Uncertainty in the BRICS

The nature of today's economy is uncertainty, and nowhere is that more true than in developing nations.

In the third of these linked blog posts, we return to the general theme of "The Great Uncertainty" to explore the consequences of the shift in the balance of economic power that many discern, broadly from ‘West’ to ‘East’. The issues, we suggest, are rather more complex and involved than we are typically led to believe in popular accounts couched in terms of ‘rising powers’ and the challenge of the BRICS economies.

So where to start? Well, what is clear to us is that there is indeed a shift taking place in the balance of global economic power. That, at least, we can agree on. There is no need, we feel, to fill this post with figures because the broad picture is pretty well established. Indeed, it is captured, after a fashion, in those speculative pieces that we have all read about exactly when China will overtake the US as the largest economy in the world (although this, too, is more complicated a calculation than is often recognised).

The essential point, though, is that the combination of longish periods of (very) fast economic growth in some countries with slow growth, stagnation and recession in others cannot but alter the respective weights of different countries (and by extension regions) within the global economy. It is from that core shift that all the other features that are so much discussed – different patterns of FDI, aid, trade, bond purchases and the like – emanate.

However, the analytical problem is that economic power does not translate easily or automatically into political power. Or, to put it a little differently in what has been a common theme of ours, economics is not political economy. Economic power can be measured statistically by reference to GDP, proportion of world trade, level and direction of financial flows, and so on. Political power cannot. It has instead to be pondered and probed.

What do we find when we do this? Let’s start with China. In a simple sense it is the most obvious candidate to replace the US as the hegemon of the global political economy. But, for all its fast and continuing economic growth, it is in fact beset by a host of problems generated by its particular experience of late industrialisation and single-party politics. These include: a core imbalance in its economy between investment and consumption, considerable ongoing financial instability, deep social inequalities and tensions, and the confusion about intentions inevitably generated by its opaque and increasingly corrupt state structure. And this is not even to mention the big, looming issue of being pressured to move at some point in a democratic direction.

The reality is that, for all the talk a while ago of an emerging "Beijing Consensus", China has yet to produce a style of capitalism that is globally attractive.

Let’s move on to think about India, Brazil and other ‘rising powers’. Here, once more, the political picture is much less sharply defined than the economic one. In global terms India still lives mostly within itself. It has a very strong historical sense of the uniqueness of its continental civilisation and seems content for the moment to deploy an assertively ‘Southern’ rhetoric amidst broad acquiescence in a US-centred world order.

Brazil is best seen politically as the major regional power of South America. Given its location and history, it is always alert to the possibility of overbearing behaviour by the US and is ready to be stroppy if necessary. But it has yet to set out a coherent and convincing account of the global role that it might like to play in the future.

We could at this point go further on down a list to discuss Russia, South Africa, Mexico, Indonesia, even Turkey. But we already know that we are referring here to countries that have a power and a presence in global politics, without yet constituting major players when it comes to shaping policy outcomes in the UN, the IMF, the WTO or any other global, as opposed to regional or ‘Southern’, institution.

In a very interesting recent article, the veteran Indian political scientist, Achin Vanaik, has argued that what is emerging is a ‘new pentarchy’, consisting of the US, the EU, Russia, China and India. Others don’t quite make the grade. In his view, such a pentarchy will not be formalised like the G8 and G20. Nor will it be a concert of equals or near-equals, but rather a hub-and-spokes arrangement with the US at the centre and the others at the circumference.

Vanaik advances this proposition on the basis of an attempt to integrate economic and political power into his thinking. All his five entities have sufficient demographic, economic and military weight to qualify, as it were, but only the US has the soft – or ideological – power to ‘project a social-political-cultural model that is potentially generalisable’. He asks tellingly: ‘How many states and their ruling and middle classes want to become more and more like Russia, China or India rather than like the USA?’ What about the EU in this context? It is dismissed in a single brutal phrase: ‘The EU by its very nature cannot be a single unified aspirational model’.

Now, this is but one recent piece of political analysis. It’s quite persuasive in its way, but things almost certainly won’t work out in quite the manner that Vanaik suggests, and that is really the key point. Political economy analysis is contentious stuff. We don’t ever stand on especially firm ground. We make judgements, and then see how events unfold, adjusting our thinking as we go. Economic power in the world is shifting, but we can’t be certain quite what that will mean politically over the next few years and that just reinforces the sense of the uncertainty of the times in which we live.

This is the third in a five-post series on the "Great Uncertainty".

Professors Colin Hay and Tony Payne are Directors of the Sheffield Political Economy Research Institute at the University of Sheffield.

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Justin Trudeau points the way forward for European politics

Is the charismatic Canadian Prime Minister modelling the party of the future?

Six months after Canadian election day, Justin Trudeau’s Liberal party continues to bask in the glow of victory. With 44 per cent of support in the polls, the Liberals are the most popular party amongst every single demographic – men and women, young and old, and people of all educational backgrounds. 

While most European mainstream parties only dream of such approval, this is actually a small dip for the Liberals. They were enjoying almost 50 per cent support in the polls up until budget day on 21 March. Even after announcing $29.4 billion in deficit spending, Canadians overall viewed the budget favourably – only 34 per cent said they would vote to defeat it.

Progressives around the world are suddenly intrigued by Canadian politics. Why is Justin Trudeau so successful?

Of course it helps that the new Prime Minister is young, handsome and loves pandas (who doesn’t?) But it’s also true that he was leader of the Liberals for a year and half before the election. He brought with him an initial surge in support for the party. But he also oversaw its steady decline in the lead up to last year’s election – leadership is important, but clearly it isn’t the only factor behind the Liberals’ success today.

Context matters

As disappointing as it is for Europeans seeking to unpack Canadian secrets, the truth is that a large part of the Liberals’ success was also down to the former Prime Minister Stephen Harper’s extreme unpopularity by election time.

Throughout almost ten years in power, Harper shifted Canada markedly to the right. His Conservative government did not just alter policies; it started changing the rules of the democratic game. While centre-right governments in Europe may be implementing policies that progressives dislike, they are nonetheless operating within the constraints of democratic systems (for the most part; Hungary and Poland are exceptions).

Which is why the first weeks of the election campaign were dominated by an ‘Anybody But Harper’ sentiment, benefitting both the Liberals and the left-wing New Democratic Party (NDP). The NDP was even leading the polls for a while, inviting pundits to consider the possibility of a hung parliament.

But eight days before election day, the Liberals began to pull ahead.

The most important reason – and why they continue to be so popular today – is that they were able to own the mantle of ‘change’. They were the only party to promise running a (small) deficit and invest heavily in infrastructure. Notably absent was abstract discourse about tackling inequality. Trudeau’s plan was about fairness for the middle class, promoting social justice and economic growth.

Democratic reform was also a core feature of the Liberal campaign, which the party has maintained in government – Trudeau appointed a new Minister of Democratic Institutions and promised a change in the voting system before the next election.

The change has also been in style, however. Justin Trudeau is rebranding Canada as an open, progressive, plural society. Even though this was Canada’s reputation pre-Harper, it is not as simple as turning back the clock.

In a world increasingly taken by populist rhetoric on immigration – not just by politicians like Donald Trump, Nigel Farage, Marine Le Pen and other right-wingers, but also increasingly by mainstream politicians of right and left – Justin Trudeau has been unashamedly proclaiming the benefits of living in a diverse, plural society. He repeatedly calls himself a feminist, in the hope that one day “it is met with a shrug” rather than a social media explosion. Live-streamed Global Town Halls are one part of a renewed openness with the media. Progressive politicians in Europe would do well to take note.

Questioning the role of political parties today

Another interesting development is that the Liberal party is implicitly questioning the point of parties today. It recently abolished fee-paying, card-carrying party members. While this has been met with some criticism regarding the party’s structure and integrity, with commentators worried that “it’s the equivalent of turning your party into one giant Facebook page: Click ‘Like’ and you’re in the club,” it seems this is the point.

Colin Horgan, one of Trudeau’s former speechwriters, explains that Facebook is “literally a treasure trove for political parties”. All kinds of information becomes available – for free; supporters become easier to contact.

It was something the Liberals were already hinting at two years ago when they introduced a ‘supporters’ category to make the party appear more open. Liberal president Anna Gainey also used the word “movement” to describe what the Liberals hope to be.

And yes, they are trying to win over millennials. Which proved to be a good strategy, as a new study shows that Canadians aged 18-25 were a key reason why the Liberals won a majority. Young voter turnout was up by 12 per cent from the last election in 2011; among this age group, 45 per cent voted for the Liberals.

Some interesting questions for European progressives to consider. Of course, some of the newer political parties in Europe have already been experimenting with looser membership structures and less hierarchical ways of engaging, like Podemos’ ‘circles’ in Spain and the Five Star Movement’s ‘liquid democracy’ in Italy.

The British centre-left may be hesitant after its recent fiasco. Labour opened up its leadership primary to ‘supporters’ and ended up with a polarising leader who is extremely popular amongst members, but unpopular amongst the British public. But it would be wrong to assume that the process was to blame.

The better comparison is perhaps to Emmanuel Macron, France’s young economy minister who recently launched his own movement ‘En Marche !’ Moving beyond the traditional party structure, he is attempting to unite ‘right’ and ‘left’ by inspiring French people with an optimistic vision of the future. Time will tell whether this works to engage people in the longer term, or at least until next year’s presidential election.

In any case, European parties could start by asking themselves: What kind of political parties are they? What is the point of them?

Most importantly: What do they want people to think is the point of them?

Ultimately, the Canadian Liberals’ model of success rests on three main pillars:

  1. They unambiguously promote and defend a progressive, open, plural vision of society.
  2. They have a coherent economic plan focused on social justice and economic growth which, most importantly, they are trusted to deliver.
  3. They understand that society has changed – people are more interconnected than ever, relationships are less hierarchical and networks exist online – and they are adapting a once rigid party structure into a looser, open movement to reflect that.

*And as a bonus, a young, charismatic leader doesn’t hurt either.

Claudia Chwalisz is a Senior Policy Researcher at Policy Network, a Crook Public Service Fellow at the University of Sheffield and author of The Populist Signal: Why Politics and Democracy Need to Change