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World-System analysis came into being in the 1970s, when U.S. global power was being challenged seriously in the aftermath of its Vietnam War defeat and the run on the dollar following the dissolution of the Bretton Woods gold standard. In this context, the analysis of hegemonic decline in the capitalist world-system became a core theme of discussion among leading world system analysts. In the classical Wallersteinian formulation, capitalist world-system differed from premodern world empires in that the core of the system is divided among competitive states, and one of these states performed a hegemonic role at a given time period. Sixteenth-century Dutch, nineteenth-century UK, and twentieth-century US were the hegemonic states of the respective periods, enjoying commercial, political and military primacies and setting the rule of the game for other states to follow. These primacies, nevertheless, were destined to decline after they peaked, and the world-system would be pushed into a period of inter-core rivalry in which competing core states competed to become the next hegemon. To the world-systemists, the challenges that the US faced in the 1970s signaled the beginning of the decline of the US hegemony, which emerged amidst the chaos of the two world wars (Wallerstein 1984; 1974).
To Wallerstein, the capitalist world-system has reached its limit of expansion, and the crisis of U.S. hegemony is equivalent to the crisis of the system itself, and such crisis will ultimately lead to the end of the capitalist system as we know it. (Wallerstein 1979) Others who loosely follow a world-system perspective, on the other hand, assume the contest for the throne of new hegemony would proceed as usual, and they are keen to look for candidates of the next hegemon, with Germany (Europe), Japan, and China as the favorite at different times. Likewise, according to more recent works by Arrighi (1994; 2007) and Arrighi and Silver (1999), the trajectory of the end of American hegemony will likely depart from earlier hegemonic declines, and the world-system is likely to face one of the three scenarios: the dawn of protracted systemic chaos and warfare, the rise of a more egalitarian world market society let by emerging powers in Asia, and the rise of a coercive US-centered global empire.
In the theorization of the current transition...