The BRICS microcosm

I read an interesting transcript of an interview today at CFR. It was an interview with … well … another journalist. But it was great nonetheless.

The group of fast-growing emerging markets known as the BRICS–Brazil, Russia, India, China, and South Africa–held their fourth annual summit this past week in New Delhi. The leaders of the five nations agreed on new measures to facilitate greater trade within the bloc, including a deal to extend credit facilities in the local currencies of other BRICS countries. They also discussed a potential plan to set up a joint BRICS development bank, which would serve as a counterweight to the Western-dominated World Bank and International Monetary Fund. However, the BRICS have not set out a comprehensive long-term agenda because they are hobbled by internal differences and have “nothing in common,” argues the Financial Times’ Martin Wolf.

At one point the interviewee said:

There’s no reason to expect them to agree on anything substantive in the world, except that the existing dominating powers should cede some of their influence and power.

Interviewer: There’s also been criticism by the BRICS that Western monetary policy has been too loose, and has hurt developing countries. What do you make of that?

and the answer was:

I should have added that as one of the complaints. The answer to that is: “Who the hell cares?” Western policy is made in light of what the Western countries see as their interests. And these countries make their monetary policy in light of their interests. There is no global monetary system at all, of any kind, that disciplines this. So the reality is [that] we live in monetary policy anarchy, from a global point of view, in which each country pursues its own interest. So I regard these as completely fruitless complaints, unless we start thinking about a total reordering of the global monetary system, which these countries don’t want any more than the developed countries want because they would all lose sovereignty.

And then goes on to say:

They have very different values [referring to BRIC countries]. They all share the idea that they are important countries and should be taken seriously, and that’s clearly right. What they have in common, it seems, is their view of their relations with the established powers. They see themselves as rising powers, and the established powers as declining powers, and they want the world order to change for that reason.

What is interesting here is the superficiality of this view. The interviewee fails to realize what he is saying. If two or more parties need to negotiate then they must harbor substantial differences; otherwise, what are you negotiating over? The key question isn’t in the differences of interest that present in negotiation but in the relationshp between differences and similarities.

In order for a negotiation to be successful, assignment of value between parties must be viewed by each party as a just, self-interested assignment. If each party shares a common interest whose value to each of them exceeds the value of other surrendered interests of value to each of them, then you have what some might call a “deal”. But lets be more precise.

Let the set of common interests be denoted C, and the set of subjective, selfish interests be denoted Xi, where ‘i’ is the i‘th party to the negotiation. Please note that C has no subscript. It is common to all parties. The author has argued against himself when associates the concept of C with a common interest in countering the global influence of the currently disproportionately empowered economies of the world:

There’s no reason to expect them to agree on anything substantive in the world, except that the existing dominating powers should cede some of their influence and power.

And he then proceeds to list out a presumably non-exhaustive list of interests we can easily associate with Xi. But my point is deeper than this. Even if we decide that C is not a common interest of sufficient value to overcome the negatives of X, there are always variants of C that can be identified and exploited for the purpose of consensus. It is done every day in national and global politics. It is simply disingenuous to state that there is not common interest that cannot be leveraged with sufficient effect, imo.

Thankfully, he acknowledges a need for global rule of law and a global financial system.

– kk


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