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The Political Economy of Hegemony: The (Surprising) Persistence of American Hegemony

Summary and Keywords

First-generation research in International Political Economy focused considerable attention on the relationship between hegemony and global economic stability. This focus was the result of a confluence of scholarly and policy concerns about the impact that the apparent decline of U.S. hegemony would have on international trade and investment regimes. Interest in this hegemonic stability hypothesis waned, however, as deeper explorations of the theoretical logic indicated that hegemony was not a necessary condition for international economic openness, and as the collapse of the Soviet Union and the consequent “unipolar moment” suggested that American hegemony was hardly in decline.

Interest in hegemony resurfaced in the wake of the 2008 financial crisis. The crisis triggered many scholars to proclaim the end of the era of American global hegemony. Scholars argued that the U.S. government’s attachment to a large budget and trade deficits and the resulting growth of foreign debt were likely to weaken foreign confidence in the dollar and encourage the shift to an alternative reserve currency such as the Euro. At the same time, China’s rapid industrialization and emergence as a large creditor nation was creating a new pole in the international economy that constituted a meaningful alternative to a global economy organized around the United States’ economy. Thus, a shift toward a Beijing hegemony was all but inevitable.

The predicted decline of American hegemony has yet to materialize. The U.S. economy remains the world’s largest, and the U.S. government continues to play the leading role in system making—creating new rules to govern international economic cooperation—and in privilege taking—manipulating these rules in ways that advantage U.S. public and private sector actors. Moreover, the U.S. government plays this role in all three economic subsystems: finance, knowledge, and production. Empirical scholarship conducted over the last decade encourages one to conclude by paraphrasing Mark Twain: Recent reports of the death of American hegemony are premature.

Keywords: hegemony, structural power, international economy, U.S. foreign policy, declinism, empirical international relations theory

Introduction

Hegemony was central to international political economy (IPE) at its founding as an American subfield of international relations. In the United States, IPE emerged from within the broader field of international relations (IR) as a distinct subject during the 1970s. America’s retreat from Vietnam, the collapse of the Bretton Woods System, the oil shock, global stagflation, and rising trade protectionism all seemed to suggest that standard IR theories were unable to account for so much of what was happening in an increasingly interdependent world. Academics and policymakers alike interpreted these events as evidence of a weakening of American power and position in the international system. Concern about America’s hegemonic decline led scholars to examine the likely consequences for global economic stability. As a consequence, the hegemonic stability hypothesis became the most prominent research program in this burgeoning field.

The hegemonic stability hypothesis posited a relationship between the global distribution of power and the openness and stability of international trade, investment, and exchange rates. In a collection of monographs published in the late 1970s and early 1980s, political scientists and economic historians claimed to have identified a relationship between a hegemonic concentration of power and global economy stability. In Kindleberger’s (1976) terms, the world economy was unstable during the 1920s because it lacked a stabilizer—a single state with the power capabilities and political capacity to perform a series of functions that would have supported global economic ties in the face of the stock market crash of 1929. Krasner (1976) presented descriptive statistics that hinted at a correlation between hegemony and world trade openness that dated back to the early 1800s. Robert Gilpin (1981) posited that hegemons rise, establish a global order, and then decline as they become overwhelmed by the costs of system maintenance. Kennedy (1987) advanced a similar hypothesis that he derived from a detailed history of the rise and decline of great powers. This declinist hypothesis rested on the logic of imperial overreach: In the course of extending and defending its preferred international order, a hegemonic power would eventually dissipate its economic and financial strength by spending too much on military power. Economic weakness would force the hegemon to reduce its overseas activities. This work offered an attractive frame for viewing contemporary events—the post-World War II order that the United States had constructed was fragmenting as American hegemony decline—in part from the costs of creating and maintaining the system—and in part from the inevitable catching up of other states.

Scholars began to focus less on hegemony in general and on the hegemonic stability hypothesis in particular in the late 1980s. Attention shifted away for two reasons. First, scholars identified a number of problems with the theoretical logic of the hegemonic stability hypothesis. Duncan Snidal (1985) argued that a hegemon wasn’t necessary to supply the global public goods that stabilized economic cooperation; small sets of states—so-called K groups—could also have the capabilities and the incentives to provide global public goods. John Conybeare (1984) argued that hegemons don’t necessarily have an interest in free trade. Instead, an income-maximizing hegemon will use optimal tariffs to shift terms of trade in its favor. Robert Keohane (1984) argued that the international institutions that a hegemon creates at the height of its power help states sustain cooperation once hegemonic decline sets in. Second, the belief in America’s impending decline dissipated as the Soviet Union collapsed, the Japanese economy struggled to adjust following a massive banking system crisis, and the U.S. economy recovered. By the early 1990s, declinist arguments had given way to a large body of research that explored the implications of the so-called Unipolar Moment.

Interest in hegemony among IPE scholars resurfaced in the wake of the 2008 financial crisis. Some scholarship embraced the declinist thesis of the 1980s to argue that American hegemony was in decline—and this time around it was real. Proponents argued that the economic burden of extended conflict in Afghanistan and Iraq were sapping America’s economic strength, that the global financial crisis was eroding governments’ willingness to hold the dollar as a reserve asset, and that years of unprecedented economic growth would soon enable China (and India) to overtake the United States (Layne, 2009, 2012). Parag Khanna (2008) proclaimed the end of American hegemony, suggesting that the American economy could descend into the second world unless steps were taken to fundamentally adjust the U.S. economic model. Kishore Mahbubani (2008) celebrated the “irresistible shift” of power to Asia. Christopher Layne (2009, 2012) argued that the Great Recession revealed the extent of America’s economic and financial weakness as well as the degree to which power had shifted eastward.

A large body of empirical research produced during the last 10 years contradicts this declinist hypothesis. The remainder of this article presents an overview of this research. I use Susan Strange’s concept of structural power to organize the discussion. This allows me to define hegemony in terms of its impact on global security, finance, knowledge, and production arrangements. I then survey the research that supports the claim that the U.S. economy remains hegemonic and explores the purposes to which American actors—state as well as private actors—have used this power to shape global arrangements in ways that generate substantial and often disproportionate benefits for American actors and interests.

Is the International Economy Still Hegemonic?

One of the more surprising developments in the years since the financial crisis of 2008 is the ability of the American economy to regenerate and retain its status as an international hegemon. Scholars have dedicated substantial resources to an effort to uncover the reasons for America’s endurance as a global hegemon. Many of the scholars who work along these lines rely explicitly on the concept of “structural power” that Susan Strange introduced to IPE about 30 years ago. And even scholars who do not rely on structural power explicitly can be usefully incorporated into this structural power framework. Because this concept is so useful, I organize the discussion around its conceptualization of hegemony.

Strange (1988, p. 25) defined structural power as the capacity “to decide how things shall be done … to shape frameworks within which states relate to one another, relate to people, or relate to corporate enterprises.” Structural power “is the power to shape and determine the structure of the global political economy within which other states, their political institutions, their economic enterprises and (not least) their scientists and other professional people have to operate” (Strange, 1988, pp. 24–25). Strange identified four domains of international politics within which structural power operated: control over security arrangements, control over finance and credit, control over economic production, and control over knowledge creation and diffusion. She argued that “no single domain is always or necessarily more important than the other three. Each is supported, joined to and held up by the other three” (Strange, 1988, p. 26).

A large and growing body of empirical work documents the degree to which the United States retains its hegemonic status across all four domains. American military preponderance and its resulting control of the security domain is clearly evident. In terms of military spending and military forces, the United States stands head and shoulders above its closest rival. The United States spends more than the next 10 largest military powers combined. This spending has created and sustained the capacity to extend American power into the furthest corners of the globe quickly and from a considerable distance. Moreover, the United States has globalized its security umbrella by creating a network of security alliances with states throughout the world. Cranmer, Desmarais, and Menninga (2012) reveal the extent to which the U.S. security network extends the American security umbrella over much of the Northern Hemisphere, from central Europe to East Asia, as well as large segments of the Southern Hemisphere. This network structure is apparent as early as 1956 and although the network of alliances becomes denser over the next 60 years, the density further accentuates the asymmetry already apparent. Thus, in spite of substantial discussion among academics and policymakers about the need for retrenchment in the wake of the wars in Iraq and Afghanistan and the financial crisis, one sees little evidence of significant decline in American control over global security arrangements.

The American economy continues to dominate the three economic domains as well. In the financial domain, many scholars questioned American hegemony in the immediate wake of the 2008 financial crisis. Jonathan Kirshner (2014) develops the argument in its most persuasive form, arguing that the global financial crisis constitutes an inflection point in the transition away from the U.S.-based international order. But Kirshner was hardly the only scholar to reach this conclusion. Helleiner and Pagliari (2011, p. 175) wrote, “the crisis has coincided with, and reinforced, a diffusion of power in global finance, thus challenging analysts to move beyond their past focus on the United States and the EU as dominant powers.” Otero-Igelsias and Steinberg (2012, 2013) surveyed governments to evaluate whether the dollar was becoming a “negotiated currency,” that is, held as reserves only under pressure by the U.S. government and in exchange for American concessions.

In the ensuing years, however, the United States has consolidated and perhaps even increased its preponderant role in this domain, aided in part by the continuing uncertainty surrounding the Eurozone. Winecoff (2015); and Oatley, Winecoff, Pennock, and Danzman (2013) offer a network analysis of cross-border portfolio investment that strongly highlights the location of the American economy at the center of the global financial system. This analysis demonstrates that the United States continues to host portfolio investment in larger volumes from more foreign economies than any other country in the world, and twice as much as the United Kingdom, the second most central economy in global finance. We also see U.S. preeminence in the role of the dollar as a global reserve currency and its use in private cross-border transactions. Carla Norrlof argues that the dollar retains its preeminent status as a global reserve currency because the U.S. government can “mobilize capabilities through different forms of power” (Norrlof, 2014, p. 1057). In addition, American capital markets (and British markets) continue to dominate international transactions in nine distinct domains ranging from foreign currency exchange to derivatives trading (Fichtner, 2016). Finally, Schwartz (2017) articulates how the United States can exploit its central position in global financial networks to control the creation and distribution of credit worldwide. Overall, therefore, America’s dominant position in global finance is certainly on par with and might even surpass its control over global security.

American actors also continue to dominate the one domain where perhaps we least expect it—production. The traditional approach to economic power focuses on aggregate measures of national production. Starrs (2013) argues that such an approach is increasingly misleading in a deeply interdependent global production network. Rather than comparing national output, Starrs argues that we must examine the ownership of transnational corporations and he provides evidence that U.S. residents continue to increase their control over global production. He reaches this conclusion by calculating ownership shares for 2,000 of the world’s largest firms. He finds that Americans continue to control the global structure of production even if the American economy isn’t any longer the largest producer. In his own words, “American investors are not only the predominant owners of American corporations, but also the largest owners of top European corporations and significant owners of top corporations domiciled in the rest of the world. And as American investors own and thus profit from the world’s top TNCs (whether U.S.-domiciled or not) more than any other nationality, American citizens continue to own the predominant share of the world’s wealth—much more than America’s declining share of world GDP would suggest” (Starrs, 2013, p. 818). Thus, in contrast to the common claim that American economic power has declined, he argues that it has simply globalized. Moreover, he argues that far from facing a challenge from China, the United States has no serious rivals.

Finally, the American economy continues to rank at the very top of global knowledge production. The Global Innovation Report (Dutta, Lanvin, & Wunsch-Vincent, 2016) reports that the United States remains tied for first in the world in export earnings derived from intellectual property (IP), measured as a percent of total trade. Given that the United States is a much larger economy than the other first place nations (Switzerland, Finland, Ireland, Japan, and Sweden), the United States earns more from IP than any other nation, and the gap is large. The United States also scores very high in terms of inputs. It ranks second in research collaboration between industry and universities. It is essentially tied for first place in patent applications per unit of GDP, fifth in the number of researchers employed by business, and scores high on most other measured dimensions as well. And given Starrs’s findings, this national-level data probably underestimates the American position in this domain, as American residents are majority shareholders of foreign firms based in the European and Asian economies that also rank high on measures of knowledge creation. In short, the United States retains a high degree of control over knowledge production via its ownership of the private enterprises at home and abroad that generate innovative products and processes.

Finally, Norrlof inverts the declinist argument and claims that the trade deficit benefits U.S. hegemonic power. The trade deficit allows America to attract foreign capital inflows goods. The capital inflows, in turn, impart substantial autonomy and flexibility to American economic and foreign policy. American officials can delay external adjustment and implement corrective measures when they are convenient rather than in response to market movements or IMF programs. In her own words, “The gain in policy flexibility means it can adjust imbalances using its preferred policy instruments, and that its ‘policy error’ threshold is higher than it is for other countries. Therefore, it can more easily avoid the kind of shock therapy that is normally associated with a consistent pattern of trade deficits and high external liabilities” (Norrlof, 2010, p. 5).

Viewed through the lens of structural power, therefore, the international system continues to be organized by and around American hegemony. The United States continues to supply essential security services to its allies, and the U.S. Navy secures the sea lanes that connect them as well. The global economy remains organized around the U.S. economy; global finance—credit creation as well as financial intermediation and management are even more centered upon the United States today than they were 15 years ago. And in the real economy, American residents control significant shares of multinational corporations across the world and in that capacity generate and distribution is an important share of the world’s new knowledge.

(How) Does Hegemony Matter?

How does American hegemony matter for the global political economy? First-wave hegemonic stability theory emphasized the importance of hegemony as a stabilizer. Some work stressed its willingness to create global public goods. Others focused on its willingness to actively manage global economic developments during times of systemic stress—engaging in counter-cyclical lending, keeping its market open to countries in crisis, and other such actions (Kindleberger, 1976). Research in the second wave of hegemonic theorizing shifts the focus a little bit to explore what Michael Mastanduno (2009) has called the two dimensions of hegemony: system making and privilege taking. In system making, the hegemon creates and changes the global rules that establish common regulatory and governance arrangements. And in arrangements regulating economic and financial activities, specific rules are written to benefit private actors—firms and financial institutions—based in the hegemon’s economy. There is thus an unbreakable tie between international and domestic politics. We might be tempted to call this supplying global public goods, but current scholarship is more skeptical about the stabilizing impact of system building than first-wave research. In privilege taking, actors associated with the hegemon extract private benefits from the system, even at the risk of destabilizing the system. American actions to make the system and privilege from it are evident in all three domains of the global economy.

Finance

In the domain of finance, American policymakers have had a large impact on the creation and evolution of global financial regulations and institutions. Much of the research on this process concentrates on global standards for bank capital reached within the Basel Committee on Banking Supervision (BCBS).

The first wave of research on the Basel Accords adhered to a state-centered perspective and stressed the importance of market size as the source of American bargaining power (Drezner, 2007; Kapstein, 1991; Oatley & Nabors, 1998; Simmons, 2001; Singer, 2004). As such, this work concluded that the first Basle Accord was motivated largely by American concerns about the adequacy of American banks’ capital and fears that imposing more stringent requirements at home would disadvantage U.S. banks globally. The solution was to use the BCBS to internationalize the rules that the United States wanted to apply at home in order to create a level playing field. And while the global outcome reflected the interests of American financial institutions, this work assumed that these private actors played a very limited role in the rule-creating process.

Other work applies this state-centered analytical framework to other dimensions of global finance. Alexander Reisenbichler (2015) examines the development of the Financial Stability Forum in the wake of the 1997 Asian financial crisis. He argues that although the United States and the EU recognized the utility of a new FSF in the wake of the Asian crisis, they disagreed on how it should be organized. The EU proposed a technocratic structure in which international organizations would collect and disseminate information without direct participation of national governments. The United States, in contrast, wanted a more traditional organization controlled by finance ministries. The U.S. position reflected the Clinton administration’s determination to retain control of the ability to create and reshape domestic and global financial regulation rather than cede control of this capacity to unaffiliated technocrats. And in the end, the American position prevailed, and this in turn created a global organization that facilitated the U.S. ability to internationalize American regulatory principles rather than have to adapt American regulation to foreign concerns.

More recent scholarship challenges the state-centric nature of this first-wave research by bringing into much sharper focus the role of non-state actors. Much of this research is not particularly interested in American hegemony per se; instead, this work is more concerned with demonstrating the extent to which private actors have captured global regulatory agencies (see e.g., Tsingou, 2008; Underhill & Zhang, 2008; and Young, 2012, offering a critique). Lall (2011, p. 614), for instance, argues that the revised Basel agreement, known as Basel II, “promotes the interests not of particular countries on the Basel Committee, but of large international banks regardless of their national origin.” Yet, recognition of the importance of private actors—in this case, financial institutions—does not imply that national origin is irrelevant. Given the centrality of American capital markets in the global financial system, the large transnational banks that shape global regulation are either based in or have large subsidiaries based in the United States. Thus, their interests as transnational banks are derived from their activities within the American-centered global financial system. As a result, transnational banks are not an alternative to hegemonic power; they are instead another manifestation of American structural power. This suggests the need for a more synthetic approach based on the recognition that power manifests in ways that are complementary. As Goldbach (2015, p. 1090) summarizes, “scholars increasingly synthesize state-bound and state-transcending factors … From this perspective, the content of global regulatory standards is a function of internationally, transnationally, and nationally rooted politico-economic variables of influence.” Goldbach’s empirical work highlights the ways in which state power and private influence rooted in the United States jointly shaped the Basel Accords.

American actors have extracted benefits from the global financial system in a number of ways. The U.S. government has leveraged America’s control over finance in order to advance its foreign and domestic policy objectives. At home, the U.S. government exploits its structural power in order to relax its budget constraint. Because the dollar is the dominant reserve currency and American capital markets are the largest in the world, the U.S. government is able to borrow from foreign agents in large amounts, at low interest rates, for extended periods. This privilege enables the U.S. government to finance larger budget deficits at a lower cost. And as a result, the United States can delay difficult choices over competing budget priorities. Some scholars have suggested that the U.S. government pressured the Japanese to liberalize their capital markets in the early 1980s in order to allow Japanese capital to flow abroad, where it would allow the Reagan administration to finance its budget deficits without crowding out domestic private investment (Krippner, 2011).

Other recent research asserts that the U.S. government has exploited its financial power to support foreign and national security policy objectives. Oatley (2015) argues that the U.S. borrows from global lenders most heavily during the periods in which it is engaged in conflict. Periodically the United States confronts security shocks—unexpected foreign military challenges to an American interest. And typically, at least since World War II, the United States has reacted to these shocks by increasing its military spending sharply and quickly. The sharp increase following the terrorist attacks of 2001 is the most recent example. Yet, the American political system makes it difficult to adjust other elements of the budget to accommodate these larger military expenditures. And thus the U.S. government pays for these post-shock military buildups with borrowed funds. And because the United States is at the center of global finance, it can attract the foreign funds it needs in large volumes, at low interest rates, for extended periods.

American financial institutions derive private benefits from the global financial arrangements they help shape. The specific gains that accrue to American financial institutions have not received much attention. The theoretical conception of these gains, however, has been called “denomination rents” (Swoboda, 1968). “The average level of profits of the banking system of [the reserve currency country] will tend, other things being equal, to be higher than that of the banking systems of other countries” (Swoboda, 1968, p. 14). In addition, the American financial system appears to operate as a global hedge fund or venture capitalist; it acquires debt from foreign lenders on short term and relatively low interest rates and invests overseas in higher risk assets such as equities and direct investment (Gourinchas & Rey, 2007). As a result, the American financial system as a whole typically earns a surplus in its investment income account in spite of the fact that the value of America’s foreign liabilities is substantially larger than its foreign assets.

Knowledge

The United States also plays the leading role in the creation of global rules to protect proprietary knowledge. The greatest achievements in this domain have come in the context of the General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO) and taken the form of the agreement on Trade-Related Intellectual Property Rights (TRIPS) (see, e.g., Ryan, 1998; Sell, 1998). As Drahos (1995, p. 7) notes, this agreement “is remarkable because one country, the U.S., was able to persuade more than 100 other countries that they, as net importers of technological and cultural information, should pay more” to do so. The magnitude of the expected price shock was substantial. Some estimated that a fully enforced intellectual property rights (IPR) regime in India would increase the price of patented medicines by between 100 and 400% (Chaudhuri, Goldberg, & Jia, 2006). Moreover, the specific rules offer asymmetric protection for IP, obliging states in the Global South to protect Western patents but not allowing them to benefit from traditional indigenous knowledge.

And much as we saw in the financial domain, global IPR rules emerged as a consequence of the interaction between private and public pressure. In the private sphere, Ed Pratt, then the CEO of Pfizer, used his position as the chair of the Advisory Committee on Trade Negotiations (ACTN) to place IP on the trade agenda within the United States. The rationale for doing so was clear—as a pharmaceutical firm, Pfizer was especially vulnerable to piracy. And as the American economy became ever more dependent on intellectual property, the absence of effective protection, particularly in the developing world, was of increasing concern. Susan Sell argues that “These private actors were in a good position in so far as they represented vigorous export industries that enjoyed positive balances … They were able to present their industries as part of the solution to America's trade woes, as opposed to being part of the problem. They successfully argued that foreign pirates, particularly in East Asia and Latin America, were robbing them of hard-earned royalties. They pushed hard for a trade-based approach to IPR protection.”

Pressure from IP-intensive producers resulted in the incorporation of IPRs into the Uruguay Round of negotiations that began in 1986 and eventually to the creation of TRIPS as one of the three pillars of the WTO. TRIPS established minimum standards for IPR protection. In terms of patents, the initial TRIPS agreement created uniform standards of patent protection based largely on the practice of the United States and European Union. This included a minimum of 20 years of protection from the date of filing, created a uniform definition of trademarks, and established global rules for geographic indicators, copyrights, trademarks, trade secrets, and other forms of IP. In addition, and hardly least importantly, the Uruguay Round established the WTO’s dispute settlement mechanism that allowed for cross retaliation in TRIPS-related cases.

In the wake of the Uruguay Round, American policymakers sought to extend the minimum standards enshrined in TRIPS. In doing so, the 2002 Trade Promotion Authority instructed the executive to negotiate TRIPS-Plus standards that “reflect a standard of protection similar to that found in United States law.” TRIPS-Plus elements include stronger protection, extended periods of protection, and reduced flexibilities for developing countries. And because the United States met considerable opposition to TRIPS Plus within the WTO from developing countries, it began to pursue this goal through bilateral and regional free trade agreements. Under the Bush administration, the United States negotiated FTAs with TRIPS-Plus elements with Singapore, Chile, Dominican Republic, Australia, Morocco, Bahrain, Oman, Peru, Colombia, Panama, and Korea. The Obama administration pursued the Trans-Pacific Partnership that would establish a free trade area among 12 nations on both sides of the Pacific in which TRIPS Plus was centrally important.

Production

Production is the third economic domain of structural power. One sees the United States engaged in system making along three dimensions. Two of these dimensions entail the creation of international rules that safeguard private assets. As we saw IP as American firms globalize production. Second, the U.S. government has signed a series of Bilateral Investment Treaties (BITs) in order to secure the physical assets of American transnational corporations. Somewhat surprisingly, IPE scholarship on BITs until quite recently has paid little attention to hegemonic states, focusing instead on how the need to compete for capital imports leads capital importing states to sign BITs as commitment mechanisms. Recent work is beginning to change this emphasis. Todd Allee and Clint Peinhardt (2014), for example, find that BITs with strong enforcement elements are much more likely when one party is a large and powerful capital exporting state. Similarly, Michael Jacobs (2016) finds that transnational corporations from the Global North have been the driving force for the establishment of BITs. Kerner and Lawrence (2011) find that the United States is more likely to sign BITs with foreign hosts of American firms’ physical capital, but not more likely to sign BITs with states that are important to American TNC activity in other ways. Given the dominant position of American firms among TNCs, these findings suggest that the U.S. government has created a global investment protection regime to support the overseas fixed assets of American firms.

And finally, the United States has negotiated a set of multilateral, regional, and bilateral trade agreements that incorporate the states that collectively comprise the global production network. At present, the United States has signed free trade agreements with 20 states and is creating such agreements with Asian and European states as well. And though these agreements are nominally about “free trade,” in many instances they constitute an effort to reinforce the protection of American overseas private assets as well as open foreign markets to American producers and products. The Trans-Pacific Partnership (TPP), for example, in addition to a section on trade in goods, includes sections on IP, investment, regulatory coherence, labor, state-owned enterprises, services, telecommunications, transparency, and corruption. The TPP also creates a dispute settlement mechanism. As is the case for BITs, research on PTAs has tended to focus on the demand for such agreements in emerging market countries and has devoted less energy to examining how these regimes constitute a component of America’s hegemonic strategy.

We have very little evidence on privilege taking in the production domain. Schwartz argues that here, any “claim that the U.S. has structural power over production thus requires showing that U.S. firms have disproportionate share of control over global turnover and assets, rates of return above the global average (an indicator of pricing power and, implicitly, power in the takeover market), and a large enough position in each global region to reap the fruits of U.S. credit expansion” (Schwartz, 2017, p. 280). Only recently have scholars begun to collect and examine evidence at this level of aggregation. As we saw above, the evidence reported by Starrs indicates the continued dominant position of American owners in global production networks. U.S. firms are dominant in 18 out of 25 sectors, and are especially dominant in high-technology sectors such as pharmaceuticals, aerospace, telecommunications, computer hardware and software, and so on. Schwartz (2017) reports that American TNCs earn substantially higher profits on their overseas activities than firms based in other countries. Drawing on OECD data, Schwartz finds that U.S.-based MNCs earned 11.8% return on their outward investment, compared to a 7.6% average return for OECD countries as a group. More research is clearly needed on this issue.

Conclusion

The past 10 years has seen a resurgence of scholarly interest in hegemonic political economy. While some of this work hearkens back to earlier concerns about hegemonic decline and relies on some of the first-wave theory, much more of this work argues that American hegemony is thriving and self-consciously seeks to differentiate itself from the questions and theoretical framework of the hegemonic stability hypothesis.

And somewhat surprisingly, now more than 20 years after her death, Susan Strange provides the central theoretical logic for this “new political economy of hegemony” (NPEH). Strange’s work shapes the NPEH in two ways. First, current scholars have embraced her conception of structural power as a useful way to conceptualize hegemony, in part because it establishes a multidimensional conception in which power is present across four domains and emerges from control exerted by state and private actors. Second, by providing a conception of power that stresses state and private actors, the focus on structural power has encouraged scholars to look at how states create institutions and how private actors—and sometimes the state, too—extracts private benefits from these arrangements. Strange’s work, in other words, encourages us to think about both system making and privilege taking.

Though motivated by and organized around Strange’s conception of structural power, current NPEH researchers are quite self-conscious about addressing earlier criticisms of this approach. Scholars working in this tradition have stressed theoretical development in order to transform insightful observations into more coherent and fully articulated theoretical models. In addition, researchers have embraced methodological rigor in a way that wasn’t typical 30 years ago. This methodological revolution has led to interesting network, statistical, and qualitative evaluations of some of the core propositions of the emerging NPEH perspective.

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