The Washington Consensus comprises the United States Department of the Treasury, the World Bank and the IMF. The Washington Consensus is a set of ‘economic policy prescriptions’ or a so-called ‘development plan’ for ‘developing countries’. The Washington Consensus revolves around market-led capitalism, trickle-down effect, privatisation, debt-laden stabilisation programs, debt-laden structural reforms and poverty reduction.
For the record, a number of developing countries – including Pakistan – have long been under the umbrella of the Washington Consensus. The US Department of the Treasury “obligated nearly $67 billion (in constant 2011 dollars) to Pakistan between 1951 and 2011” in the form of Economic Assistance (EA), Military Assistance (MA) and funding through USAID.
The World Bank has lent Pakistan more than $15 billion between 1970 and 2019 (IBRD loans and IDA credits). In 1950, Pakistan became a member of the IMF and we have since had a total of 22 ‘debt-laden’ programs; 6 Extended Fund Facilities, 3 Extended Credit Facilities, 12 Standby Arrangements and one Structural Adjustment Facility. Starting in 1965, the IMF has so far extended Pakistan loans in excess of $21 billion of which Pakistan has paid back around $14 billion. The Washington Consensus has so far lent Pakistan upwards of $100 billion.
The Washington Consensus has given four things to almost all the countries under its umbrella, including Pakistan: political instability, debt, multiple currency crises and stagflation (persistent high inflation along with high unemployment). The Washington Consensus’ ‘economic policy prescriptions’ have failed. The Washington Consensus’ so-called ‘development plan’ for ‘developing countries’ has also failed. The Washington Consensus has failed – miserably so. Maybe, The Washington Consensus was ‘designed’ to fail. Perhaps, The Washington Consensus was in essence a US foreign policy instrument.
The Beijing Consensus revolves around six elements: people-focused development, self determination, pragmatism, innovation, flexibility, equitable development and a ‘peaceful rise’ (influence by example, not weaponry). Imagine; the “US has been at war 225 out of 243 years since 1776.” Never in human history has a model lifted 800 million out of poverty in a matter of two decades. For the first time in human history, the Beijing Consensus has done it.
Under the Beijing Consensus, economic growth is a subset of political stability. Political instability, on the other hand, results in three things: lower rates of productivity, lower accumulation of human capital and lower accumulation of physical capital. And the three result in lower economic growth. The Beijing Consensus does not allow disorderly political struggles and does not have ‘separation of powers’. The Beijing Consensus prescribes strong institutions, not powerful individuals. The Beijing Consensus, with an efficient, merit-based bureaucracy, keeps the cost of governing low and has zero-tolerance for corruption.
The Beijing Consensus has ‘democracy at the bottom, experimentation in the middle and meritocracy at the top’. According to The Hague-based World Foresight Forum, ”The Beijing Consensus is increasingly viewed by developing countries as an attractive alternative to western development strategies based on free market and democracy.” The World Foresight Forum further adds: “The Beijing Consensus reflects a new approach to development based on China’s model for economic growth and political principles of non-interference and self-determination.”
The writer is a columnist based in Islamabad.