Sunday, 17 April 2016

Brics Made of Straw

The survival of Germany's lese majesté law, under which a comedian is to be prosecuted for insulting the President of Turkey, is a reminder both of Germany's legalistic rigour and the way that the postwar occupying powers, specifically the UK, influenced the institutions of the Federal Republic. The irony is that desuetude, the customary ignoring of obsolete laws that allows the UK to resolve the conflict of past and present with a blithe "whateva", is alien to the more prescriptive German tradition of the Rechsstaat and the country's postwar commitment to constitutional propriety. What this tale reveals is not merely that German-Turkish relations are at a delicate point, but that institutional legacies are often the result of the historic interplay of internal and external forces. The British experience, in which institutions are the product of organic growth and the reconciliation of domestic interests, even when we import foreign monarchs, is atypical.

In many countries, the dominant factor in institutional design is importation, either through executive fiat or conquest, while in others it is the reaction and resistance to foreign imports that is crucial. This is particularly notable in the case of the Brics (Brazil, Russia, India, China and South Africa), a group of countries whose varied institutional histories were blended (and blanded) for the consumption of international investors during the 00s, but whose differences have once more become matters of concern for the global economy since 2010, though even now the pessimistic view still tends to accentuate the similarities: "A common factor for all Brics countries as they struggle economically is institutional weakness, in particular a lack (or in some cases, a total absence) of democratic accountability, transparency in public life, and independent media scrutiny of official behaviour" (this assessment appears perverse considering Brazil's current turmoil).

The history of graft in Brazil cannot be understood without reference to the continuing power of landowners, descendants of the original Portuguese colonialists, who were major beneficiaries of the commodities boom of the 90s and 00s. Their historic dominance of society long-hampered the growth of a native middle class that wasn't dependent on their patronage. When that independent middle class started to emerge in the 1990s, facilitated in no small part by Lula's compromise with neoliberalism, there was a predictable turn against establishment corruption. Though the current protests (and those before the 2014 World Cup) are directed at the governing Workers Party, the salience of graft in the debate actually reflects the declining power of the landowning elite as the economy develops and diversifies. The problem is that the institutions of the Brazilian state are still geared to colonial extraction and influence-peddling, largely because of the lasting influence of that elite and its institutional embedding during the military dictatorship of 1964-85.

Before the early 70s, the economy of the Soviet Union was growing at rates comparable to the West. The ensuing "era of stagnation" is variously attributed to the flaws of central planning, gerontocracy, and bad choices in computer architecture. The more straightforward explanation is that the economy turned away from a potentially "inclusive" path towards a more "extractive" one, in the terminology used by Acemoglu and Robinson in Why Nations Fail, as a result of the combination of rising oil prices and over-capacity in heavy industry. This in turn reflected an institutional bias towards war-preparedness, which was the paranoid (if understandable) legacy of the 1940s. The shock-treatment of the Yeltsin years abandoned this (Putin's national revival is militarily cheapskate) and imported the institutions of extractive capitalism as the quickest route to solvency (and the transformation of the nomenklatura into oligarchs). Russia's problem since Peter the Great has been a tendency to import institutions (the revolution was a prime example) that don't fit together well, leaving gaps that encourage corruption and instability.

India continues to suffer from the legacy of the Raj. We Brits forget that the colonial government of India was wholly unlike its UK equivalent, despite the shared ceremonial features, having repurposed institutional forms established by the East India Company, many of which had been adapted from earlier Mughal forms, particularly in respect of land tenure and agricultural production. This is how "a tiny sliver of British soldiers and administrators somehow managed to govern a subcontinent populated by roughly 250 million subjects" (i.e. they subcontracted to local elites). While there was considerable reform once direct rule was established after the rebellion of 1857, there was also much continuity, as there would be after 1947. Imported "national" institutions, such as the civil service, the railways and cricket, which remain popular with BBC documentary-makers keen to show the positive side of the British legacy, obscure the enormous social and cultural fragmentation of the Indian state.

China is often read in terms of the traditional motifs of chaos versus order: the mandate of heaven, the rule of the emperor, the fear of dissent (Michael Wood's recent BBC documentary series was a decent survey of its history but too reliant on these motifs). The story of repeated invasion, destruction and absorption (actually no worse than the history of many European countries) tends to downplay the institutional resilience of China, outside the tropes of culture and Confucianism, instead implying a decadence and other-worldliness that was originally theorised as part of the justification for the incursion of Western powers in the nineteenth century (the British characterisation of the Chinese as debauched opium-addicts was particularly ironic). The chief institution in Chinese society has always been the extended family and its setting within the wider clan or lineage group, and the overlap of this with economic units. In institutional terms, China is one of the most robust nations on the planet, but this has little to do with the state apparatus.

In South Africa, the symbolism of the Truth and Reconciliation Committee encouraged a changing of the guard with insufficient attention to institutional reform. Much of the corruption visible today is the continuation of practices established during the latter years of minority rule, often ironically stimulated by Western sanctions. Apartheid was always presented internationally as a perversion of an otherwise "civilised" polity based on the British model. This was a consequence of the institutional continuity between the old Cape Colony and the Republic of South Africa. Consequently, there was insufficient appetite to reform the state and legal system beyond making it "colour-blind". While this continuity has provided stability (despite the high profile of social violence, political violence has been relatively rare), it has also allowed the preservation of essentially colonial institutions, a point made by the original Rhodes Must Fall movement.

There are many institutional similarities between South America and Southern Africa. Brazil and South Africa remain essentially colonial states with society divided along racial lines and the lack of significant land reform a running sore. Old elites retain extensive power and influence, while official politics places an increasing emphasis on the "new middle class" as the arbiters of democracy. Russia struggles to escape its history as the world's institutional laboratory (much of Putin's attraction domestically was a promise to stop the experiments), while the Chinese state, having failed to conquer the institutional base of society during the Cultural Revolution, is gradually producing an increasingly fractious ancien regime. India is a cohesive nation only insofar as it hangs on to antiquated British institutions and the shared bogeyman of a nuclear Pakistan. The eclipse of the Congress Party by the BJP suggests that the tensions arising from variable economic growth are becoming acute.

States that transition to democracy initially suffer institutional weakness because of the legacy of pre-democratic institutions. Even if a new broom approach is adopted, the "remnants" of the previous regime still exert considerable influence, and attempts to sweep away the old order in its entirety are often counter-productive, as in Iraq after the fall of Saddam. The idea that the introduction of the "free market" will accelerate institutional development, like the idea that it will naturally spawn democratic practice, is misguided. The problem of the commercial firm as an institution is that the law is considered secondary to business norms, even in established democracies (CSR is no substitute for civics). This is why a company like Mossack Fonseca is not a pariah, why UK-based banks can shrug off convictions for money-laundering, and why whistleblowers are routinely treated as traitors.

Germany will no doubt repeal its law of lese majesté in time, and will pat itself on the back both for its constitutional diligence and cultural progress. The evolution of the Brics is less certain. The national institutions of India and China are more fragile than their postwar politics implies, though this is less surprising when viewed in the context of a history of division. Brazil and South Africa will shrug off their colonial legacies eventually, but it is hard to predict the manner in which this will happen and what the outcomes will be. Russia is currently indulging a nostalgia for popular institutional forms of the past, notably the "little father" in the Kremlin and the "elite" army, but this looks like an indulgent distraction from an institutionalised kleptocracy. What we can say with certainty is that the western homogenisation of the Brics as an investment portfolio is a delusion that can be safely consigned to the dustbin of history.

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