TheWashington Consensus is a set of 10 economic policy prescriptions considered to constitute the "standard" reform package promoted forcrisis-wrackeddeveloping countries by Washington, D.C.–based institutions such as theInternational Monetary Fund (IMF),World Bank, and theUS Treasury Department. It was coined in 1989 by English economistJohn Williamson. The prescriptions encompassed policies in such areas as macroeconomic stabilization, economic opening with respect to both trade and investment, and the expansion of market forces within the domestic economy.
If theimperial order of Western supremacy is very slowly beginning to change, the reasons are instructive. China's economic growth in recent decades is precisely the outcome of a constant refusal to accommodate to the Washington Consensus; that is, a refusal to allow China's economy to be shaped by the institutional structures that this system generated. Other emerging economies have also succeeded precisely to the extent that they have refusedneoliberal policies.
The Washington doctrine was everywhere greeted by ideological cheerleaders: from the profiteers of the ‘Irish miracle’ (the property-bubble boom of the ‘Celtic tiger’) to the doctrinaire ultra-capitalists of former Communist Europe. Even ‘old Europeans’ were swept up in the wake. The EU’s free-market project—the so-called ‘Lisbon agenda’; the enthusiastic privatization plans of the French and German governments: all bore witness to what its French critics described as the new ‘pensée unique’. Today there has been a partial awakening. To avert national bankruptcies and wholesale banking collapse, governments and central bankers have performed remarkable policy reversals, liberally dispersing public money in pursuit of economic stability and taking failed companies into public control without a second thought. A striking number of free market economists, worshippers at the feet ofMilton Friedman and his Chicago colleagues, have lined up to don sackcloth and ashes and swear allegiance to the memory ofJohn Maynard Keynes. This is all very gratifying. But it hardly constitutes an intellectual revolution. Quite the contrary: as the response of the Obama administration suggests, the reversion to Keynesian economics is but a tactical retreat. Much the same may be said of New Labour, as committed as ever to the private sector in general and the London financial markets in particular. To be sure, one effect of the crisis has been to dampen the ardor of continental Europeans for the ‘Anglo-American model’; but the chief beneficiaries have been those same center-right parties once so keen to emulate Washington.
Washington itself implied that this is something out of the rich Western countries, and if they agree on something that is to be imposed on the rest of the world, it means that there is no consultation. It should be a world consensus, not a Washington consensus. Every time we are up against this understanding there, we find that they are all designed in order to be in their favor, to enrich them, in fact, and it would be at our expense. That is why we feel a need to resist the Washington consensus.
What I would agree with is that the Washington Consensus, whatever you want to call it, got a little too comfortable with, they’re looking at GDP numbers, and they’re looking at the internet, and everything is looking pretty great; and particularly after the Cold War, Jim, after what you guys engineered, you have this period of great smugness on the part of America and American elites, thinking, ‘We got this all figured out.’ Remember there were books coming out that it’s the end of history.
