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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Pity the Premier League – so much money can get you into all sorts of bother

You’ve got to feel sorry for our top teams. It's hard work, maintaining their brand.

I had lunch with an old girlfriend last week. Not old, exactly, just a young woman of 58, and not a girlfriend as such – though I have loads of female friends; just someone I knew as a girl on our estate in Cumbria when she was growing up and I was friendly with her family.

She was one of many kind, caring people from my past who wrote to me after my wife died in February, inviting me to lunch, cheer up the poor old soul. Which I’ve not been. So frightfully busy.

I never got round to lunch till last week.

She succeeded in her own career, became pretty well known, but not as well off financially as her husband, who is some sort of City whizz.

I visited her large house in the best part of Mayfair, and, over lunch, heard about their big estate in the West Country and their pile in Majorca, finding it hard to take my mind back to the weedy, runny-nosed little girl I knew when she was ten.

Their three homes employ 25 staff in total. Which means there are often some sort of staff problems.

How awful, I do feel sorry for you, must be terrible. It’s not easy having money, I said, managing somehow to keep back the fake tears.

Afterwards, I thought about our richest football teams – Man City, Man United and Chelsea. It’s not easy being rich like them, either.

In football, there are three reasons you have to spend the money. First of all, because you can. You have untold wealth, so you gobble up possessions regardless of the cost, and regardless of the fact that, as at Man United, you already have six other superstars playing in roughly the same position. You pay over the odds, as with Pogba, who is the most expensive player in the world, even though any halfwit knows that Messi and Ronaldo are infinitely more valuable. It leads to endless stresses and strains and poor old Wayne sitting on the bench.

Obviously, you are hoping to make the team better, and at the same time have the luxury of a whole top-class team sitting waiting on the bench, who would be desired by every other club in Europe. But the second reason you spend so wildly is the desire to stop your rivals buying the same players. It’s a spoiler tactic.

Third, there’s a very modern and stressful element to being rich in football, and that’s the need to feed the brand. Real Madrid began it ten years or so ago with their annual purchase of a galáctico. You have to refresh the team with a star name regularly, whatever the cost, if you want to keep the fans happy and sell even more shirts round the world each year.

You also need to attract PROUD SUPPLIERS OF LAV PAPER TO MAN CITY or OFFICIAL PROVIDER OF BABY BOTTLES TO MAN UNITED or PARTNERS WITH CHELSEA IN SUGARY DRINK. These suppliers pay a fortune to have their product associated with a famous Premier League club – and the club knows that, to keep up the interest, they must have yet another exciting £100m star lined up for each new season.

So, you can see what strains and stresses having mega money gets them into, trying to balance all these needs and desires. The manager will get the blame in the end when things start to go badly on the pitch, despite having had to accommodate some players he probably never craved. If you’re rich in football, or in most other walks in life, you have to show it, have all the required possessions, otherwise what’s the point of being rich?

One reason why Leicester did so well last season was that they had no money. This forced them to bond and work hard, make do with cheapo players, none of them rubbish, but none the sort of galáctico a super-Prem club would bother with.

Leicester won’t repeat that trick this year. It was a one-off. On the whole, the £100m player is better than the £10m player. The rich clubs will always come good. But having an enormous staff, at any level, is all such a worry for the rich. You have to feel sorry . . .

Hunter Davies’s “The Beatles Book” is published by Ebury

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 29 September 2016 issue of the New Statesman, May’s new Tories