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Welcome to the not-so-new world order

The latest IMF report has confirmed what some have long argued – ‘rising powers’ like Russia and China are changing the world, but not in the way you might think.

 

When the International Monetary Fund (IMF) released its annual report last month, it seemed to confirm what has long been argued – the world order is changing. Measured in terms of PPP (purchasing power parity), China is set to overtake the US as the world’s largest economy by the end of the year.

New kids on the bloc

The IMF measures GDP both in terms of market exchange and purchasing power parity (PPP). PPP, which forms the basis of The Economist’s ‘Big Mac Index,’ takes into account the fact that the price of a t-shirt – or a luxury city pad, depending on your budget – is not the same in Shanghai, St Petersburg, and Seattle. The average wage in the US may be higher than in China, but simply converting Chinese (or Russian, or Brazilian) wages into US dollars, gives an incomplete picture of what workers and their governments can afford to buy. Thus, according to this measure, the US’s position as the number one economy is fast drawing to a close. By the end of 2014, China will make up 16.48% of the global economy (in terms of PPP) while the US will make up just 16.28%.

The report also shows that, with a combined GDP of $37.8 trillion (in PPP terms), the BRICs states (Brazil, Russia, India, China) and three of the so-called MINT states – Mexico, Indonesia, and Turkey – are outperforming the established G7 (Canada, France, Germany, Italy, Japan, the UK, and the US) by more than $3 trillion, leading to talk of an alternative G7. Moreover, half of the world’s 20 largest economies are now ‘emerging markets’ – Indonesia has overtaken the UK and now sits in ninth place, and Nigeria (the final MINT) has moved up from 30th to 20th place. In short, the world appears to have changed dramatically.

Half of the world’s 20 largest economies are now ‘emerging markets.’

Talk of a new world order is itself far from new. The spectacular economic growth of China in particular but also India, Brazil, and Russia (whose economy was a byword for shambles little over a decade ago), and the massive shift in power from West to East that these states seem to represent, have long been the subject of considerable envy, concern, and debate in the West.

For over a decade, pundits and academics from within mainstream International Relations have warned of (in the case of realists), and cautiously celebrated (in the case of liberals) the rise of these ‘new’ powers. Of course, the idea that China – an ancient civilisation – or Russia – successor state to a superpower – can be regarded as in any way new is absurd. Whether seen as threat or as business opportunity, one thing is accepted as given: these new economies are changing the world order as we have known it. This most recent IMF report only seems to have shored up this belief.

However, despite endless op-eds, articles, and policy papers analysing the successes, failures, and impact of these ‘rising powers,’ there has been little mainstream engagement with the term itself. How useful is the concept of ‘rising powers’ for understanding international politics? The answer to this may lend some much-needed perspective to the ‘new’ world order that people have been talking about for so long.

‘Rising powers’

One of the main problems with the ‘rising powers’ narrative is that it presents a misleading image of a world made up of individual, autonomous, boxed-off states, which stand apart from one another. This mistaken starting point results in a flawed understanding of the impact these new powers are having upon the international political system.

Via International Monetary Fund (click to enlarge)The economic and political rise of the BRICs and MINTs is commonly said to signal a massive transference of power from West to East. However, this linear notion of power makes little sense when taking into account the ways in which powers from both ‘poles’ are connected and depend upon one another.

The BRICs and the MINTs are deeply entrenched within the global neoliberal system and their success is intimately linked to and, in many ways, reliant upon those very states and regions with which they are assumed to be in competition.

China is heavily reliant upon foreign trade; the export of goods and services constitutes 30% of the country’s GDP, and the US and the EU (its alleged western nemeses) are China’s two largest trading partners. Russia too is highly externally dependent: much of Moscow’s revenue comes from oil, gas and coal exports – here again, the EU is the largest trading partner. And Moscow relies on other states to both buy these resources and to act as transit routes to carry them to other customers.

Some of these ‘new’ economies also depend upon foreign soil to feed themselves.

Some of these ‘new’ economies also depend upon foreign soil to feed themselves, further complicating the rigid state and regional borders that much of the narrative takes for granted. China’s activities on the African continent have been well discussed but it is also buying up vast swathes of land in Brazil, Argentina, Australia and Bulgaria, and it recently purchased 3m hectares of farmland in Ukraine. These foreign territories are used, among other things, to house dairy cows and grow soya beans, corn, forage, and sunflower intended for the domestic market. Other countries, like India, South Korea, the US, and food-poor Arab states, such as Kuwait, Qatar and Saudi Arabia, are similarly buying up foreign land to ‘guarantee’ their food security.

To focus on individual states and regions is also to ignore the important and powerful transnational capitalist dynamics at play, which have influenced and shaped these ‘new’ powers. For example, the global economy of today is increasingly made up of cross-border production chains. While Ford cars used to be produced almost entirely in Detroit, today the production chain stretches across international borders, from the US to China to Japan to South Korea and beyond. The individual components of today’s products, whether cars or iPhones, are produced in different countries and entirely different continents, engaging workers from separate ‘rival’ territories and spreading wealth, power, inequalities, and environmental damage across state borders.

The individualistic and fragmented world view which informs so much of the debate about these ‘rising powers’ thus fails to take account of the important ways in which global powers, both old and new, are connected, and the ways in which they sustain one another. It is this blind spot which leads many commentators to perceive the economic successes that are the BRICs and MINTs as a substantive change to the world order. In their eyes, power is being transferred on a massive scale from West to East. However, given the extent to which these new powers are integrated into and contribute to the global neoliberal system, it would be more pertinent to speak of an extension of that system. With this in mind, the world order is not so much changing as becoming entrenched.

The world order is not so much changing as becoming entrenched.

The BRIC and MINT economies, for example, are all based upon the Washington consensus economic model (a model which promotes, among other things, financial liberalisation, foreign direct investment, and privatisation); and they are all members of the World Trade Organisation, thus signalling their commitment to the global neoliberal political and economic project. China and Russia are also both permanent members of the UN Security Council – membership they don’t seem in any hurry to give up – and India and Brazil are keen to join the club. Though these new players may be seeking reform of international institutions such as the UN, they seem happy (as happy as anyone else that is) to work within their structures.

Of course, that is not to suggest that power is not being transferred within the international political system; it is, just not in the way suggested by most commentators. As the hegemonic neoliberal system is reinforced, it facilitates the continuation and intensification of power transference from the natural world and from the mass of humanity to ‘the economy.’ Both these important dynamics, however, are overlooked by the mainstream debate leading us to the second problem with the rising powers framework.

Chinese, Indian and US projected growth until 2050. CC: Strike Eagle (click to enlarge)

The state-centric view of international politics

A second issue with the dominant narrative is that it accepts and perpetuates the state-centric view of international politics. In this world of ‘rising powers’, where countries ascend and fall as they battle it out, the state plays the leading role. Its focus on high politics means that commentators are blind to important and far-reaching trends and dynamics within the international political system, leading them to overlook both changes and consistencies within the global order.

The terms that this narrative accepts – ‘new powers’, ‘rising China’, ‘re-emerging Russia’ – are themselves entirely state-centric, and make huge assumptions about what these rising powers are. In their turn, these assumptions affect the way in which we understand and relate to the world; and so produce the question we are driven to ask: ‘how does a rising China/India/Russia affect the global order?’

If, however, we take one step back and begin with different questions – for instance, ‘what is China?’, 'what is India?’, ‘what is Russia?’ – we might start to look a little differently at this changing world we are constantly being told about.

For example, if we shift the focus from GDP (itself a state-centric measure) to the rivers that flow and the earth that lies within the borders of these new global powers, then the idea that they are becoming more powerful or wealthy (terms which themselves might be contested) seems somewhat misplaced. The factories and industrial plants that have contributed to the unprecedented growth in China have also dirtied the air, degraded the soil and muddied the waters. One-fifth of China’s rivers are considered to be toxic with a further two-fifths classified as seriously polluted. In Russia too, the natural world is being mortgaged to set up ‘entrepreneurial ventures’ that contribute to the all-important GDP that commentators value so much. Meanwhile, the cumulative effect of this growth will be felt worldwide in the form of anthropogenic climate change. From this perspective, the world is certainly changing – the natural environment is being destroyed, the climate irrevocably changed, and resources depleted - but not in the way suggested by the ‘rising powers’ discourse.

It would be equally contentious to suggest that ordinary people who live within the borders of these BRICs and MINTs have gained power. The liberalisation of China’s economy, which produced its much-lauded growth, has also meant the loss of tens-of-millions of state worker jobs; the loss of workers’ rights such as medical insurance, access to housing and guaranteed pensions; and a vast urban-rural disparity. The ‘re-emergence’ of Russia over the past decade as a global power also demands qualification. While its economy might have moved ‘back on track’ since the collapse of the Soviet Union, the inequalities pervading its society have only increased, in no small measure thanks to the IMF-imposed shock therapy of the 1990s.

Across the board, citizens of both rising and established powers are themselves losing power to a global corporate elite. The financialisation of the global economy has left the system wide open to so-called virtual senates of faceless traders and nameless investors who hold huge sway over the policies pursued by national governments. These secret senates hold moment-by-moment referenda on governmental policies. If they dislike these policies – in that they privilege the interests of ordinary people rather than their own – they veto them with the threat of capital flight and/or attacks on currency. Banks in London, New York or Frankfurt, for example, are quick to make it known that they can just as easily operate in Hong Kong, Moscow or Singapore if governments should bring in laws and regulations that they do not like. In this context, ordinary people find themselves increasingly powerless to influence their national politics.

The real winners and losers

The state-centric world presented by the ‘rising powers’ narrative provides a misleading picture of what is really going on in international politics. While we focus on the rise and fall of states, we overlook the ways in which wealth and destruction are spread unevenly both within and across state borders, enriching and empowering a global capitalist elite at the expense of the environment and ordinary people. Far from threatened, this order is emboldened by the rise of the BRICs and MINTs. Cheap sources of labour in China, for example, allow capitalists in the West to lower the wages of their own employees and increase their profits by moving capital to China (and other low-wage economies), exacerbating social hierarchies both at home and abroad. Often, they do not even need to go to the trouble of moving  just threatening workers with the relocation of factories and offices encourages them to accept lower wages and reduced working conditions. Similarly, the wealth secured by elites in the BRICs and MINTs as they continue on their rise, is partially invested in the property market (and many other sectors) in the West, thus enriching Western land and property owners, sanitising spaces of unwanted social groups through gentrification, and re-enforcing an already rigid social order.

For more than a decade, commentators have been talking about these ‘rising powers;’ the IMF report released last month confirms that they have arrived. For many commentators this signals a change in the world order. However, the framework which informs so much of the commentary arguably conceals more than it reveals. Rather than a transference of power from West to East, these new powers are contributing to the continuation and extension of the neoliberal system. In some important ways, yes, the world is certainly changing. But in others, it remains very much the same.

 


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