Global Policy Forum

By Xavier Cano Tamayo

Translation. Prudence Dwyer. Coorditrad, volunteer translators

A few days ago the Davos World Economic Forum, the capitalist economy's Sanhedrin, came to an end. Davos recognised that every country should apply the economic and social policy which best suits it without demanding allegiance to the economic and financial orthodoxy which has been destroying our lives for the past decade, the ill named "Washington Consensus". The cause of this change of attitude by the rich men's Forum is the economic disaster following a decade of "Consensus" dogmas.

Communism, having been disarmed and extinguished in combat; capitalism put on a brave face and in the death throws of the eighties formulated economic policy directives with mandatory effect; a process leading towards the final consequences of economic liberalism as formulated at the end of the eighteenth century and the beginning of the nineteenth.

The "Consensus" prescribed budgetary discipline (a passion for eliminating deficits), fiscal reform (favouring those who own most), trade liberalisation (removal of tariff barriers by less developed countries without any compensation from the rich), opening up to foreign investment (without rules or controls) privatisation (public patrimony within the grasp of the powerful), deregulation (weakening or removal of labour guarantees, social and environmental controls)absolute guarantee of right to property and management of lesser affairs (excepting police involvement).

This "Washington Consensus" was produced and developed by a select few whose interests left no room for doubt. When someone keeps company with the chief supporters of a certain type of economic policy it is clear where his interests lie. The secretary of the North American Treasury, Robert Rubin, comes from Wall Street, like the former Secretaries, Roger C.Altman and Nicholas Brady. They all used to work in investment companies. Ernest Stein, former President of the World Bank is a Director of J.P.Morgan Bank and the current President, James Wolfensohn, was also director of an investment Bank. And so it goes on...

The "Consensus" was drawn up by a group of economists, officials of the U.S. Government, the World Bank and the International Monetary Fund. A very restricted consensus; it was never the subject of general debate and never submitted to a vote. It was not even formally ratified by the countries it was imposed on. It has been, and still is, an authoritarian exercise, greedy and unsupportive, whose champions try to justify it on the grounds of the supposedly unquestionable economic-scientific character of its guidelines. It is paradoxical that while the world's physicists call into question the immovable and unquestionable nature of certain principles of Science (with a capital) editors, defenders and executors of the ill named "Washington Consensus" claim that this selfish, obscene and biased view of the economy is pure economic science, making compliance obligatory. The "Consensus", however, used to predict that with its application economic growth would increase, poverty would diminish and employment would expand. Just the opposite. Moreover, intensive use of natural resources has caused damage, perhaps irreparable damage, to the environment.

Latin America, the principal victim of this "Consensus", is a prime example of the disaster it has caused. In 1980 there were 120 million poor; in 1999 the number had increased to 220 million, 45% of the population; the richest 20% is almost 19 times richer than the poorest 20%, when the world average is that the rich are only 7 times richer than the poorest. After a decade of blindly devoted application of the Washington Consensus guidelines, Latin America stands on the edge of a precipice. Debt grew from US$492,000 million in 1991 to US$787,000 million in 2001. Railways, telecommunications, airlines, drinking water supplies and energy supplies were virtually wound up and handed over to giant US and European corporations. Public spending on education, health, housing and social benefits was reduced, price control was abolished, wages were frozen and millions of workers were dismissed by the new masters of the now-privatised public undertakings. Massive imports (with the reduction of customs tariffs of course) to nourish the consumerism of the upper and aspiring middle classes caused national undertakings to disappear. And more unemployment. And according to the ILO (International Labour Organisation) 84% of jobs created in the golden years of the "Consensus" were temporary and poorly paid. Quite a programme!

In the recently held Porto Alegre World Social Forum, Jorge Wertheim, representing UNESCO in Brazil, roundly condemned what everybody has known all along; the "Consensus has meant a dramatic increase in inequalities and an incredible worsening of poverty worldwide."

The new President of Brazil, Ignacio Lula da Silva has rejected the neoliberal dogma of the "Consensus". With very little fuss he has altered the intended use of millions of dollars meant for buying fighter aircraft and has devoted them purely to fighting the hunger of millions of Brazilians; at the same time committing a great deal of State aid to education, health, environmental protection and safeguarding natural resources, Pure heresy!

The "Washington Consensus" has been a howling failure. The undeniable figures and facts are here. Perhaps this is why Jacques Chirac, who during 2003 will be G7 President, the club of the world's richest countries, has promised to fight for "a controlled and caring globalisation ".Perhaps out of contempt for the destructive consequences of the pernicious neoliberal theology which is the "Consensus" James Wolfensohn, President of the World Bank, declared in November 2002 at a Latin American Meeting in preparation for the Davos World Economic Forum;" the Washington Consensus is dead". Force of circumstance.

And at the Porto Alegre World Social Forum representatives of UNESCO urged that the "Washington Consensus" be buried forever and every effort made to confront the urgent task of eradicating poverty and overcoming the hunger and illiteracy that afflict 900 million of the Earth's inhabitants.

Let us consign the "Washington Consensus" to the cemetery. Or would it contaminate the dead?

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