The three-day summit of the BRICS leaders ends today. The BRICS are Brazil, Russia, India, China and South Africa. Russian leader Putin was not present in person – he has plenty on his plate already!
The five BRICS nations now have a combined GDP larger than that of the G7 in purchasing power parity terms (a measure of what GDP can buy domestically in goods and services).
This sounds like a turning point in the world economic order. But that would be an illusion. First, within the BRICS, China (accounting for 17.6 per cent of global GDP) is dominant, followed by India at a distant second (7 per cent); while Russia (3.1 per cent), Brazil (2.4 per cent), and South Africa (0.6 per cent) together made up just 6.1 per cent of world GDP. So this is no equally shared economic power.
Moreover, in nominal dollar terms, which in my opinion is what matters, the BRICS countries are still well behind the G7. Combined, the BRICS bloc had a GDP of USD26trn in 2022, which is about the same as the US alone. And when we measure GDP per person, the BRICS are nowhere. Even using PPP-adjusted international dollars, the United States’ per-capita GDP amounts to $80,035, more than three times that of China, which amounts to $23,382.
From this summit, more countries have been invited to join as full members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates. But even if that happens, the BRICS group will remain a much smaller and weaker economic force than the G7 imperialist bloc. Moreover, the BRICS are very diverse in population, GDP per head, geographically and in trade composition. And the ruling elites in these countries are often at loggerheads (China v India; Brazil v Russia).
So, unlike the G7, which has increasingly homogenous economic objectives under the hegemonic control of the US, the BRICS group is disparate in wealth and income and without any unified economic objectives – except maybe to try and move away from the economic dominance of the US and in particular, the US dollar.
And even that objective is going to be difficult to achieve. As I have pointed out in previous posts, even though there has been a relative decline in US economic dominance globally and in the dollar, the latter remains the most important currency by far for trade, investment and national reserves.
Approximately half of all global trade is invoiced in dollars and this share has hardly changed. The USD was involved in nearly 90% of global FX transactions, making it the single most traded currency in the FX market. Approximately half of all cross-border loans, international debt securities, and trade invoices are denominated in US dollars, while roughly 40 percent of SWIFT messages and 60 percent of global foreign exchange reserves are in dollars. The Chinese yuan continues to make gradual gains and the renminbi’s share in global FX turnover has increased from less than 1% 20 years ago to more than 7% now. But the Chinese currency still only represents 3 percent of global FX reserves, up from 1 percent in 2017.
And it’s even the case that ‘anti-US’ China remains heavily committed in its FX reserves to the US dollar. China publicly reported that it reduced the dollar share of its reserves from 79% to 58% between 2005 and 2014. But China doesn’t appear to have changed the dollar share of its reserves in the last ten years.
Moreover, multilateral institutions that could be an alternative to the existing IMF and World Bank (controlled by the imperialist economies) are still tiny and weak. For example, there is the New Development Bank set up in 2015. The NDB has now appointed Brazil’s former leftist President Dilma Roussef as head, based in Shanghai.
There is much noise that the NDB can provide an opposite pole of credit to the imperialist institutions of the IMF and World Bank. But there is a long way to go in doing that. One ex-official of South African Reserve bank (SARB) commented: “the idea that Brics initiatives, of which the most prominent thus far has been the NDB, will supplant Western-dominated multilateral financial institutions is a pipe dream.”
Even so, international rivalry, politically, economically and militarily, is going to hot up in this decade. The days of complete domination by the imperialist bloc under the US are over – because globalization ie unimpeded trade and financial flows of the last two decades of the 20th century, is over.
As the profitability of capital fell back in the major economies in the first two decades of this century, the struggle for surplus value by the major capitalist economies has intensified. And this is leading to a fragmentation of economic power. The US-led imperialist bloc is still dominant, but its dominance is being questioned as never before.
Michael Roberts Blog 
Accurate report, in my view. The problem that arises, in my opinion, is that i) what questions the US-led block is not particularly attractive or desirable as an alternative (politically, culturally, economically), and ii) you never know how a falling dominant will react – mere acceptance does not seem very likely.
It is impossible to predict the future of these kind of institutions/architectures without a very detailed, exhaustive investigation that would require at least one or two Ph.D. theses (and that’s assuming there is enough historical evidence to produce them, which may never be the case). That’s because they occupy or are a symptom of a very high level of superstructural sophistication and development of a given mode of production, so they are very susceptible to to rise or collapse even to superstructural change itself.
I remember the 1990s, the apex of the End of History era, when the economic blocs were the bee’s knees. NAFTA was considered to be the consolidation of globalization, while the rise of the European Union was seriously considered to be an inevitable peer to the USA itself. ALCA was just an inevitability, the logical step of NAFTA’s and Mercosul’s creation. Greatest evidence of this are the Western high school Geography books of the 1990s, which dedicate large portions of themselves to teach the students the importance of these blocs. They have all turned to dust after the catastrophic event of September 2008.
There are also examples where the reverse was the case: the IMF was a marginal, almost irrelevant institution during the Cold War, an era where the star of the show was the World Bank. Then, all of a sudden, the neoliberal reforms started during the 1990s (in Mexico at the end of the 1980s), and, coupled with the sudden collapse of the USSR, the IMF saw itself at the right place, the right time, and was catapulted to stardom basically overnight, leaving the WB (and even the UN) in the dust. For a period of five-six years (1992-1997), the IMF was the most important and powerful supranational institution in the world. After the Asian Tigers Crisis, the IMF took a hit to its prestige, but still remained the most important if not for reasons of damage control (the crisis had to be crushed); after the catrastrophic event of September 2008, it definitely entered a period of constant decline, a process that continues to this day.
So, where will the BRICS head to? Based on previous examples, anything can happen, including the inertial path (that is, it deliver exactly what it indicates to deliver). The important thing to pay attention about the BRICS is the historical context it is being founded and it is rising/expanding: a context of accelerated decline of the American Empire; a real, concrete bet of a group of nation-states, led by China, to seriously defy American hegemony. As with all bets, it may fail, but there’s no denial that this is the first real chink in the American armor since the rise of the USSR-as-a-superpower in May, 1945.
👏👏👏👏 good
One thing not mentioned here is that the Bricks (to say nothing of the rest of the “Global South) produce most of the world’s use values, that are financially transmogrified into the exchange value GNP of the fat consumer economy “West”.
This is because use value production within the Western imperium of neocolonial states) became increasingly unprofitable by the close of the 19th century. The system, in actuality (from the perspective of a marxist critique of political economy), is an interest/rent/and war-booty seeking “economic” system. It lives by war and plunder, not “profit”. NATO and globalized Silicon Valley are its commercial centers.
I would be a bit more cautious Michael. The G7 are united yes, against China. They are petrified that China will gain the economic and technical power to restructure the world economy disadvantaging them. One just has to read surveys of the heads of German companies doing business in China to smell their fear. The BRICS+ are also united, this time against imperialism led by the USA. They have been bullied for decades and for the first time they can exploit the antagonism between the USA and China and navigate between the two ‘super-powers’ for their own benefit. Their raft of choice is of course the BRICS+ So let us not overestimate on the one side and underestimate on the other. We will shortly see how united the EU and the USA is when Ukraine is defeated, the US walks away and a weakened EU has to deal with the aftermath of a destroyed society in its backyard. I will deal with the BRICS+ more fully in a forthcoming article.
The article below from New Left Review is a bit old, 2014, nine years ago. But it’s a thoroughly documented argument why Western economies are still in a commanding position and will stay as such for a while to come.
It would be interesting to do an update of this article, sector by sector, to see exactly how much has changed. China is now the largest auto exporter in the world, and has advanced in renewable energies and IT technologies, but other sectors seem to be still in Western dominance.
THE CHIMERA OF GLOBAL CONVERGENCE
SEAN STARRS
https://newleftreview.org/issues/ii87/articles/sean-starrs-the-chimera-of-global-convergence
Hoshang – a quick read of this NLR article. Many good and relevant points somewhat close to my view. But as you say it is old.
It’s not BRICS versus the G7. It is China versus the U.S.
* An expanding industrial power versus a hollowed-out financial giant.
* A monopoly capitalist power that must insist on a redivision of global goodies versus an established monopoly capitalist power.
* A state with no ideology that attracts the masses versus a state with the dried-out clichés of a once thriving ideology.
The full text of the BRICS Johannesburg Declaration has been published:
Johannesburg BRICS declaration (FULL TEXT)
https://www.rt.com/news/581814-full-text-johannesburg-brics-declaration/
Persian translation
Interesting write up. US and China being the key players in G7 vs BRICS has been mentioned quite a bit in the comments. I am wondering if you had any thoughts on the development of the Aviation sector in China? Specifically, the production of the first few COMAC C919s. Does this symbolically represent an ascent (no pun intended) by China into more direct status as equals (or near equals) with the Europe or even the US? Commercial aircraft manufacturing is highly technical, requires massive capital investment, and is one of the most protected industries in the world. Even with COMAC still in its infancy (compared to Boeing and Airbus), do you see this development as consequential for the contention among the leading economic powers? Either from an economic or purely symbolic perspective.
Yes. The airplane is considered to be the jewel of the crown of modern civilian engineering, and dominating this technology is usually a good indicator the overall engineering of that nation is doing well.
It’s important to highlight that the Russian Federation already dominates the airplane technology (including civilian). But that’s an exceptional case, because they inherited it from the Soviet Union.
besides, vk, Russia MASTERS aircraft building (and now China, too), while especially building of civilian aircraft building is DOMINATED by USA and Europe. 2 equivalents of German “beherrschen”, but with different meaning.
The question is how many C919 can be sold outside of China (and Russia) and if the wide body CR929 gets off the ground. Putin’s silly war against Ukraïne does not help.
There are some things that are not considered in the analysis.
The first is that the currency and financial systems, in addition to being unstable, only grow as they are used, for example, the insurance sector, as embargoes are created, these grow in countries without strong sectors, but with large flows of commodity sales. , naturally they will quickly strengthen.
Another sector that will undergo rapid changes is the market sector for these commodities, which is dominated by countries such as the USA and the UK, with direct sales in currencies of different countries also suffering rapid losses. A typical example is coffee, where Switzerland and Germany are currently classified as the second and fourth exporters of coffee in the world and the Netherlands are the fourth exporters of cocoa in the world, as far as I know these three countries do not have a foot of coffee or cocoa in their countries.
The production of agricultural commodities has low added value, but if the products run out or become rare, their prices rise by more than 100% in the first month. Food before the 20th century consumed around 30% to 40% of the average income of the population, due to the exploitation of peripheral countries it dropped to around 10%, but it will rise!
“The US-led imperialist bloc is still dominant, but its dominance is being questioned as never before.”
But not by Michael Roberts who writes:
an illusion … well behind … are nowhere … will remain a much smaller and weaker economic force … are very diverse … at loggerheads … is disparate in wealth and income and without any unified economic objectives … going to be difficult to achieve … are still tiny and weak … a long way to go … “is a pipe dream”.
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How does this analysis of ‘economic force’ change when counting in unpaid wealth production and adjustments for value of goods produced such as ‘bad food’ in the global North. This latter causing major public health problems which will show up in GDP but are hardly wealth producing.
How does the picture look if not seen through global North hegemonic eyes measuring wealth more directly?
Do you think this is something that bricks might develop to tell the lie to western hegemonic distortions.
“First, within the BRICS, China (accounting for 17.6 per cent of global GDP) is dominant, followed by India at a distant second (7 per cent); while Russia (3.1 per cent), Brazil (2.4 per cent), and South Africa (0.6 per cent) together made up just 6.1 per cent of world GDP. So this is no equally shared economic power.”
Neither in the G7. Take a look at the GDP of the USA, and later to the other partners.
Yes neither in the G7 – the US is dominant. But the rest of the G7 is following US policy and interests -even France and Germany.
So far, so good … But, doesn’t the first sentence of The Capital, volume one suggest that looking at GDP is not sufficient, and even misleading?
Not for capitalists
The economic realities aside, it should be noted that more than 60 other countries took part in the recent BRICS conference in South Africa, with high level delegations.