BRICS: Search for New Paradigm

BRICS: Search for New Paradigm

An Article by Zorawar Daulet Singh published at The Tribune on April 4, 2013

The aftermath of the Durban BRICS summit has witnessed a flurry of cynical commentaries. A common theme that runs through nearly all of them paints BRICS as a motley of parochial power seekers with little in common.

In India, there is also the persistent China factor that seems to overshadow any far-sighted conversation on larger questions of global governance. There is a "cut your nose to spite your face" logic in some arguments where if China stands to benefit then India must automatically belittle an idea.

This is a flawed prism to explicate the idea of BRICS. The real potential of BRICS has always been not simply to balance the material power of advanced states but to offer an alternative ideational approach to the governance of the international political economy.

The Ancien R?gime is on its last legs. The 2008 economic crisis shook the foundations of the post-1970s neoliberal economic consensus that defined the essence of global governance in recent decades. Ironically, even the Bretton Woods twins no longer propagate their earlier norms regarding macroeconomic management or microeconomic interventions in national economies. In recent years jumpstarting the global growth engine has been the overriding policy goal everywhere. Reforming the structural framework that produced the economic crisis has received only perfunctory attention.

BRICS as an opportunity

In the aftermath of the crisis some western economists viewed BRICS as an opportunity to resurrect the present mode of globalisation with minor tactical reforms. The argument being that since BRICS have flourished during the phase of globalisation that is now under stress, it is in their self-interest to shore up the system that underpins their growth. After all, since 2001 BRICS have accounted for over 30 per cent of global economic growth.

On the surface, this argument is compelling. However, if we undertake a dispassionate cost-benefit analysis of the structure of growth that emerging economies have actually witnessed, such as, investigating the consequences on social inequality, human capital development, ecological degradation, indigenous technological innovation, and financial instability we will conclude that BRICS has an ugly underbelly that reflects their active participation in the imbalanced and unequal global economy. In fact, some BRICS members are seriously lagging even low-income Southern economies on per capita human capital and socio-economic indicators even as absolute statistics advertise national success.

The 'ecological footprint'

Sections of the BRICS' policy elite have acknowledged some of these contradictions though there is still no consensus on the deeper lesson of the global crisis, which is that replicating western capitalism is ultimately suicidal both nationally and for the entire planet. Resource constraints are such that BRICS, which account for 43 per cent of the world's population, cannot assume per capita consumption levels of non-renewable energy and other natural resources at the level of the North without severely undermining the globe's and their own ecological stability. Plainly put, BRICS cannot emulate the 'ecological footprint' of the North in their future development strategies.

Furthermore, the present spectrum of available technological solutions to overcome 'Malthusian' type shortages is in itself resource and fossil fuel-intensive in its applications, thus, imposing even greater demands on the finite resources available. It is also in this context that the present agenda of climate change is inadequate for it merely seeks to limit the growth potential of the South without fundamentally altering the essence of the present fossil fuel-dependent technological mode of industrialisation or modifying the global capital accumulation structure itself. Logically, it is imperative to envision a completely new spectrum of technological solutions to sustain growth in a resource-constrained world. No state can go it alone in this endeavor.

Capital accumulation

New norms require a new discourse before they can be accepted. The main obstacle to constructing a new discourse has been the illusion among the BRICS policy elite that their economies exemplify the untainted winners of the globalisation boom. In retrospect, the scale of global growth witnessed in recent decades would have been impossible to attain without ravaging the ecological system and degrading (underpricing) the value of labour and human initiative, and, with most of these costs being borne disproportionately by the global South. If true, then doesn't BRICS have a strategic self-interest in producing a discourse that dis-incentivizes unrestrained capital accumulation?

First, one of the enduring insights from North-South interdependence is that as emerging economies plugged into globalisation they found capital accumulation easier than 'intellectual accumulation', the latter strategically guarded by Northern MNCs. To overcome this, BRICS' elites should end their overriding obsession with GDP growth rates, and, focus more on metrics that actually gauge social realities, human capital, innovation and the technological potential of their economies.

In many BRICS economies, and, across the global South in general, we observe that despite high GDP growth rates, there has been modest progress on human development indicators, food security and nutrition, science and technology, and, healthcare and education systems.

Furthermore, if BRICS economies aim to improve the terms of trade with the North, that is move up the value chain by increasing the quality of local value-addition, it is people-centric development as defined above that alone will sustain the rise of the emerging South.

'State versus market'

Second, BRICS can promote a discourse whereby the logic of unrestrained profit accumulation inherent in capitalism is balanced by a dynamic, responsive, and, a strategic state. For Russia and China's political economy this has been less of an issue. In other BRICS economies there is an implicit or even open contempt for the state. For instance, the emergence of an anti-statist ideology in India is, ironically, even undermining the prospects of big capital who are now discovering that the receding of the state in socio-economic life diminishes their own long-term prospects for capital accumulation!

As the developed world's history shows, the dichotomy of 'state versus market' is a contemporary and erroneous invention emanating from the Reagan and Thatcherite transition to anti-statist neoliberalism, and historically, both elements have been indispensable for capitalism to function. Without a robust state, there can be no governance, no agency to establish and enforce property rights, and nobody to ensure the development and systematic flow of commodities, labour, and capital. Indeed, as some historians argue, the Westphalian state is the most enduring legacy of European capitalism.

Third, it is now evident that interdependence between Northern capital and BRICS labour has adversely affected the latter's workers. Indeed, the BRICS workers cannot be faulted for wondering why their hard-earned savings were not reinvested in productive domestic capital or social infrastructure but 'recycled' back into western debt to finance western profligacy with the state mediating this process.

The 'New Deal'

What is required is an ideological reconstruction of capitalism and a new compact between capital and labour akin to the 'New Deal' forged during the 1930s as a response to the then crisis of 'over accumulation' in the West. The contemporary difference being that the globalisation of the production process requires such a compact to be on a global scale. The state will inevitably assume a central role in regulating and sustaining this new deal. Unsurprisingly, the political economy of the North rejects such a 'New Deal' and its implied redistributive features not only as ideologically abhorrent but also because it would imply ceding wealth, and thus power, to the emerging South.

BRICS, however, cannot rebalance their own economies without forging a compact between capital and labour. And the fact that BRICS provides both the spatial and human inputs vital to global production, potentially represents a bargaining leverage that the BRICS states could collectively benefit from.

For now, the intensity of intra-BRICS competition makes it difficult to practise any collectivist strategies.

Perhaps, the BRICS can take a leaf out of the Western playbook: if the US, Europe and Japan can fiercely compete among their industrial and consumer MNCs without compromising on their common strategic agenda to preserve their asymmetric advantages in the global terms of trade and finance, surely BRICS too can learn to reconcile the logic of competition with a parallel strategic collectivism to adapt the fallible norms of the West?

The Southern policy elite is reluctant to recognise that the old policy paradigm cannot be the basis of future national and global rejuvenation. BRICS offers an international political network to articulate new norms that can adapt globalisation for the emerging era of resource-driven ecological pressures and social convulsions that await many of the economies of the emerging South, including this one.

How can eschewing the prospect of change be in India's national interest?

The writer is a PhD candidate at King's College London

Published at: http://www.tribuneindia.com/2013/20130404/edit.htm#6