Do Washington Consensus Policies Promote Poverty Reduction?
The answer, quite obviously, depends on which interpretation of the Washington Consensus one is referring to. Let me take first the popular, or populist, interpretation of the Washington Consensus as meaning market fundamentalism or neo-liberalism: laissez-faire, Reganomics, let’s bash the state, the markets will resolve everything… It will presumably come as no surprise that I would not subscribe to the view that such policies would be good for poverty reduction. We know that poverty reduction demands efforts to build the human capital of the poor, but on the populist interpretation the Washington Consensus signally fails to address that issue. We know that an active policy to supervise financial institutions is needed if financial liberalization is not to lead to financial collapse, which invariably ends up by using tax revenues to write off bank loans that were made to the relatively rich. And some measure of income redistribution would be recommended by any policy that was primaril
