Whither the Washington Consensus?

Continuing the theme of the Rhodes Politics teach-in, on the heels of Tito Mboweni, academic Charles Simkins on Wednesday weighed in by putting things in historical perspective.

(Interesting aside: Simkins’s own personal history includes an illegal wedding — having a reception on the big day when he was supposed to be banned by Pretoria and disallowed from seeing groups of people at a time.)

The Washington Consensus, said Simkins, emerged in response to specifically Latin-American crises of macro-economic instability, and had become a normative framework for dealing with this.

According to Simkins, the 10 principles (fiscal stability, privatisation etc) were not in fact a prescription for growth, but rather a recipe for avoiding macro-economic disaster.

“Macro-economic stabilisation is necessary but not sufficient for growth,” he argued, adding that Zimbabwe had messed with the principles, with evident results.

In his view, the WC had become associated with market fundamentalism and the view that greed was good.

But it was clear that he, himself, saw much value in the principles, even though more was needed to ensure micro-level progress. An example of what was needed (beyond the WC achievement in South Africa) was getting education right given that only 5% of matric candidates passed higher-grade maths.

Simkins cited a study showing that, of a week of 41 hours recorded by an average teacher at work, only 16 were spent with pupils — and even there, learning did not always happen in that time. He urged a coalition for change involving unions, province, business and other stakeholders with an interest in growth.

And the future of the Washington Consensus? It was still being followed by most Latin-American governments, with some exceptions like Venezuela, which could end up in a similar situation to Zimbabwe.

But, said Simkins, the US itself did not follow the principles — citing what he said were populist policies by Alan Greenspan. And the rise of China and India presented different principles.

“It’s unlikely we will see a narrative like the Washington Consensus emerging for quite a time,” he concluded.