Over the last decade, China has suddenly become a major player in the global economy, and it has become increasingly common to read that it is on the way to becoming the world’s dominant power. In the literature of such forecasts, Giovanni Arrighi’s Adam Smith in Beijing stands out for two reasons. The first of these is that Arrighi embeds his analysis within a grand and sophisticated historical model of the rise and fall of a sequence of hegemonic powers. The second is that while many Western scholars view China’s ascent with trepidation, Arrighi welcomes it with enthusiasm.

In Arrighi’s model, which was most fully developed in The Long Twentieth Century (1994), the capitalist world system has evolved through a succession of hegemonic cycles. These have each been dominated by a single power, and although they have had distinct characteristics, so far they have all followed similar trajectories. When The Long Twentieth Century was published, Arrighi was already convinced that the global centre of capital accumulation was shifting from the North Atlantic to East Asia, yet at that time China had only just begun to transform its economy in a fashion that would allow it to fully integrate into the global economy and become the ‘workshop of the world’. Today, the emergence of China as a global economic power, and the military and economic setbacks of the United States, have given Arrighi the confidence to predict that the epoch of us hegemony is likely to be followed by an era of East Asian dominance, with China at its centre.

For Arrighi, Chinese world hegemony could have three positive results. Firstly, by restructuring the current hierarchy of powers, dominated by the West, a period of East Asian pre-eminence might bring about greater equality among the world’s nations. Secondly, Chinese hegemony might prove to be less militarist and more peaceful than its European-American predecessors. Thirdly, the rise of China might foster a more egalitarian and humane East Asian development path—one based on market exchange, but that is not capitalist.

Arrighi’s optimistic scenario has attracted surly responses from reviewers convinced of the superiority of Western civilization, and more thoughtful and positive reviews from others, less sanguine about the world order produced by Western domination.footnote¹ Each of his three predictions deserves serious individual consideration. In this essay, I will limit myself to responding to the last—that China might be pioneering the development of a market system that is not capitalist.

What you see, of course, depends greatly on the conceptual framework you employ. Arrighi starts with a model of capitalism derived from Braudel’s historical narrative of the development of capitalism in Europe. Braudel divided the economy into three layers. At the bottom, economic activity consisted of subsistence production with little market exchange. A middle layer was composed of market-oriented activity organized by competitive entrepreneurs. The top echelon was reserved for capitalists proper, benefiting from monopoly positions and closely associated with state power. This is a framework that has informed much world-systems analysis, and Arrighi employs it to suggest distinct models of Western and East Asian development. In the West, capitalists dominated the state, generating a potent combination of economic and military expansion that allowed Western powers to conquer the world. In East Asia, by contrast, a strong state fostered market exchange, but kept large-scale capital in check. This model flourished under the hegemonic supervision of the Chinese empire, presiding over a relatively peaceful system of interstate relations in the region which made it the wealthiest in the world until the nineteenth century. Then, as the Chinese state declined and East Asia was incorporated into a world economy dominated by European powers during the nineteenth and early twentieth centuries, Japan grafted elements of the Western capitalist model into its own economy, creating a hybrid system.

In The Long Twentieth Century, Arrighi was hopeful that the rising economic power of Japan, stripped of its military dimension after the Second World War, might foster a new model in which economic and military power were dissociated, and could eventually usher in a ‘post-capitalist world market society’.footnote² In Adam Smith in Beijing, Arrighi has shifted his attention to China, where, he writes, a strong welfare-oriented state created by the Communist revolution has rediscovered the economic dynamism of the market, fostering the initiative of masses of small entrepreneurs, rural and urban.footnote³ As China leads East Asia to recover its position as the most economically developed region of the globe, he suggests, it may choose to conform to the Western capitalist paradigm or it may blaze a different path more in accord with its own past.

Arrighi’s develops his models on a grand scale, encompassing global networks of power and trade, interstate competition, and the evolution of economic and political systems over hundreds of years. Like others who work in the world-systems paradigm, he is more concerned about structures that reproduce international inequality than those that reproduce inequality within nations. As a consequence, he devotes little attention to analysing the details of production relations. What might we see if we revisit recent Chinese economic history, turning our attention to production relations? Such will be my focus, and for this purpose I will use Marx’s conceptual framework. I will then consider Arrighi’s suggestion that China might be pioneering a development path distinct from that of the West, using Braudel’s definition of capitalism, which focuses on the relationship between capital and the state.