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Inter Press Service

Consensus Against Neoliberal Washington Consensus

Julio Godoy

DAR ES SALAAM- One thing is clear from debates at the third Helsinki Process conference, underway here: there is agreement among economic development experts, civil society representatives and government officials attending the meeting that the neoliberal Washington consensus is not a solution to the problems of developing countries, but rather one of the causes of these problems.1129 05

In contrast to the neoliberal emphasis on privatisation, participants of the conference argued that the state has a central role to play in launching and supporting economic and social development.

"Neoliberalism is not the solution to the economic and social problems confronted by developing countries," said Josep Xercavins, professor of development economics at the Technical University of Catalonia, Spain, and co-ordinator of the World Forum of Civil Society Networks: an umbrella organisation of civil society groups studying economic and social development.

"We are seeing in Latin America the devastating consequences of 25 years of application of neoliberalism," Xercavins added. "We need a new paradigm, with a new role for the state."

The Washington Consensus is the term commonly used since the late 1980s to describe the set of neoliberal economic and social policies imposed on developing countries by Washington-based international financial institutions (IFIs) such as the World Bank and the International Monetary Fund, through structural adjustment programmes.

The Dar es Salaam meeting is reviewing progress made over the past two years with the Helsinki Process on Globalisation and Democracy. This joint initiative by the governments of Finland and Tanzania got underway in 2003 to give representatives of the North and South "a new kind of equal come together to discuss common issues of concern."

Titled 'Inclusive Governance -- Bridging Global Divides', the Nov. 27-29 event is dealing with numerous issues related to globalisation and democracy, from the role of non-state actors in promoting international peace and security, to the relationship between national and global economic policies in the fight against poverty and for development.

"We should promote a new development agenda, following three principles which differ radically from those of the IFIs," Kjeld Jakobsen, director of Brazil's Social Observatory Institute, said Wednesday at a plenary session of the conference.

"First: we need to recognise that it is wrong to adopt the same (social and economic) measures in countries going through different phases of development. One size does not fit all."

Second, he added, "Economic and social concerns must be given the same importance in the formulation of these measures. And third, this agenda should be conceived through a democratic process...Civil society's participation in the debate and implementation is crucial in a complex and interdependent world like ours today."

A similar point was made by Michelle Pressend, senior researcher at the South Africa-based Institute for Global Dialogue. "In countries with high levels of inequality, the state has no choice other than to embark on an active economic development agenda," she said.

"The state has to concede to these underdeveloped constituencies or face social instability," Pressend added. "Crucially, the developmental state must develop the capacity and power to implement its economic and social policies."

The developmental state's first goal must be the equal redistribution of the country's wealth among the people, she noted further.

Other participants of the conference agreed.

Mat Noor Nawi, director of the distribution sector at the Malaysian government's Economic Planning Unit, explained that his country was almost able to eradicate poverty between 1971 and 2004, thanks to "a sustained commitment by the government, manifested in providing pro-poor services and infrastructure, such as schools, hospitals, and the like -- and in affirmative action to avoid racial strife."

Nawi said that during the well over 30 years that had passed since the first application of the so-called New Economic Policy in 1971, life expectancy in Malaysia rose from 61.6 to 71.8 years in 2004, and literacy rates from 58 to 95 percent of the total population. "Malaysia was able to reach high economic growth rates during this period, and at the same time reduce poverty and provide for social equality," Nawi added.

To reduce poverty, the Malaysian government implemented programmes that included the provision of improved services in agricultural areas, the absorption of poor households into modern agriculture and other sectors through accelerated creation of employment opportunities -- and the provision of social services and amenities such as education, health, housing, water and electricity.

"With these programmes and a well co-ordinated delivery mechanism, the poor were able to increase their productivity and income through a fuller utilisation of their productive assets and skills, as well as enjoy quality of life," Nawi said.

Another consensus was also reached in Dar es Salaam: that the "Global South" -- developing countries, assumed to share common problems and goals -- does not exist.

"There is no such Global South," Yash Tandon, executive director of the Geneva-based South Centre, told the conference. "The South is facing, fragmented, the development challenges posed by globalisation."

While strong emerging economies such as Brazil, China, India and South Africa might advance positions at international forums shared by other nations of the South, they are also pursuing their own agendas -- sometimes even acting as new imperial powers towards their neighbours, he said.

Yet another subject discussed at the Dar es Salaam conference was the financing of development policies.

Xercavins urged the Helsinki Process to support the taxing of speculative financial transactions with the aim of having the resources so collected used for international co-operation projects.

He said this tax should be discussed by the U.N. General Assembly. "We have to go back to the U.N., we have to reinforce the multilateral, democratic institutions in favour of this new development paradigm."

© 2007 Inter Press Service

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