Raghuvir Kelkar at the Silk Road School of the Renmin University of China and Zhengxu Wang from the Department of Politics at the School of Public Administration, Zhejiang University take a look at the so-called ‘Washington Consensus (WC)’ and what’s replacing it.
Pronouncing the WC dead, they move on to consider how a ‘Post Washington Consensus (PWC)’ compares to the ‘Beijing Consensus (BC)’ which has been talked over a lot recently.
The WC has died of natural causes. It’s promulgation from around 1989 was followed by a string of failures. From the post-Soviet empire experiments to the collapse of South American economies with the climax being Argentina’s total fail in 2002. Noted also are the serial failures across Africa and the climax of all this muddled thinking being what we now refer to as the Global Financial Crisis in 2008.
The simple, plain and in miserable-sight reality of the WC is it doesn’t/hasn’t work/worked.
The BC does work though. At least as far as China has been concerned. No wonder then that developing nations, tired of being lectured by richer peers about what’s best for them whilst observing failure of the advice, have taken note.
Where the paper gets interesting is where it draws out not just the differences between the WC and BC but when it attempts to fix a bead on what the PWC is. The researchers define the main tenets as follows:
- The State is the acknowledged regulator, especially of the financial system where it’s now responsible for domestic capital flow management.
- The Current and Fiscal accounts must align with State policy. The monitoring authority of this is the State.
- Innovation and technological advancement have to progress within spaces proscribed by the State who is responsible for providing the human capital to keep this engine running.
- The State must provide the Citizenry with adequate social safety nets via minimum wages, pensions, job guarantees and etcetera.
- Progressive taxation is a norm for the purpose of addressing income inequality via redistributive policies.
- Excessive state subsidies should be removed. The “..situation of the state in the economic, political, and financial spheres.” must be considered with regard to all income redistribution and allocation.
- “The country’s domestic economy should be appropriately regulated to fit and adapt to the international economic order.” Know your limits?
To remind, the above is NOT the BC. However it’s spooky how much the PWC looks like the BC and this is the author’s main point. The BC is gaining traction, a) because it works and, b) because the WC promoters are altering their pitch, intentionally or unintentionally, to conform to BC norms anyhow.
If you’ve followed the Belt and Road Forum in Beijing in the last week you’ll have seen representatives of 130-countries (of the 149-countries that’ve signed on) gathering to discuss what is, de facto, the progress of a Chinese economic commonwealth based on BC principles.
The paper in full will get you quickly up to speed on what those BC principles are and you’ll find it via this link Will the Beijing Consensus Replace the Washington Consensus?
This trend isn’t going away and we all need to know more as it’s changing the world, daily and before our eyes; whether one finds it agreeable, or not.
Happy Sunday.