The Washington Consensus, a set of economic policies that gained prominence in the 1980s and 1990s, is facing criticism for its continued influence in shaping global development strategies.The Washington Consensus, a set of economic policies that gained prominence in the 1980s and 1990s, is facing criticism for its continued influence in shaping global development strategies. According to Antara Haldar, a law, economics, and philosophy professor at the University of Cambridge, the Washington Consensus has become a hindrance to the emergence of a new development paradigm that is more responsive to the needs of the Global South. The ten commandments of the Washington Consensus, such as macroeconomic stabilization, trade liberalization, and privatization, were initially formulated to address the economic crisis in Latin America. However, Haldar argues that these policies have failed to deliver sustainable growth and development in many developing countries. She points out that Latin American economies have suffered periods of hyperinflation, stagnant growth, and political violence despite implementing these policies. Europe, which was once the epicenter of the Washington Consensus, has also experienced economic challenges. Haldar raises important questions about the purpose of development and the need to consider alternative approaches that are more culturally and contextually appropriate. She suggests that the Global South, with its communal cultures and younger population, may have a better understanding of the challenges faced by the world today. The article also touches on the implications for India, a rising power that is increasingly challenging the dominance of the West. India’s unique geography, demography, and technological capabilities could make it a significant force in shaping the future of global development. The author suggests that the Washington Consensus is a reflection of the West’s desire to maintain absolute control over the global economy and security. However, the balance of power is shifting, and the Global South is becoming more assertive in shaping its own future. The article concludes by highlighting the need for a new development paradigm that recognizes the diverse challenges and opportunities faced by different regions of the world. It calls for a re-examination of the Washington Consensus and the adoption of more inclusive and sustainable approaches to global development.
FILE PHOTO: The IMF logo is seen outside its headquarters in Washington. Image: REUTERS
In an article published by global syndication agency Project Syndicate, Antara Haldar, who teaches law, economics and philosophy at the University of Cambridge, argued that the ‘Washington Consensus’ continues to haunt the world.
What exactly is the Washington Consensus? According to Haldar, “in 1989, British economist John Williamson christened what would become the defining intellectual export of the era of globalization, the Washington Consensus. Initially a reference to the policies adopted to address macroeconomic turmoil in Latin America, the term quickly turned into a canonical ‘Ten Commandments’ of development.”
Those ten commandments no longer work. It’s even arguable that they’ve ever worked in the past. Globalization, a key feature of the Washington Consensus, has made China the world’s most advanced technological power, ahead of the United States in many areas. Latin American economies continue to suffer periods of hyperinflation, stagnant growth and political violence, despite – and even because of – Western interventions through the IMF and the World Bank.
Europe has reached its peak. Countries such as Britain, France, Spain and Portugal can no longer balance their books with tax revenues extorted from their Asian and African colonies.
Haldar adds: “Is there more than one route to growth and development? Is there a way to reinvent or restructure the global economy now that it has become a source of widespread discontent? Do some of the Global South’s core characteristics – such as its relatively more communal cultures – make it better suited for a leadership role in the current era? And most importantly: what is actually the purpose of development?
“The Washington Consensus never had time for such questions, and its spirit continues to hinder the emergence of a new development paradigm based on cultural contexts and human cognition.”
In 2009, British Prime Minister Gordon Brown declared the Washington Consensus dead. The 2008 global financial crisis had scorched the world, but the fires were lit in the capitals of the West: New York, London and Paris.
Also in 2009, the Western agenda to encircle Russia with new NATO member states was almost complete.
At the 2007 Munich Security Conference, Russian President Vladimir Putin had warned a range of Western military, security, diplomatic and political leaders that Washington had broken its promise not to expand NATO into Eastern Europe. According to him, there would be consequences.
This is what Putin told his audience in Munich in 2007: “I think it is clear that the expansion of NATO has no relationship whatsoever with the modernization of the Alliance itself or with ensuring security in Europe. On the contrary, it is a serious provocation that affects the level of mutual trust. And we have the right to ask ourselves: who is this expansion aimed at? And what happened to the guarantees given by our Western partners after the dissolution of the Warsaw Pact? Where are those statements today? No one even remembers them anymore.
“But I allow myself to remind this audience what was said. I would like to quote the speech of the Secretary General of NATO, Mr Woerner, in Brussels on 17 May 1990. He said at the time: ‘The fact that we are prepared not to deploy a NATO army outside German territory the Soviet Union a firm hold. safety guarantee.’ Where are these guarantees?”
In 2007, Russia was still a member of the G8. The G7 had admitted Moscow into the powerful group in 1997 to counter Moscow’s expansionist ambitions. Russia also wanted to Europeanize itself and even briefly considered applying for membership of the European Union (EU).
However, as NATO’s eastward expansion continued unabated, Putin annexed Crimea in 2014 to protect Russia’s Black Sea Fleet.
The West immediately expelled Russia from the G8, which turned back into the G7.
Climate of change
Haldar raises an important issue about how the West has approached the climate change crisis, even as the Washington Consensus begins to unravel: “Global climate negotiations could not be more important for the future of the planet and human civilization. But whenever the issue of climate finance comes up, developing countries are subjected to the same kind of demeaning treatment that the Washington Consensus once prescribed.”
The unspoken narrative underlying the Washington Consensus is that the West must maintain absolute control over the global economy and global security.
Any rising power that challenged the Washington Consensus was immediately confronted. With China, there was a ban on high-tech chips that power AI devices, from electric vehicles to semiconductors. With Russia, it was economic sanctions and the placing of weapons in the hands of Ukraine to degrade Moscow’s military power.
What about India? It is also a rising power. But for Washington, India is still too small to cause the West unnecessary worries. But there will come a time early in the next decade when India’s economy will cross the $10 trillion mark and its military budget will become the third largest in the world. Washington will then turn its full attention to New Delhi.
At present, India is a useful counterweight and outsourced marine gendarme against China in the Indian Ocean Region (IOR). Small pinpricks like the Nijjar and Pannun cases are enough to keep India off balance.
The India Doctrine
However, India presents Washington with a different set of problems than it faces with China and Russia. Unlike them, India is a vibrant democracy. The 2024 Lok Sabha elections have silenced those who criticized India for its ‘backsliding democracy’.
India’s unique geography and demography place it in a special category. It is the route between west and east. The peninsula’s coastline is a geostrategic asset. The development of the Greater Nicobar into a transshipment port in the direct line of East Asian trade could be a game changer.
A space and software power, India’s cohort of developers on Microsoft’s GitHub platform will be the world’s largest by 2027, ahead of the US and China.
The 1989 Washington Consensus was written as the Berlin Wall fell and on the eve of the collapse of the Soviet Union.
As Antara Haldar writes: “The balance of global power is rapidly shifting. The Global South is already the place where most people in the world live; and thanks to the younger population, the future of the world lies here.”
The writer is an editor, author and publisher. The opinions expressed in the above piece are personal and solely those of the author. They do not necessarily reflect the views of Firstpost.
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