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Payne, Chp. 4 Contending Ideas
. . Contending Ideas This chapter considers the role played by contending (challenging) ideas in the constitution of the framework of action within which the global politics of development is presently pursued. Ideas are here understood in the Gramscian sense as setting out the patterns of thinking that are largely taken for granted in any society. They contend because the dominant ‘common sense’ of any era is always under challenge by alternative ways of framing issues.
Contending Ideas are thus always political in their impact. Ideas can have real power in the political world. They can effect significant changes in the definition of interests and the conduct of both individual and collective behaviour.
Contending Ideas But ideas do not acquire political force independently of the constellation of institutions and interests already present’ in political and economic life. In short, the contention of ideas is an important dimension of the general framework of action but it is only part of a wider context that we must see as a whole. Ideational determinism is very much to be avoided.
Contending Ideas Hence we will look at various ‘global politicaleconomic visions’. We will focus upon two contrasting global visions: The first is the emergence within the Anglo. American world of what became known as ‘Third Way’ thinking and its shaping of a so-called post. Washington Consensus.
Contending Ideas The second is the recent, swift rise to prominence within the US of a powerful neoconservative strand of thinking. Both visions can only be understood by reference to the firm hold that neoliberalism, broadly defined, gained upon the parameters of political economy debate during the 1980 s and we must start therefore by going back to consider the origins of its ascendancy.
Neoliberalism and the Washington Consensus Neoliberalism did not spring upon the world fully formed and fully armed. During most of the post-1945 era it lurked in the minds of a small number of heretical economists working away largely on their own in the academy or think-tanks, rather than advising governments. The intellectual orthodoxy of this period permitted, even encouraged, forms of state management and intervention in economic and social matters. (In the West Keynesianism, in the developing countries developmental strategies).
Neoliberalism and the Washington Consensus In other words, neoliberal economic ideas extolling the classical virtues of the market had initially to fight their way into the mainstream from the periphery of the debate. It is worth emphasizing this given the way in which their subsequent rise to prominence has so often been presented by their advocates as both inexorable and inevitable.
Neoliberalism and the Washington Consensus The neoliberal counter-attack against Keynesian orthodoxy was also first launched in specific national contexts- in the United Kingdom and the United States- rather than on the global change or within global institutions. It both contributed to, but then drew great strength from, the emergence into office in these two key countries of the Thatcher and Reagan administrations in 1979 and 1981 respectively.
Neoliberalism and the Washington Consensus Both these leaders brought several neoliberal ideas directly to bear on national economic policy making, seeking to reduce the role of state bodies in economic management, giving greater freedom of action to business corporations, curbing trade unions and generally allowing the market to shape major social and political decisions. Yet, even under Thatcher and Reagan, rhetoric always ran ahead of reality and in practice the proclaimed neoliberal ‘revolution’ was often implemented incrementally, partially and sometimes almost by accident.
Neoliberalism and the Washington Consensus For example, the Thatcher administration did not fully embrace privatization as a policy option until it had been in office for several years, and the Reagan administration always have a higher priority to spending then sound finance.
Neoliberalism and the Washington Consensus Nevertheless it cannot be denied that these two governments, led by strong personalities emerged symbolically as the leading national flagships of neoliberal thinking and as such, constituted important models for other leaders in other countries. Yet, for all its appeal and apparent success, the Thatcher-Reagan approach did not succeed in eliminating the residual appeal of other existing forms of capitalist organization within the leading postindustrial countries.
Neoliberalism and the Washington Consensus In fact, it gave rise to a vigorous intellectual debate about the competing merits of contrasting national ‘models’ of capitalism, of which that represented by the UK and the US during the 1980 s was but one type. Vigorous intellectual debate about the competing merits of contrasting national ‘models’ of capitalism:
Neoliberalism and the Washington Consensus Michael Albert: drew striking distinctions between the Anglo-American variant which he theorized as grounded upon notions of individual success, shortterm financial profit and the glorification of the market, and what he termed a Rhenish model (stretched from the northern fringe of Europe through Germany to Switzerland) found on ideas of group success, long-term planning and the pursuit of consensus.
Neoliberalism and the Washington Consensus Hence, through the 1980 s the rise of Anglo-American neoliberalism faced stubborn and persistent ideological opposition within several other major ‘Western’ countries, as well as domestically from opposition elements within the UK and the US themselves.
Neoliberalism and the Washington Consensus Yet, eventually neoliberalism did eventually achieve victory with stunning success. It was nothing less than the capture of the intellectual high ground within the major global institutions, notably the IMF and the World Bank. The adherence to neoliberal ideas in US and UK government circles during the 1980 s was sufficiently extensive to bring in its train their rise to the position of dominant ideology within the Fund and the Bank.
Neoliberalism and the Washington Consensus The conversion of the Fund was of significance because these two bodies, more than any others, have been able throughout the post-1945 era to set the terms of the official debate about development.
Neoliberalism and the Washington Consensus It was for this reason, -the location in Washington, not just of the Reagan White House, but of these two organizations- that John Williamson so aptly coined the phrase “Washinton Consensus” to describe the essential components of the neoliberal take upon development which dominated “Western” thinking from the end of the 1980 s through into the 1990 s.
Neoliberalism and the Washington Consensus The new ascendancy of neoliberalism within the IMF and the World Bank, especially the latter, was not affected without having to overcome dissent. Staff had to come and go and, amongst those that stayed, minds had to be changed. A significant political challenge also had to be resisted. Japanese government pressed early in 1990 s to oversee the publication in September 1993 of a major Bank report, entitled The East Asian Miracle, which considered the role played by the government intervention in modern East Asian development. But by the time of publication as a result of internal battles within the Bank, the role attributed to interventionism had been rendered invalid. The key argument advanced in the report was that the miracle was nonreplicable in other countries. Japanese government did not push the issue further.
Neoliberalism and the Washington Consensus As a result, over the course of this period, all models of capitalism, other than the Anglo-American version, were effectively sidelined in the assertion of a new ideological orthodoxy within the global economic institutions. Reflecting this shift in orientation, the Bank moved steadily away from the large-scale infrastructural loans and projects that were typical of its work during the Keynesian era and embraced instead the promotion of market institutions and the dismantling of public enterprises as part of a series of ‘structural adjustment’ programmes introduced into countries all around the world. For its part, the IMF similarly widened its remit beyond its original role as a short-term stabilization instrument and entered the same ‘structural adjustment’ territory.
Neoliberalism and the Washington Consensus It is important too, to stress that the Washington Consensus only ever existed as a loose set of ideas: it was never formally set out in any document or officially endorsed by any body. In fact in his initial analysis Williamson was seeking to do no more than adress the policy reforms deemed to be appropriate to bring Latin America, back into economic growth following the recession due to the emergence of the debt crisis’ at the beginning of the 1980 s. Accordingly, he set out ten generalizations that he suggested were the ‘common core of wisdom’ on this issue.
Neoliberalism and the Washington Consensus ‘These market oriented prescriptions focused specifically upon the linked objectives of fiscal discipline, altered public expenditure priorities, tax reform, financial liberalization, trade liberalization, privatization, deregulation and support for property rights.
Third Way Thinking and the post-Washington consensus A seemingly new ideological construction started to be articulated in mid 1990 s. Initially this took place within the context of political debates taking place in the US and UK. Bill Clinton (1992) and Tony Blair’s (1995) victories in the US and the UK. Their concept of Third Way did reject the fundamentalist neoliberalism of the Washington Consensus. Clinton and Blair aimed to show that they were genuine in wanting to move a step or two away from full-blooded market principles.
Third Way Thinking and the post-Washington consensus However, their mission was to lay to rest the legacy of American social reform of the style of Franklin Roosevelt and of British social democracy of the type pioneered after 1945 by the Labour government of Clever Atlee. Clinton pronounced again and again that ‘the era of big government’ was over, Blair emphasized repeatedly that the politics of ‘tax and spend’ was dead.
Third Way Thinking and the post-Washington consensus The same impulse to ameliorate the worst excesses of fundamentalist neoliberalism that gave birth to the Third Way in the US and the UK was also felt in relation to the global political economy as a whole. By the mid 1990 s, a number of public intellectuals who were not hitherto known for possessing a critical outlook began to speak out and raised some criticisms to neoliberalism.
Third Way Thinking and the post-Washington consensus The Third Way thus associated with an embrace, rather than a rejection, of the shift towards Neoliberal globalization. “Third Way is the best ideological shell of neoliberalism today”. Clinton and Blair used Globalization- “our hands are tied because of globalization, we need to reduce government spending, we can’t keep up with social spendings” etc. Nevertheless, Third Way did succeed in loosening some of the features of fundamentalist neoliberal political economy, the better perhaps to consolidate the hold of core elements of the programme in the long run.
Third Way Thinking and the post-Washington consensus Joseph Stiglitz, the chief economist of the World Bank from 1996 until 1999 (in 1999 he was dismissed from that office). Stiglitz called for continued movement towards a ‘post-Washington consensus’, an intellectual and political construction that he thought was already beginning to emerge.
Third Way Thinking and the post-Washington consensus It should be defined by 2 principles: First, it should not be based in Washington, for if policies are to be sustainable, developing countries must claim ownership of them. Second, it should be characterized by ‘a greater degree of humility’ and an acknowledgement that Bank and the Fund ‘do not have all the answers’.
Third Way Thinking and the post-Washington consensus Stiglitz pointed to the failings of the Washington Consensus because the Consensus: took privatization and trade liberalization as ends in themselves, rather than as means to a more sustainable, equitable and democratic growth. focused too much on price stability rather than growth and the stability of output. failed to recognize that strengthening financial institutions is every bit as important to economic stability as controlling budget deficits and increasing the money supply. focused on privatization, but paid too little attention to the institutional infrastructure that is required to make markets work, and especially to the importance of competition.
Third Way Thinking and the post-Washington consensus Stiglitz failed to fully develop his criticism of neoliberalism, and was open to the charge of all he was trying to do was ‘create a new Washington consensus’, in which institutional structures would be given more prominence and in which the policy package would be more flexible.
Third Way Thinking and the post-Washington consensus Stiglitz’s contribution was important not because of the merits of his specific take upon development of political economy, but because of his pivotal position in the World Bank. He symbolized a renewed intellectual debate within the Bank and global institutions as a whole. Stiglitz was eventually forced to resign his post due to the pressure coming from the US Secretary of the Treasury in the Clinton administration. Stiglitz’s departure from the Bank served to draw attention to the proposition that a Post Washington Consensus had slowly, and perhaps painfully, been coming into being over the last few years of the 1990 s.
Third Way Thinking and the post-Washington consensus Yet the problem is that it is less formally set out or codified than there was in relation to the Washington consensus itself. The PWC is perhaps best understood as the picemeal addition of a number of new ideas to the core of the original consensus in a series of attempts to rescue it from its own inadequacies. The theoretical basis upon which these interventions were defended did not move very much, beyond mainstream neoclassical economics.
Third Way Thinking and the post-Washington consensus The concept of the state espoused by PWC was very much the ‘lean and mean’ state of neoliberal provenance. PWC also upheld the idea of ‘global governance’. This meant in the first instance reform and consequential strengthening of the various global organizations, principally the UN, the World Bank and the IMF. After the Asian financial crisis of 1997 -1998 the mood in and around Washington was different.
Third Way Thinking and the post-Washington consensus Not only did a specific debate begin about reform of the structures of the international financial system, but renewed interest was also shown in theorizing the concept of global governance. Regardless of the detail of particular proposals, and plenty of others were advanced in the late 1990 s, the promotion of programmes of global governance in this period seemed always to fall solidly within the broader embrace of liberal ideology.
Third Way Thinking and the post-Washington consensus So, what did all these additional dimensions to the original Washington Consensus add up to? The PWC was manifestly a broader, more wideranging ‘global-economic vision’ than its predecessor. PWC is looser than its predecessor. The principal achievement of the PWC was to head off opposition to the most fundamental principles of a liberal international economic order by coopting potentially challenging ideas, bringing them into the service of the neoliberal mainstream and thereby rendering their radicalism redundant.
Third Way Thinking and the post-Washington consensus Interestingly, when the PWC came in turn to be challenged, it was not from a leftist or radical direction at all, but rather the result of an ambitious reassertion of right-wing politics and political economy mounted, once again, in Washinton, formed by George W. Bush in early 2001.
Neoconservatism and the disintegration of ‘Western’ consensus Bush- A new US isolationism which seemed to emerge as the most striking initial characteristic of US foreign policy. But everything changed since 11 September 2001. Since that day the US government has viewed every problem and every policy option through the prism of its security concerns. The Bush strategy after 9/11 is best thought of as an uneasy marriage of three interlinked, but ultimately separable approaches to the articulation of US power.
Neoconservatism and the disintegration of ‘Western’ consensus The first is an orthodox foreign policy realism, grounded in a traditional conception of the national interest, anxious about the stability of the international system and instinctively ready to use all of the longstanding resources of the diplomatic system, including international agencies and institutions.
Neoconservatism and the disintegration of ‘Western’ consensus Second: assertive nationalism: hawkish position, pessimistic about the world and ready accordingly to deploy US power in order to keep US mainland safe. Third: neoconservative position. Neoconservatives celebrated US power as a force for moral good in the world. The Soviet Union was an evil empire, containment was insufficient. The Reagan Administration gave office to a number of younger neoconservatives who did not have a leftwing past.
Neoconservatism and the disintegration of ‘Western’ consensus Thereafter this emergent neoconservatism tended to inhabit a number of distinctive, new think- tanks, often funded by the US defence industry, bodies such as American Enterprise Institute, the Project for a New American Century. Neoconservatives’ approach to US foreign policy characterized by a willingness to use US power to advance ideological goals.
Neoconservatism and the disintegration of ‘Western’ consensus In particular, they wanted to effect the complete transformation of the economic and political order of the Middle East so as to bring this region fully into line with classical liberal democratic norms. They are not conservatives at all, but rather crusading liberals with a belief in the power of activist government to bring about liberal ends. Bush’s foreign policy statements and actions since September 2001 have been an uneasy amalgam of all of these appraoches. Traditional patterns of alliance-building with other great powers, increased military spending, the doctrine of ‘pre-emptive attack’, the desire to extend ‘the benefits of freedom across the globe’ all made their appearance.
Neoconservatism and the disintegration of ‘Western’ consensus 9/11 have projected the neoconservative take on the world to a greater degree of prominence within the Bush administration. As the focus of the war on terror moved from the invasion of Afganistan to the invasion of Iraq, there developed a growing convergence of view between the ‘assertive nationalists’ and the neoconservatives. US’s approach to questions of international development under Bush: neoliberal policies. Praise of market economies, free trade, emphasis on conditionality. Bush administration’s unilaterism brought to an end, at least temporarily, much of the ideological consensus that bound the West together throughout the Cold War.
Radical Challenges The appeal and coherence of other radical ideologies that seek to challenge mainstream ‘Western thinking’. There can be detected a variety of resistance responses in different localities taking many forms from micro-scale to large-scale movements. Examples: peasant protests in the southern Indian state of Karnataka, the Zapatista movement in Chiapas in Mexico, workers’ strikes in South Korea, etc.
Radical Challenges Core ideas and assumptions of this alternative view of development: -sufficiency -the inherent value of nature, cultural diversity and the communitycontrolled commons (water, Land, air, forest); -human activity in balance with nature; -self-reliance rather than reliance on the market or external agents; -democratic inclusion and participation, e. g voice for marginalised groups such as women, indigeneous groups and local control
Radical Challenges In many respects, obviously these ideas make a firm bow to the neoliberal view of development: they accept multilateral rules and arrangements and they acknowledge the imperative competitiveness. Yet they represent something little distinctive from the PWC. They are rooted in a continuing economic nationalism- their appraoch also rescues a modestly developmental conception of the state and in so doing, joins ideological battle from the other side.
Radical Challenges The second and more serious ‘Southern’ challenge to mainstream Western thinking is anything but latent, for it derives its ideological appeal from the extraordinary economic growth achieved over the last decade by China. It is argued that the Beijing Consensus (implying new physics of power and development in China) is replacing Washington Consensus. According to this argument, the Beijing Consensus is made up of three theorems:
Radical Challenges 1) Repositions the value of innovation 2) Looks beyond measures like per-capita GDP, focuses instead on ‘quality of life’ and advocates a model of ‘balanced development’ where sustainability and equality become first considerations, not luxuries.
Radical Challenges -Third element is constituted by a theory of selfdetermination that stresses using leverage to move big, hegemonic powers that may be tempted to tread on your toes. Growing intellectual charisma of the Beijing Consensus. Yet it’s important to note those aspects of China’s record which damage its standing as developmental model: mainly its unsatisfactory human rights regime. But, even with that said, it is already clear that China has the potential to change the contest of ideas about development in very significant ways.