The world is made up of two actors;
there are the ‘rule-makers’ and there are the ‘rule-takers.’ On one hand, the
rule-makers have a high degree of both normative and coercive power at their
disposal to illicit the obedience of rule-takers. On the other hand,
rule-takers, in the absence of sheer coercive power, rely on a counter-normative
strategy to resist the imposition of rules. In every aspect of social and power
relations, the dynamics between the rule-makers and the rule-takers are focal. In
no other are these dynamics more consistently located than in the area of the
global political economy, more specifically in the aspect of development. The
rule-makers are the United States and the Washington institutions that are the
World Bank and the International Monetary Fund. The rule-takers are developing
countries like those in Latin America and Asia. The rule being promoted is the
Washington Consensus, a set of policy recommendations by Washington
institutions that are essentially neoliberal in character. The game is
essentially played by leverage. Prior to the heyday of neoliberalism,
developing states engaged in inward-looking models for development. In Latin
America, industries were nationalized, protectionist tariffs were instituted
and capitalization was found internally. In Asia, the state was more
pro-private capital and sponsored domestic businesses through large amounts of
technological recapitalization and favourable industrial policies. These models were at the opposite spectrum of US interest; it restricted their access to raw
markets of the region. The models, nevertheless, led to incredible strides in economic growth and development in the regions. The leverage was clearly with
the developing countries. However, the 1982 debt crisis in Latin America and the
1997 Asian Financial Crisis, coupled with a post-Washington Consensus
emphasizing democracy, delegitimized the national development models of largely
authoritarian regimes in both regions. Latin America adjusted to neoliberal
policies conditioned by the IMF for its financial assistance, Northeast Asia
saw foreign competition challenge the dominance of state-sponsored domestic
businesses, and Southeast Asia became heavily reliant on foreign direct
investment and export-oriented industrialization. While there are some minor
resistance and indigenization of the adjustment, the post-Washington Consensus
of a neoliberal economic order remains intact.
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| Photo from carmillaonline.com |
The political economy of development
is a game of leverage. At the surface, it appears that leverage only comes with
luck. The crises that discredited the national developmental models of Latin
America and Asia were exogenous in nature and thus, outside the control and
fault of national economies. But a more critical examination reveals the
powerful irony of neoliberal policy. The exogenous crises were results of
increasing liberalization of trade, finance and production. The liberalization
of the oil market eventually led to an energy price hike that choked Latin American
countries to debt. In Asia, the opening up of financial markets led to hot
money short term investments and eventually bursting to the Asian Financial
Crises. Neoliberal policy, it appears, has a natural mechanism of correcting
divergent developmental models by naturally inducing exogenous crisis; making
it, in effect, a self-fulfilling prophecy. Leverage is not a matter of luck or
natural economic consequences; but, in fact, manipulated and rigged towards
neoliberal interests. Such is the genius of the Washington Consensus and
institutions. It presents the economy as an organic, objective and apolitical
arena where neoliberal policies are the only ‘correct’ path to development.
Through the infiltration of ideas in popular and policy spaces through agents
of media and the educational system of so-called ‘experts,’ neoliberalism is
raised to Gramscian hegemony status. The epitome of the sheer cunningness of
neoliberal agents is their ability to adapt and change. When the Washington
Consensus was discredited by critiques of socioeconomic inequality, proponents
re-legitimised it neoliberalism through the Post-Washington Consensus where
little concessions were made to poverty reduction and the discourse of market
compatibility with democracy was introduced. It was no longer an issue of
neoliberalism causing poverty; but authoritarianism as the bane of these
societies and only market-friendly policies can ensure the democracy answer. It
was a masterful reframing of critiques. Counter-hegemonic agents against
neoliberalism must strike back just as creatively if there is any hope in undermining this
neoliberal global order.
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