As the world continues to evolve, so do states. Since the dawn of time, old empires have fallen and new superpowers have emerged, mostly at the behest of large territories, military might and thriving economies. Trade, finance, and supply chains have been pivotal in shaping the rise and fall of great powers. In the 21st century, as the global order undergoes a transformation, the world is also witnessing the emergence of new trade partnerships, growing markets, and economic alliances, with BRICS standing out as a significant example.
Challenging the supremacy of western, especially US led institutions and frameworks such as the World Bank, IMF, G-20 and the G-7, BRICS is on the path to become a forum that gives emerging markets the chance to promote mutual economic growth and development. Recognizing the significance and relevance of BRICS, this piece seeks to examine its rise through the lens of World Systems Theory and analyze how BRICS is positioning itself to challenge the Western-dominated capitalist order.
Wallerstein divides the capitalist world economic system into three tiers: core states, periphery states and semi periphery states
The World Systems Theory proposed in the 1970s by Immanuel Wallerstein is a sociological theory that attempts to explain the development of world economy through the lens of a single interconnected system, as opposed to individual state economies. Wallerstein divides the capitalist world economic system into three tiers: core states, periphery states and semi periphery states. According to Wallerstein the economies of these states transcend borders and are integrated into one single system through trade, economic production and political alliances.
According to him, it is essentially the division of labor that divides states into core, periphery and semi periphery states and this division of labor is set on an elaborate capitalist cycle of exploitation. Where the economically strong and developed core states exploit the economically weaker, underdeveloped but resource rich (this resource includes cheap labor as well) periphery states to fuel their own economies, while the semi periphery states are the developing states that are being dominated by core states to a small extent but are also dominating the periphery states. Semi periphery states are therefore transitioning to become future core states.
A core state also has a strong bourgeois or working class and a larger tax base to run the economic affairs of the state. These states are independent of external control or outside control from other states and are at the forefront of technological and industrial development
Certain characteristics that define a core state are that it is economically diversified, wealthy and has strong central governments which would control the bureaucracy, military and help state institutions manage internal and external economic affairs. These states are greatly industrialized, and produce value added goods for export purpose instead of exporting raw materials. A core state also has a strong bourgeois or working class and a larger tax base to run the economic affairs of the state.
These states are independent of external control or outside control from other states and are at the forefront of technological and industrial development. Currently, many such core states exist for example Canada, Australia, Japan most of Europe including the UK, France, Spain, Portugal etc., but occasionally it so happens that one core state possesses clear dominance over all other core states and in the 21st century USA is that one hegemonic core state. This dominance has happened because of three main reasons as proposed by Wallerstein: productivity dominance, trade dominance and financial dominance.
Productivity dominance happens when a state produces superior quality, manufactured products at a price cheaper than that of other countries because of access to cheap labor from the periphery or semi periphery states, advanced industrial systems and supply chains. Productivity dominance then leads to trade dominance where other states buy more of the country in question’s product owing to them being higher quality and cheaper.
Trade dominance then leads to financial dominance where more capital is flowing into that country than leaving it, leading to a favorable balance of trade and ability to take control of the financial resources of the world. Due to these three reasons, a single core state, in this case the US is able to achieve financial hegemony over the other core states thus becoming a leading economic powerhouse.
Periphery states are the lowest tier states which are the least economically diversified, and least industrialized states. They have weak governments and institutions and are easily swayed by external control of other states
Periphery states are the lowest tier states which are the least economically diversified, and least industrialized states. They have weak governments and institutions and are easily swayed by external control of other states. They have a higher percentage of poor, uneducated people who then form a smaller tax base thus failing to support infrastructural development. Periphery states are often engaged in extracting and exporting raw materials instead of manufactured goods, these raw materials are mostly sent to core states to aid in their economic development by being converted into manufactured products and exported from there.
Such periphery states are often targets of multinational and transnational corporations from the core states looking to exploit cheap labor. Moreover, in certain instances the core states intervene directly as well to exploit cheap labor which they can export back to their country to aid their own industrial manufacturing. Since the periphery states own a very small percentage of the world’s means of production, they also receive the smallest share of surplus production in the world system, with the core states naturally receiving the most share.
The core states are able to acquire raw material from these periphery states at low prices, process them, turn them into value added goods and then export them to other core and semi periphery states at higher prices, thus earning significant profit at the behest of exploitation of the peripheries. Examples of periphery states includes the states of Africa (except for South Africa), much of the Middle East (except for Saudi Arabia, Oman, UAE and Türkiye), the states of Chile, Bolivia, Bangladesh, Pakistan, Afghanistan, Nepal etc.
Semi periphery states are midway between core and periphery states. They are developing countries that are striving to become core states and keeping themselves from falling into periphery states
Semi periphery states are midway between core and periphery states. They are developing countries that are striving to become core states and keeping themselves from falling into periphery states. They therefore impose protectionist policies to advance their economies and industrial base and such states import more goods from core states all the while exporting more goods to the periphery states.
Although they themselves are not subject to external manipulation, semi periphery states do tend to have some control over periphery states either through institutions or via trade. Examples of semi periphery states include Russia, China, Brazil, India, South Africa, Saudi Arabia, Argentina, Mexico, Türkiye, Oman etc. It is important to note that four of these semi periphery states mentioned form the BRICS alliance.
Therefore, as illustrated the World Systems Theory, views the economies of the world as a single system with core, periphery and semi periphery states striving to better their individual economic situation.
It aspires to provide a platform for the member states to promote cooperation, especially economic cooperation, expand multilateral trade between members and challenge the dominance of similar western led institutions such as the EU and the G-7
BRICS is an intergovernmental organization founded in 2009, comprising originally of Brazil, Russia, India, China and South Africa. It aspires to provide a platform for the member states to promote cooperation, especially economic cooperation, expand multilateral trade between members and challenge the dominance of similar western led institutions such as the EU and the G-7. Essentially the objectives of BRICS include promoting mutual economic growth and development, reforming global financial institutions such as IMF to better reflect the needs and interests of developing nations and enhance political coordination on global issues such as sustainable development and climate change.
As an alternative to Western led institutions, BRICS saw its membership increase in January 2024 when four new states joined i.e. Iran, Egypt, Ethiopia and the UAE. Saudi Arabia too was invited to join and is currently contemplating joining. Now known as the BRICS+, these ten nations represent one quarter of global GDP, two fifth of global goods trade and around 40 percent of the world’s crude oil consumption.
Essentially comprised of semi periphery states, BRICS+ now also includes peripheries like Iran, with another dozen periphery nations applying for membership including Pakistan, Thailand, Vietnam and Bangladesh. A few notable initiatives under BRICS include the New Development Bank (NDB) which was established in 2014 to finance sustainable development and infrastructure projects in BRICS and other developing economies, as well as the Contingent Reserve Arrangement (CRA) which is formulated to provided financial support to member states facing short term balance of payment issues.
Immanuel Wallerstein when discussing the emergence of core states and the dominance of a single core state on the global economic stage, highlighted that this is a recurring process. Countries at the height of economic development can descend into the semi-periphery or even the periphery, while peripheral and semi-peripheral states can rise to replace the dominant core state. Perhaps the world in the 21st century is witnessing that phenomenon in real time.
Earlier in the aftermath of the abolishment of feudalism in Europe in the 18th century and then the subsequent Industrial Revolution, Europe became the manufacturing hub of processed goods, European powers like the French and British empires sourced raw materials from their colonial lands such as India, Sudan, Algeria and Syria, brought them to their own countries, processed them and turned them into value added goods for export. Moreover, the acquisition of cheap labor from the poorer colonies meant that the cost of production of these goods was lower, allowing the European powers to sell the goods in hefty profits.
So, during those times, European nations were the core states. But after WWI and WWII which was largely fought in the European theater, Europe had to face significant economic blows and let go of its colonies as well. That is when the United States emerged as a major economic player, since during the war it had been the primary supplier of goods to the warring European nations, it had largely remained out of both wars and only joined WWII towards its end which meant that it did not spend much to fuel a war economy. Moreover, the US became the largest lender to the European economies for rebuilding and reconstruction such as the Dawes plan after WWI to help Germany pay war reparations and the Marshall plan after WWII to rebuild Europe.
US has been at the forefront of all economic activity and is considered an economic powerhouse, it has played a key role in the creation of forums such as the World Trade Organization, International Monetary Fund (IMF) and the World Bank
Ever since then, the US has been at the forefront of all economic activity and is considered an economic powerhouse, it has played a key role in the creation of forums such as the World Trade Organization, International Monetary Fund (IMF) and the World Bank, inadvertently controlling global trade, capital flows, financing and funding due to it being the largest share holder in these initiatives. Moreover, through the SWIFT banking system the US also holds significant control over all financial transactions that take place worldwide. The USA has become what Wallerstein would describe as the dominant core state.
BRICS on the other hand as an alliance of periphery and semi-periphery states or what one could describe as the Global South is now challenging this western led economic order. BRICS and BRICS+ are now advocating for trading in local currencies which means they are now striving to reduce reliance on the US dollar and go for de-dollarization. Taking Iran as a case study, since Iran is under US sanctions, this means that Iran can no longer use the US dollar or the SWIFT banking system to trade, BRICS through their de-dollarization initiative will now ensure that Iran can bypass the dollar and trade with other member nations in local currencies at a multilateral level. It is also striving to encourage South-South cooperation and strengthen trade and investment ties among member nations and other developing countries via capacity building, technology transfer, and infrastructure development, thus reducing dependency on Western markets.
The establishment of NDB and CRA also means that BRICS is now seeking to provide an alternative to western led frameworks such as the IMF or the World Bank for the provision of loans and bail out packages. Talks of introducing a separate BRICS economy mimicking the Euro and indigenous initiatives of BRICS member states to provide alternative trade routes and economic partnerships such as China’s Belt and Road Initiative (BRI) means that the western dominated economic status quo is being greatly challenged.
The bloc is also working to establish energy alliances and trade partnerships that diminish the role of western controlled oil and gas markets. Periphery and semi periphery states are now seeking to acquire a significant share in the means of production and advance their own manufacturing base through BRICS, this is threatening to rival or even replace the existing core states such as those in Europe and especially the US which has dominated financial markets for so long.
Over time more and more periphery states have emerged, such as Haiti, Zimbabwe and Yemen, which are now being exploited for their raw materials and cheap resources, so for the world system to work, periphery states would always exist, from which the core and the semi periphery states can extract resources to develop their own economies.
By emphasizing a multipolar world economy where decision making power is distributed more evenly among developed and developing nations and where issues of the global South such as impacts of climate change take the center stage, BRICS is now reshaping global economic discourse. In due course of time, it is anticipated that BRICS states especially the five initial members i.e. Brazil, Russia, India, China and South Africa will slowly transition into Core states with China, owing to its wide industrial base and economic growth going so far as to replace the US as the dominant core state.
However, it is still important to note that the system of exploitation might still continue, as seen in history when past core states were replaced by new core states, those in the peripheries would get promoted to semi periphery states such as South Korea being promoted from a periphery to semi periphery state after state led industrialization in the 1960s and 1980s, this can be seen as a positive development under the World System Theory, but it does not mean that the exploitation of the periphery states would end.
Over time more and more periphery states have emerged, such as Haiti, Zimbabwe and Yemen, which are now being exploited for their raw materials and cheap resources, so for the world system to work, periphery states would always exist, from which the core and the semi periphery states can extract resources to develop their own economies.
As the saying goes, “A leopard never changes its spots,” meaning that systems of exploitation, much like the inherent nature of a leopard, are deeply entrenched and unchanging, regardless of appearances. If current periphery or semi-periphery states within BRICS, or those aspiring to join, believe that relatively developed economies like China or Russia, once they become core states in the future will continue cessation of exploitative practices which they currently promise under the BRICS framework, they are living in a fool’s paradise. Since these nations, in order to advance their industrial base and economy as core states, will still require cheap resources and raw materials from somewhere. Meaning that this system of the peripheries which has been operational since centuries will continue.
It is also important to understand that as opposed to the official narrative, BRICS is also biased in nature towards the developing states. Pakistan for example has been vying for BRICS membership as a developing country but due to India’s disapproval, Pakistan is being barred from joining it
In conclusion, while the BRICS framework as a coalition of periphery and semi periphery states is a promising initiative to challenge the western influenced economic order and raise the issues of the global south on the world stage, it is also important to understand that as opposed to the official narrative BRICS is also biased in nature towards the developing states. Pakistan for example has been vying for BRICS membership as a developing country but due to India’s disapproval, Pakistan is being barred from joining it.
Had BRICS as a framework been so mindful of sustaining equitable economic growth for the global south, Pakistan as a global south country should not have had trouble joining in the first place. Nonetheless, BRICS represents a revolutionary alliance of developing nations, striving to challenge the existing economic order and break free from the exploitation by core states, predominantly European countries. As such, it should be welcomed.
Disclaimer: The opinions expressed in this article are solely those of the author. They do not represent the views, beliefs, or policies of the Stratheia.
