6-21-05,8:39am

The “Washington Consensus” and “Beijing Consensus” From People's Daily Online

Two experts on the Marxist theoretical studies and construction project recently had a dialogue regarding the “Washington Consensus” and “Beijing Consensus”

Professor Wu Shuqing, former president of Beijing University, is the chairman of the Social Sciences Committee and chairman of the Instructing Committee on Economics Teaching of the Ministry of Education. Cheng Enfu is the vice chairman of China Association of Foreign Economic Doctrine Studies and director of the Shanghai School Economics Research Center at Shanghai University of Finance and Economics.

Different settings of the two “Consensuses”

Cheng Enfu: In May 2004 an expert on China issues at Goldman Sachs Mr. Joshua, Cooper Ramo published an article titled The Beijing Consensus, which caught the attention both at home and abroad. Much debate has been going on centered on the “Washington Consensus” and “Beijing Consensus.” The debate is very much worth analyzing since it involves directional questions such as how to command the overall situation with a scientific outlook on development, truly improve the socialist market economy system and build a harmonious socialist society.

Wu Shuqing: The question is very important. Since the oil crisis in the 1970s Keynesianism has been at a loss when it comes to the “stagflation” of the Capitalist economy. After former British Prime Minister Margaret Thatcher and US President Ronald Reagan took office Neo-liberalism replaced Keynesianism as the mainstream school of economics in the west, and became an important part of the theoretic system with which international monopoly capitals promote globalization. In 1990 led by the US Institute for International Economics, international institutions from Latin America, the United States and World Bank took part in a seminar on the readjustment and reform of the Latin American economy since the latter half of the 1980s. The meeting put forward a ten-point proposal guiding the economic reform in Latin America, which is called the “Washington Consensus.” And the theoretical foundation of the “Washington Consensus” is Neo-liberalism. The “shock therapy” based on the “Washington Consensus” later became the guiding principle for the reform in former Soviet Union and East European countries.

Cheng Enfu: For this reason the Central Leadership's proposal to research and criticize Neo-Liberalism is correct. In my article published in the third issue of Qiushi magazine this year I summarized Neo-liberalism theory as follows:

First, it advocates deregulation, praises market fundamentalism and opposes government interference. Second, it advocates privatization, blazons the perpetual role of the “private ownership myth” and opposes public ownership. Third, it stands for global liberalization, protects the liberal economy under the US' dominance and opposes establishing a new international economic order. Fourth, it affirms the individualization of welfare, emphasizes the shift of responsibility of social security from the government to individuals and argues against welfare society.

Wu Shuqing: At the beginning of a new era there arose an international debate regarding the “Beijing Consensus” and “China Pattern”. What is different is that the “Washington Consensus” was put forward deliberately and systematically. Participants of the “Washington Consensus” reached their consensus on the basis of actual acceptance of Neo-liberalism, while the “Beijing Consensus” was brought forward spontaneously by international opinions against the background of China's fast economic development since the reform and opening up and considerable raise in people's living standard. It does not have universally recognized documents and its content is still under debate. What is more, its presenter and those participating in its debate do not necessarily all accept the theoretical basis of the “Consensus”. For this reason, it is not yet a fully established “consensus” in precise terms. On the other hand, because of its theoretical scientificity and practical superiority it will be a “consensus” accepted by more and more people and of growing influence in the world particularly among developing countries.

What counts is the nature of the reform

Cheng Enfu: Neo-conservative economic thought adopts a double standard for the developed and developing countries. Its goal is to establish a new global economic order dominated by the developed countries and global expansion of Capitalism. The effect of implementing Neo-conservatism is, on the one hand, more room for Capitalism to exist and develop and the mitigation of Capitalism's fundamental contradictions; and on the other, the creation of new contradictions in global Capitalism system, particularly the polarization between rich and poor within the developed countries themselves and between the developed and developing countries. It therefore gave rise to the struggle against the Neo-conservatism economic thoughts at the national level.

A comprehensive look at the economic practice of Neo-liberalism over the last ten years shows that the former Soviet Union and East European countries had ten years in retrogression, Latin America lost ten years, Japan was crawling during the ten years, the US and Europe slowly climbed up over the ten years. None of the 49 countries, identified by the United Nations as the least developed countries (also called the fourth world), has become strong and prosperous with Neo-liberalism approaches such as privatization. Some even became poorer. The global economy is in urgent need of vigorous growth and sound development in reflection on and transcending the conservative Neo-liberalism economic thoughts.

Wu Shuqing: During the 20 years of China's reform and opening up the annual economic growth stayed above 9.5 percent, 7.3 percentage points higher than that in the developed countries and 4.8 percentage points higher than that in the developing countries. At the start of the reform China's GDP was less than 5,000 yuan in 1980. In 2003 China's GDP reached 11,669.4 billion yuan, ranking the sixth in the world. Here is a comparison between the economies of China and Russia. In 1989 the former Soviet Union had a GDP more than two times that of China. Ten years later it was 1/3 that of China. The “shortage economy” thought unsolvable with Socialism disappeared as the reform and opening up unfolds. Per capita GDP has reached $1,000. The society as a whole has reached a moderately well-off level with poverty population drastically reduced and people's living standard considerably raised.

Even now, some, both at home and abroad, still believe that only a reform carried out according to the “Washington Consensus” is a thorough one, that the recession in the former Soviet Union and East European countries that carry out Neo-liberalism is but pains in the process of reform and that China's reform will eventually follow their pattern.

In my opinion, to differentiate the reforms of former Soviet Union and East Europe and China simply with radical and progressive reforms is rather superficial because this kind of distinction does not touch on the essence of the question. As far as China is concerned our Socialist system is always affirmed as a system of superiority. The question is to give full scope to its inherent superiority. For this reason the nature of the reform is the self-improvement and development of the Socialist system. Its goal is to tap the inherent superiority consistently and effectively. Obviously, the guiding theory of the reform is Marxism, Deng Xiaoping Theory that integrates Marxism with the practice of contemporary China. The two modes, two consensuses have two kinds of outcome. The fundamental reason lies with the different guiding thoughts and different goals of reform.

From People's Daily Online