Post–Washington Consensus

The post–Washington Consensus (PWC) is a term used to define a shift away from a more starkly neoliberal policy agenda, encapsulated in popular understandings of the Washington, DC consensus. The key distinctions of the PWC are the following:

• An interest in institutions. It is not self-evident that free markets flourish merely as a result of the roll back of state intervention. For markets to work, it is necessary to ensure that they exist in the appropriate institutional context. This means largely that states need to establish robust legislative contexts for a market economy. It also means exploring the possibility of more networked forms of governance as underpinnings of marketization.
• An interest in information. The nature of a market or economic sector crucially depends on the topography of its information flows. Fluid and transparent forms of information allow markets to work more effectively. It is poor or limited information flows that contribute to financial crises, poorly executed privatizations, or localized monopolies.
• An interest in public goods. Related to the previous ideas, economists within the PWC tradition have highlighted the importance of public goods, especially at the global level. These public goods include security and order in the first place; thereafter, one could add predictable and transparent trade regulations and various forms of data or information sharing. These kinds of goods are seen as central to ensuring that economic globalization works efficiently.
• An interest in policy execution. Rather than focusing on economic liberalization as a single, unified project to be executed as rapidly as possible—even through shock therapy—the PWC pays attention to the scheduling and rolling out of new economic policies. This concern was largely the product of the poor performance of privatization programs in various transition economies.

Taken collectively, we can see the PWC as an intellectual development from neoliberalism. The idea that an abstract (free) market would always prove to be the best possible way of organizing economic life has been replaced by a moderate caution toward the market, in which the latter's functioning is significantly conditioned by a set of interrelated contexts.

These ideas are actually not particularly new. They derive from some classical theories of the market economy as well as some contemporary developments in theoretical economics, with its growing algebraic complexity. Hence, we can only fully understand the PWC as a political construct. In this sense, obviously, the PWC reflects a desire to generate distance from the Washington Consensus and its perceived failure.

It is certainly the case that neoliberal policy agendas throughout the world did not produce strikingly healthy results by almost any criteria. In this respect, the PWC constitutes an attempt both to move beyond the Washington Consensus but also to salvage aspects of the neoliberal policy raft and rethink their application.

The key intellectual figure here is Joseph Stiglitz, former World Bank Chief Economist and Nobel Prize [Page 733]winner. Throughout the 1990s, his writing on institutions and information fed into World Bank policy, moderating its desire to promote the free market. After his resignation from the World Bank—itself a highly charged political event—he wrote scathingly about the International Monetary Fund, representing it as an unreconstructed neoliberal fundamentalist. Thus, the PWC has become part of the World Bank's repositioning through the 1990s, a useful intellectual hook to see the World Bank through a range of criticisms of its previous policies.

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