[P2P-F] Fwd: [NetworkedLabour] Fwd: [Debate-List] (Fwd) Bye, BRICS (Immanuel Wallerstein)

Sat Jan 2 09:10:13 CET 2016

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Subject: [NetworkedLabour] Fwd: [Debate-List] (Fwd) Bye, BRICS (Immanuel
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*From:* Patrick Bond <pbond at mail.ngo.za>
*Date:* 1 Jan 2016 14:49:26 GMT+1
*To:* DEBATE <debate-list at fahamu.org>, progeconnetwork at googlegroups.com,
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*Subject:* *[Debate-List] (Fwd) Bye, BRICS (Immanuel Wallerstein)*
*Reply-To:* pbond at mail.ngo.za

(More from Wallerstein in this
<http://www.counterpunch.org/2015/09/18/thick-as-brics-an-illusory-alternative-to-neoliberalism/>
book, whose Indian edition from Aakar Books will be launched in New Delhi
at JNU on 18 January and in Mumbai at Tata Institute on 19 January.)
<Bond Garcia BRICS front cover.jpg>

Commentary No. 416, January 1, 2016

"The BRICS - A Fable for Our Time"
by Immanuel Wallerstein

The story of the BRICS is a strange one. It starts in 2001 when Jim
O'Neill, at that time the chairman of the Assets Management division of
Goldman Sachs, the giant investment house, wrote a widely-commented article
about what we have come to call "emerging economies." O'Neill singled out
four countries – Brazil, Russia, India, and China – all of whom were large
enough in size and territory to have noticeable weight in the world market.
He labeled them the BRICs.

O'Neill argued that their assets were growing at such a pace that they were
going to overtake collectively the asset values held by the G-7 countries,
which had long been the list of the wealthiest countries in the
world-system. O'Neill did not say exactly when this would occur – by 2050
at the latest. But he saw the rise of the BRICs as more or less inevitable.
Given his position at Goldman Sachs, he was essentially telling the clients
of Goldman Sachs to shift significant parts of their investments to these
four countries while their assets were still selling cheaply.

The argument caught on, including in the four countries themselves. The
four BRICs decided to assume the name and create structures of annual
meetings as of 2009 in order to transform their emerging economic strength
into geopolitical strength. The tone of their successive collective
statements was to assert the place of the South against that of the North,
and especially that of the United States in the world-system. They talked
of replacing the dollar as the reserve currency with a new South-based
currency. They talked of creating a South-based development bank to assume
many of the functions that were the purview of the International Monetary
Fund and the World Bank. They talked of redirecting world trade flows, so
as to enhance South-South exchanges.

They talked of all these things, but somehow they never quite got around to
implementing these proposals. Instead, they concentrated in the 2010's on
enjoying the fruits of a high level of commodity prices, which allowed the
governments of the four countries to augment significantly the income
levels of their upper and middle strata, and even to increase some benefits
to the lower strata.

The times seemed good, and not only for the BRICs. In 2009, South Africa
managed to convince the four BRICs to admit it as a fifth member of the
group. The name was changed from BRICs to BRICS, the final capital S
referring to South Africa. South Africa did not really meet the economic
criteria O'Neill had specified, but in terms of geopolitics, it enabled the
group to say it had an African member.

Meanwhile, other countries began to show economic characteristics similar
to those of the BRICS. Journalists began to speak of the MINT – Mexico,
Indonesia, Nigeria, and Turkey. Although this group also included
‘emerging’ economies, they never became a formal structure. One other
country was an obvious member – South Korea. However, South Korea had
already been admitted to the club of the wealthy – the Organization of
Economic Cooperation and Development (OECD) – and thus saw no need to
enhance further its geopolitical status.

Then all of a sudden, the economic strength of the BRICS took a turn for
the worse in the 2010s. It isn't that the G-7 countries were growing faster
again, but that the BRICS were showing lowered asset figures. The swift
rise of the BRICS seemed to be vanishing.

What had happened? A look at the world-economy of the first decade of the
twenty-first century shows that the world economic boom was largely driven
by China's no-holds-barred construction and industrialization drive. It had
created an enormous demand for inputs of all sorts, which China got from
the BRICS countries as well as elsewhere. China's boom had been built on
some shaky and reckless loan policies of the large number of regional banks
that had come into existence, aided and abetted by considerable corruption.
When the Chinese government sought to repair the damage, its growth rate
plummeted, although it still remained relatively high.

In addition, China's attempt to assert her geopolitical power over its
neighbors in east and southeast Asia has led to accumulated tensions. Said
to be part of China's rivalry with the United States, both China and the
United States have been careful not to let the rivalry go so far that it
threatens the longer-run possibilities of a partnership.

China's adjustments were immediately felt elsewhere, and especially in the
other BRICS countries, which turned out to be economically shaky and
therefore politically vulnerable. The dramatic fall of the world oil prices
took their toll. One after the other, the BRICS found themselves in
trouble, each in its own form.

Brazil's economic policies had combined neoliberal macroeconomic policies
with important transfers to the poorest third of the population – the
so-called *Fome Cero* or Zero Hunger no longer worked. The fluid and
ever-changing political alliances in the Brazilian legislature became a
turbulent scene, threatening political stability. At the moment, the two
main sides are trying to impeach each other's leaders. And the image of the
person who had constructed Brazil's previously successful policies – Lula
or former President Luis Inácio Cruz de Silva – is badly tarnished.

Russia's policies of heavy investment in the military combined with
state-aided economic redistribution were strongly threatened by the fall in
gas and oil price. Its geopolitical assertiveness in Ukraine and the Middle
East led to various kinds of boycotts that hurt its economic national
income sharply.

India's attempt to catch up, not only with the West but with China,
resulted in massive ecological damage as well as the diminution of
investments by its diaspora in North America and western Europe. The
current government, led by Prime Minister Narendra Modi, is finding it very
difficult to fulfill the promises that led to his landslide victory so
recently.

In South Africa, the overwhelming majority of the African National Congress
(ANC) is finally receding, as an ever-larger proportion of the electorate
is too young to remember the anti-apartheid struggle. Instead, politics
have become increasingly based on ethnic politics. And the ANC is
threatened by an anti-White upsurge among younger voters, so foreign to the
ANC’s historic non-racial policies. In addition, South Africa's neighbors
are increasingly uneasy with South Africa's strong hand in their internal
politics.

Oh, how the mighty have fallen! What remains of the geopolitical
aspirations of the BRICS is anyone's guess.

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