It has become a staple of conventional wisdom that global economic power is shifting inexorably towards the East and the South. Many insist that we are on the brink of a world-historic rebalancing that will result in the end of Western domination and the rise of a new hegemony. In particular, the emergence of China on the world stage—or re-emergence, if one has a longer time-scale in mind—is seen as heralding the dawn of an ‘Asian Century’. Yet this narrative of Western decline is misleading, above all because it greatly exaggerates the fading of the us as the world’s leading capitalist power. In fact, the contemporary rise of so-called ‘emerging markets’ poses even less of a challenge to us leadership than the revival of Western Europe and Japan in the post-war decades. There is already evidence to suggest that the growth rates of these markets may have peaked around 2011, without altering their basic dependence on commodity exports to Western economies (with the partial exception of China). The road towards convergence between the West and the Rest is a great deal rockier than most commentators believe, and there is no certainty about the outcome.

For the most part, debates on these questions lack a solid empirical foundation. Many of the scholars who conduct serious research in this area are hampered by a methodology that has become anachronistic in the age of global capitalism, one that equates national power with national accounts—gdp above all, but also balances of trade and payments, shares of world manufacturing and so on—as if we still lived in a world of nationally discrete political economies. Whether or not the equation ‘gdp = power’ was meaningful in the 1950s, the globalization of capital in recent decades has clearly rendered it problematic. When a substantial, often growing proportion of economic activity within a country’s borders is directed by foreign capitalists, we need to rethink the way that we measure national power—which does not mean that the concept itself is now irrelevant, as some have argued, since power is still nationally organized and concentrated.

It is useful in this respect to compare the past rise of Japan with the present rise of China. When Japanese electronics and automobiles began flooding Western markets in the 1960s and 70s, this was reflected both in a rising Japanese trade surplus and gdp and in the strengthening of Japan’s major corporations, many of which became household names. China, meanwhile, has seen its trade accounts and gdp soar in the age of globalization, and has become the world’s biggest exporter of electronics since 2004. Yet this growth has not been matched by the emergence of Chinese firms as world leaders in the field. Ninety per cent of what China Customs classifies as high-technology exports is actually produced by foreign-owned companies.footnote1 Thus, while an increasing share of global manufacturing takes place in the prc, much of this production is controlled, directly or indirectly, by outside interests. The contrast with Japan’s earlier ascent is stark. Any survey of global economic power must therefore take account of this shift, which means focusing our attention on the world’s leading transnational corporations.

When we look carefully at the statistics, three salient points about the ‘rise of the Rest’ emerge. Firstly, much of that growth is linked to the so-called ‘commodity super-cycle’ that began in the early 2000s (Figure 1). Most analysts in the Anglo-American business press do not expect this unprecedented, exponential hike in prices—379 per cent from 2002 to 2011—to continue into the second decade of the new century. This has ominous implications for most of these countries, as they have been unable to escape from commodity-export dependence.footnote2 Secondly, four states account for the great bulk of the progress made by the Rest. Brazil, Russia, India and China produced 47 per cent of the Rest’s gdp in 2002 and 63 per cent in 2012. Hence, despite the (often fickle) attention lavished on many emerging markets by the business press as they seek opportunities for Western investors—from Chile to Indonesia, Turkey to Vietnam—when we seek to quantify the shifting balance of global capitalism, the brics are the only serious contenders. Finally, as Figure 2 demonstrates, China is by far the most significant player among these states: while they all had similar gdp levels in the early 90s, by 2012 China’s gdp was four times greater than that of any other bric.

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As we have noted, however, national accounts tell us very little about the structure of each political economy in a context of globalization: we need to dig much deeper. Table 1 (below) shows data compiled from the Forbes Global 2000 annual list of the world’s top 2,000 publicly traded companies, ranked by a composite of four metrics: assets, market value, profit and sales. These firms are organized into twenty-five broad sectors, with the number of firms and nationalities in each sector, as well as total profit, to aid with comparison (obviously, some sectors count for more than others). Table 1 also reveals the top two aggregate national profit-shares in each sector, in addition to the profit-shares of companies based in China and the other brics. In most sectors, data are given for two years, 2007 and 2013, while 2010 is also included when there is significant fluctuation. Therefore, we can observe in each sector changes from the last full year before the start of the financial crisis to the last year of available data at time of writing: seven crucial years during which the Rest were supposed to have risen at the expense of the West.

Before examining this data closely, we should ask in advance what the criteria for ‘dominance’ are. Most commentators agree, for example, that the us occupied a dominant position in the global economy during the 1950s, at a time when its share of world gdp was approximately 40 per cent. Does it follow that any proportion lower than 40 per cent cannot be regarded as ‘dominant’? It is also important to compare the leading share with its nearest competitor and consider the extent of its lead. If the us profit-share declines from 40 to 30 per cent in one sector, while that of the number two country declines from 20 to 10, can this really be said to represent ‘American decline’? In the first instance the American share is double its nearest competitor, in the second instance triple. Benchmarks for ‘decline’ and ‘dominance’ can thus be somewhat arbitrary.

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The most striking feature of Table 1 may be the remarkable number of sectors in which American firms still held the lead by 2013: eighteen out of twenty-five. In fact, American leadership had increased in absolute terms across five sectors (business and personal services; casinos, hotels and restaurants; computer hardware and software; financial services; and media), and in relative terms—as a multiple of its nearest competitor—across a further five (aerospace and defence; food, beverages and tobacco; heavy machinery; retail; and utilities). In another five sectors, American leadership declined with the onset of the financial crisis, only to recover after 2010: these were conglomerates; healthcare equipment and services; heavy machinery; oil and gas; and transportation. Figure 3 (below) presents this data in graphic form, showing the gap between the us profit-share and that of its nearest competitors in 2013 in the eighteen sectors in which it held the lead. If we define 40 per cent as the benchmark for dominance, on the grounds set out above, American firms hold sway in ten sectors, especially those at the technological cutting edge: aerospace and defence; business and personal services; casinos, hotels and restaurants; computer hardware and software; conglomerates; financial services; healthcare equipment and services; media; pharmaceuticals and personal care; and retail.footnote3 The only other nations to dominate even a single sector are Germany in auto, truck and parts—note, however, the massive instability in this sector—and Japan in trading companies. On the other hand, American positions in the remaining ten sectors have declined, with no American presence in trading companies, a sector that accommodates an enterprise-type largely peculiar to Japan: the sogo shosha.

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