John Williamson: A US-centric world will wither away in any case

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The editorial board of the Russian Journal presented a new issue of the newsletter RJ – Standpoint of the Week. The topic this week is ‘Is the “Moscow Consensus” possible?’

The possibility of forming a new political consensus was raised at 2009 Yaroslavl Forum where the political principles of the world order were discussed. Today, this issue continues to be examined within the framework of preparations for the next session of the Global Political Forum. There was a time when the informal ‘Washington Consensus’ was regarded as the international standard for economic policy. Today, after a series of failures and the recent global economic crisis, the master role of the Washington Consensus has been widely disputed and criticized. This week, the editorial board of RJ – Standpoint of the Week presents an overview of the debates going on in political and social science about the expected review of the foundations of the Washington Consensus, its substitution with a different agreement, and the prospects of  a new  Beijing or Moscow Consensus.

The following experts took part in the discussion: John Naisbitt, a well-known American economist and futurologist, as well as the director of the independent think tank the China Institute and professor of economics at Nankai University (China); John Williamson, the American economist who coined the term ‘Washington Consensus’ and senior fellow at the Peterson Institute for International Economics (Washington); Joshua Cooper Ramo, an American political scientist and managing director at Kissinger Associates, who that coined the term ‘Beijing Consensus;’ Susan George, a well-known public activist in the USA and France and head of the Transnational Institute, an international think tank for progressive politics; Evgeny Yasin, former Minister of Economy of the Russian Federation, academic adviser at the State University – Higher School of Economics, and President of the Liberal Mission Foundation; Andry Korotaev, Russian historian, sociologist, economist, director of the Eastern Anthropology Center of the Russian State University for the Humanities, and co-editor of the international journal Social Evolution & History; Richard Sakwa, British historian and political scientist, and professor of Russian and European politics at the University of Kent.

John Williamson is an American economist who first coined the term ‘Washington Consensus’. He is a Senior Fellow at the Peterson Institute for International Economics (Washington):

Dear Professor Williamson, in your opinion, does the return to progressive and socioliberal practices that existed before the advent of the Washington Consensus represent a
new form of global crisis management? Or do you think we need an even stricter implementation of neoliberal prescriptions for the sake of the ‘final abolishment of paternalism and colonialism’? Is some new form of global crisis management possible? If the answer is yes, then what principles could serve as a foundation for such a new model?

The Washington Consensus, as I envisaged it, was actually not ‘a rigid version of neoliberalism’. Upon coining that term, I aimed to classify the existing doctrines into those doctrines that were generally accepted (by consensus) versus those that were irrational and thus, espoused only by a small number of adherents. There are many, and you also seem to be
among them, who use the term to describe the latter, but I find this approach to be unhelpful. I regard the consensus doctrines to be helpful, both with respect to dealing with crisis as well as the normal development of events (in non-crisis periods), although that does not prevent me hoping for, and seeking, further advances. I doubt that it is helpful to attempt to put a label on a desired form of crisis management. Over time, the concept of the ‘Washington Consensus’ has changed dramatically. For example, many people have come to focus on
some specific doctrines of my list and, moreover, they are, more often than not, of a totally different interpretation than that which was intended when I first put forward the idea about the ‘Washington Consensus’. This doctrine seems to have began a life all of its own life, but everyone has continued to refer to all of this as the ‘Washington Consensus’.

Should the developed industrial world focus on itself and abandon the ideas of bringing the world closer to an ‘even playing field’? Should the world remain ‘divided’ or should it
gain another chance of becoming ‘even’ within the framework of a new consensus? Is is possible to say that all of the originally defined obstacles to independent development of Third World countries have finally been removed and that the severe constraints placed on the provision of financial aid to Third World countries has also been removed? If so, what is the rationale?

I certainly would not want to see the industrialised world retreating and no longer taking into account the needs of the countries of the developing world, and I do not expect to see the current crisis becoming an unconquerable hurdle in the thrust toward globalisation. I completely disagree with those opinions claiming that the financial conditions placed on monetary aid programs have been an obstacle to their development.

Moving towards a more ‘even’ world, should we render our existing ecological problems unresolvable – problems such as the extensive pollution of our environment as a result of economic progress, unrestrained exploration and exploitation of mineral resources, and the inevitable deficit of precious metals and other natural resources? Can we bypass
them while creating strategies for planetary development?

On the flip side of economic growth, there are certainly costs associated with environmental pollution and natural resource consumption. That is why it is important to properly factor in these external factors so that future growth will not be environmentally destructive and so the environment can undergo improvement despite the occurrence of such economic
growth.

Does the liberal repositioning of global financial institutions encounter obstacles with respect to the indifferent approach to the political order of the ‘economically lagging’ states that are receiving financial aid?

I disagree with those countries that are resisting greater representation of non-Western countries in the various international financial institutions today, but I nevertheless doubt that reforms in the latter group will greatly change the conditions according to which financial assistance is provided to them. The conditions are, in my view, largely dictated by the need to ensure their eventual repayment.

Can a non-Western country or civilisation emerge as a new centre where global management rules would be devised? Would the Western world accept such a development?

We will see, if and when there is ever a viable blueprint for reform emanating from a non-Western source. I would hope so, but I do not think that is likely in the near future.

Does the neoliberal economic system qualify as the only possible foundation for a US-centric world? Would it be possible to speak of dismantling the US-centric world should the neoliberal economic system disappear from the post-crisis world? Is the demise of the Washington Consensus and the post-American world one and the same thing?

The answer very much depends upon the definition of ‘neoliberal’ that is being used. If you mean this term in the original sense of this word, which describes the policy proposals of Milton Friedman and Friedrich Hayek, for instance, then the answer is clearly no. The world was US-centric long before the ideas put forward by this country even achieved prominence. If you mean ‘liberal’, in the sense of being market-oriented, then it is difficult to see citizens of the USA ceasing to value the ideas that have guided the society in which they live and have done so since the foundation of that country. At the same time, I cannot help remarking that there are currently no signs of the world ceasing to be US-centric, just as there is nothing to indicate that the ‘Washington Consensus’ is nearing its end, at least insofar as we are speaking about the meaning of this term as I envision it. I do think that the US-centric world will end up withering away sooner or later in any case. It is very possible that the economic crisis has somewhat accelerated this process. The financial sector as it exists today has also lost its former status and prestige at this point.

Does the Washington Consensus exist today, perhaps in a different form or with different content?

I am not sure that, twenty years ago, the majority of people would have agreed that the positions I underlined indeed represented the major ideas of that time. Instead, it is more likely the case that they were an important part of the major ideas of that time. Moreover, today I regret not having expressed my ideas regarding financial deregulation in a different way. Instead, I should have expressed that financial deregulation demands the introduction of certain institutions that would oversee these processes. I did not do that and today I have regrets about that.