Page 2 of
2 Beyond the Washington
Consensus By Walden Bello
with such people as economist
Jeffrey Sachs, sociologist David Held, Stiglitz,
and the British charity Oxfam.
Unlike the
three previous approaches, this perspective
acknowledges that growth and equity may be in
conflict, and it ostentatiously places equity
above growth. It also fundamentally questions the
central thesis of neo-liberalism: that for all its
problems, trade liberalization is beneficial in
the long run. Indeed, Stiglitz says that in the
long run, trade liberalization could lead to
a
situation where "the majority of citizens may be
worse off".
Moreover, the global social
democrats demand fundamental changes in the
institutions and rules of global governance such
as the IMF, the World Trade Organization, and the
Trade Related Intellectual Property Rights
Agreement (TRIPs). Held, for instance, calls for
the "reform, if not outright abolition, of the
TRIPs agreement", while Stiglitz says "rich
countries should simply open up their markets to
poorer ones, without reciprocity and without
economic or political conditionality". Also,
"middle-income countries should open up their
markets to the least developed countries, and
should be allowed to extend preferences to one
another without extending them to the rich
countries, so that they need not fear that imports
might kill their nascent industries".
The
global social democrats even see the
anti-globalization movement as an ally, with Sachs
thanking it "for exposing the hypocrisies and
glaring shortcomings of global governance and for
ending years of self-congratulation by the rich
and powerful".
But globalization is where
the global social democrats draw the line. For
like classical neo-liberalism, the Washington
Consensus Plus school and neo-structuralism,
global social democracy sees globalization as
necessary and fundamentally sound and, if managed
well, as bringing benefits to most.
Indeed, the global social democrats see
themselves as saving globalization from the
neo-liberals. This is all the more important
because, contrary to an assumption that was gospel
truth just a few years ago - that globalization
was irreversible - the global social democrats
worry that contemporary globalization is in danger
of being reversed. As a cautionary tale about the
consequences of such a development, they hold up
the turbulent reversal of the first wave of
globalization after 1914.
To Sachs, Held
and Stiglitz, the benefits of globalization
outstrip the costs, and what the world needs is a
social-democratic or "enlightened globalization"
where global market integration proceeds but is
one that is managed fairly and is accompanied by a
progressive "global social integration". The aim,
as Held puts it, is to "provide the basis for a
free, fair and just world economy", where the
"values of efficient and effective global economic
processes ... function in a manner commensurate
with self-determination, democracy, human rights,
and environmental sustainability".
Can
globalization be humanized? There are
several problems with global social democracy's
attachment to globalization.
First of all,
it is questionable that the rapid integration of
markets and production that is the essence of
globalization can really take place outside a
neo-liberal framework whose central prescription
is the tearing down of tariff walls and the
elimination of investment restrictions. Slowing
down and mitigating this inherently destabilizing
process, not reversing it, is the
global-social-democratic agenda. That global
social democrats have come to terms with the
fundamental tendency of global market forces to
spawn poverty and inequality is admitted by Sachs,
who sees social-democratic globalization as
"harnessing [of] the remarkable power of trade and
investment while acknowledging and addressing
limitations through compensatory collective
action".
Second, it is likewise
questionable that, even if one could conceive of a
globalization that takes place in a socially
equitable framework, this would be desirable. Do
people really want to be part of a functionally
integrated global economy where the barriers
between the national and the international have
disappeared? Would they not prefer to be part of
economies that are susceptible to local control
and are buffered from the vagaries of the
international economy? Indeed, the backlash
against globalization stems not only from the
inequalities and poverty it has created but also
the sense of people that they have lost all
semblance of control over the economy to
impersonal international forces.
One of
the more resonant themes in the anti-globalization
movement is its demand for an end to
export-oriented growth and the creation of
inwardly oriented development strategies that are
guided by the logic of subsidiary, where the
production of commodities takes place at the local
and national level whenever that is possible, thus
making the process susceptible to democratic
regulation.
The larger problem The fundamental problem with all four
successors to the Washington Consensus is their
failure to root their analysis in the dynamics of
capitalism as a mode of production. Thus they fail
to see that neo-liberal globalization is not a new
stage of capitalism but a desperate and
unsuccessful effort to overcome the crises of
over-accumulation, overproduction and stagnation
that have overtaken the central capitalist
economies since the mid-1970s.
By breaking
the social-democratic capital-labor compromise of
the post-World War II period and eliminating
national barriers to trade and investment,
neo-liberal economic policies sought to reverse
the long-term squeeze on growth and profitability.
This "escape to the global" has taken place
against the backdrop of a broader conflict-ridden
process marked by renewed inter-imperialist
competition among the central capitalist powers,
the rise of new capitalist centers, environmental
destabilization, heightened exploitation of the
South - what David Harvey has called "accumulation
by dispossession" - and rising resistance all
around.
Globalization has failed to
provide capital an escape route from its
accumulating crises. With its failure, we are now
seeing capitalist elites giving up on it and
resorting to nationalist strategies of protection
and state-backed competition for global markets
and global resources, with the US capitalist class
leading the way. This is the context that Jeffrey
Sachs and other social democrats fail to
appreciate when they advance their utopia: the
creation of an "enlightened global capitalism"
that would both promote and "humanize"
globalization.
Late capitalism has an
irreversibly destructive logic. Instead of
engaging in the impossible task of humanizing a
failed globalist project, the urgent task facing
us is managing the retreat from globalization so
that it does not provoke the proliferation of
runaway conflicts and destabilizing developments
such as those that marked the end of the first
wave of globalization in 1914.
Note 1. "Washington
Consensus" is a phrase initially coined in 1989 to
describe a relatively specific set of 10
economic-policy prescriptions considered to
constitute a "standard" reform package promoted
for crisis-racked countries by Washington-based
institutions such as the International Monetary
Fund, the World Bank and the US Treasury
Department. The term has since acquired a
secondary connotation, being used to describe a
less precisely stipulated gamut of policies,
broadly associated with expanding the role of
market forces and constraining the role of the
state, sometimes also described (almost invariably
pejoratively) as neo-liberalism or market
fundamentalism.
Walden Bello is
professor of sociology at the University of the
Philippines and senior analyst at the
Bangkok-based research and advocacy institute
Focus on the Global South.
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