“From the Washington Consensus to the Berlin Declaration” is the headline of a June 27th Project Syndicate column by Dani Rodrik, Laura Tyson, and Thomas Fricke. They are talking about a statement put forth by 80 prominent economists and others, the authors above being among them. After a three-day “Winning Back the People” summit in Berlin in May this Declaration was issued and has at least several hundred signatories. Rodrik and his colleagues depict it as a “paradigm shift in mainstream economic thinking.”
The so-called Washington Consensus has dominated international development policy for decades, calling for private sector solutions to social problems and concomitant reduction of government activities and spending. The underpinning ideology has been the market fundamentalism that is the hallmark of neoliberalism. For a long time, dissatisfaction with the harmful effects of these neoliberal policies has prodded a search for a post-Washington Consensus, but one has not been forthcoming. The Berlin Declaration is seen as a start.
The Berlin Declaration is relatively short. It argues that the multiple crises the world faces – authoritarianism on the rise, climate change, “unbearable” inequalities, global conflicts – need to be met with major government interventions. They include a big emphasis on industrial policies and strategies in all nations, targeting the creation of good jobs, attention to a “healthier” globalization, more taxes and redistribution. In sum, the Declaration wants to change the role of government, or as Rodrik & Co. put it, “change the balance between markets and collective action avoiding self-defeating austerity.”
The Berlin Declaration is nothing new. It basically states the long-term position of liberal “neoclassical” economists that a market system in capitalism needs substantial intervention by governments to achieve an equitable and efficient economy and society. Neoliberals won the government intervention debate for the past 40+ years. The Declaration is hoping for a reversal. While the policies recommended would be a vast improvement over those of today, there are two major problems with the Declaration: its diagnosis and its solutions.
I find its diagnosis strange. The basic problem is seen as a widespread “popular distrust” of government’s ability to solve our crises leading to a “real or perceived loss of control over one’s own livelihood and the trajectory of societal changes.” This “sense of powerlessness” has driven people around the world to elect right-wing politicians and parties and support cut-back-the-government austerity policies.
While I agree that there are many disaffected citizens who feel powerless, loss of control is a very individual characterization of what are system problems. Moreover, at an individual level, that powerlessness is underlay by widespread fear – fear of economic precariousness, of immigrants, of crime, of others of different races or ethnicities, of your culture and way of life being changed. Right wing platforms, like Fox “News” in the U.S., and social media more generally, are stoking those fears every day, 24/7. At bottom, many support Trump and other right-wing neo-fascists, because their lives are difficult enough right now and they are afraid that all these things will make it worse in the future. Restoring faith in governments, in collective action, is a very tall order in these circumstances. Industrial and redistributive polices, even if they could be enacted in this still very neoliberal environment, will change minds and hearts with great difficulty.
Moreover, the solution of the Berlin Declaration is still capitalism, a kinder, gentler capitalism to be sure but with the world still run by a corporate global elite and their hangers on who populate groups like the World Economic Forum and the Trilateral Commission. It is doubtful they would allow the government intervention foreseen in the Berlin Declaration and, even if they did, it is unlikely that these policies alone can put much of a dent in the global polycrisis we face. Many of the Declaration policies are good ones, but they will only be successful if we develop alternatives to out-of-control markets and corporate domination as I and many others have argued.