The Global Sociology Blog

Just as I was reading the article I shall discuss below on the need to reform the Washington Consensus system, I saw this great and very relevant cartoon that Carlos Serra had posted on his blog and I could not resist (other great comics by Gado are available on his website):

The article by David Held I wanted to discuss here is"At The Global Crossroads: The End of the Washington Consensus and The Rise of Global Social Democracy?" in Globalizations, May 2005, Vol. 2, No. 1, pp. 95-113. Held is well known for his conceptualizations on global governance as he has published extensively on the subject. The article offered here is, to put it simplistically, a short version of his book Global Covenant: The Social-Democratic Alternative to the Washington Consensus.

Held’s conception of globalization is increased interconnectedness that created overlapping communities of fate as opposed to discrete national communities of the Westphalian order. Globalization is multi-layered and is not just economic, but political and cultural as well. The question of global governance is especially crucial for Held as greater interconnectedness involves a greater reach of a body of international laws dedicated to the promotion of justice. A great deal of this body of human rights juridical activity came about after World War II and the Holocaust.

"[Those involved in drafting these universal principles of human rights] rejected the view of national and moral particularists that belonging to a given community, limits and determines the moral worth of individuals and the nature of their freedom, and they defended the irreducible moral status of each and every person. The principles of equal respect, equal concern and the priority of the vital needs of all human beings are not principles for some remote utopia; they are at the centre of significant post-Second World War legal and political developments." (96)

The global crossroads mentioned in the title of the article refer to the dilemma faced by the international community: promote and extend this human rights regime, or let be eroded and dismantled. And Held is rather pessimistic (remember, that was in 2005 although I don’t think there is much reason to be more optimistic now). For Held, the human right regime is particularly threatened by four crises:

1. The collapse of the Cancún trade talks

And the correlative rise in bilateral and preferential trade agreements. This goes back to the fact that the global trade system is rigged against developing countries and therefore is of questionable legitimacy.

2. Little progress on the Millenium Development Goals

I have blogged extensively on the MDGs and the lack of progress is attaining these goals is a massive failure of the moral conscience of the international community. I would add that this is even more shameful now considering that the cost of reaching these goals does not compare to the money poured into the financial system to rescue the developed economies.

3. Little progress on a sustainable framework to deal with global warming

And the lack of real progress at Poznan shows that this is still an issue today and we are already witnessing some of the effects of this in the form of more frequent violent storms, resource wars (especially for water, oil and land) as well as climate migrants and refugees.

4. The threats to the multilateral order by the unilaterialism initiated by the US in Iraq

Incidentally, the change in administration might not change much on that. The additional problem is that other countries can use the same doctrine to go it alone against defined enemies, further undermining the multilateral order and weakening the UN system.

All these crises are both symptoms of increased interconnectedness and crises that threaten the global order. According to Held, what is missing is greater integration and greater commitment to social justice. This is so for two main reasons: the Washington Consensus and the Washington Security Agenda.

The Washington Consensus

This one is well known and rather well defined. It is understood as the underpinning of the global spread of global capitalism through liberalization. The Washington Consensus was promoted and pushed though global institutions such as the IMF and the World Bank who imposed conditions – structural adjustments – on developing countries, forcing them into integration into the global market.

This Washington-driven economic agenda has come under heavy criticism for a number of reasons and after years of being forced on developing countries, it does not have much to show for it. Held (99) cites three major points made by Branko Milanovic (2003: 679):

1. How to explain why after sustained involvement and many structural adjustment loans, and as many IMF Stand-bys, African GDP per capita has not budged from its levels of 20 years ago. Moreover, in 24 African countries, GDP per capita is less than in 1975, and in 12 countries even below its 1960s level;

2. How to explain the recurrence of Latin crises, in countries such as Argentina, that months prior to the outbreak of the crisis are being praised as model reformers;

3. How to explain… ‘pupils’ among the transition countries (Moldova, Georgia, Kyrghyz Republic, Armenia), after setting out in 1991 with no debt at all, and following all the prescriptions of the IFIs, find themselves 10 years later with their GDPs halved and in need of debt-forgiveness.

So, on the one hand, the Washington Consensus failed many developing countries and at the same time, the countries that have experienced growth and development are those that stayed outside of that system (China and the emerging Asian tigers as well as India, for instance).

"There is much evidence to suggest that a country’s internal economic integration – the development of its human capital, of its economic infrastructure and robust national market institutions, and the replacement of imports with national production where feasible – needs to be stimulated iniitally by state-leg economic and industrial policy. The evidence indicates that higher internal economic integration can help generate the conditions in which a country can benefit from external economic integration (Wade, 2003). The development of state regulatory capacity, a sound public domain and the ability to focus investment on job creating sectors in in competitive and productive areas is more important than the single-minded pursuit of integration into world markets." (100)

The Washington Consensus has eroded the state capacity to promote internal integration, promoted the misleading view that there is only one path to development and growth and aggravated the major asymmetries of global market access and power and therefore made things worse for developing countries.

"Leaving markets to resolve alone problems of resource generation and allocation misses the deep roots of many economic and political difficulties; for instance, the vast asymmetries of life chances within and between nation-states which are a source of considerable conflicts; the erosion of the economic fortune of some countries in sectors like agriculture and textiles while these sectors enjoy protection and assistance in others; the emergence of global financial flows which can rapidly which can rapidly destabilize national economies; and the development of serious transnational problems involving the global commons. Moreover, to the extent that pushing back the boundaries of state action or weakening governing capacities means increasing the scope of market forces, and cutting back on services which have offered protection to the vulnerable, the difficulties faced by the poorest and the least powerful – north, south, east and west – are exacerbated. The rise of ’security’ issues to the top of the political agenda reflects, in part, the need to contain the outcomes which such policies provoke.

The Washington Consensus has, in sum, weakened the ability to govern – locally, nationally and globally – and it has eroded the capacity to provide urgent public goods. Economic freedom is championed at the expense of social justice and environmental sustainability, with long-term damage to both. It has confused economic freedom and economic effectiveness." (102)

Attempts at reforming the Washington Consensus have been meek and unconvincing. For Held, the alternative lies with a social-democratic approach. Held defines social-democratic view as follows:

"Traditionally, social democrats have sought to deploy the democratic institutions of individual countries on behalf of a particular project: a compromise between the powers of capital, labour and the state which seeks to encourage the development of market institutions, private property and the pursuit of profit within a regulatory framework that guarantees not just the civil and political liberties of citizens but also the social conditions necessary for people to enjoy their formal rights. Social democrats rightly accept that markets are central to generating economic well-being, but recognized that in the absence of appropriate regulation they suffer various flaws, especially the generation of unwanted risks for their citizens and an unequal distribution of those risks, and the creation of negative externalities and corrosive inequalities." (103)

The problem is then how to extend social-democratic policies on a global scale in the context of diminished capacities of the states. That is the major challenge for Held: how to create a global social democracy based on transparency, accountability, commitment to social justice, equitable distribution of life chances, public management of global flows of various sorts, corporate governance and environmental sustainability. Held provides a fairly detailed laundry list to make this happen. And, again, the question of cost is no longer a valid one in the context of massive bailouts.

The Washington Security Agenda

For anyone who has been following the doctrines of the Bush administration, this is a familiar story of the US policy after the terrorist attacks of 9/11. The choice faced by the US government was to either strengthen the multilateral order or to undermine it. We all know which path the administration chose.

"After 9/11, the US and its major allies could have decided that the most important things to do were to strength international law in the face of global terrorist threats, and to enhance the role of multilateral institutions. They could have decided it was important that no single power or group should act as judge, jury and executioner. They could have decided that global hotspots like the Middle East which feed global terrorism should be the main priority. They could have decided that the disjuncture between economic globalization and social justice needed more urgent attention. And they could have decided to be tough on terrorism and tough on the conditions which lead people to imagine that Al-Qaeda and similar groups are agents of justice in the modern world." (106)

They decided none of these things and the rest is history with side effects with long-term impacts and none of the issues above addressed.

In other words, both the Washington Consensus and the Washington Security Agenda are massive failure and this is even more visibly true now than it was when Held wrote his article. But Held does not end with this pessimistic diagnosis. He offers specific prescriptions for a global social-democratic agenda based on some basic principles:

• Commitment to the rule of law and development of multilateral institutions

• Generation of new forms of legitimacy for global political institutions for security and peace-making

• Acknowledgment that ethical and justice issues based on the global polarization of wealth, power and income, the asymmetries of life chances

None of these can be solved by the market. Similarly, security must be reconceptualized from a narrow conception (protection from coercive power and violence) to a broader meaning (economic, political and environmental protection especially for the vulnerable). So, indeed, what Held suggests is a global social covenant to promote fair trade rules, more democracy at the global level, a more just and equitable world order. This is also means a more open mode of governance including the global civil society.

Held was indeed prescient when he wrote this article and the current disastrous financial and economic conditions should, if reason prevailed, mark the end of the Washington Consensus and the final days of the Bush administration should also be the final days of the Washington Security Agenda. However, Held was somewhat pessimistic then, and there is no reason to be less so now. Leadership on these issues will not come from the US. According to Held, the only other likely candidate for such leadership is Europe.