In the aftermath of the economic crisis that began in 2008 it has become fashionable to say that the BRICS buried the Washington Consensus with their state-led economic models. This rhetoric has been supported by BRICS countries themselves and has made ripples in the international financial press. But is there solid evidence for such assertions? A closer look at the empirical reality suggests a more mixed picture. As Marion Fourcade put it, in the BRICS the Washington Consensus is in fact “more invisible than irrelevant.”
The life of BRICS has had interesting turns. First, they were known as a group via Goldman Sachs investment product more than a decade ago, responding to the insatiable demands for accountability, and profit, that emanates from the financial nebulae. Then, BRICS became one of the few beacons of the global economy during the Great Recession and they did so unmoored from the institutional enforcers of the Washington Consensus. In a demonstration of the performative effects of financial marketing, the BRICS governments picked on the new acronym and formed an inter-governmental alliance of South-South cooperation with an ambitious agenda in international economic institutions. A decade after the term BRICS was coined by investment bankers, Robert Wade noted that the economic map of the world had the United States, the European Union and the BRICs as the three poles of the emerging economic multipolarity. In all the BRICs, the liberal economic drive of the Washington Consensus dramatically altered their ideational and institutional landscape but that the commands of this development paradigm were only selectively institutionalized. The most important pattern the role of the state as a critical actor in development has been rediscovered in ways that go beyond the modest institutionalist turn experienced by the Consensus after the East Asian crisis but without crafting a consummate counter-hegemonic “state capitalist” economic model.
China and Brazil have operated the most important transformations of the Washington Consensus. Although talk about a “Beijing Consensus” conceals more than it reveals, it is clear that China’s hybrid development model mixing elements of central planning with neo-structuralist and market socialist ideas has been the most important deviation from development orthodoxy. Yet as one China scholars shows, Chinese Communist Party, New Left and Liberal intellectual leaders use China’s relationship with the ideas and policies associated with the Consensus as a weapon in their ideational struggles. Sometimes the same holds true for the legitimacy strategies of different generations of the Communist Party itself.
Closer to a more capitalist development model, Brazil “edited” it and “grafted” the ideas and institutions of the Washington Consensus on domestic heterodox traditions. The result of this process has been the gradual crafting of a realistic (semi) alternative to the Consensus that recovers the importance of the state in development. Continuing commitment to mainstream ideas about macroeconomic discipline have been layered with policy positions that emphasize heterodox debt management in good times (reduced reliance on foreign finance) and heterodox countercyclical interventions in times of crisis (off-the-books fiscal stimuluses through public development banks, expansionary minimum wage policy, controls on capital flows). Brazil engaged in bold privatization campaigns while consolidating the state’s role as owner and investor in financial institutions able to fund industrial, innovation and credit policy. Deregulation was only selectively pursued in the case of the financial industry and, in defiance of the Consensus, it left few traces in the labor market. Finally, the conditional cash transfer programs certified as legitimate by the latest incarnation of the Consensus were followed by heterodox wage and employment policies. To capture the hybridity of this policy regime that blends the Consensus with heterodox economics by pursuing growth with redistribution through inclusionary state activism but without old-fashioned statism’ and while avoiding the wrath of financial markets, one can frame Brazil a case of liberal neo-developmentalism.
Like Brazil, India also institutionalized a hybrid between the Consensus and domestic institutional imperatives via a strategy of gradual neoliberalization that has remained unchallenged by the Great Recession. Here, the actual institutionalization of the Consensus by India’s “soft state” had to be negotiated with a coalition of industrialists, professionals and farmers whose political power filtered out some of the key elements of the Consensus (labor deregulation, the removal of farm subsidies, the liberalization of the retail sector and of sectors considered strategic). The same kind of political moderation of the Washington Consensus agenda took place in Russia, except that resistance came mostly from select niches of state technocracy. Reflective of this tension between economic liberalism and post-Soviet neo-developmentalism, Putin’s governments put the market order on a more systematic footing while reasserting state power and curbing the political power of the oligarchs by integrating security and military elites in the government apparatus, rising the share of the state in the economy and reasserting state control over strategic sectors like energy and banking. Like in the case of Brazil, Russia’ variant of statism points towards the emergence of a multipolar global energy and financial order in which state-owned non-Western energy giants and banks will play alongside the “establishment” of private Western capitalists. Yet relative to Brazil and even China, Russia’s rediscovery of the economic role of the state did not translate into significant efforts to curb rising inequalities, with the country superclass even experiencing a renewed boom under Putin.
BRICS’ reassertion of the state was not pre-determined. Some developing countries reduced the economic role of the state to the supply of institutional and material resources demanded by foreign direct investment. The result was the transformation of their economies in dependent varieties of capitalism that are little more than assembly platforms for the substandardized goods of multinational corporations. Others went further even. For example the Baltic countries joined the global economy by eviscerating most of the state’s economic functions. At the opposite end of the spectrum, other countries aimed for a very robust reassertion of the state’s role in the economy. Brazils liberal brand of neo-developmentalism is arguably much closer to the reformist versions of the Washington Consensus than are the economic models of Venezuela or Argentina.
In short, the BRICs balanced their adoption of select agenda points from the Washington Consensus while defending and often reinventing the relevance of state-led development policies. But in so doing, they have neither pioneered a full-blown post-neoliberal transformation, nor have they proved to be pure status quo forces in the global economy.
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