The "Washington consensus"

“Washington consensus” – is a set of economic prescriptions for macroeconomic policy, set forth by English economist John Williamson in 1989. They were intended as basic guidance to countries in need of assistance from such international economic organizations as the world Bank and the international monetary Fund. The emphasis was on the importance of macroeconomic stability and integration into the world economy, in other words, the neoliberal idea of globalization. He has, however, led to limited results, after it has been applied in countries experiencing economic crises.

For many years “Washington consensus" has been blamed on a number of serious destabilizing, primarily in the Argentine crisis. John Williamson noted that in many cases, the results of its implementation had been disappointing, identified some shortcomings, but at the same time concluded that this policy has brought some positive results, namely – economic growth, jobs, poverty reduction in many countries.

Ideas for the time when they were formulated by Williamson, were not new. But they represented a distillation of the common themes among the recommendations that were defined by the International monetary Fund, the world Bank, the U.S. Treasury Department and other bodies lending.

The Purpose of a standard package of reforms has been that solve real problems in Latin America. Its subsequent use in other countries has been criticized even by supporters of the rules. As pointed out by Williamson himself, a term introduced by him for ten specific recommendations on economic policy, began to be used in a wider sense than in its original intention, it became synonymous with market fundamentalism and neo-liberal policies in General. And in this wider sense, "Washington consensus" has been criticized by many economists, including from the George Soresu, Nobel laureate Joseph Stiglitz, and Latin American politicians.

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The Public in the world today sure that this is evidence of such neo-liberal policies, when international financial institutions in Washington has created a number of specific measures against Latin American countries experiencing the economic crisis, which led to even greater losses. There are even people who can't pronounce the words “Washington consensus” and it does not come in fury.

Ten reforms that made up the list of Williamson, was actually the base level.

1. Budget discipline. It was supposed to be implemented in all countries where there was a large deficit, which led to the balance of payments crisis and high inflation, which has hit the poor classes, because the rich people could have their cash assets stored abroad.

2. Redistribution of public expenditure to those areas that offer high economic returns and the potential to improve income distribution (this is the medical care, primary education, infrastructure).

3. Tax reform (lowering the marginal rates, broadening the tax base).

4. The liberalization of interest rates.

5. A competitive exchange rate.

6. Liberalization of foreign direct investment.

7. Privatization.

8. The liberalization of trade.

9. Deregulation.

10. The rights of ownership.

The Adoption by many governments of the “Washington consensus" was largely a reaction to the global economic crisis that hit most of Latin America and some other developing regions during 1980-ies. The crisis had several causes: a sharp increase in the price of imported oil after the establishment in 1960 of OPEC, mounting levels of external debt growth in the United States, and hence in the world interest rates. As a result of these problems – loss of access to additional foreign credit.

I Must say that many other countries tried to implement various items of the proposed package, it is sometimes used as a condition for receiving loans from the IMF and the world Bank.

However, the results of these reforms remain the topic of much debate, also economists and politicians continue to analyze the causes and factors of the economic crisis since that time, there was a first world economic crisis in 1857, which had an impact even on Russia. The fact that Karl Marx began work on “Capital” in the winter of 1857-1858 year, and it was caused by the economic crisis that erupted in the autumn of 1857, And today, as you know, the theory of crises associated with Marxist Economics.