BRICS is planning to work closely with the G20 and United Nations. They are looking to co-operation with the existing financial system and want a system that cannot be dominated by one dominant group (The US led West). At the moment The West can ‘pick off’ individual members of BRICs and they look to prevent this in future.
An interesting ‘non-Western’ look at BRICS
It’s tried before but seems to be picking up a bit of traction this year:
Countries will, of course, be free to use the US dollar. There will now be some competition which is usually a good thing (unless you are the one losing the monopoly that is).
That is the crux statement of the aspiration. Ask all of history what actual tactics within what viable strategy — short of successful war – can be used by BRICS to “prevent this in future” and you get…crickets
At the beginning of the 18th C France and Spain were troubled by the rise of the new-fangled wealth of mercantile Amsterdam and London. Spain’s rulers were too money addled and corrupt (hello Arab petropowers) to even attempt to concoct much of anything in response, but France did make a bold stab by empowering an unquestionably brilliant Scottish financial expert, John Law, to use brilliant financial construction to attempt to escape the strangling dominance of pound and guilder in the world economy.
And so then this happened:
BRICS faces the same brutal fact of a dominant currency backed not by mere precious metals, petroleum, let alone bits, but by
extreme huge volume of world trade
taking place in and dependent on that currency,
protected by dominating effective naval power.***
Currently the dollar, with its highly cooperating proxies the Euro and Yen, backed by both huge economies and an overwhelming naval alliance, rides almost as high as at the end of WWII.
Of course, the collapse of the earlier dominant pound sterling holds important lessons.
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*** Alfred Mahan, the genius of sea power, figures in this as he was the first to clearly enunciate that Power results from dominant international trade protected by sea power.
Mahan has been the core figure in USA international policy for over 100 years: The Influence of Sea Power upon History - Wikipedia
Ziehan touched on sea power in his book “Accidental Super Power” the Pacific and Atlantic oceans along with the only standing navy in 1945 made the USA an inevitable super power.
However, while Ziehan does point it out for most of the past super powers or world empires, the fall of those empires was technological change. He does not point it out for the USA and assumes that unlike Egypt that was undone by naval innovation, the USA will always be a super power based on its awesome river system and massive defensive position.
But that idea flys in the face of 10,000 years of history. No advantages last forever. Technology and innovation always sweep them away.
Remember recent events. The Maginot line, The shallow depth of Pearl Harbor.
Qaz,
No argument from me against the overwhelming power of innovatation. Of course, that power is one of the excellent reasons to continue to make the USA open and attractive to brilliance from all over the world.
Leap,
Interesting points on early supply side to stabilize currency and give China a chance. Do you think those types of goals were the actual long term strategic economic intent behind supply side policy?
Oh, me too! And with Churchill on hand as bartender and provocateur.
The USA Naval War College was founded on Mahan’s ideas, greatly influenced by Fisher’s insistence on actually implementing a updated variant of Mahan’s ideas at the Admiralty against idiot traditionalist attitudes.**
I am a fanatic subscriber to lectures from the Naval War College, mostly because it is the hottest most direct publicly available forum on USA global strategy. Here is a brilliant lecture from the war college on adapting Mahan to the 21st C. https://youtu.be/ZGlkUkzhfUE?si=T7er10iToUrDYPEU.
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** Gilbert and Sullivan were fans of Fisher and his critique of the naval traditionalists and used that struggle as the basis of “HMS Pinafore”. See this for a snicker or two.
Even better is “When I was a lad”, second song at your link. “Stick close to your desk, and never go to sea, and you all may be rulers of the Queen’s Navy”
For those who do not know Mahan and want a quick expert summary here is a terrific quick summary of a few high points:
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(Dad, Granddad and Great Uncle were all Army types and I learned to walk talk eat and stand my ground as an army brat on army bases, but my favorite Uncle Bud was a dashing Naval pilot who headed up the design of the Harpoon missile system. John Paul Jones was my god in Elementary School and Mahan in High School.)
Hamilton was brighter than Jefferson, and while Jefferson was also brilliant he was less educated in practical philosophy, including economics.
The confluence of greatness at the beginning of the Republic was extraordinary, and the falling out of circumstances brought their very best out of most of them.
Jefferson was in debt always hoping the slave labor would bail him out.
He objected to the power in the North. Virginia was the largest state population wise but the slave owners were broke.
Jefferson was a better man that Aaron Burr.
The people who want the gold standard are broke in their own way. That does not mean they have no revenues. Just that economically things do not add up.
Are largely irrelevant. The collection of countries have nothing in common other than a feeling of insecurity relative to the industrialized West. That’s not enough to develop coherent policy. Compare that to the G7, a collection of democracies committed to western liberalization and free trade.
In contrast, what’s the common philosophical or political or economic thread linking the BRICs countries? What common aim could China, India, Iran, Brazil, and Saudi Arabia possibly share? The BRICs countries standout for being extremely protectionist and exclusionary. Not a great basis for international collaboration.
The US and developed western nations pretty much run the world. The BRICS would like a piece of that action. Other than that, they don’t have much in common.
The thing that makes headlines is that some of the hardliners like Iran want to create a BRICS currency to challenge the dollar. China isn’t interested and the BRICS countries don’t trade much with each other anyway.
Some of them would like that, Iran in particular. In order to have a common currency, you need central control over the monetary policy, including a common regulatory framework and policies to manage currency fluctuations.
The BRICS have very divergent economic, political, and monetary systems. What do you do when the BRICS monetary policy is working in favor of one country, but against another country?
IMO, the only BRICs countries that matter are China and India. If they disagree it won’t get adopted. Neither country has a history of global collaborations or being particularly transparent in how they run their economies. And it seems inevitable that the two are going to be intense economic rivals. The two successfully collaborating on a global reserve currency seems ambitious.
Perhaps having all these diverse BRICs countries work together will reduce the threat of regional wars. I’m all for that.
I have a feeling though that the BRICs moment may have come and gone. Their best chance was shortly after the Chinese economy pulled the world out of the global recession caused by the US banking and real estate crisis in 2008. It seemed inevitable then that China would soon be the no. 1 economy. That ain’t the case any more.
