Because of its size, the Asian crisis of 1997 was the first real challenge to the virtually unchallenged rule of neoliberalism. The crises in Russia and Brazil that followed quickly, and possibly the crash of the LTCM hedge fund, have certainly intensified doubts. Although critically important for global economic policy, the Asian crash was nothing generically special. Liberalization and deregulation had triggered a host of crises before. Inflation-adjusted losses due to the US Savings & Loans débâcle were ‘several times larger than the losses experienced in the Great Depression’, as Stiglitz (1998a, p.16) pointed out. Yet, in relation to GDP, it is dwarfed by crises in SCs and formerly communist countries: ‘This debacle would not make the list of the top 25 international banking crises since the early 1980s’ (ibid.). This means that there was more than one such major crisis per year on average - effects of the Washington Consensus that had simply been repressed by official thinking for nearly two decades. This may be an indication of the strength of interests behind the Washington Consensus. Joseph Stiglitz (1998a), then chief economist and a vice president of the World Bank, was the first high-ranking BWI official to draw attention to the flaws of ruling ideology and to speak about moving toward a ‘PostWashington Consensus’, challenging sacred cows such as the belief that success by governments was ‘at best a fluke, and at worst impossible’ (ibid., p.9), that budget deficits are necessarily bad in SCs, or that moderate inflation...
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