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If the Washington Consensus was really over, what would that look like for development strategy?

June 24, 2021June 6, 2021 RRowden3 Comments

If it still looks like a duck, swims like a duck, and quacks like a duck – then it probably still is a

Recent years have witnessed a notable re-embrace of the state鈥檚 role in the economy, leading to declare that the set of free market economic policy reforms widely known as the Washington Consensus has .

First popularized by U.S. President Ronald Reagan and U.K. Prime Minister Margaret Thatcher in the 1980s, the Washington Consensus policies offered a set of policy guidelines for developing countries, many of which were struggling with high debt and high inflation at the time. These free market reforms included trade and financial liberalization, privatization, deregulation, the removal of capital controls, fiscal austerity (cutting public spending) in order to achieve strict targets for maintaining low inflation and low fiscal deficits, the adoption of independent central banks, and deregulating restrictions on foreign investment, among others. Broadly speaking, the policies sought to roll back the role of the state in the economy and unshackle the animal spirits of the free market. In the 1980s, adopting the policies became binding conditions for developing countries to receive debt relief and new lending by the International Monetary Fund (IMF) and World Bank, in the 1990s, the policies served as the basis for World Trade Organization (WTO) membership rules 鈥� and ever since then, the policies have become a cornerstone of the curricula in economics departments at universities across the world.

Neoliberalism and global development before and after the Washington Consensus: Agricultural credit at the World Bank

June 17, 2021May 17, 2021 Nick BernardsLeave a comment

We鈥檝e witnessed a revival of debates about the Washington Consensus and the future of neoliberalism in recent months. Recent increases in public spending have led to conclude, or , that decades of neoliberal consensus have been shattered. Much of this debate is misguided, rooted in a mistaken dichotomy between 鈥榮tates鈥� and 鈥榤arkets鈥�, and a corresponding conception of neoliberalism as primarily involving a reduction in the role of the former. Efforts to rehabilitate the Washington Consensus, meanwhile, rely on flimsy and heavily ideological counterfactuals.

In this post, I want to take up another angle on this question, asking: what is 鈥榯he market鈥� in practice? In particular, I take a closer look at the emergence of the idea that 鈥榠nterest rates should be market-determined鈥�. This was a core tenet of the 鈥榃ashington Consensus鈥� in John Williamson鈥檚 . It was also, historically, a key argument of neoliberal economists. From the early 1970s, several influential pieces (e.g. McKinnon 1973; Shaw 1973) urged the deregulation of interest rates, arguing that while usury caps were intended to assist small farmers, they wound up forcing banks to concentrate on relatively low-risk loans to government or large-scale industry.

In practice, though, the relatively simple proposition that 鈥榠nterest rates should be left to the market鈥� invited a whole range of difficult questions and political challenges.

In a recent article in tracing the history of World Bank agricultural credit programmes (Bernards 2021), I show how neoliberal approaches to development have never really involved 鈥榮hrinking the state鈥� and unleashing markets so much as fraught and failure-prone efforts to figure out who and what should be governed by, and how to construct, markets.

National Fiscal Redistribution as 鈥淚nternational鈥� Development Assistance

June 7, 2021May 3, 2021 Abel B.S. Gaiya2 Comments

The histories of international development and foreign aid often focus on aid between independent nations. Williams鈥� (2013: 234) history of international development aid only begins from the British Colonial Development Act of 1929. Markovits, Strange and Tingley鈥檚 (2019) history of foreign aid focuses on aid between 鈥渘ations鈥� or empires. Helleiner (2014), for instance, traces the origins of multilateral development finance proposals to China鈥檚 Sun Yat-sen in 1919.

There is, however, a major problem with these histories. Their starting points reveal a methodological nationalist approach. The history of states and societies since the modern era, is however more complex. The early modern era is well known for the spate of state consolidations and national formations. It may be argued that intra-national transfers within modernizing nations may represent important forms of regional development assistance that have been left out of the consideration of the history of development assistance.

The power of private philanthropy in international development

May 10, 2021June 16, 2021 Arun KumarLeave a comment

By Arun Kumar and

In 1959, the Ford and Rockefeller Foundations pledged seven million US$ to establish the International Rice Research Institute (IRRI) at Los Ba帽os in the Philippines. They planted technologies originating in the US into the Philippines landscape, along with new institutions, infrastructures, and attitudes. Yet this intervention was far from unique, nor was it spectacular relative to other philanthropic 鈥榤issions鈥� from the 20^th century.

How did philanthropic foundations come to wield such influence over how we think about and do development, despite being so far removed from the poor and their poverty in the Global South?

In a recent paper published in the journal , we suggest that metaphors – bridge, leapfrog, platform, satellite, interdigitate – are useful for thinking about the machinations of philanthropic foundations. In the Philippines, for example, the Ford and Rockefeller foundations were trying to bridge what they saw as a developmental lag. In endowing new scientific institutions such as IRRI that juxtaposed spaces of modernity and underdevelopment, they saw themselves bringing so-called third world countries into present鈥揹ay modernity from elsewhere by leapfrogging historical time. In so doing, they purposively bypassed actors that might otherwise have been central: such as post鈥揷olonial governments, trade unions, and peasantry, along with their respective interests and demands, while providing platforms for other – preferred – ideas, institutions, and interests to dominate.

A new Washington Consensus on the role of the state?

April 15, 2021 Ilias ALAMI5 Comments

By Ilias Alami, Adam Dixon and

In a recent , Martin Sandbu of the Financial Times argues that 鈥渢he conversion by the IMF and World Bank to support the activist state would put Saul of Tarsus to shame.鈥� According to him, we may be witnessing the rise of a new Washington Consensus, which embraces deficit spending (by rich countries), 鈥渢emporary solidarity surtaxes鈥� on the rich and businesses, green public investment, and other forms of government intervention. This is not only to address the short-term effects of the pandemic, but also to stimulate demand across the world economy. Sandbu finds evidence of this new consensus in the benign view that the IMF has taken on Biden鈥檚鈥渞escue package鈥�, and claims that 鈥渢he new Washington consensus could prove as politically powerful as the old one.鈥� In another in October 2020,

Sandbu characterised this new consensus as follows:

鈥淎fter 1945, the guiding assumption was, first, that the state knew best, then that the private sector was best. We are about to transcend both, in favour of an economic worldview based on finding ways in which government intervention can guide the private sector to perform better. In that sense, economic planning and the activist state are back.鈥�

It is indeed striking that the IMF, the World Bank, the OECD, the G20, and other multilaterals, have adapted their discourse on the role and place of the state in development. This predates the COVID-19 pandemic. In an recently published in Antipode, we document the emergence of this new vision of the state in development and outline its key features. Since the early 2010s, these institutions have produced a remarkable wealth of material explicitly concerned with old and new forms of state ownership and intervention. Witness, for instance, this November 2020 EBRD Transition titled The State Strikes Back, or this dedicated to state-owned enterprises in the IMF 2020 Fiscal Monitor. Our analysis of such policy documents and others suggests that we are witnessing a gradual yet fundamental reorientation of official agendas and discourses about the state. This emerging vision embraces a fuller role of the state in development (than the post-Washington Consensus), including as promoter, supervisor, and owner of capital. Our analysis expounds the material context in which this vision is emerging. Two interrelated transformations are particularly important.

Enduring Relevance: Samir Amin鈥檚 radical political economy

April 11, 2021April 9, 2021 Ingrid Harvold Kvangraven1 Comment

By Ingrid Harvold Kvangraven, , and

In moments of great uncertainty there is refuge to be found in the work of intellectual titans like Samir Amin. After the sad news of his passing in August 2018 in Paris, aged 86, we began thinking about how best to explore the enduring relevance of his analysis and concepts to make sense of contemporary crises.

The pertinence and analytical heft of Amin鈥檚 work is particularly important in the contemporary period marked by the interconnected crises related to COVID-19, Black Lives Matter, the climate emergency, and looming debt crises across the periphery. In the years ahead, confronting these multiple and intertwined crises will require the kind of commitment to combining research with political engagement that Amin demonstrated.

Amin鈥檚 ability to weave together thorough analysis of the polarising effects of capitalism with concrete political projects for an international radical left makes his work particularly relevant in our quest to understand capitalism, its particularities across the world, and oppositions to it. There is a younger generation of scholars, of which we are a part, that is particularly hungry for Amin鈥檚 perspectives, one that came of age in a time where the universities have been thoroughly marketised and moulded by neoliberal processes, and where intellectual production and debates are not necessarily embedded within social struggles.

Multilateral Development Banks: A system of Debt or Development?

March 26, 2021March 14, 2021 SusanEngel_uow5 Comments

By Susan Engel and

Most people interested in development know about the World Bank and probably some of the bigger regional development banks, like the Asian Development Bank. But few people realise there is a system of 30 functioning multilateral development banks (MDBs). Indeed, we did not initially realise there were quite so many because there was no comprehensive tally or an academic study analysing them all. We set out to explore whether the MDBs work as a system and what role they play in promoting both debt and development so here is a short summary of some of our key finding on these three issues.

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