Thursday, August 6, 2009

One Brick at a Time

From the August 2009 issue of the Socialist Standard

Capitalist governments find it useful to get together in various ways, despite the inevitable rivalry between them. It can be helpful to avoid being at loggerheads too much of the time, whether to benefit from some temporary mutual interest or to club together against some country or bloc that is for the time being an enemy. From the United Nations to G8 to the Association of Southeast Asian Nations, many capitalist alliances have proven themselves worthwhile to ruling classes.

One of the most recent such groups to emerge is known as BRIC (for Brazil, Russia, India, China). The idea has been around for a few years, but only in June did the first summit of these countries take place. They are currently behind the United States as the uncontroversial leading power, Japan and the European Union (itself a grouping, not a single country, of course). Yet, together these four states account for forty percent of the world’s population, and their political and economic influence is only likely to increase. Even in the current recession, their economic growth outstrips that of the rest of the world.

And what kind of thing do the bosses of BRIC talk about when they get round a table? They talk about areas where their countries may be able to work together, such as energy (including nuclear energy), agriculture and technology. They talk about areas where competition and cooperation are both possible (such as between Brazil and Russia in aircraft construction).

There is a possible division of labour over the next few decades, with Brazil and Russia becoming major players in the provision of raw materials, and China and India supplying manufactured goods and services. China’s economy is based on manufacturing, with cheap labour power offering an advantage for the time being. India’s strength is in information technology, with software being developed for many international companies. Russia has enormous reserves of oil and natural gas, but long-term reliance on high energy prices is not considered to be a sensible strategy. Brazil, in contrast, specialises in agricultural exports, together with producing minerals such as iron and aluminium. So there are plenty of opportunities for cooperation, with Russian oil and gas finding their way to India and China, for instance.

In June the leaders also discussed changing the global currency system, with regional reserve currencies being adopted and some transactions being conducted in national currencies. This could well be bad news for the US, with the role of the dollar as the main reserve currency being undermined. Though China, with huge dollar reserves, wishes to see the US currency maintain its current role. Even if little changes in the short term, it is highly likely that over a longer period there will be considerable reshaping of how capitalism’s global finances are structured.

It is not clear whether BRIC will remain as a forum, let alone become a more formalised association. But you can bet your bottom dollar (or yuan or rouble) that the world’s power-holders will continue to defend their own interests by cooperating or competing with whoever suits them at the time, with no regard for those who actually produce the wealth or for any concept of democracy.

Paul Bennett