Yash Tandon
[Extracted from SEATINI Bulletin
Volume 3, No. 16, 31 August 2000]
Joseph Stiglitz is one of the leading thinkers of the Post-Washington
consensus, a “consensus” which is still in the making. Its father,
the Washington Consensus, revolved around the fundamentals of
market economy reduced to some simplistic policy prescriptions
that overvalued fiscal prudery, and monetary and foreign exchange
considerations over the direct role that the state might play
in regulating the economy. In a widely-quoted speech that Stiglitz
gave to a meeting organised by WIDER (an institute of the United
Nations University located in Finland) in January 1998, Stiglitz
made a stinging attack on the Washington Consensus, and recognized
the importance of state-provided regulatory role to the economy,
and of distributive economics. (See his “More Instruments and
Broader Goals: Moving Toward the Post-Washington Consensus”).
Stiglitz was then the Senior Vice-President and Chief Economist
of the World Bank. The Bank, Stiglitz claims, has taken on
some of the new challenges of the post-Washington “consensus”.
If so, then, it would appear that in the process of bargaining
on how far the Bank could go beyond politically acceptable limits
set by its chief architect, the United States, the Bank had
to sacrifice Stiglitz himself.
To the extent that Stiglitz has
punctured the hubris of the International Monetary Fund, which
he attacks more vehemently than his own erstwhile employer,
the World Bank, he is a recognized ally of NGOs and grassroots
movements that have been saying for years more or less what
Stiglitz now says. The latter have generally welcomed Stiglitz
amongst their midst, not because he has said anything new,
but because of the platform that he used, that of the World
Bank, to say it. Coming from that citadel of putative monopoly
of knowledge, Stiglitz’s candid reflections were a breadth
of fresh air, an expression of a fundamental institutional
self-critique. The World Bank has gingerly adopted some of
his ideas, such as the idea of “Knowledge Bank”, but has carefully
avoided some of the more radical implications of Stiglitz’s
suggested reforms of the global system of governance and suggested
revision of development economic theory.
Thus, despite Stiglitz’s travails
and marathon public speaking and writings, mainstream economists
who design policies in the World Bank and the IMF do not accept
his critique of the Washington Consensus that still reigns
supreme in the realm of ideas. Ideas are always encumbered
by institutional and political fetters, Stiglitz should have
known. Ideas do not spring from thin air, as that erudite
Palestinian scholar, Edward Said, has reminded us in his voluminous
writings. Ideas are part of the struggle between contending
social and political forces vying for control of the world.
They are additional instruments that states and politicians
use besides guns and trade to conquer and control.
And hence the question: between
the Washington Consensus (WC) and the Post-Washington Consensus
(PWC), between the father and the son, where do the progressive
forces of the world, forces that want the world change for
the better, stand? If the WC reflected, and continues to reflect,
the ideas of those who presently control and run the world,
whose instruments of conquest are the ideas of the PWC? And,
indeed, why are these questions important, especially for
those in the countries of the South that are engaged in the
day to day running of the state, the economy and hard-headed
negotiations at the World Trade Organisation?
First, these questions are important
because there is no escape from the ruling ideas that provide
the overall ideological framework in which politics of state
and of trade negotiations take place. These are still, by
and large, governed by rules of the so-called “free market”
economics. Of course, no such thing as a “free market” exists;
it is a myth. But policy makers and trade negotiators operate
under the assumption that it does, and that maximization of
the conditions for its operation is the surest way to growth
and out of poverty. Eminent economists such as Jagdish Bhagwati
are the doyens of that make-belief, but because of the authority
and aura they command in academic and policy-making circles
the myth persists despite evidence to the contrary in real
life. When persons like Stiglitz and Nobel Prize winner, A.K.
Sen, from their different vantage points, challenge (some
aspects of) the ruling orthodoxy, then the ideas parameters
of policy-makers and trade negotiators shift slightly, initially
imperceptibly, but over time, they could open up the gates
to fundamental shifts. That is why there is so much institutional
resistance against the shift. But this is also the reason
why it is necessary not only to take note of these shifts
in debates and paradigms of development, but also to engage
in them, and to shape them.
And therefore the importance of
the question: whose ideas of conquest are the principles of
the still-emerging PWC? It would be difficult to say that
a single body of ideas has actually emerged that can be named
“the PWC”, but elements of these exist in the writings of
various revisionist neo-classical economists and thinkers,
mainly in the West. One of these is the idea of knowledge
as a public good in what Stiglitz calls the new “knowledge
economy.” It is indeed becoming quite fashionable for research
and policy-based institutions to put “knowledge” on their
programmatic agenda. The World Bank has mooted the idea of
“Knowledge Bank”. The United Nations Development Programme
(UNDP) has a position of a “Chief Knowledge Officer”. The
UNCTAD is holding an Experts meeting on “Systems of Traditional
Knowledge: Protection, Innovation & Practices” starting
30 October, 2000. Elsewhere in this Bulletin, we report on
our reflections on the inaugural conference of the African
Knowledge Network Forum (AKNF) organised by the Economic Commission
for Africa (ECA) held in Addis Ababa in August 2000. Everybody,
it would appear, has suddenly woken up to the importance of
the centrality of knowledge. Epistemology, or rather its crude
versions, is in vogue. Something is happening, and we better
take note of what it is that is happening, or not happening.
Against this background, it is
important to highlight what Stiglitz says in the summarized
article in this Bulletin. He says:
Today the World Bank has shifted much of its emphasis to the intangibles
of knowledge, institutions, and culture in an attempt to forge
a more comprehensive New Development Framework. The shift in
focus was motivated in part by the experience of the most successful
countries - and the failures of many of economists’ efforts
around the world. … There was also a change in ways of thinking:
an acceptance of change, and, perhaps most important, the appreciation
of the centrality of knowledge and education in general and
the science and technology in particular.
“A change in ways of thinking:
an acceptance of change…” Is that really the case? On whose
part is this “acceptance of change”? This is an empirical
question. To most objective observers from the South there
is, in fact, no such change in thinking or even an acceptance
of change in the World Bank and in official thinking in the
West. Things are pretty much as they have been over the last
fifty years, if not indeed worse in some cases. Hence the
salience of the slogan of the peoples’ movement who protest
against the World Bank and the IMF: “Fifty Years is Enough!”
Unfortunately, even the experience of Seattle and Washington,
where people came to the streets to protest against the WTO
and the IMF/WB respectively, will not bring about a “change
in ways of thinking” in these bastions of control over “knowledge”.
Much more social upheaval at the global level may, sadly,
be the only leverage to change. As that astute observer of
paradigm shifts, the American scientist, Thomas Kuhn, argued
in his celebrated “The Structure of Scientific Revolutions”,
paradigmatic shifts in knowledge come as a result of systemic
crisis. So far, the West, and their organs of global governance
– the IMF, the WB and the WTO – have been able to stave off
every major crisis (such as the debt crisis of 1970s and the
“currency” crises in Mexico followed by East Asia in the 1990s)
that the system has encountered.
Nonetheless, the fact that serious
epistemological questions are being raised about the fallibility
of the Washington Consensus is a good sign. And Stiglitz
should be complemented for his courage and audacity to have
challenged that “consensus” from within the belly of the beast.
But he does not go far enough.
Indeed, the Post-Washington Consensus is only a reformed version
of its father. There is no real paradigm shift. It may be
that realism dictates only a reformist change in the language
of discourse, and the parameters of knowledge that informs
that discourse. The fact that
Another World Bank “rebel”, Ravi
Kanbur, had to resign his post in May 2000 is an indication
of the rigidity of the World Bank. Kanbur, a high-ranking
Bank official, and a Stiglitzian author of World Development
Report resigned after a row over WDR 2000's emphasis on growth
and market liberalisation as against income redistribution.
For those struggling for paradigmatic
shift in the realm of development ideas, reformism of the
kind Stiglitz advocates can hardly prescribe a way forward.
Indeed, that kind of reformism is the only way the system,
with all its faults, can prolong its life a little longer.
It is only because of the short-sightedness of the major global
players (including the US Treasury, for example), and the
bureaucratic and political rigidity of institutional gatekeepers
in the World Bank and the IMF, that they cannot see the reformist
light that Stiglitz and his kind are offering to them. At
the end of the day, what Stiglitz is offering is the management
of knowledge in a more sophisticated manner than the boorish
efforts of the Bretton Woods institutions, for the latter
can only further encourage antagonism and resistance from
those whose sufferings have increased under the reign of the
Washington Consensus.
Therefore, those for whom the
challenge is to transform global governance, and not just
reform it, the Stiglitzian way is only the first step to discrediting
the dominant ideas in the World Bank’s “knowledge Bank”. That
“bank” is pretty bankrupt of ideas. The main article carried
in this Bulletin summarises some interesting ideas from Stiglitz
that are usable in a technicist fashion, but they cannot be
the main content of a transformist knowledge bank. For that
we have to look elsewhere.Ì
|
