A few choice words about poetic justice and the Washington Consensus

I'm adding David Bosco's April 6, 2011 report for Foreign Policy, Is the Washington Consensus dying? to my MENA's New Left post, in which I mentioned in passing that Mackell's complaints about the Washington Consensus weren't entirely unjustified. The 'money' quotes in Bosco's report(which he took from the Bretton Woods Project):

World Bank chief economist Justin Lin continues to stir the waters by pushing for increased global investment to boost growth and by suggesting that developing country governments need more interventionist industrial policies.

Lin, a Chinese national, speaking to the G24 group of developing countries in mid-March, called for "a global push for investment along the line of Keynesian stimulus [which] is the key for a sustained global recovery."

He argued that current policies of richer countries risked locking in a period of low growth, but "a push for investment will increase the demand for capital goods and reduce manufacturing sectors' underutilisation of capacity in high-income countries, which in turn will increase "employment, consumption, demand for housing, opportunity for private investment, and growth."

This runs contrary to the austerity measures being pursued by many countries at the behest of the IMF.

I don't have anything against the basic tenets that make up the Washington Consensus (aka neoliberalism) any more than I have something against capitalism. But as long-time readers of this blog know I've had plenty against the indiscriminate, state-imposed application of neoliberal tenets in countries that have had neither the deep democratic political and judicial infrastructures nor the social safety nets of Margaret Thatcher's England or Ronald Reagan's America.

The cookie-cutter application of neoliberal shock therapy to developing countries(which includes the sudden privatization of state-run industries) has unleashed havoc in one country after another, created entire classes of super-oligarchs, given capitalism a bad name, driven large numbers of people toward (or back toward) communist ideas, caused them to cling ever more tightly to Keynes's economic nostrums and caused them to thorougly despite not only the United States but the entire 'West.' And -- and -- transformed a small insurgency in Iraq that initially had no chance of getting off the ground into a monster that took thousands of lives.

So it's poetic justice that the developing country of China, which managed to resist the worst of neoliberal shock therapy, is now in a position to lecture the World Bank and IMF -- and the United States -- about overzealous application of the Washington Consensus. Hah!

Capitalism vs Democracy, Part 1: What is a foreign policy, anyhow?

It is fair to say that for almost a quarter century prior to September 12, 2001, the United States of America did not have a foreign policy; we had economics theories fobbed off as foreign policy. So from the long view it could be considered a kind of cosmic comment on insane policymaking that America's twin cathedrals to neoliberalism, globalization and economics 'shock therapy' were blasted to rubble.

One would hope that the catastrophic attack on the World Trade Center marked the end of the Insane Era in US foreign policy, but at this time the application of defense doctrine to US foreign policy should be considered a blip. There is no guarantee that the policy will outlive the Bush presidency. What's more, there's no guarantee that US foreign policy won't revert to a showcase for economics policy once Bush leaves office.

There was much right about the Reaganomics revolution -- for America. There was much right about Thatcher's economics revolution -- for Britain. There was much right about unrestricted global trade -- for the rich countries. And when viewed on a limited basis, the revolutions had positive consequences when applied to several countries. The revolutions had terrible consequences for developing countries that did not have the government and private sector infrastructures in place to accommodate a radical shift to privatization and free market economics, which could not count on NATO to come to their defense, and which had big trouble coming up with enough petrodollars to purchase energy to fuel their experimental market economy.

The fall guy for the debacles should have been the International Monetary Fund and their structural adjustment program. (Here's a foreign policy tip for governments: If you're going to do something that you're only hoping will work, you need a front man.) But no, the US government under Bush 41 and Clinton wanted to be the world standard bearer for neoliberalism, shock therapy and globalization.

So here we are today, with a good portion of the world hopping mad at the United States for pushing disastrous economic policies on them. And with foreign policy advisors who are still seriously wondering whether it's strictly necessary to work the concept of national defense into a nation's foreign policy.

To be continued tomorrow.