From Washington to London: A new economic consensus for 21st century, Pg15.

Key Highlights:

• In 1990, John Williamson outlined 10 economic policy instruments known as the "Washington Consensus".
• The Washington Consensus promoted policies like reduced government borrowing, market-determined interest rates, and privatization.
• The Global Financial Crisis of 2008 and the rise of China led to a backlash against the Washington Consensus.
• In May 2023, scholars at the London School of Economics (LSE) proposed a "London Consensus" with five core principles.
• The London Consensus emphasizes wellbeing, growth, resilience, politics, and state capacity.

Detailed Insights:

• The Washington Consensus advocated for hyper-globalization, benefiting countries like China, Vietnam, and India but causing job losses in the West.
• The London Consensus emerged due to new economic challenges like climate change, artificial intelligence, and waning support for liberal democracy.
• Unlike the Washington Consensus's clear commandments, the London Consensus offers broader principles to guide policymaking based on unique national circumstances.
• The London Consensus views politics as an enabler rather than a constraint, emphasizing the need to get politics "right" to avoid economic shocks.
• Building state capacity is crucial for providing essential services and creating confidence among investors in a functional market economy.
• The London Consensus lacks concrete actionable directions for policymakers compared to the Washington Consensus, focusing instead on adaptable principles.

Key Concepts Involved:

• Washington Consensus: A set of 10 economic policy prescriptions for sustainable growth, promoted by institutions like the IMF and World Bank.
• Hyper-globalisation: Increased integration of the world economy through trade, investment, and migration.
• State Capacity: The ability of a government to effectively implement policies and provide public services.