The Washington Consensus is dead: Long live the new Berlin Declaration
Paradigm shifts in mainstream economic thinking usually accompany crises demanding new answers, as occurred after stagflation—low growth and high inflation—gripped advanced economies in the 1970s. And it may be happening again, as liberal democracies confront a wave of popular distrust in their ability to serve their citizens and address the multiple crises— ranging from climate change to unbearable inequalities and major global conflicts—that threaten our future.
The consequences can now be seen in the US, where former President Donald Trump has a good chance of winning the presidential election in November. Similarly, a far-right government could take power in France after the coming snap election.
To prevent dangerous populist policies that exploit voters’ anger, and to avert major damage to humanity and the planet, we must urgently address the root causes of people’s resentment. With this imperative in mind, many leading economists and practitioners convened in Berlin at the end of May for a summit organized by the Forum New Economy.
This ‘Winning Back the People’ summit led to something resembling a new understanding that may replace the market-liberal ‘Washington Consensus,’ which for four decades emphasized the primacy of free trade and capital flows, deregulation, privatization, and other pro-market shibboleths. The Berlin Declaration published at the end of the gathering has since been signed by dozens of leading scholars, including Nobel laureate Angus Deaton, Mariana Mazzucato and Olivier Blanchard, as well as by Thomas Piketty, Isabella Weber, Branko Milanovic and many others.
Read more on livemint.com
