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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.

Understanding development in a Global Value Chain World: Comparative Advantage or Monopoly Capital Theory?

April 22, 2021April 23, 2021 benjaminselwynLeave a comment

By Benjamin Selwyn and

The recent period of globalisation 鈥� following the collapse of the Eastern bloc and the integration of China into the world economy 鈥� is in essence the period of global value chains (GVCs). From low to high-tech, basic consumer goods to heavy capital equipment, food to services, goods are now produced across many countries, integrated through GVCs.

The big question in development studies is whether this globalised reconfiguration of production is contributing to, or detracting from, real human development? Is it establishing a more equal, less exploitative, less poverty-ridden world? To understand these complex dynamics, scholars rely on economic theories. These theories must be relevant to the GVC-world and equipped to tackle these pertinent questions.

In 2020 the World Bank published its World Development Report (WDR2020, or 鈥榯he Report鈥�) to address these questions. It confidently proclaimed that 鈥楪VCs boost incomes, create better jobs and reduce poverty鈥� (: 3). Given the World Bank鈥檚 promotion of neoliberal globalisation, this conclusion is unsurprising.

However, before accepting the Report鈥檚 claims at face value, we should reflect on the findings of Robert Wade (: 220). These annual World Bank reports serve as “both a research-based document and a political document鈥�. the Bank鈥檚 flagship message must reflect back the ideological preference of key constituencies and not offend them too much, but the message must also be backed by empirical evidence and made to look technical”.

When globalisation is booming it may be possible for the report鈥檚 liberal bias to appear to complement its data. However, the GVC world has generated such inequalities that the dissonance between the report鈥檚 liberal bias and its own data is stretched to breaking point.

Drawing on our , this blog post uses the Report鈥檚 own data to undermine its core claims. It shows that the GVC world enhances the dominance of transnational corporations (TNCs), concentrates wealth, represses the incomes of supplier firms in developing countries, and creates many bad jobs 鈥� with deleterious outcomes for workers.

The Washington Counterfactual: don’t believe the Washington Consensus resurrection

April 8, 2021April 8, 2021 Carolina Alves4 Comments

By Carolina Alves, Daniela Gabor and Ingrid Harvold Kvangraven

Decades of research have documented the devastating impacts of the Washington Consensus in the developing world. Yet revisionist accounts of this story have emerged in recent years. Remarkable amongst these, a recent blog post by the Peterson Institute for International Economics – 鈥溾€� – draws on research that is jaw-droppingly ideological and flawed.

The pathology of economics

April 3, 2021March 23, 2021 howstein44 Comments

COVID-19 exposes the deadly dominance of neoclassical economics in Africa.

On February 24, 2021 Ghana received a vaccine shipment (600,000 doses), the first to sub-Saharan Africa under the COVAX facility. It amounted to a tiny fraction of the hundreds of millions needed on a continent increasingly ravaged by the pandemic. Contrast this to the tens of millions already vaccinated in the UK and US. The optimism that Africa would be spared by 鈥渆arly lockdown鈥�, 鈥渓ess dense population, 鈥渢he effect of ultraviolet鈥�, 鈥渁 climate that meant people spent more time outside鈥� and 鈥淎frica鈥檚 youthful population鈥� has rapidly faded. Officially there are now more than 100,000 deaths on the continent, but the real numbers are much higher due to the paucity of testing and the lack of capacity to accurately track and evaluate causes of mortality.

The shortage of tests and vaccines are exacerbated by the West鈥檚 hyper-nationalism restricting the import of these two vital tools to combat the pandemic. The same forces have also generated a scarcity of personal protective equipment (PPE), the lack of monoclonal antibody and other treatments, and terrible shortages of medical oxygen so vital to keeping people alive. How is it possible, 60 years after independence, for African countries to be so highly dependent on the goodwill of the outside world for basic health goods? A good deal of the answer lies in the pathology of economics and related policies, which have spread like a pandemic globally and have come to dominate both the West and the continent of Africa. How did this come about? How does it relate to the strategies that have undermined African capacities to mitigate the effects of the pandemic on the health and welfare of its people? And what should be done?

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.

Green Structural Adjustment in The World Bank鈥檚 Resilient Cities

June 30, 2020July 1, 2020 pmbigger2 Comments

jakarta-indonesia-city-building — Jakarta, Indonesia

By Patrick Bigger and Sophie Webber

Cities across the world are facing a double-barreled existential problem: how to adapt to climate change and how to pay for it. Over the next thirty years, more than聽聽owing to sea level rise and more intense storms, while as many as聽. Other looming crises include soaring urban temperatures, the urgent need to transition away from fossil-fueled energy and transport systems, and plummeting rates of local biodiversity.

Responding to these problems will, international bodies project,, from hardened municipal water and sewage systems, to urban afforestation, to renewable energy systems. This massive infrastructural program coincides with global economic conditions marked by the lingering ideological stranglehold of austerity, unprecedented levels of capital concentration, and now, myriad uncertainties produced by COVID-19. Cities across the world are facing a double-barreled existential problem: how to adapt to climate change and how to pay for it. Over the next thirty years, more than owing to sea level rise and more intense storms, while as many as . Other looming crises include soaring urban temperatures, the urgent need to transition away from fossil-fueled energy and transport systems, and plummeting rates of local biodiversity.

In response to the twin problems of resilient infrastructure needs and public fiscal constraints, the World Bank and an array of partner institutions from the to USAID have been ramping up programs to facilitate private investment in urban resilience. From a baseline of $10 billion across 77 cities in 2016, the World Bank aims to 鈥榗atalyze鈥� investment of more than $500 billion into urban resilience projects across 500 cities by 2025.聽Read More »

Using Marx as a Pejorative to Defend the Ease of Doing Business: Analysing The World Bank鈥檚 attack on CGD

November 17, 2019February 26, 2020 Dissenting Voices1 Comment

The recent by a Senior World Bank Official, against the Centre for Global Development (CGD) has been rightly publicised on social media, for failing to engage with critique and misconstruing it as ideology. The encounter was based on a discussion with a CGD economist, where an excerpt of a of World Bank鈥檚 much debated Ease of Doing Business Index was presented. The well researched and evidence-based critique prompted an unwarranted response by the World Bank employee, where the CGD economists were labelled as 鈥榬eformed Marxists鈥� and the critique labelled as originating from Das-Capital.Read More »

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