[lbo-talk] The 'BRIC' countries as a new 'pole' in the global order - A bubble trade?

boddi satva lbo.boddi at gmail.com
Mon Sep 1 11:11:12 PDT 2008


On Sun, Aug 31, 2008 at 9:27 AM, <dredmond at efn.org> wrote:
> On Sat, August 30, 2008 12:53 pm, boddi satva wrote:
>
>> I ask about the BRIC development state, you give me:
>>
>> Japan, Korea, Taiwan, Singapore, Venezuela, Central Europe (which is,
>> of course, clamoring to join the EU and EMU), and FRANCE????
>
> The BRIC thesis is problematic -- Brazil has the beginnings of a
> developmental state, while India is still very much a periphery.
>
> France was a Second World economy in 1945, and got rich through dirigisme.

I think the question is not whether some sort of dirigisme is the answer to better economic growth. I realize that this is scarcely a widely-accepted argument, but I think the credit crisis and coming economic deflation will bring the numbers into focus.

If we start from a pro-dirigisme point of view, the question becomes what that dirigisme should and will look like. You concede my original point here, but I didn't mean to make the point as purely negative. I just think the BRIC thesis - which one finds on the left and right - comes both out of a bubble trade AND, more importantly, a theory of dirigisme that hasn't changed much since Lenin, Mao and Lyndon LaRouche.

An effective model for an economy governed by a broader base of the people has not yet been put together. The BRIC thesis comes from the idea that resources flowing to a standard dirigiste nation-state should produce prosperity. Yes to a point, no doubt, but international trade now seems to be the key to the most-successful versions of the dirigiste model (whether commodities-based or "Asian Tiger") moving us away from the old autarky model. But is the export model dependent on "First World" capitalism rather than a replacer of it?

I suggest that a failure of the predicted BRIC model will show that we need to re-think dirigisme - what it is, how it works, what it needs to provide.


>
>> The Chinese state-industrial complex is absolutely dependent on
>> exports
>
> Exports to Asia. Exports to the US - less so these days.
>

Well, I don't think the numbers are on your side yet and I would suggest that the Asian exports are funded by the First World exports, as Asian economies to which China exports are themselves export-driven economies.


>> First, these structures have failed, as yet, to internationalize.
>
> Huawei, Lukoil, Gazprom, and all those sovereign wealth funds are
> international through and through.
>

Huawei, yes. Lukoil and Gazprom? That's where I think Putin may be in the process of killing the goose that lays the golden eggs.


>>> They're not. 40% of world reserves are in non-dollars.
>>
>> That's 35%, actually, DOWN from about 43% in 1997.
>
> There's a measurement problem, because actual reserves are a state secret.
> Most estimates I've seen (Brad Setser, e.g.) say 40% or thereabouts, and
> show a slow decline of dollar holdings.
>
> -- DRR

Okay, but once again my point was about Latin America, where dollarization has increased ENORMOUSLY.

So the development state in Latin America is clearly choosing the US dollar.



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