Towards A New Global Consensus? Maybe.

In response to a variety of system failures in all directions, this year’s World Economic Forum focused on the themes of: Rethink, Redesign and Rebuild. World leaders and business titans had explored new options to ensure a brighter future for global communities.

Commenting on the happenings at the World Economic Forum, New York Times columnist Thomas Friedman noted there was a significant shift in tone, particularly regarding the United States as a role model in how we think, design and build. With the United States at the center of the global economic crisis and eight years and counting in Iraq and Afghanistan, the American way of getting things done seem less seductive than it once was.

In recent years, nations such as China, India and Brazil have proved themselves as able competitors in the free market system, which has resulted in a more diverse trading environment. In addition to that, the world has become more pluralistic in its consumption of the arts; movies like Slumdog Millionaire and musicians like Juanez and Jay Sean have made the world pay attention to nations that until recently were only known for their booming birth rates and low standards of living. For the first time, the world is looking beyond Western Europe and North America for new ideas and innovations, and perhaps most strikingly, for solutions.

This remarkable shift in the way the world works has stimulated a debate regarding strategies for third world development. For the last 20 years, development policy has been dominated by the Washington Consensus; a post cold war doctrine that stresses the principles of macroeconomic discipline, a market economy, and free trade. However, there has been growing concern about the efficacy and prescriptive nature of this model. Such criticism has resulted in the development of an alternative model by China: the Beijing Consensus.

Washington Consensus	Beijing Consensus
Fiscal Discipline	Innovation
Prioritizing Public Expenditure towards basic health and education.	Long term sustainable development
Tax Reform.	Self determinism
Liberalizing interest rates.
Trade liberalization.
Privatization
Deregulation

When compared, some striking contrasts become apparent:

• Accused of being too specific, the Washington consensus is more prescriptive and comprehensive in its policy recommendations. In comparison, the Beijing consensus is deliberately brief and vague; its proponents claim that it leaves more room for innovation and creativity.
• The Beijing consensus claims to tailor make development policies to the needs of a country, so that all the resources of a state are maximized with considerations for potential hurdles taken into account. In contrast, the Washington consensus does not offer the same room for tweaking policies to fit the particularities of a specific nation and shifting conditions.
• One of the guiding principles of the Beijing consensus is that of self determinism, in which a state is empowered to solve its own problems in order to ensure long-term sustainability of policies and programs. Such a policy challenges the notion of super power hegemony with an aim to make development an expression of self determination.

The cracks in the Washington consensus reflect a worldview that is dated. The nature of this document doesn’t support a world that is far more fluid and volatile than such policies allow for. In contrast, the Beijing consensus seems to capture some of the mercurial conditions and demands of economic development, and offers a customized set of policy recommendations in response.

Given the simmering challenges presented by climate change, political instability, resource shortages and conflict it is clear that every path taken needs to be facile and tailored to the needs of a people, culture and region. For now, the international community will have to wait to test out the first batch of Beijing inspired development in order to really get a taste of what is in store for development policy in 2010!

Article By: Neha Mashooqullah