The role of world-money and finance in the current contest for global hegemony

ABSTRACT

"The role of world money and finance in the current contest for global hegemony

US hegemony, also called Pax Americana, has been based largely on US control over the dollar, which has acted as world money. This hegemony has consisted of two periods; the first phase, which runned from 1945 until the fall of the Soviet bloc and based on the dominant global role of its domestic accumulation, and the second, based on the so-called Washington Consensus, and the aggressive imposition of the neoliberal agenda on the periphery through the provision of loans accompanied by conditions on domestic policies, and forcing the opening of trade and financial flows.

The second hegemonic phase is also the phase in which the euro was created, which will act as both a domestic currency and a means of payment between Eurozone member states, and will be proposed as a potential competitor to the dollar. However, the European currency will only serve to project German hegemonic power regionally, creating new peripheries within Europe, not achieving the role of competitor to the dollar and generating structural problems in the old continent.

This phase will also be marked by China's incorporation into the WTO, with the expectation on the part of the American elites that the country would adhere totally to the neoliberal workings and that it would be politically transformed. The expected changes have not occurred, whereas, in 2010, China was already the world's largest exporter, doubling exports from the United States. Currently, its exports have a large presence in the manufacturing sectors of low, medium and high added value, highlighting its role as a producer of telecommunications equipment and electric vehicles. China's emergence has been paired with disputes with Russia since the mid-2010s, a power with strong military and industrial capacity demonstrated in its current war with Ukraine.

Despite rising as a serious competitor for hegemony, China is still unable to compete with the US in the field of finance and world money. However, following the growing tensions and sanctions imposed by the US, among which most notably the freezing of Russian reserves in dollars in 2022, a group of countries led by China, Russia and Iran are exploring alternatives arrangements that bypass American control over monetary and financial institutions by exploiting new distributed ledger technologies.

This article aims to review these developments and question the subordinate strategy followed by Western European countries in the US' current hegemonic contest with the emerging bloc led by China. The article aims to offer a perspective of how this subordination in the neoliberal period that is reaching its exhaustion, has placed European states, especially those on the southern periphery, such as Spain, in a situation of political and economic dependence that does not offer a viable alternative for the future.

KEYWORDS: USA, Hegemony, neoliberalism, world money, China, Russia"