The other day I switched on BBC Radio 4 at random. To my disgust, I found myself listening to someone lecturing assorted Indonesian politicians and business people in the most pompous and arrogant—indeed neo?colonial—way.
After a while I realised this was Jim O’Neill and all became clear. O’Neill used to be chief economist at Goldman Sachs, the widely hated Wall Street investment bank whose predatory practices led to it being likened to a vampire squid.
O’Neill, however, is most famous for inventing the acronym “Brics” to name a group of “emerging market” economies—Brazil, Russia, India, and China—which he claimed would come to dominate the world in the 21st century.
Grouping these economies together was always incredibly superficial. China is in a category all its own. Its rapid industrialisation has led to it becoming the second biggest economy in the world. It has just overtaken the US as the biggest importer and exporter and in a few years time will be producing the largest share of global output.
The rest of the Brics are a very mixed bag. Russia is in many ways a declining economy heavily dependent on its exports of oil and gas. India is an important producer of software and manufactured goods but lags far behind China.
Brazil has become increasingly dependent on supplying food and raw materials to China. It has slid sharply down the league table of industrial producers in the South over the past generation.
But O’Neill was lucky in his timing. The idea of the Brics became popular particularly as the global economic and financial crisis weakened the US and strengthened China.
The four states have started to think of themselves as a collective grouping and to hold regular summits. In 2010 South Africa—another country heavily dependent on the export of raw materials to China—joined. The Brics plan to set out their own development bank this year.
Now O’Neill is hoping to get lucky again. He is presenting a series on Radio 4 about another group of rising “emerging market” economies, the Mints—Mexico, Indonesia, Nigeria, and Turkey. He pontificates that, if they “get their act together, some of them could match Chinese-style double-digit rates between 2003 and 2008”.
This latest category is even more tenuous than the Brics, as O’Neill’s own analysis effectively concedes: “Economically three of them—Mexico, Indonesia and Nigeria—are commodity producers and only Turkey isn’t.
“This contrasts with the Bric countries where two—Brazil and Russia—are commodity producers and the other two—China and India—aren’t.
“In terms of wealth, Mexico and Turkey are at about the same level, earning annually about $10,000 (£6,100) per head. This compares with $3,500 (£2,100) per head in Indonesia and $1,500 (£900) per head in Nigeria, which is on a par with India. They are a bit behind Russia—$14,000 (£8,500) per head—and Brazil on $11,300 (£6,800), but still a bit ahead of China—$6,000 (£3,600).”
Just to put things in perspective, US income per head was £31,400 in 2012, and British £22,200. In other words, a huge gap still separates the Brics—let alone the Mints—from the advanced capitalist economies.
Moreover, most of these countries remain trapped in a division of labour inherited from colonialism that leaves them supplying raw materials to industrial economies.
This makes them highly vulnerable to the ups and downs of the commodities markets. When the Chinese boom helped pull commodity prices up the Bric and Mint economies did well. But now China is slowing down and commodity prices have retreated.
O’Neill’s labels are designed for the financial markets, to help them target countries where quick profits can be made. In recent years, with the US and Europe in depression, speculative money has rushed into countries such as Brazil and Turkey.
Now it’s beginning to pull out, partly because the American economy is looking a bit stronger, partly because of the problems the “emerging markets” themselves are struggling with. Understanding the trajectory of global capitalism demands more than the banalities of Jim O’Neill.