By Simon Johnson, former chief economist at the IMF, Professor at MIT

The recent BRICS summit in South Africa marks the start of a new phase of Great Power competition. At the apparent urging of China, the BRICS group (which also includes Brazil, Russia, India, and South Africa) invited six other countries to join: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. By some measures, the economic output of this expanded group will rival that of the G7 (the major developed countries: the United States, Canada, Japan, the United Kingdom, France, Germany, and Italy).

According to public statements by Russian President Vladimir Putin and, more importantly, by Chinese President Xi Jinping, the goal is to build a group that can stand up to Western influence and create the foundation for an alternative international order, with less reliance on the US dollar.

This effort will no doubt gain greater attention in the coming year, especially when the expanded membership meets for the first time in October 2024 (in Kazan, Russia). But BRICS+ is unlikely to reshape the world, for three reasons.

First, the extent of common interest among its members should not be exaggerated. India has plenty of reasons (based on a great deal of recent history) not to want China to become too powerful. And any group that includes oil and gas producers (Brazil, Russia, Iran, Saudi Arabia, and the UAE) and energy importers has a fundamental fault line. For example, South Africa, where energy shortages (and rolling power cuts) are having serious negative effects on the economy, has no interest in paying more for energy; but selling oil to the world is what keeps the oil and gas producers’ public finances afloat.

Second, the idea of replacing the dollar with other currencies for trade and for financial transactions has been around for decades. The problem is that you cannot replace something with nothing. If the alternative involves the Chinese renminbi, it will require putting a great deal of faith in the Chinese economy, which currently looks more than a little shaky. When the going gets tough, would the Chinese authorities really allow foreigners to sell their renminbi holdings without restriction?

Third, any alliance with Russia is obviously fraught with dangers at this point. Russia’s leadership looks unstable and unpredictable. Rather than backing down from his war of aggression against Ukraine, Putin seems determined to continue disrupting global energy markets (bad for energy importers) and grain markets (very bad for countries such as Egypt).

Russia’s full-scale invasion of Ukraine has been a disaster for both countries, but Putin is the type of dictator who cannot admit a mistake. The current cascade of coups across Africa reminds us (and him) how such regimes end.

For centuries, Great Power competition was based on formal empire (ruling other countries) and exercising de facto control through military means, bribery, and unequal trading relationships. From the early 1700s until the 1940s, the British Empire led the world with both types of machinations, but other European countries also had their spheres of influence.

The global system changed after World War II, because the United States took over as the leading Western industrial power, determined to replace formal empire with much more equal trading relationships. To be sure, there continue to be plenty of complaints about the fairness of that system. But Western Europe did well, and countries such as Japan, Singapore, South Korea, and (in recent decades) China prospered under a relatively open international trading system that encouraged exports of manufactured goods from lower-wage countries to high-income markets. The Soviet Union’s alternative post-war bloc, based on military control over Eastern Europe, fell apart in 1989, two years before the demise of the Soviet Union itself.

The latest phase of Great Power competition, however, is much more about technology than it is about trade. In retrospect, this shift began during WWII, when the British shared key developments (particularly radar and early thinking about atomic weapons), and the Americans’ Manhattan Project went further and faster than anyone could have imagined. Digital computers, semiconductor chips, jet aircraft, life-saving drugs and vaccines, and the internet all came from the West (boosted significantly by US government investments).

In October 1957, the Soviet Union shocked the world by launching the first artificial satellite, Sputnik. But its rigid and repressive system could not sustain enough creativity or turn good ideas into products that people wanted (other than weapons).

Now China wants to challenge the West for leadership in new technology, with a view to tightening social control through a combination of artificial intelligence and surveillance. This, not the expanded BRICS, is the real potential threat to the West.

There is now an active bipartisan discussion in Washington, led by US Senate Majority Leader Chuck Schumer, regarding how much AI we want to develop and with what safeguards. This is healthy and will likely lead to better outcomes (although no doubt with imperfections in terms of consumer protection, alongside ongoing concerns about job losses).

In contrast, an open discussion about the technologies China wants to develop and how it directs innovation is not allowed in that country. As was true during the Cold War, a rigid and repressive system is bidding to lead the world in knowledge creation, application, and dissemination.

Will China succeed where the Soviet Union failed? As long as the West continues to nurture innovation – and manages that innovation responsibly – China is unlikely to win out. In this sense, the West controls its own destiny.

Simon Johnson is a former chief economist at the International Monetary Fund, and current Professor at MIT’s Sloan School of Management

©Project Syndicate 2023