Washington Consensus

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The Washington Consensus or Consensus of Washington (English Washington Consensus ) is an economic program that has long been propagated and promoted by the International Monetary Fund (IMF) and the World Bank . It contains a set of economic policy measures that governments should implement to promote economic stability and growth and which are seen as guidelines for action.

history

As a result of the Latin American debt crisis in the 1980s, the IMF and the World Bank took on the task of debt restructuring. Within this framework, the IMF granted loans to Latin American countries on condition that these countries carry out structural adjustments. To implement the structural adjustment programs, they held constant consultations with the economic policy elites of the Latin American countries.

These structural adjustment programs are to be understood as the implementation of the Washington Consensus, which represents the political program of the then hegemonic economic policy forces in the USA, which were organized in the IMF, the World Bank, the US Treasury and the numerous Washington think tanks . Since the rise of the “New Right” ( Reagonomics , Thatcherism ), the hegemonic economic policy ideas have mainly included ideas such as supply policy, free trade and export-oriented economic policy. The individual measures of the prescribed structural adjustment policy corresponded to this consensus:

  • Curbing demand and cutting government spending through fiscal, credit and monetary policies
  • Exchange rate correction ( devaluation ) and improvement of the efficiency of resource use in the entire economy (rationalization and cost economy)
  • Liberalization of trade policy by dismantling trade restrictions and controls, as well as improved export incentives
  • Deregulation of markets and prices (which often also meant the abolition of price subsidies for basic necessities)
  • Budget cuts
  • Privatization of public companies and institutions
  • Debureaucratisation
  • Reduction of subsidies

The Washington political consensus had the stated intention of showing simple ways to achieve greater macroeconomic stability, dismantling the extreme protectionism of Latin American states and making better use of the potential of growing global trade and foreign capital. In addition, in Washington in 1990, the expectation was expressed that globalization and reforms would lead not only to high economic growth but also to a significant reduction in poverty and a leveling out of income distribution .

There is some overlap between these demands and neoliberal policies of the 1980s, but they usually go beyond that.

The term Washington Consensus was coined by the economist John Williamson for a conference in Washington DC in 1990 . There a group of Latin American and Caribbean decision-makers (representatives of international organizations and academics) tried to assess the progress made in the economic policy of the Latin American countries. John Williamson emphasized that, contrary to today's parlance, he did not mean this term as market fundamentalism .

“I of course never intended my term to imply policies like capital account liberalization (as stated above, I quite consciously excluded that), monetarism, supply-side economics, or a minimal state (getting the state out of welfare provision and income redistribution) , which I think of as the quintessentially neoliberal ideas. "

“Of course, I never wanted my term to include strategies such as opening up the capital market (as mentioned above, I deliberately excluded that), monetarism, supply policy, or minimal state policy (that the state withdraws from social assistance and income redistribution), which I believe in typical neoliberal ideas. "

- John Williamson : Did the Washington Consensus Fail?

The Washington Consensus began to come under pressure in the wake of the Tequila crisis and the Asian crisis that occurred shortly afterwards , as a new type of financial crises emerged here , in which countries with healthy macroeconomic data (growth in gross domestic product, inflation, budget balance of public budgets) , who were also regarded as model students of the IMF's structural adjustment policy, were affected.

rating

Hernando de Soto explains in his book Freedom for Capital that the application of these recipes alone is not enough. What the Latin American countries lack are defined property rights, contract rights and the company structures to create wealth.

Joseph E. Stiglitz criticizes the implementation of the Washington Consensus in his book Die Schatten der Globalisierung . He writes that "these recommendations, provided they are properly implemented, are very useful, [...] but the IMF regards these guidelines as an end in themselves rather than as a means to more equitable and more sustainable growth." Stiglitz criticizes the IMF as saying that he “blindly pursues this goal [although] economic theory had developed important and useful alternatives.” In his more recent book The Chances of Globalization , Stiglitz continues the criticism and declares that the Washington Consensus is based on idealizations - including more complete ones Competition, complete information - "which is far removed from reality, especially for developing countries , and therefore hardly relevant". Countries that have not followed these recommendations, such as China , are developing very positively economically, while other countries in Africa and Latin America that have largely followed the recommendations show lower growth rates. Stiglitz names four main points of criticism:

  • The withdrawal of the state does not always lead to the corresponding services being offered by the private sector. So the abolition of has sales commissions for Agricultural Products in West Africa meant that the few wealthy farmers who possessed suitable means of transport, were able to build a local monopoly. As a result, the situation of the other farmers had deteriorated drastically.
  • In the event of the state withdrawing, it must be ensured that the newly emerging markets are open to all potential providers. The privatization policy in Russia caused the emergence of oligopolies and the resulting market distortions and income inequality rather than the emergence of a functioning market economy.
  • The Washington consensus is too uncritical on the assumption that economic growth benefits all sections of the population ( trickle-down theory ). In contrast, Stiglitz states that economic growth, especially in developing countries, leads to an exacerbation of social inequality, which leads to political instability, which harms the economy. This can be avoided through adequate social policy. As an extreme example, he cites the fact that the IMF has repeatedly called for countries in a financial crisis to cut their food subsidies.
  • The lending conditions also demand a rigid austerity policy from countries that are in a severe economic crisis. This would aggravate crises and threaten to slide into depression .

After the experience of the financial crisis from 2007 on, Stiglitz considers the politics of the Washington Consensus and the "underlying ideology of market fundamentalism " to be "dead".

Dani Rodrik emphasizes that the principles behind the Washington Consensus, such as property rights, a hard currency, state solvency and market-oriented incentives are necessary for successful growth, but cannot be effectively achieved through the program's specific catalog of measures. While many less successful states in Latin America have followed the Washington Consensus closely, more successful Asian countries such as China or Korea have followed it and also widely differing specific development strategies. Rodrik, for example, does not believe that radical trade liberalization will significantly affect economic growth. Industrial policy had preceded opening in many successful cases. Rodrik therefore calls for developing countries to be given more institutional leeway. The package of measures of the Washington Consensus is seldom a perfect match for the specific local conditions and bottlenecks.

Heinz-J. In two reports for the state parliaments of North Rhine-Westphalia and Lower Saxony in 2011, Bontrup clearly criticized the Washington Consensus: This ideology was put forward by the oligarchies of finance capital . It can be summarized as a triad of competition, deregulation and privatization. The “new masters of the world”, the capitalist “prey hunters” want a worldwide, unlimited market, the privatization of the planet in order to be able to enrich themselves and at the same time to exclude the poor of this world or at least to imprison them territorially. The primacy of democratically elected and therefore exclusively legitimized politics was "depoliticized" and undermined by a worldwide "dictatorship of capital", especially of finance capital. The development towards this was promoted by two factors, believes Bontrup: First, the globalization of the financial markets, i.e. the gradual abolition of capital controls and the creation of a free market for trading in securities since the early 1970s. This has created a worldwide Dorado for capital investment and speculation. Second, through the rise of so-called “institutional investors”, i. H. Mutual funds , pension funds , insurance companies that manage an ever larger portion of investors' wealth and today represent a significant capital power. As a result, governments have become driven by the financial markets. At the 3rd World Economic Forum in February 1996 , the former President of the Deutsche Bundesbank, Hans Tietmeyer , formulated this completely frankly, and intended as a warning : "From now on you (the assembled Western statesmen) are under the control of the financial markets".

literature

Web links

Individual evidence

  1. ^ Christian Kellermann: The organization of the Washington Consensus: The International Monetary Fund and its role in the international financial architecture . 1st edition. Transcript, 2006, ISBN 978-3-89942-553-6 . Pp. 95-96.
  2. ^ Christian Kellermann: The organization of the Washington Consensus: The International Monetary Fund and its role in the international financial architecture . 1st edition. Transcript, 2006, ISBN 978-3-89942-553-6 . P. 96.
  3. ↑ Nitsan Chorev: On the Origins of Neoliberalism: Political Shifts and Analytical Challenges. In: KT Leicht, JC Jenkins (ed.): Handbook of Politics: State and Society in Global Perspective , Berlin, Springer, 2010, pp. 127–144.
  4. ^ The Washington Post: A Conversation With John Williamson, Economist
  5. ^ John Williamson: Did the Washington Consensus Fail? In: Peterson Institute for International Economics. June 11, 2002, accessed November 9, 2016 .
  6. ^ Christian Kellermann: The organization of the Washington Consensus: The International Monetary Fund and its role in the international financial architecture . 1st edition. Transcript, 2006, ISBN 978-3-89942-553-6 . P. 100.
  7. ↑ Joseph Stiglitz: The shadows of globalization. Bonn 2002, p. 70
  8. ↑ Joseph Stiglitz: The shadows of globalization. Bonn 2002, p. 71
  9. ↑ Joseph Stiglitz: The opportunities of globalization. Bonn 2006, p. 51
  10. ^ Handrik Hansen: Politics and economic competition in globalization . 1st edition. VS Verlag für Sozialwissenschaft, 2008, ISBN 978-3-531-15722-1 . P. 129.
  11. ↑ Joseph Stiglitz: In free fall - From the failure of the markets to the reorganization of the world economy , Siedler, Munich 2010, p. 370.
  12. ^ Dani Rodrik : One Economics, Many Recipes . Princeton University Press, 2007. ISBN 0-691-12951-7 .
  13. ^ Print: The discredited state. PAD, Bergkamen 2012. In the name article also as a web link, Landtag Lower Saxony
  14. ↑ Jörg Huffschmid : Political Economy of Financial Markets. 2nd edition Hamburg 2002
  15. ↑ Ignacio Ramonet : The new masters of the world. International politics at the turn of the millennium. Zurich 1998.
  16. ↑ a b c Jean Ziegler : The new rulers of the world and their global adversaries. Bertelsmann, Munich 2003, p. 9 ff.
  17. ↑ Pierre Bourdieu in Der Spiegel : Interview 2001 ; its complete appeal against the depoliticization in name style. Bourdieu, web link
  18. ↑ Christoph Deutschmann: Riddle of the current economic policy. The secret return of Keynesianism . in Zeitschrift für Sozialökonomie vol. 42, volume 146, September 2005, p. 5.
  19. ↑ after Harald Schumann & Hans Peter Martin: Die Globalisierungsfalle. Hamburg 1998, p. 90.