Brazil and South Africa are countries that have long suffered from political capture of economic policy by the elites. Brazil — even when it was modernizing and industrializing — still remained dominated by feudal structures centered on agricultural landownership. The political culture that developed enabled elites to influence the direction of economic policy and maintain their dominance over the poor. Prolonged periods of military rule and the lack of an effective party system meant that the political system was always dominated by the elites (Wilkin, 2008: 99). The mechanisms of economic policymaking that developed revolved around distribution of patronage. This did not change significantly even when military rule was replaced by democratic governments. Federal fund transfers to the regions, especially to the poorest communities, remain prone to such capture, further skewing resource distribution and entrenching income inequalities (Mendes, 2005: 440–441). Though the Brazilian Workers Party of President Lula came to power promising an end to elite domination and corruption, it too soon found itself mired in accusations of corruption in government programs and procurement contracts (Michener and Pereira, 2016: 480). Given the fragmented nature of the Brazilian Parliament, the government could effectively function only by distribution of government patronage. The impeachment of Lula’s successor as President, Dilma Rousseff, and Lula’s own imprisonment on corruption charges illustrate the enduring power of such patronage systems in Brazil. The collapse of the Brazilian Workers Party government has also raised concerns about the continuation of many of the social welfare programs that they had implemented. It also illustrates how persistence of political capture can destabilize governments and threaten even successfully functioning social welfare programs.
South Africa inherited a deeply flawed economic system when it became a democratic country in 1994. Poverty was widespread, society was deeply divided, and the government bureaucracy and infrastructure that the new government inherited were designed to serve only a minority of the population (Pillay, 2004: 588). Policies enacted to address the problems of economic inequality afflicting the country further entrenched rather than reduced inequality. Government policy initiatives stressed a system of racial preferences in ownership and employment that easily lent itself to political capture. An increase in black ownership of firms was achieved through debt-funded purchases of equity by a small number of black entrepreneurs (Handley, 2005: 220). Many of these entrepreneurs were closely connected to the ruling African National Congress. In the absence of sufficient number of blacks with the requisite skills to take advantage of the opportunities provided by BEE legislation, the positive impact has been more in terms of number of blacks in senior board positions rather than in employment. The major benefits in terms of BEE legislation have accrued to a newly emerging ‘black middle class’, which has benefited from increased opportunities for employment, rather than to poorer blacks (Horwitz and Jain, 2011: 314; Iheduru, 2004).
Russia presents a broadly similar picture. The privatization of state enterprises by the government of Boris Yeltsin following breakup of the Soviet Union was marked by the sell-off of state assets cheaply to crony capitalists. About 34 of the 84 Russian billionaires earned their wealth through the privatization in the 1990s (Triesman, 2016: 238). This period of ‘chaotic capitalism’ was replaced by the ‘state-led capitalism’ of Yeltsin’s successor, President Vladimir Putin, under whom many of these assets were renationalized. Putin stressed political centralization, seeing nationalization of previous privatized assets as a means of reasserting state control and eliminating the political threat posed by the ‘Russian Oligarchs’ who had benefited from the privatization. Centralization of political power has not resulted in an increase in the efficiency of state agencies. On the contrary, it has led to persistence of corruption and continuing low levels of efficiency in the government (Robinson, 2011: 13–14).
Conclusion
It is not surprising that the BRICS economies would seek to play a much greater role in global politics, given the rapid growth of their economies, and their increasing share of global economic output. With international political and economic institutions still structured to reflect immediate post-World War II economic realities, it is also clear that international reform of these institutions is long overdue. The ability of the BRICS economies to influence the G7 to initiate these reforms is, however, constrained both by differences between them and also by their domestic vulnerabilities. While all the five BRICS economies have seen periods of rapid economic growth, continuing income inequalities and the non-inclusive nature of their growth make them susceptible to domestic instability. Rising economic inequality could undermine domestic stability, further reducing their ability to work together internationally. The effectiveness of BRICS as an emerging power bloc might be more apparent than real.
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