Washington consensus this was something like ten commandments for our time. The author of this concept is considered the English economist John Williamson, because he used it on one of the conference held somewhere in the late 80s but Williamson just wrote down and systematized what the good 20-30 years was treated as universally applicable manual to build a “good economy”.
His power and authority consensus owed to the International Monetary Fund. And that’s why it was Washington – the IMF is the seat of American capital. The importance of consensus was based on the fact that there was another overall development strategy, which politicians may or may not need to use it. It was exactly the opposite. Washington introduced the Ten Commandments in many peripheral countries maximalistic version. His commandments are not imposed directly. Typically, the case does not even have to stand on a knife edge. It took only a soft mix of incentives (grants, analysis, research grants for economists, politicians and journalists) and hard (financial aid in return for a promise to carry out “responsible” reform). And also a series of auxiliary rankings (such as the World Bank’s Doing Business), which created among the countries subject to the regime of consensus specific rat race. According to the rule: “Slovaks already been liberalized this and that, let this much capital. And we? “. Who does not believe, let’s talk with the representatives of Polish political elites (any item) responsible for contacts with international financial institutions in times of transition. Probably very quickly tell you about that, although of course they wrote Polish reform, it knew perfectly well that their room for maneuver is small.
crumbles Decalogue
Let’s show it on specifics. The first commandment consensus is: do not you keep a high level of public debt to GDP. The roots of this rule reached around indebtedness of Latin American crises of the 70s and 80s Western creditors, terrified that they may never recover their money, they began to impose conditions on debtors. Yes, there will be new money, but provided that you conscientiously pay off the previous loan. A special role in promoting this nascent commandments played in the early 90s the European Union. The economic advisor to the leaders of the major European economies have made daring here that Washington calls the commandments of the German tradition ordoliberalną. The latter proclaimed that the economy needs to grow based on a set of iron rules. It is hence the rule’s debt (60 per cent. Of government debt and 3 percent. Deficit) in the Maastricht Treaty.
However, this is only the beginning. The second commandment is, in fact: you will not be wasting public money on social benefits, subsidies and the like nonsense. Public penny should go to those who can most effectively multiply it. And so favored by pro-growth business investment. For example, in infrastructure and business development. This commandment would probably a lot of sense, if not the rule number three, which is: the best taxes are taxes low and flat. As a rule penny multiplied through public investment should not hit back because the public purse, only to remain in private hands. But it could still get over, hoping to stimulate consumption and consequently – the entire economy. But let’s look at the commandment number one (prohibition of excessive public debt) and three (prohibition of raising taxes). What does it mean? Except that in conditions of acute crisis the state is simply helpless. There is no means to stabilize the economic situation with the help of increased spending. Conversely, the country remains in line with the consensus Washington must cut spending. And if you do not want to sin against the second commandment (pro-growth investments have priority) will be cut after the weakest part of the social fabric. So when social spending.
Commandments sixth (‘ll liberalized international trade), seventh (love foreign investment as yourself) and eighth (privatize state-owned companies) explain rather not have. In the end, we had them well processed by the first 25 years of the history of the Third Republic. Indeed, they are attracting a lot of foreign capital, but while losing a large part of the industrial potential inherited from the previous regime. I finally settled into place in the very perspective of the international production chain. The consequence is a fairly low level of wages – that is one of the biggest weaknesses of the Polish economy. But this is not the end of the commandments. Ninth says again that the best market is deregulated market. And tenth: the right of property is sacred. So that there was no doubt who’s in charge.
Zareformować to the death
Such, who criticized consensus, there were many. As long as coming from outside the economy – as Naomi Klein – their disloyal voice could still be attributed to ignorance of the economy. Gradually, however, doubts began to be more and more professional economists. “I visited once a small country in Latin America, which took us local Minister of Finance. We proudly presented us what are the next generation of market reforms introduced in the life of his country. The problem was that few of them resulted. Economic growth was negligible, investments remained at a very low level, and the social inequalities to increase, “- told in an interview with the DGP Dani Rodrik of Princeton University and author shortly before the outbreak of the crisis of 2008. Of the book” One Economy, a lot of prescriptions. “
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