Chapter 8: Macroeconomic policies in transition
Haste makes waste. (The Analects of Confucius) John Williamson, the first person to coin the term “Washington Consensus,” feels wronged by criticisms from certain theoretical circles and the public. He not only believes that there is nothing wrong with his original proposal regarding Latin American countries’ transition to sustainable economic growth tracks, but also adds several new points focusing in particular on macroeconomic stabilization (Williamson, 2004). Michael Spence sees the widely prevailing generalization of the Washington Consensus—namely, that it is to “stabilize, privatize, and liberalize”—as a simplified misinterpretation of Williamson’s original proposition (Spence, 2011). The question remains, however, as to how much these debates on the Washington Consensus actually encapsulate significant differences in institutional settings and thus in the conditions of macroeconomic stability both between developed and developing countries and between those countries with mature market mechanisms and countries in system transition. It is apparent that western economics, especially those theories on which the Washington Consensus are based, have proven unable to adequately explore the roles that a variety of economic policies have played in China’s economic growth, to say nothing of accurately depicting the ways in which China’s macroeconomic stability has been accomplished and what principles should be followed in the future when deciding economic policies.
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