The BRICS must not be like an economic power of the past

The call by the BRICS countries for 'a more democratic and just multipolar world order' requires a profound shift in the world political economy, says Mark LeVine.

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AS the partnership between Brazil, Russia, India, China and South Africa known as 'BRICS' completes its fifth year, policy-makers, international investors as well as commentators are increasingly wondering whether this grouping will become a 'second superpower' that will challenge the economic and political dominance of the United States, Europe (largely in the guise of the EU) and Japan in global affairs.

Until 1989, the second superpower was, of course, the Soviet Union. With the end of the Cold War and the rise of contemporary globalisation, the global peace and justice movement briefly claimed the title with the wave of international protests in advance of the 2003 invasion of Iraq. But its power and momentum quickly dissipated.

Already in 2001, on the heels of the September 11 attacks, however, prescient economists were looking towards China, India, Russia and Brazil as heralds of a tectonic shift in the global economy in which an increasing percentage of the world's GDP, and with it the production and circulation of the goods and services that comprise the world economy, were shifting away from the traditional postwar Euro-American and Japanese centres.

The Goldman Sachs report that popularised the term 'BRICs' (the capital 'S' was added later, when South Africa joined the original four members in 2010) is still worth reading, despite being a dozen years old, particularly for its frank calls to reorganise the global political economic architecture to give more power to the BRICs. 

As report author Jim O'Neill explains, 'These estimates raise important issues about the transmission of global monetary, fiscal and other economic policies, as well as the need for general international economic and political cooperation (which events since September 11 have highlighted) on a truly global basis. Representation at global economic policy meetings might need to be significantly changed.'

But he also points out some caveats about using the notion of BRICS as anything more than a useful heuristic device: 'Clearly, the four countries under consideration are very different economically, socially and politically.' Nevertheless, O'Neill argued, incorporating them into a broader grouping of leading global economies would at the least help ensure greater sensitivity in the heart of the global system to overcome dangerous dynamics that are emerging within it.

Crisis at the core

There is also a big difference between the situation in which O'Neill was prognosticating and today: Whereas the global financial crisis of the late 1990s occurred largely 'outside the G7' countries that were then considered the heart of the global economic system, the crisis of the following decade was created and spread at the core of the system, in the process challenging the existing core-periphery model of the world system.

Indeed, it was the now 'old' economic powerhouses - the US, the EU, and Japan - that were at the heart of the current global financial crisis, while the five BRICS countries largely avoided direct impact from it. This is perhaps the biggest change in the global economy in the last decade: The old powers have become sources of instability while the emerging powers have become the legs upon which the system stands. The problem is that the system inevitably corrupts those closest to the centres of global power. 

The core countries of the post-war era were, at least, internally democratic, which meant that capitalism's inherent colonial and mafia dynamics were restrained domestically as long as the balance of power between economic elites, organised labour and governments was maintained.

But with the emergence and growing dominance of post-Fordist, flexible accumulation, corporate-led consumer-driven globalisation (known by the shorthand 'neoliberalism') beginning in the late 1960s, the internal control mechanisms gradually atrophied, producing increasing corporate power and profits on the one hand, and inequality, disempowerment and often poverty on the other.

We could also ask why Turkey, Iran or Saudi Arabia, Mexico, Indonesia or South Korea doesn't deserve mention as part of a soon-to-be first order of world powers. Many of them score higher than China and India in measures such as per capita GDP and inequality and have economies that are every bit as advanced and diversified as the BRICS, if not more so. The original 'G6' morphed into 7, 8 then 13 and now 20 countries, including all the BRICS. Each of these countries features unique economic dynamics that are potential models for other developing countries.

Aside from the metaphorical impact of the word 'BRICS', with its likeness to the 'bricks' building a new global economic order (which was the motivation for coining the acronym in the first place), the reasons for focusing on these five countries are as much political as economic. China's unprecedented growth and its and India's immense populations give both unique weight in the global political economy. Russia's huge nuclear arsenal, large gas reserves and position as the primary successor state to the Soviet Union give it outsized weight as well.

But just as the idea of 'American exceptionalism' no longer holds much analytical or political weight, so too the dynamics and particular conditions that propelled the BRICS to their present position are analytically problematic.

There are also fundamental structural problems with the political economy of all the BRICS save, in some degree, Brazil. Of the five, only Brazil has a combination of a democratic political system and a diversified and relatively sustainable economy to follow the kind of trajectory that defined the postwar 'West'.

South Africa is democratic and boasts incredible natural resource wealth, but its economy is skewed and it ranks as the second most unequal country by income distribution. Russia is increasingly autocratic; its economy overly reliant on petroleum rents and driven by corruption (which reinforces the autocratic system and hampers diversification). China and India, whose combined population constitutes over one-third of humanity, have ranked as the most impressive success stories of the last generation, with China - as is well known - boasting one of the most rapid and intensive processes of economic development in history.

Yet if we assume that China and even India can maintain high levels of diversified growth, the environmental damage caused by such unrestrained growth could overwhelm - in some areas has already outpaced - the benefits. Put simply, the already fragile global ecosystem, which is fast approaching a tipping point vis-a-vis global warming, overfishing, and agricultural production, cannot support a global economic system that depends on fossil-fuel and population-generated economic growth. The success of such a system would be the very instrument of its demise.

To hedge against food scarcity, China (which already feeds roughly 21% of the world's population on only 9% of its arable land, and is predicted to lose tens of millions of farmers in the next generation) as well as the wealthy Gulf countries are buying up large tracts of the best agricultural land in Africa. But this process cannot continue because Africa's population itself will triple in the coming decades, according to a Foreign Policy forecast, while the world's population surpasses 10 billion.

Change of economic paradigm?

And this is one of the main challenges facing the BRICS as the bloc moves forward: As the five members have created an institutional framework to represent their collective (potential) interests, there is no indication that, rhetoric aside, most of the countries - more precisely, their economic and political elites - have any interest in fundamentally transforming the global system towards a new and more just, equitable and sustainable economic paradigm.

Barring such a strategy, does it really matter if in a few years China will surpass the US as the world's largest economy, or the BRICS and other emerging economic powers increase their share of global GDP, production or consumption?

African leaders might welcome competition from the BRICS for investment, aid, loans, trade and other relations. And all things being equal, greater foreign investment in Africa will bring more wealth to a continent that is already in the midst of a strong and much-needed period of growth.

But the BRICS must not approach the continent within the same paradigm as the West has long followed; otherwise, there is little reason to think that the new 'scramble for Africa' - as a 2011 Brookings Institution report calls it - will produce a different result for the majority of the continent's inhabitants than they've experienced under the present system, particularly if, as is presently the case, a large share of investment is in the exploitation of natural resources, which is one of the most inherently corrupt forms of investment imaginable.

Without a significant investment in the transformation of the production structures of African economies, for example, agricultural investment will focus on large corporate farms that have proved as deleterious to local economies and ecologies as they have in the United States. The aid and investment will likely benefit corporations and local elites.

It is from this perspective that the BRICS development bank must be assessed. While many hope the bank can be an alternative to the Western-dominated World Bank and International Monetary Fund (IMF), the BRICS must ensure that the underlying principles guiding development assistance and investment are fundamentally different from those of Western international financial institutions and their past record.

At the same time, it would be inaccurate to assume that the BRICS view Africa and invest in the continent in the same way. Indeed, while China's massive state-led investment has been labelled a 'new colonisation' by Global Trends, Brazil's much smaller-scale, private-led investment is focused less on extraction and more on working within existing markets.

According to International Policy Digest, the BRICS will no doubt be able to 'dictate new ways of funding and underwriting development in emerging economies in Africa'. Does this then mean that China, whose investments in Africa dwarf the other four countries, will seek to control and exploit strategic raw materials in a manner that is any different from that of the West? China must sympathise and work closely with African countries demanding that the means be less damaging to their interests.

A final issue about where the BRICS countries have the potential to act as a game changer lies in the renewed focus on diplomacy in solving violent disputes, such as the Syrian civil war. Here the opposition of China and Russia to Western arming of the Syrian opposition would seem to be a boon for diplomacy. But could it be that the Sino-Russian focus on diplomacy has much less to do with support for diplomacy per se than for helping ensure the survival of one of their primary allies in the Middle East?

According to a Policy Paper published by the Jean Monnet Multilateral Research Network on the Diplomatic System of the European Union, a comparison of UN voting by the BRICS countries in previous years reveals that there is little convergence between all five in their approaches to most relevant issues.

Furthermore, the two permanent UN Security Council members, China and Russia, did not support the attempts by Brazil and India to gain permanent status - precisely because doing so would only strengthen the hands of two major rivals globally.

Ultimately, while the BRICS countries might portray themselves in their first annual summit as calling for 'a more democratic and just multi-polar world order based on the rule of international law, equality, mutual respect, cooperation, coordination and collective decision-making of all states', the group remains at the core of many of the most important problems facing the world in the coming decades.

The sentiments expressed in this quote require a truly profound shift in the world political economy in order to have a chance of coming to pass.

At the level of people rather than corporations or governments, there must be something more inherent to the BRICS idea - which, after all, was coined by a Wall Street analyst to help wealthy investors decide where to put their money - to ensure it encourages a new global and more sustainable architecture for the international system.                                                 

Mark LeVine is Professor of History at the University of California, Irvine in the US and distinguished visiting professor at the Center for Middle Eastern Studies, Lund University, Sweden. This article is reproduced from BRICS Age (April 2013, bricsage.com).

*Third World Resurgence No. 274, June 2013, pp 18-20