Topic: The new Washington Consensus

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Link: The new Washington Consensus | Bruegel

Excerpt:

 "John Williamson coined the term Washington Consensus in 1989 as he examined the extent to which the old ideas of development economics that had governed Latin American economic policy since the 1950s were being swept aside by the set of ideas that had long been accepted as appropriate within the OECD.

 John Williamson provided a list of ten policies that more or less everyone in Washington agreed were needed more or less everywhere in Latin America:
  1. Fiscal Discipline.
  2. Reordering Public Expenditure Priorities.
  3. Tax Reform.
  4. Liberalizing Interest Rates.
  5. A Competitive Exchange Rate.
  6. Trade Liberalization.
  7. Liberalization of Inward Foreign Direct Investment.
  8. Privatization
  9. Deregulation
  10. Property Rights.

Jonathan D. Ostry, Prakash Loungani, and Davide Furceri write that the neoliberal agenda rests on two main planks. The first is increased competition – achieved through deregulation and the opening up of domestic markets, including financial markets, to foreign competition. The second is a smaller role for the state, achieved through privatization and limits on the ability of governments to run fiscal deficits and accumulate debt.

Simon Wren-Lewis writes that contrary to some perceptions, the term neoliberal was not a US invention, but was first used by Rüstow. It was designed to be a ‘third way’ between socialism and a German version of capitalism. It was adopted by a group that later became the Mont Pèlerin Society, which included Mises and Hayek and Milton Friedman."

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