A previous version of this edited transcript omitted part of John Williamson's answer to the question of whether he voted for British Prime Minister Gordon Brown. His full answer was "No, I've not voted for him. I've always voted for the other party -- the Liberal Democrats."
A Conversation With John Williamson, Economist
Poor countries have decried it. Anti-globalization protesters have rallied against it. And at the G20 summit in London, British Prime Minister Gordon Brown declared it dead. But is the "Washington Consensus" really gone? Not if you ask John Williamson, the soft-spoken British economist who coined the term 20 years ago -- and has been under fire ever since. How did a wonky paper outlining 10 recommendations on fiscal discipline and open markets become such a lightning rod? Williamson, a senior fellow at the Peter G. Peterson Institute for International Economics, spoke last week with Outlook's Carlos Lozada about what caused the financial crisis and how, whatever Brown says, the Washington Consensus is alive and well -- just check out the G20 communique. Excerpts:
Where were you when Gordon Brown declared that your "old Washington Consensus is over"? Did you watch it on TV?
I was in the Galapagos. I did not watch it on TV; I did have Internet access in the Galapagos so I was able to read about it.
Were you angry? Amused?
People have been saying the Washington Consensus is dead for about twenty years now, ever since it was first created. My reaction was more amusement than anger, but it was a combination of the two.
So is Brown right?
It depends on what one means by the Washington Consensus. If one means the ten points that I tried to outline, then clearly it's not right. If one uses the interpretation that a number of people -- including Joe Stiglitz, most prominently -- have foisted on it, that it is a neoliberal tract, then I think it is right.
How would you summarize it?
[It] involved macroeconomic discipline, including fiscal discipline, which was a particular problem in Latin America. And then it involved using the market economy, not setting it up on a totem pole as some ideal that must never be interfered with, but recognizing that there were serious limitations on the market economy. And third was globalization, free trade, absorbing oneself into the global economy.
Is the Washington Consensus in any way to blame for the global financial crisis?
I think that would be pushing it. If you read the communique following the London summit, you'll find that three of the things they agreed on were very much the things I have used to summarize the Washington Consensus. It starts off with globalization, it also mentions the market economy. Fiscal discipline comes later; it's in paragraphs 10 and 11 rather than right at the beginning, because that's not the immediate problem.
If the Washington Consensus isn't to blame, what is?