Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Part – II: Emergence of ‘Beijing Consensus’ as an alternativeÂ
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â€˜Beijing Consensusâ€™ as a term evolved due to the failures of â€˜Washington Consensusâ€™ back in 2004, and gained popularity in the aftermath of 2008. Itâ€™s gaining further attention now again in 2010 as the debt crisis of the Euro-region unfolds. Â The 1st mention (by Joshua Cooper Ramo) of the term explains the difference in approach: â€˜if you wanted to understand how the sky worked, you should be more concerned about the motion of heavenly bodies than their destination.â€™ The difference is in â€˜one solution fits all mentalityâ€™, which was explicit again during the Bush-doctrine that assumed one can sow the seeds of democracy across nations, irrespective of local issues and challenges or even effectiveness of democracy in local societies. Â
Ramo reiterated back in 2004 what I started realizing in 2007. By 2010, it was much more evident (without reading Ramo on both those occasions). Ramo stated â€˜To measure Chinese power based on the tired rules of how many aircraft carriers she has or on per-capita GDP leads to devastating mis-measurement.â€™ Till date, the world (including its policy-makers, people from media, to academicians and economists) largely has not come out of that â€˜Washington Consensus Mentalityâ€™ of measuring economic well-being of citizens of a nation or the economic might of a nation (albeit this was not something introduced by John Williamson). All these were driven by the obsession of measuring and growing GDP that led to the GDP-cult, as evident all over in media and in academics of economics.Â
Taking example of Soviet Economy before its collapse, its GDP literally got decimated until 1999 but not its debt, more so the external ones. In that context, all these noises on amount of sustainable deficit as a per cent of GDP remain questionable (â€˜Russiaâ€™s external debt stood at $143.9 billion at the beginning of 1999, nearly $100 billion of which was inherited from the Soviet eraâ€™ Startfor, 1999).Â
So how is Beijing Consensus fundamentally different from the erstwhile Washington Consensus? Other than the two areas already implied ((â€˜Commitment to innovation and constant experimentationâ€™) in terms of economic policy-making by Government â€“ unfortunately which can be seen more in the Wall Street and not in corridors of policy-making in Washington; and in measures of economic growth (â€˜sustainability of the economic system and an even distribution of wealth, along with GDP, are important indicators of progressâ€™)), China emphasized â€˜geo-politics and geo-economicsâ€™ to be fundamentally linked.Â
â€˜Beijing Consensusâ€™, if something by that name at all exists in Beijing because, by definition itself, it is contextual, and therefore is unique to the problem, is also not free of its challenges or criticism. Income inequality in China has already been higher than that in the U.S. Now the question is, whether Beijing allowed that to happen to acquire the economic muscle necessary before addressing it effectively. China now has the resources to handle income inequality more effectively than it had in 1989. The rest of the world will watch with immense interest whether China has the willingness to tackle the income divide or it too succumbs to the demands of Shanghai stock exchange or to the real estate companies in Beijing.Â
Both Washington and China have shown their ability to tackle economic problems, irrespective of the different policies they have followed. In case of Washington, it has been at the cost of â€˜shoot first think laterâ€™ mentality of having GDP back in track (in order to have associated world leadership at any cost) that further escalates the problem to be reckoned with at a future date. In case of China, Beijing has shown highest level of policy-maturity in implementing sustainable policies even while solving immediate economic crises in hand. If the U.S. has been burdened by its leadership and thereby been myopic in its policy-making; China has been innovative.Â
Communist China didnâ€™t feel any stigma while adopting capitalistic rules (â€˜socialism with Chinese characteristicsâ€™) selectively in developing itself from 1978 onwards, since Deng Xiaoping started opening China up to the external world. On the other hand, U.S. felt stigma in nationalizing its major financial institutes and auto-makers during the collapse of the market economy in 2008.
There was a period in the world history when capitalism delivered more to the main street than communism or socialism did, however the last word on that might not be the same. There may be a period again when communism, socialism or a different form composite government and policy-making may deliver more to the average citizen than capitalism alone can deliver. Â There should not be any stigma in adopting the new approach. The day we do that, it means that days of experimentations or improvements are over. Fixing Wall Street within â€˜Washington Consensusâ€™ is one thing; exploring newer streets with â€˜Beijing Consensusâ€™ is altogether different.Â
Beijing is exploring these new streets. Beijing doesnâ€™t seem to have all the answers that â€˜Washington Consensusâ€™ apparently had for all situations. What deserves credit is the perseverance of policy-makers in Beijing in exploring an alternative to the â€˜Washington Consensusâ€™, against all odds since 1989. This perseverance may help the world in having some light of ideology in the darkness of failures of â€˜Washington Consensusâ€™. â€˜Beijing Consensusâ€™ is more management oriented where the context of the problem defines the solution than being driven by economic ideologies or hypotheses alone (as in the U.S.). â€˜Beijing Consensusâ€™ is more of a â€˜sense and respondâ€™ strategy than having a uniform prescription of economic cure as in its erstwhile era of the â€˜Washington Consensusâ€™.