No consensus on the Beijing Consensus

Neoliberalism with Chinese characteristics? Or the long-lost Third Way?

Published September 15, 2006 10:28PM (EDT)

China is getting credit for scoring points with Latin America this week by showing up at the Nonaligned Movement summit in Havana. The United States, invited as an observer, declined to attend.

The United States isn't doing itself any favors. While Bush administration officials like to blame the so-called Latin turn to the left on populist "thugs" and demagogues, an alternative explanation holds that the failure of Washington Consensus economic policies paved the way for the rise of leaders such as Venezuela's Hugo Chavez and Bolivia's Evo Morales. Latin America gave the Washington Consensus the good old college try: privatization, deregulation, trade liberalization, fiscal austerity... And what did it get? Higher poverty, higher unemployment and slower rates of growth than in the supposedly bad old import-substitution days. And in the case of Argentina, almost complete economic collapse.

It's the big story in developmental economics, the discrediting of the Washington Consensus and the subsequent search for a new path. And China is playing no small role in the aftermath: There's even a school of thought that China has a model of its own to offer the developing world: the "Beijing Consensus."

The Beijing-vs.-Washington semiotics are a natural outgrowth of the perception that China is the world's rising power, the only contender who can realistically challenge U.S. hegemony. But whereas the Washington Consensus is easy to define, the "Beijing Consensus" is more slippery; there is, it seems, no consensus as to what it stands for.

For some, it means economic development under authoritarian control -- economic reform without democratic constraints -- a mix sure to be popular with dictators and one-party states everywhere. But for others it is defined by what it isn't -- a path to development that does not require conforming to free-trade neoliberal dogma. Or as one Nigerian journalist quoted in a very interesting paper on China's relationship with Africa put it:

"The Chinese government knows what is good for its people and therefore shapes its economic strategy accordingly. Its strategy is not informed by the Washington Consensus. China has not allowed any [IMF] or World Bank to impose on it some neo-liberal package of reforms ... their strategy has not been a neo-liberal overdose of deregulation, cutting social expenditure, privatizing everything under the sun and jettisoning the public good. They have not branded subsidy a dirty word."

The term "Beijing Consensus" has apparently been around since at least the 1990s, but it was injected into the mainstream of political discourse in 2004 by Joshua Cooper Ramo, a former senior editor at Time who is now the managing director of the consulting firm Kissinger Associates. His paper, The Beijing Consensus, published by the United Kingdom's Foreign Policy Centre, is one of the smarter analyses of China to be written in the last few years.

"China is marking a path for other nations around the world who are trying to figure out not simply how to develop their countries," writes Ramo, "but also how to fit into the international order in a way that allows them to be truly independent, to protect their way of life and political choices in a world with a single massively powerful center of gravity."

Ramo defines the Beijing Consensus as having three main parts:
1. A commitment to innovation and constant experimentation. There are no set rules carved in stone and handed down by the IMF to a Moses-like prophet that everyone must follow if they want to get to the promised gross domestic product. There is, instead, constant tinkering and constant change, and a recognition that different strategies are appropriate for different situations.
2. A rejection of per capita GDP as the be-all and end-all: sustainability and equality must also be part of the mix.
3. Self-determination.

Critics from both the left and the right have pounced upon the second "theorem" as a glaring weak point. How can one say that China, with its rapidly increasing inequality and disastrous pollution, is concerned with issues of sustainability and equity? In response, one can wave weakly at China's recent announcement that it has recalculated its GDP figures by subtracting the costs of pollution from them, and the numerous public statements that its leaders regularly make about the need to address widening income inequality. But the critique still seems valid: Ramo seems to be a little too willing to take policy statements at face value and ignore the situation on the ground.

Not for nothing does one Marxist-oriented critic of Ramo call his formulation a "Silicon Valley Model of Development" that ignores the reality of transnational exploitation of labor, a core part of China's success. It is true, Ramo, albeit brilliant and fun to read, does come off as a little glib in an unrepentant dot-comish way, with all his talk of the "new physics of development and power," with which China is "reshaping the international order." The Beijing Consensus is just another way new business model. After reading Ramo, its hard to stifle the impulse to call your broker and ask if there is a way to get in on China's upcoming IPO.

But Ramo's assertion that the Beijing Consensus represents opposition to the status quo, to U.S. hegemony and U.S. power, is undoubtedly on the money, and explains why China is gaining face worldwide at the expense of the United States. Scores of developing nations want to imitate China's economic growth, and at the same time, chafe at the paternalism and stipulations that come with American advice and aid. No one seems to be comfortable with a world with just one superpower. So there doesn't have to be any there there, in the Beijing Consensus. The University of Oregon's Arif Dirlik hits the bull's-eye when he suggests "that the term derives its meaning and appeal not from some coherent economic or political position but from its suggestion of a pole in the global political economy which can serve as a gathering place for those who are opposed to Washington imperialism."

Which brings us right back to Havana, where China is hobnobbing with the nonaligned nations. Maybe Donald Rumsfeld should compare Hugo Chavez to Hitler a few more times. That will surely mend some fences.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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