On Monday Nkoko came and picked me up from the hotel and we went to "the mall" to get that Joburg feeling. So nice to see him again, my economic soul mate!
I was so lucky that John Williamson was going to give a talk that evening on the Washington Consensus and the implications of the crisis on development policies.
It was great to meet the man who (willingly or unwillingly) has affected millions of people's lives...but as Nkoko said it was a total anti-climax.
Williamson basically tried to whitewash his name (well who wouldn't) by saying that his Washington Consensus had been completely misinterpreted.
One of his main points was that he did not want to make a distinction between developing and advanced nations. Rather his recommended policies depended on factors such as whether or not a country has a vibrant private sector, or if a country has a low debt/gdp ratio.
He used China as an example of a developing nation with a vibrant
private sector....but there is no such thing as a clear cut private
sector in China. The boundaries between public and privatee or more
often than not blurred.
What I find problematic with this is that it basically renders countries in groups of developing and advanced nations anyways. Countries with a vibrant private sector are for the most part advanced nations and countries with high debt/gdp ratios are generally poor countries.
Hence if only countries with low debt/gdp ration should follow a Keynesian expansionary policy it de facto means that rich nations should follow a Keynesian expansionary policy whereas developing nations should practise financial discipline during the crisis.
His attempts to claim that it is not about developing versus advanced nations but the structure of their economies is thus nothing more than a cheap cop out.
What is interesting though is that he believed that the government should step in and support businesses through a crisis if they had the potential to become productive again later on. Following this line of argument why should then not developing nations be allowed to step in and support their industries if it is believed that these also have a potential to become productive in the future?
To be fair, Williamson's version of the Washington Consensus was a little bit more sensible than the practises of the IMF, for example he criticised the IMF for taking so long to accept that capital controls are sometimes necessary and not an all around evil.
However, when Nkoko asked about the power imbalance between the IMF/WB and a poor nation and pointing out that it was the IMF's interpretation of the Washington Consensus that matters since this is the
one that has been enforced (not Williamson's:"this is what I actually meant" version) Williamson simply replied that the IMF's interpretation was far more gentler than his own.
Riiight.
What a useless answer.
What is more disturbing is how many people criticised Williamson for being too little neo-liberal.
People who believe in the Washington Consensus are like the followers of the book "the Secret".
If you don't get that red sports car it is because you did not visualise it enough / if your economy isn't developing despite the WC policies in place it is because you weren't doing exercising them enough.
Rather than just accepting the fact that the economy is shit/you don't have a red sports car simply because your tools (WC policies/ visualising) simply doesn't work.
And lastly, the whole idea of a consensus is ridiculous. If there was a consensus on what is the best way of going about to fix an economy there would be no need to impose such a set of policies as conditions for a loan. Clearly there is no consensus.
And thank goodness for that.
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