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The Washington Consensus

The Washington Consensus

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Published by Cody Valdes
Written in an intro-level Political Science course at Tufts: Intro to Comparative Politics... for professor David Art. I don't know if I agree with what I've written any more, but it is nevertheless amusing.
Written in an intro-level Political Science course at Tufts: Intro to Comparative Politics... for professor David Art. I don't know if I agree with what I've written any more, but it is nevertheless amusing.

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Published by: Cody Valdes on Feb 20, 2011
Copyright:Attribution Non-commercial


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What¶s in a policy?The efficacy of Friedman¶s logic and whether it really matters.Cody ValdesIntro to Comparative PoliticsProfessor David Art November 24, 2009
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In Part I, I question the efficacy of Export-oriented industrialization (EOI) as ithas been implemented in throughout the world during the latter half of the twentiethcentury. EOI and the Washington Consensus are essentially interchangeable derivationsof Milton Friedman¶s liberal ideal of limited government protection of markets, lowtariffs, free trade, and the creation of a favorable environment for growth and investmentin businesses. It is on the latter condition that I will contend EOI has failed in developingcountries, especially in post-colonial societies. In Part II, I question the debate betweenExport-Oriented Industrialization and Import-Substitution Industrialization, askingwhether either of these distinct models of economic structuring can explain the disparate pace of growth in East Asian countries in the wake of cataclysmic events. I conclude thatthe state¶s democratic potential and ability to manage conflict are far more important thanEOI/ISI as determinants of economic growth in the long term.PART I ± The Failure of EOI as Implemented in Developing CountriesAccording to Dani Rodrik of Harvard University, a mixture of the basic ideas of the liberal and statist schools of thought constitutes the ³most valuable heritage that thetwentieth century bequeaths to the twenty-first in the realm of economic policy.´ (Rodrik,2000) If the nineteenth century pioneered capitalism, the twentieth ³learned how to tameit and render it more productive by supplying the institutional ingredients of a self-sustaining market economy: central banking, stabilizing fiscal policy, antitrust andregulation, social insurance, political democracy.´ The tenants of the WashingtonConsensus ± deregulation, privatization, and free trade ± were conceptually sound, for they arose from a country whose market economy was sufficiently regulated to prevent
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the robber barons of the late nineteenth century from ever emerging again. When freemarkets were transposed onto developing world economies, however, the merging of theory and implementation produced a series of cataclysmic outcomes that would gripcertain countries in a dire cycle of inequality, conflict, and poverty. A strong regulatoryframework was conspicuously absent, while a disparity between the speed of deregulation and privatization ± ³creative destruction´ ± on the one hand, and the erectionof regulatory institutions, on the other, created a window of opportunity for self-interested elites to plunder the state resources and emerge as the twentieth-centuryoligarchs.
iedman and EOI 
Friedman¶s position on the role of government in market economies naturally precedes the idea of free trade and EOI as embraced by the Washington Consensus.Friedman places his argument for ³politically unfettered market coordination,´ as JamesC. Scott succinctly describes it, in the context of his benevolent critique of authoritarianism and all forms of freedom-repressing polities whose desired ends fail to justify their undesirable means. If societies of competing and disparate actors cannotreach a productive level of conformity without having to suppress or omit the voices of the few, his argument goes, then no form of political control is as acceptable as theultimate vehicle of proportional representation: the free market. In a free market, one¶scapital (i.e.: money, land, skills and knowledge, networks, motivation, etc.), as opposedto one¶s voice in an inherently flawed political system that imposes misrepresentativerestrictions on individual aspirations, becomes the ultimate determinant of one¶s power insociety. The Rousseauian threat of a corrupt, nepotistic, and exclusionary polity is

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