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one for the money

There is post here and here on development and the environment at public opinion. By development public opinion means wealth creation, increased GNP, and rising standards of living. Good development (economic growth), means a good performance in increasing wealth, GNP and standards of living.

But development has an international context and a wider economic interpretation; one associated with the Washington consensus (US Treasury, IMF, World Bank etc). Joseph Steiglitz says that the Washington consensus held that good economic performance can be achieved through liberalized trade, macro-economic stability( controlling inflation, reducing the budget deficit etc) and getting prices right. Once big government got out of the way, private markets would allocate resoruces efficiently and generate robust growth.

The Washington consensus, which has ben bought lock, stock and barrel by the Australian Treasury, is all about making markets work and to hell with everything else. The emphasis is on devising the instruments to make markets work, promoting efficient markets, and forgetting all about ecologically sustainable development and democratic development. The Washington consensus has a very narrow understanding of development.

It can be seen at work in the East Asian crisis. The root cause of the 1997 East Asian crisis, for instance, was seen as the active government intervention (crony capitalism); hence the solution was making markets work through the governing instruments of trade liberalization, deregulation and privatisation.

In the circulation of the Washington consensus in Australia, a competitive and efficient marketplace often became an end in itself. Its toolkit see any social problem (education) as a market waiting to be developed and perfected. All that was need was some hammering to get the market up and running, and the market would solve the problem. This is the approach currently being taken to water issues.

It downplayed unemployment through the structural adjustment to make markets work; and the devasting impacts of unemployment in terms of disrupted lives, increasing poverty, declining living standards and social turmoil. This social fallout was the concern of citizens; they had a broader conception of development that was at odds with development as economic growth (measured in terms of an increase in GDP). it was one that involved issues of distribution

What the Washington consensus talks about is wage rigidities and the need for labour market flexibility----meaning lowering wages, laying people off and asking workers to bear the costs of adjustment. It so gives lots of sermons on how globalization, opening up capital markets and free trade would bring enormous economic growth that would provide lots of new jobs. Utopia was always promised. It was always just around the corner.

We, those who had to bear the burden of economic change, had no say in the decisions that affected our lives. We had no voice, even though development involved the transformation of Australian society and culture and so our concerns were not addressed.

Posted by Gary Sauer-Thompson at July 5, 2003 11:41 PM | TrackBack