Contemporary politics comprise an array of approaches, which show varying results upon long-term implementation. The relation between market trade and the involvement of the state from one of the primary aspects upon which such models are compared. The Washington Consensus was a popular policy at the end of the 20th century, but it showed mixed results. Simultaneously, socialism was one of the dominant models throughout the previous century. Despite its large-scale collapse in the 1990s, it managed to survive into the present in a different form. Both policies demonstrate particular differences in the context of the balance between the state and the market. The purpose of this essay is to explore both models and compare their approaches to state regulation in the market.
The Washington Consensus was an important political model of the 20th century recommended for emerging economies. According to Moosa and Moosa, this policy was actively developed by organizations based in Washington, D.C., namely the International Monetary Fund and the World Bank (19). The primary points of the doctrine are neoliberal in nature, encouraging free market relations. The Washington Consensus promotes direct foreign investments, as well as market-determined interest and exchange rates. This model implies that the role of the government in the economy must be reduced, thus allowing the market to organize itself. These principles derive from developed democracies, such as the United States, which aimed at providing emerging economies with a clear framework of sustainable growth. Overall, the Washington Consensus made an attempt to introduce democratic, free-market values into the economies of developing countries.
On the other hand, socialism has been an opposing force to capitalism and its principles. Gilbert states that this model aims at confronting the principles of neoliberalism, relying on the centuries-old dogmas of classical socialism and Marxism (33). Proponents of such policies claim the neoliberalist approach leads to greater labor market insecurity and increased individualism. According to Gilbert, the primary objective of 21st-century socialism is to encourage people to work together, thus meeting the goal of networking (35). In other words, society must demonstrate a stronger sense of unity and cooperation in the economic context, whereas the state should regulate market relations to ensure stability. 21st-century socialism opposes the dominant model of capitalist rule in the light of technological progress, promoting equal sharing of knowledge among all people. This approach dwells on the dogmas of its prior iterations while adjusting itself to contemporary reality.
The two models discussed above share common human-centric ideas while being inherently different. Moosa and Moosa write that the Washington Consensus promoted liberty of trade as the only path to sustainable growth for developing economies (20). At the same time, it said that the model had a negative impact in terms of the increasing domination of large, multinational corporations. As a result, many players lost their share of the market in the countries where the Washington Consensus was in effect. Socialism of the 21st century takes an opposing stance in this regard, as Gilbert argues that industry giants, such as Apple, must be transformed into workers’ cooperatives (36). This way, regular people are expected to wield the actual power of the economy instead of being elements of a globalized system. Both policy sets have demonstrated mixed results, which explains their position in the modern environment.
In conclusion, the Washington Consensus and 21st-century socialism promote opposing ideas. The former aims at free-market relations, in which the role of the state is reduced to a minimum. Socialism recognizes the power of the government in terms of market regulation, considering its role one of paramount importance. Overall, neither policy set managed to dominate the political landscape, which is why classic forms of democracy determine present-day economic development.
Works Cited
Gilbert, Jeremy. “Models of Anti-Neoliberalism: Moralism, Marxism, and 21st Century Capitalism”. Alternatives to Neoliberalism: Towards Equality and Democracy, edited by Bryn Jones and Mike O’Donnell, Policy Press, 2017, pp. 27-40.
Moosa, Imad A., and Moosa, Nisreen. Eliminating the IMF. Palgrave Macmillan, 2019.