November 26, 2014
The Vampire Squid
According to Goldman Sachs, the BRICS should soon be running the show, pushing away worn-out old-timers
In Rolling Stone, Matt Taibbi memorably described the investment firm Goldman Sachs as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”. But Goldman Sachs can also be creative. Among its offspring is the BRICS grouping that Cristina would dearly like Argentina to join. Its founding members, Brazil, Russia, India and China, came together after government advisers read a paper written in 2001 by Jim O’Neill, a British economist working for the allegedly blood-sucking squid, in which he predicted that by mid-century the quartet would be running the show, pushing aside worn-out old-timers like the US, the European Union and Japan. They were later joined by South Africa for what presumably were good multicultural rather than economic reasons.
These days, geopolitical predictions tend to have a short shelf life. Of the BRICS five, only one, China, remains on course. The others are either in recession or pretty near it, and will probably stay that way for some time to come. Despite the macho posturing of Vladimir Putin, Russia could soon fall over a democratic cliff; unless the recently elected president Narendra Modi manages to shake things up as he promised, India may return to what glum humourists once called “the Hindu rate of growth”; protectionist Brazil is struggling to extricate itself from the “middle-income trap” and South Africa faces a plethora of social problems that are not about to go away.
Meanwhile, China marches on. It too will have to overcome a huge number of difficulties before becoming a genuine rival to the US, but it has an advantage that is denied to other members of the club: a relentlessly hard-working and self-sacrificing population that takes it for granted that education is the key to just about everything that is worthwhile. Though the people governing China still pay lip-service to Marxist and Maoist pieties, deep down they are as capitalistic as anyone in Wall Street or the City of London.
Had it not been for the elite’s decades-long infatuation with Communism, by now the Chinese economy would already be considerably bigger than that of the US, Europe and Japan combined. Even if the entire country failed to match the achievements of the overseas Chinese in Singapore or their compatriots in Hong Kong, it could surely have done as well as Taiwan, whose per capita income is currently three times higher, and would therefore boast a gross domestic product dwarfing that of the US.
As most middle-class Argentines have learned to their cost, Lenin was on to something when he said that the best way to crush the bourgeoisie is to grind them between the millstones of inflation and taxation; he could have added that applying his own brand of economics would be more than enough to crush an entire country. Had cunning strategists in Washington back in the 1950s sought to make sure that the US remained top dog for a very long time, they would have sold to the Chinese revolutionaries millions of copies of the Marxist-Leninist cook-book. Apparently, it never occurred to them to do play such a dirty trick. Instead, they went on about the merits of capitalism. Luckily for the US and its friends, the Chinese refused to listen until, thirty-five years ago, Deng Xiaoping put a stop to the lefty nonsense that had been holding them back. Since then, China has been playing catch-up with a vengeance.
For China, the BRICS alliance is at most a useful tool. By making out that, unlike those heartless North American and European imperialists, the Chinese really respect other countries’ sovereign rights and deplore “neoliberal” excesses, they should be able to make many favourable deals with “partners” who are tired of being hectored by Western know-alls and are looking for a less demanding alternative. They can then get down to behaving like a “vampire squid” looking not for money but for the raw materials: minerals, petrol, gas and farm products they need for their growing economy. Will they be more careful than the previous lot when it comes to other people’s susceptibilities? It would be nice to think so, but by and large the Chinese do not seem to go in for the hand-wringing and self-flagellation that are so fashionable in the more prosperous Western countries. They are certainly not going to be moved by the plight of poverty-stricken Argentines who for the most part are far better off that hundreds of millions of Chinese who live in rural areas.
If the Chinese economy keeps growing at a heady pace, the temptation to reshape the world order so it resembles what it might have become had the Ming dynasty not turned inwards just when the Europeans were starting to get their act together could become well-nigh irresistible. That would be bad news for China’s neighbours who are fated to be treated as vassals, and for Russia, whose vast empty spaces chock-a-block with raw material goodies would be a welcome addition to Peking’s domains. Argentina and other Latin American countries are a bit further off and should be able to benefit from China’s rise without running too many risks, but even so, they would have to be careful. Vampire squids may be less threatening that the name given them suggests, but that does not mean they are benign creatures more interested in other people’s welfare than in their own.