There is little dispute now that the history of Western capitalism since the end of World War ii can be partitioned into two distinct periods. Its ‘Golden Age’, lasting roughly through the end of the 1960s, was characterized by rapid economic growth, low unemployment, mild business cycles and rising mass living standards, especially for the white, male sector of the working class. The ‘Leaden Age’, running from the early 1970s into the present, has been distinguished by slow growth, high unemployment, more severe business cycles, and stagnating or declining living standards for the majority. This fundamental economic transformation has also redefined politics in the West. Much of the success of the Golden Age was attributed at the time to the development of large-scale government interventions in the market that aimed to ameliorate both the severity of business cycles and the worst disparities of wealth, income and opportunity that characterized pre-war capitalism. As the Leaden Age advanced, the hegemony of ‘big government’ policies yielded to an ascendant Thatcher-Reagan agenda of unqualified support for big business and similarly unqualified opposition to any sort of downward redistribution initiatives.

One of the most prominent aspects of this transition from the Golden to the Leaden Age has been the evolution of financial markets and practices. The Golden Age was characterized by low real interest rates and low levels of private indebtedness, relatively little speculative trading in financial markets, and most generally, a degree of financial stability that was historically unprecedented. Extensive government regulation also prevailed in this period, both within domestic economies and, through the Bretton Woods system of fixed exchange rates, in the broader realm of international currency markets. The justification for such tight regulatory regimes was not hard to find, given that destabilizing forces emanating from speculative financial markets—including most prominently the 1929 Wall Street crash—were widely held to have been a major cause of the Depression.

The Leaden Age, by contrast, has seen the return of high levels of private indebtedness and historically high real interest rates, a revival of highly active speculative financial markets, and much more frequent financial crisis episodes—the most recent being the December 1995 crisis ignited by the collapse of the Mexican Peso. Accompanying these Leaden Age financial patterns has been a world-wide dismantling of financial regulatory controls, the most prominent example being the abandonment in 1971 of the Bretton Woods system. The resurgence of speculative financial practices and decline of regulatory controls in the Leaden Age also created conditions in which the overriding concerns of financial capitalists for tight money, high interest rates and low inflation have established the acceptable parameters of economic policy in Western countries.

Giovanni Arrighi’s The Long Twentieth Century is a highly ambitious effort to explain, as his subtitle puts it, ‘money, power and the origins of our time’, that is, precisely this contemporary transition from Golden to Leaden Age capitalism.footnote1 The premise which animates the study is that the current period does indeed represent a fundamental transformation of Western capitalism. However, such a transformation is itself part of the normal pattern in the development of Western capitalism which can be traced back to the fourteenth century. It is therefore necessary to evaluate the contemporary cycle in light of previous transformative processes to understand the forces producing change, as well as the most likely end results of this change. Marx said, ‘The history of all dead generations weighs like a nightmare on the brain of the living,’ and Arrighi is committed to bringing such spectral connections into the strong light of day.

Arrighi holds that the current period is most likely the terminal phase of a historical process that has been advancing throughout the ‘long twentieth century’. Two fundamental developments, beginning in the 1870s, represent the starting point of the long twentieth century. One is the decline of Britain from and rise of the us to the status of the hegemonic capitalist power. The other is the first period of protracted economic depression throughout the Western capitalist economies, which lasted from the early 1870s until the mid-1890s. Arrighi argues that the 1970s mark the initial phase in the demise of this long century when we begin to observe the rising power of financial capital and the spread of speculative financial practices. Indeed, a central contention of Arrighi’s study is that such periods of ‘financial expansion’ represent the ‘autumn’ of a prevailing capitalist order as it slowly gives way to a new order. Arrighi argues that the patterns of transformation that are present over the long twentieth century are comparable to three previous ‘long centuries’: the Genoese sixteenth century, the Dutch seventeenth century, and the British nineteenth century. The question he poses by the end of the study is whether Japanese capitalism, perhaps along with other rising East Asian economies, is in the process of supplanting us hegemony as the twenty-first century gathers force.