Two events this month, one tragic and another routine, may have some keys to the future of the global economy and globalization. Sad news first: Last week there was talk of the death of international economist John Williamson. He has worked with governments, multilateral organizations, educational institutions and think tanks. In his work at the (now Peterson) Institute for International Economics, he convened a conference on the Latin American debt problem in 1990 and brought a 10-point structured reform program for these economies, the road-map to achieve “standard economic goals” growth, low inflation, His paper, which advocates policy measures such as balance of payments and equal income distribution, deficit control and state investment in health and education, ulated that there is a broad consensus among various policy pillars in and around Washington DC, which soon became known as ‘The Washington Consensus’. Over time, Moniker took his life and became a little neo-liberal, or the policies of the free-market monetary policy and the International Monetary Fund (IMF) and the World Bank, especially the IMF’s excellent structural adjustment programs in Southeast Asia’s 1997 balance-off-payments Crisis, washing The ton is also forcibly set in consensus rubric. Williamson spent many years correcting myths and distortions of his choice, although his other well-known coins – the ‘crawl peg’ for exchange rate management and the ‘pure transfer theory’ for trade balance – did not exist. The same desires.
The IFF and the World Bank have in the past avoided what they considered to be a tough consensus, imposing excessive austerity on borrowing countries and calling market-led policies one-size-fits-all solutions. Presenting the IMF’s Global Policy Agenda for its spring meeting this year, its Managing Director Kristalina Georgieva called on national governments to spend freely on public health and education, as well as to seek greater cooperation between nations, to provide financial assistance to reduce casualties and livelihoods. In short, increasing state involvement is no longer taboo, nor is it considered offensive to growth and development.
Neoliberal agenda, as some have ined backed laissez-faire Lawyers, this day is clearly old. Hence the need for a new consensus that can balance the roles that markets and states play. The enduring lesson of the last century is that domination is exactly the recipe for disaster. Emerging consensus should strive for a clear boundary of roles, responsibilities and moral concerns, with a definite role for independent regulators, to respond to a bilateral mix of legislators. The Washington consensus (in any form) may lead to a new order, but there are additional complications that cloud the horizon: climate change and growing inequality (between and within countries). Any new consensus, on a priority basis, should address these two issues. If left unattended, these can wreak havoc on the world economy and exacerbate inequalities in unacceptable ways. Throw in the latest geopolitical concerns arising from passionate issues such as borderless wars or vaccine nationalism for digital dominance and the new consensus has cut its work. Unlike in the past, this applies equally to rich and poor countries.