Editing Washington Consensus (section)

==Criticism==
{{seealso|Post-neoliberalism}}
As of the 2000s, several Latin American countries were led by socialist or other left wing governments, some of which—including Argentina and Venezuela—have campaigned for (and to some degree adopted) policies contrary to the Washington Consensus policies. Other Latin American countries with governments of the left, including Brazil, Chile and Peru, in practice adopted the bulk of the policies included in Williamson's list, even though they criticized the market fundamentalism that these are often associated with.

General criticism of the economics of the consensus is now more widely established, such as that outlined by US scholar [[Dani Rodrik]], Professor of International Political Economy at [[Harvard University]], in his paper ''Goodbye Washington Consensus, Hello Washington Confusion?''.<ref name=PRIVATISEb>{{harvnb | Rodrik|2006}}</ref>

As Williamson has pointed out, the term has come to be used in a broader sense than its original intention, as a synonym for market fundamentalism or neoliberalism. In this broader sense, Williamson states, it has been criticized by people such as [[George Soros]] and [[Joseph Stiglitz]].<ref name="Williamson2000" /> The Washington Consensus is also criticized by others such as some Latin American politicians and [[heterodox economics|heterodox economists]] such as [[Erik Reinert]].<ref name="Reinert2000">Reinert, Erik S. (2000) [http://othercanon.org/wp-content/uploads/2020/02/Mongolia-Underdevelopment-of-the-1990s-as-a-Morgenthau-Plan.pdf The Underdevelopment of Mongolia in the 1990s—Why Globalisation is one Nation's Food and the Other Nation's Poison] {{Webarchive|url=https://web.archive.org/web/20210805062218/http://othercanon.org/wp-content/uploads/2020/02/Mongolia-Underdevelopment-of-the-1990s-as-a-Morgenthau-Plan.pdf |date=August 5, 2021 }}.</ref> The term has become associated with neoliberal policies in general and drawn into the broader debate over the expanding role of the [[free market]], constraints upon the [[Sovereign state|state]], and the influence of the United States, and globalization more broadly, on countries' national [[sovereignty]].{{Citation needed|date=May 2015}}

Some US economists, such as [[Joseph Stiglitz]] and [[Dani Rodrik]], have challenged what are sometimes described as the 'fundamentalist' policies of the IMF and the [[US Treasury]] for what Stiglitz calls a 'one size fits all' treatment of individual economies. According to Stiglitz the treatment suggested by the IMF is too simple: one dose, and fast—stabilize, liberalize and privatize, without prioritizing or watching for side effects.<ref name=CHALLENGING>{{Cite journal|jstor = 24590462|title = Challenging the Washington Consensus|last1 = Stiglitz|first1 = Joseph|last2 = Schoenfelder|first2 = Lindsey|journal = The Brown Journal of World Affairs|year = 2003|volume = 9|issue = 2|pages = 33–40|url = http://www.watsoninstitute.org:80/bjwa/archive/9.2/Feature/stiglitz.pdf|archive-url = https://web.archive.org/web/20030828054917/http://www.watsoninstitute.org/bjwa/archive/9.2/Feature/stiglitz.pdf|archive-date = August 28, 2003|access-date = November 20, 2008|url-status = dead}}</ref>{{blockquote |The reforms did not always work out the way they were intended. While growth generally improved across much of Latin America, it was in most countries less than the reformers had originally hoped for (and the "transition crisis", as noted above deeper and more sustained than hoped for in some of the former socialist economies). Success stories in Sub-Saharan Africa during the 1990s were relatively few and far in between, and market-oriented reforms by themselves offered no formula to deal with the growing public health emergency in which the continent became embroiled. The critics, meanwhile, argue that the disappointing outcomes have vindicated their concerns about the inappropriateness of the standard reform agenda.<ref name=BELOW>{{harvnb | Rodrik|2006| p=2}}</ref>}}

Besides the excessive belief in market fundamentalism and international economic institutions in attributing the failure of the Washington consensus, Stiglitz provided a further explanation about why it failed. In his article "The Post Washington Consensus Consensus",<ref name="policydialogue.org">{{cite web |url=http://policydialogue.org/files/events/Stiglitz_Post_Washington_Consensus_Paper.pdf |title=The Post Washington Consensus Consensus |author=Joseph Stiglitz |website=policydialogue.org |publisher=The Initiative for Policy Dialogue |access-date=April 24, 2015 |author-link=Joseph Stiglitz |archive-date=May 10, 2013 |archive-url=https://web.archive.org/web/20130510080021/http://policydialogue.org/files/events/Stiglitz_Post_Washington_Consensus_Paper.pdf |url-status=live }}</ref> he claims that the Washington consensus policies failed to efficiently handle the economic structures within developing countries. The cases of East Asian states such as Korea and Taiwan are known as a success story in which their remarkable economic growth was attributed to a larger role of the government by undertaking [[industrial policies]] and increasing domestic savings within their territory. From the cases, the role for government was proven to be critical at the beginning stage of the dynamic process of development, at least until the markets by themselves can produce efficient outcomes.{{citation needed|date=August 2020}}

{{blockquote |The policies pursued by the international financial institutions which came to be called the Washington consensus policies or neoliberalism entailed a much more circumscribed role for the state than were embraced by most of the East Asian countries, a set of policies which (in another simplification) came to be called the [[development state]].<ref name="policydialogue.org"/>}}

The critique laid out in the World Bank's study ''Economic Growth in the 1990s: Learning from a Decade of Reform'' (2005)<ref>World Bank. ''Economic Growth in the 1990s: Learning from a Decade of Reform'' Washington, D.C., 2005.</ref> shows how far discussion has come from the original ideas of the Washington Consensus. Gobind Nankani, a former vice-president for Africa at the World Bank, wrote in the preface: "there is no unique universal set of rules.... [W]e need to get away from formulae and the search for elusive 'best practices'...." (p. xiii). The World Bank's new emphasis is on the need for humility, for policy diversity, for selective and modest reforms, and for experimentation.<ref name=CRITIQUEWB>World Bank, Economic Growth in the 1990s: Learning from a Decade of Reform, Washington, D.C., 2005</ref>

The World Bank's report ''Learning from Reform'' shows some of the developments of the 1990s. There was a deep and prolonged collapse in output in some (though by no means all) countries making the transition from [[communism]] to market economies (many of the Central and East European countries, by contrast, made the adjustment relatively rapidly). Academic studies show that more than two decades into the transition, some of the former communist countries, especially parts of the former Soviet Union, had still not caught up to their levels of output before 1989.<ref>{{cite book|last=Ghodsee|first=Kristen|date=2017|title=Red Hangover: Legacies of Twentieth-Century Communism|url=https://www.dukeupress.edu/red-hangover|publisher=[[Duke University Press]]|pages=63|isbn=978-0822369493|author-link=Kristen R. Ghodsee|access-date=October 13, 2018|archive-date=August 4, 2018|archive-url=https://web.archive.org/web/20180804180848/https://www.dukeupress.edu/red-hangover|url-status=live}}</ref><ref>{{Cite journal | doi = 10.1080/05775132.2015.1012402| title =After the Wall Fell: The Poor Balance Sheet of the Transition to Capitalism| journal =[[Challenge (economics magazine)|Challenge]]| volume = 58| issue = 2| pages =135–138| year = 2015| last1 =  Milanović | first1 = Branko| s2cid =153398717|author-link=Branko Milanović|quote= "So, what is the balance sheet of transition? Only three or at most five or six countries could be said to be on the road to becoming a part of the rich and (relatively) stable capitalist world. Many of the other countries are falling behind, and some are so far behind that they cannot aspire to go back to the point where they were when the Wall fell for several decades."}}</ref> A 2001 study by economist [[Steven Rosefielde]] posits that there were 3.4 million premature deaths in Russia from 1990 to 1998, which he party blames on the [[Shock therapy (economics)|shock therapy]] imposed by the Washington Consensus.<ref>{{cite journal |last1= Rosefielde|first1=Steven|s2cid=145733112|date=2001 |title=Premature Deaths: Russia's Radical Economic Transition in Soviet Perspective|journal=[[Europe-Asia Studies]]|volume=53 |issue=8 |pages=1159–1176|doi= 10.1080/09668130120093174}}</ref> Neoliberal policies associated with the Washington Consensus, including pension privatization, the imposition of a flat tax, monetarism, cutting of corporate taxes, and central bank independence, continued into the 2000s.<ref>{{cite book|last1=Appel|first1=Hilary|last2=Orenstein|first2=Mitchell A.|date=2018|title=From Triumph to Crisis: Neoliberal Economic Reform in Postcommunist Countries|url=https://books.google.com/books?id=PHhTDwAAQBAJ&pg=PA3|publisher=[[Cambridge University Press]]|page=3|isbn=978-1108435055|access-date=June 5, 2022|archive-date=April 16, 2022|archive-url=https://web.archive.org/web/20220416093356/https://books.google.com/books?id=PHhTDwAAQBAJ&pg=PA3|url-status=live}}</ref> Many [[Sub-Saharan Africa]]n's economies failed to take off during the 1990s, in spite of efforts at policy reform, changes in the political and external environments, and continued heavy influx of foreign aid. [[Uganda]], [[Tanzania]], and [[Mozambique]] were among countries that showed some success, but they remained fragile. There were several successive and painful financial crises in Latin America, East Asia, Russia, and Turkey. The Latin American recovery in the first half of the 1990s was interrupted by crises later in the decade. There was less growth in per capita GDP in Latin America than in the period of rapid post-War expansion and opening in the world economy, 1950–80. [[Argentina]], described by some as "the poster boy of the Latin American economic revolution",<ref name=BELOWb>{{harvnb | Rodrik|2006| pp= 3–4}}</ref> came crashing down in 2002.<ref name="CRITIQUEWB"/>

A significant body of economists and policy-makers argues that what was wrong with the Washington Consensus as originally formulated by Williamson had less to do with what was ''included'' than with what was ''missing''.<ref>See, as examples representative of a much more extensive literature, e.g., Birdsall and de la Torre. ''Washington Contentious'' (2003); {{harvtxt|Kuczynski|Williamson|2003}}.</ref> This view asserts that countries such as Brazil, Chile, Peru and Uruguay, largely governed by parties of the left in recent years, did not—whatever their rhetoric—in practice abandon most of the substantive elements of the Consensus. Countries that have achieved macroeconomic stability through fiscal and monetary discipline have been loath to abandon it: Lula, the former President of Brazil (and former leader of the [[Workers' Party (Brazil)|Workers' Party of Brazil]]), has stated explicitly that the defeat of [[hyperinflation]]<ref>{{Cite web|url=http://www.econ.puc-rio.br/gfranco/How%20Brazil%20Beat%20Hyperinflation.htm|title=How Brazil Beat Hyperinflation|archive-url=https://web.archive.org/web/20040518120408/http://www.econ.puc-rio.br/gfranco/How%20Brazil%20Beat%20Hyperinflation.htm|archive-date=May 18, 2004}}</ref> was among the most important positive contributions of the years of his presidency to the welfare of the country's poor, although the remaining influence of his policies on tackling poverty and maintaining a steady low rate of inflation are being discussed and doubted in the wake of the Brazilian Economic Crisis currently occurring in Brazil.<ref>{{cite web | title=imf-says-brazil-economy-to-shrink | website=Bloomberg | date=2015-10-06 | url=https://www.bloomberg.com/news/articles/2015-10-06/imf-says-brazil-economy-to-shrink-3-in-2015-on-political-crisis | access-date=2021-08-28 | archive-date=February 5, 2017 | archive-url=https://web.archive.org/web/20170205235640/https://www.bloomberg.com/news/articles/2015-10-06/imf-says-brazil-economy-to-shrink-3-in-2015-on-political-crisis | url-status=live }}</ref>

These economists and policy-makers would, however, overwhelmingly agree that the Washington Consensus was ''incomplete'', and that countries in Latin America and elsewhere need to move beyond "first generation" macroeconomic and trade reforms to a stronger focus on [[productivity]]-boosting reforms and direct programs to support the poor.<ref>See, e.g., Birdsall and de la Torre, ''Washington Contentious'' (2003); de Ferranti and Ody, [https://web.archive.org/web/20060809014850/http://www.brookings.edu/views/papers/20060803.pdf ''Key Economic and Social Challenges for Latin America''] (2006):</ref> This includes improving the investment climate and eliminating [[red tape]] (especially for smaller firms), strengthening institutions (in areas like justice systems), fighting poverty directly via the types of [[Conditional Cash Transfer]] programs adopted by countries like Mexico and Brazil, improving the quality of primary and secondary education, boosting countries' effectiveness at developing and absorbing technology, and addressing the needs of historically disadvantaged groups including [[Indigenous peoples of the Americas|indigenous peoples]] and [[Afro-Latin American|Afro-descendant]] populations across Latin America.{{Citation needed|date=May 2015}}

In a book edited with future [[president of Peru]], [[Pedro Pablo Kuczynski]] in 2003, John Williamson laid out an expanded reform agenda, emphasizing crisis-proofing of economies, "second-generation" reforms, and policies addressing inequality and social issues.{{sfn|Williamson|2003}}

Nobel laureate [[Michael Spence]] has defended the Washington Consensus, arguing "I continue to find that when properly interpreted as a guide to the formulation of country-specific development strategies, the Washington Consensus has withstood the test of time quite well."<ref name=":4" /> According to Spence, "The Washington Consensus was never intended as a complete or a one-size-fits-all development program."<ref name=":4" /> He does however note that the Washington Consensus "was vulnerable to misuse due to the absence of an accompanying and explicit development model."<ref name=":4" />

===Anti-globalization movement===
Many critics of [[trade liberalization]], such as [[Noam Chomsky]], [[Tariq Ali]], [[Susan George (political scientist)|Susan George]], and [[Naomi Klein]], see the Washington Consensus as a way to open the [[labor market]] of underdeveloped economies to exploitation by companies from more developed economies. The prescribed reductions in tariffs and other [[trade barrier]]s allow the free movement of goods across borders according to [[market forces]], but labor is not permitted to move freely due to the requirements of a [[Visa (document)|visa]] or a work permit. This creates an economic climate where goods are manufactured using cheap labor in underdeveloped economies and then exported to rich First World economies for sale at what the critics argue are huge markups, with the balance of the markup said to accrue to large multinational corporations. The criticism is that workers in the [[Third World]] economy nevertheless remain poor, as any pay raises they may have received over what they made before trade liberalization are said to be offset by inflation, whereas workers in the First World country become unemployed, while the wealthy owners of the multinational grow even more wealthy.<ref>{{Cite book|title=Profit over people: neoliberalism and global order|last=Chomsky|first=Noam|date=1999|publisher=Seven Stories Press|isbn=9781888363821|oclc=39505718}}</ref>

Despite macroeconomic advances, poverty and inequality remain at high levels in Latin America. About one of every three people—165&nbsp;million in total—still live on less than $2 a day. Roughly a third of the population has no access to electricity or basic sanitation, and an estimated 10 million children suffer from malnutrition. These problems are not, however, new: Latin America was the most economically unequal region in the world in 1950, and has continued to be so ever since, during periods both of state-directed import-substitution and (subsequently) of market-oriented liberalization.<ref>Michael Read, "Forgotten Continent" (2007), page 156.</ref>

Some socialist political leaders in Latin America have been vocal and well-known critics of the Washington Consensus, such as the late Venezuelan President [[Hugo Chávez]], Cuban ex-President [[Fidel Castro]], Bolivian President [[Evo Morales]], and [[Rafael Correa]], President of [[Ecuador]]. In Argentina, too, the recent [[Justicialist Party]] government of [[Néstor Kirchner]] and [[Cristina Fernández de Kirchner]] undertook policy measures which represented a repudiation of at least some Consensus policies.<ref>Charlie Devereux and Raymond Colitt, [https://www.bloomberg.com/news/2013-03-07/venezuelans-quality-of-life-improved-in-un-index-under-chavez.html Venezuelans’ Quality of Life Improved in UN Index Under Chavez.] {{Webarchive|url=https://web.archive.org/web/20141107050220/http://www.bloomberg.com/news/2013-03-07/venezuelans-quality-of-life-improved-in-un-index-under-chavez.html |date=November 7, 2014 }} Bloomberg News May 7, 2013.</ref>

===Proponents of the "European model" and the "Asian way"===
Some European and Asian economists suggest that "infrastructure-savvy economies" such as [[Norway]], Singapore, and China have partially rejected the underlying Neoclassical "financial orthodoxy" that characterizes the Washington Consensus, instead initiating a [[Realpolitik|pragmatist]] development path of their own<ref>{{in lang|en}} {{Citation |url=http://www.turkishweekly.net/op-ed/2799/forecasting-the-future-the-brics-and-the-china-model.html |access-date=2011-03-09 |title=see M. Nicolas J. Firzli, "Forecasting the Future: The G7, the BRICs and the China Model", JTW/Ankara & An-Nahar/Beirut, March 9, 2011 |archive-date=March 14, 2011 |archive-url=https://web.archive.org/web/20110314200831/http://www.turkishweekly.net/op-ed/2799/forecasting-the-future-the-brics-and-the-china-model.html |url-status=dead }}</ref> based on sustained, large-scale, government-funded investments in strategic infrastructure projects: "Successful countries such as Singapore, [[Indonesia]], and [[South Korea]] still remember the harsh adjustment mechanisms imposed abruptly upon them by the IMF and World Bank during the [[1997 Asian financial crisis|1997–1998 'Asian Crisis']] […] What they have achieved in the past 10 years is all the more remarkable: they have quietly abandoned the Washington Consensus by investing massively in infrastructure projects […] this pragmatic approach proved to be very successful".<ref name="Euromoney">{{Cite news|author= M. Nicolas J. Firzli quoted by Andrew Mortimer|title= Country Risk: Asia Trading Places with the West|url= http://www.euromoneycountryrisk.com/Analysis/Country-Risk-Asia-trading-places-with-the-west|work= Euromoney Country Risk|date= May 14, 2012|access-date= November 5, 2012|location= .|archive-date= May 28, 2020|archive-url= https://web.archive.org/web/20200528062918/https://www.euromoney.com/country-risk|url-status= usurped}}</ref>

While opinion varies among economists, Rodrik pointed out what he claimed was a factual paradox: while China and India increased their economies' reliance on free market forces to a limited extent, their general economic policies remained the exact opposite to the Washington Consensus' main recommendations. Both had high levels of [[protectionism]], no [[privatization]], extensive industrial policies planning, and lax fiscal and financial policies through the 1990s. Had they been dismal failures they would have presented strong evidence in support of the recommended Washington Consensus policies. However they turned out to be successes.<ref name="PRIVATISEz">{{harvnb|Rodrik|2006|pp=3–5}}</ref> According to Rodrik: "While the lessons drawn by proponents and skeptics differ, it is fair to say that nobody really believes in the Washington Consensus anymore. The question now is not whether the Washington Consensus is dead or alive; it is what will replace it".<ref name="PRIVATISEb" />

Rodrik's account of Chinese or Indian policies during the period is not universally accepted. Among other things those policies involved major turns in the direction of greater reliance upon market forces, both domestically and internationally.<ref>An overview of the origins of the Chinese reforms and their implementation over roughly the first decade of the reforms is provided by Harry Harding in ''China's Second Revolution: Reform after Mao''.  Brookings, 1987.</ref>