Friday, September 16, 2005


The Washington Consensus

The rules of the global economy should be rewritten. Fascinating article on the future of the global economy, from a former chief economist of the International Monetary Fund.

He says that many people around the world, including in the rich countries, have "failed to find a viable alternative to the much reviled "Washington Consensus" of economic liberalization." Regardless, there is growing unrest.

A posting below (Who is responsible for the Global Economy?, 26 August) shows that many countries, including the US, have frantically been looking for and finding alternatives. Whether they are viable alternatives is an entirely different matter. Professor Rogoff has his doubts. And the situation is getting worse. The Washington Consensus needs rethinking.

1) This view appears in the Wall Street Journal, in an op-ed highlighted by Thomas Barnett. "Revolutionary China, Complacent America," op-ed by Charlene Barshevsky and Edward Gresser, Wall Street Journal, 15 September 2005. "Biggest point Charlene and her co-author make is that China is generating new rules throughout the global economy. This is my favorite theme of BFA [TB's new book, Blueprint for Action]: the New Core sets the New Rules."

2) A What if? scenario was published recently. The essence is that history is repeating itself in US financial governance : a similar loss of financial control in the 1960's drove the US to a drastic solution in the following decade - which was to scrap the UN (IMF) system of global monetary discipline, and introduce floating exchange rates. There are lessons here for many countries.
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