states represent processes whose origins trace back to the foundations of the postwar international economic order. By tethering global economic expansion to its technological, productive, monetary, financial, and cultural networks, the United States progressively reinforced its structural position within the interstate system, as transnational integration advanced. While the 1970s crisis appeared to manifest through challenges to US hegemony and dollar speculation, the period’s more profound and enduring transformations in socioeconomic and interstate relations ultimately revealed an opposite dynamic—the consolidation of American structural power.

Not every international economic crisis constitutes a hegemonic crisis, just as not every hegemonic assertion ensures global stability and growth. Transformations in capital’s social, geographical, technological, and institutional foundations can generate equally disruptive shifts in the international order. The consolidation of US global power and the transnationalization of capital represent interrelated yet contradictory phenomena. The contemporary crisis of globalization—manifested in socioeconomic and socio-environmental dimensions—stems in part from the inability of America’s centripetal governance to restrain the centrifugal, expansionary logic of capital accumulation.

Supplemental Material