Asymmetric dilution of the centre of influence has inspired the BRICS to form the New Development Bank (NDB), apparently challenging Western hegemony, led by the USA. This will be a new and sustained architecture in the management of world's capital mobilisation and utilisation of natural resources. Although technology has still remained under the control of the western powers, particularly the USA, innovations and inventions are no longer a monopoly of the West.
Member countries of BRICS (Brazil, Russia, India, China and South Africa) represent about 2/3rd of the world's poor. Their focus on poverty alleviation cannot any longer depend on bureaucratic and complicated western model. The long-drawn Cold War left neither the open market nor the command economy as the winner. Instead, an animated quagmire created by the deregulated market system compounded the difficulties in wealth making, developing skill and in establishing the normalcy in financial transactions. Developing economies constantly appealed to the capital markets and to the western regulators to rein in the creative practices and to invest more in basic activities of economy. But "opulence" became the key to growth in the western economies and overrated and inflated values were added to the GDP (gross domestic product) of those economies.
Very little was done for the safety net and nothing was considered as a limit to manipulation and scheming. Planners, governments and business managers all connived to extrapolate the growth conception. Sadly, some well-known social thinkers and reputed economist supported and defended it. Increasing growth of world population did not however change the demand curve as most growth centres of population were located in those nations of region where organised markets are non-existent and supply to them and their consumption did not form any economic character. The architecture in these markets mostly remained primitive and could only support poverty-stricken life. Belated attempts to alleviate poverty by introducing charitable ideas of microcredit had at the best earned complacent satisfaction for compassion but made no significant impact on any one's life.
Market-dominated consumption in the western markets became fundamental and became the only pull for the growth of developing markets. Almost total dependence on export to the western markets became synonym of success. Export-earning, as it became only preference for national income which was done at the cost of great sufferings of the nationals and economising on the domestic demands, only resulted in the growth of uneconomic demands and superficial gains in the developed markets. A corps of "Spoil Brats" took over the management of governments and business enterprises in the western nations since the revered Prime Minister of the United Kingdom late Margaret Thatcher declared to unleash the market potentials in full.
There has been a conceptual conflict between the North ( the developed world) and the South ( the undeveloped world). Apolitical hegemony was established by grouping the decolonised nations into preferred nations for sustaining continued extraction and supply of raw materials for industrial demand. The leadership in the decolonised nations had difficulty in articulating and rationalising the purpose of independence and liberty for their citizens. Sacrificing the prosperity of their nations, they, instead, played into the hands of ex-colonial benefactors by emulating them. A great deal of wealth was transferred from the newly decolonised nations to the western economy.
Simultaneously, technology began creeping in and, in particular, communication technology took a giant leap forward which empowered the citizens of all nations. Social demands, cultural traditions and common causes of political identity began bonding the population of different social background, different ethnicity and different political spectrum. Markets converged that boosted the demands and consumption worldwide.
Now the governments of so-called developing nations came under pressure to function and perform to provide education, employment, health care, housing and political liberty to their citizens which they were unable to deliver in collaboration and in partnership with the developed economies of the West. Developing governments needed to adopt "fast track" concept in quelling their ever-restive population. Western governments, busy recovering from a very badly managed economic crisis and handicapped by an ambiguous unity, were unable to support a growth plan which had become a necessity in the developing economies. BRICS and BRICS Development Bank have, therefore, emerged as a result of natural progression and, indeed, as an appropriate conclusion.
BRICS Development Bank will face challenges from within and not, as ordinarily assumed, from World Bank or International Monetary Fund (IMF). BRICS's two protagonists, China and Russia, are persistent but not successful socialists. India is neo-socialist attempting to convert itself into a market economy and practise western-style democracy. Brazil, a fractured democracy, is now dependent on market to sustain cohesion in society by wealth making. South Africa will be marginalised when their dependence on western conglomerates will force them to remain within the limits of western capital and market mechanism. The political and philosophical incongruity among the BRICS sponsors will take quite a long time to settle conflicts and contradictions. By this time the reform process, as now being undertaken in the West, will be able accommodate speed and haste of those client states in Africa and Asia and in Latin America that BRICS would aspire to bring them to their fold.
In addition, the experience that the West has acquired since the Marshall Plan in managing the multi-complexities of international monetary, growth and development policies will be difficult to match by those who are still experiencing transition to fully developed economies.
By joining BRICS, Russia has perhaps relegated itself, politically, and conceded leadership to the USA. This realisation will soon dawn on Russia and it will then be expected to make all efforts to regain its challenging and competitive role vis-a-vis the USA in the political arena which may limit its participation and contribution to BRICS.
The nett gainer in BRICS initiatives will be China and secondary benefit may come to India. Brazil and South Africa will have difficulty in getting out of the clutches of the West to gain anything from BRICS. The perception that BRICS will challenge the already organised market system of the West will soon be nullified as it will find itself dependent on the same market mechanism for its capital mobilisation. Outside the dollar regime, all other currency alliances failed to incorporate multi-trade transactions. Dollar replacement is theoretically possible. But capital mobilisation requires common and reliable measures which over last sixty years have been adopted and fine-tuned by dollar while all other currencies failed in this respect.
BRICS is not a new idea, other similar attempts were made to challenge and compete with the West. In a globalised market system with ever-improving technology, BRICS's main thrust at best could be to maintain a conflict-free environment for trade & development which the West achieved at a great cost. Russia and its confusing and fluid state of transition may prove to be BRICS's main obstacle.
The writer is an economist and business consultant. kbahmed1@gmail.com
BRICS Bank to challenge and compete with the West
K.B. Ahmed | Published: July 26, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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