The Washington Consensus: Duflo’s Warning Exemplified?

By Jan Minke Contreras

In Poor Economics, Esther Duflo and Abhijit Banerjee make a cutting statement: “even the most well-thought-out policies may not have an impact if they are not implemented correctly”. They draw a distinct line between policies and politics and exposes how the latter can affect the implementation certain policies. This blogpost will exemplify such scenario with the implementation of the Washington Consensus (WC) in Latin America during the 1980’s. Latin America was immersed in a severe debt crisis. Governments were defaulting on payments owed to the IMF and the United States. Convinced there was a huge problem, policy-makers from Washington and the IMF decided to draft a 10-point policy document that Latin American countries must follow if they wished to borrow more money in the future. The policies were supposedly also designed to stimulate growth in the region. 

As well-intentioned the idea might sound, the implementation of the WC had disastrous effects in many parts of Latin America. Ecuador was one of these countries. With the hopes of being able to pay off its debts to the IMF, Ecuador had no other option but to implement the WC. However, the implementation of these policies had horrendous consequences on the Ecuadorean economy. One of the 10 policies, for example, stipulated that government-owned companies should be privatised. When Ecuador did this, numerous politicians sold the companies to themselves, retaining control of vital sectors like energy or telecommunications. These, now private companies, went bankrupt because of the high corruption levels amongst the “new owners” and because of faulty allocation of funds. Ecuador saw such results from the WC implementation because, as Duflo mentions, the WC was unable to “sort out the political process” before actually implementing the policies.  The moral: policy should never be taken out of the political context. 

The Multiple “isms” in Charles Tilly’s Model

By Jan Minke Contreras

In his paper, Charles Tilly comes to the conclusion that most historical research papers can be classified into two categories (axes) namely the (a) scale of the research and (b) the epistemological assumptions. Tilly subsequently assigns them a certain ‘value’. A paper with a large-scale of research will have a higher ‘value’ than a small-scale one. The same happens with the epistemological assumptions: a paper that relies more on social-scientific concepts will have a higher value than a paper based mainly on humanistic assumptions. 

Tilly’s two-dimensional makes perfect sense at a first glance but, it might become unconventional when trying to allocate account for concepts. For example, concepts like interpretivism or positivism fit quite nicely into the “humanistic vs. social-scientific axis”. Qualitative and quantitative data also conveniently paired with the “large- small-scale axis”. Nonetheless, when trying to allocate concepts like nomothetic or ideographic  into the model it seemed counterintuitive to allocate them in any of the axis. My main criticism here is that these concepts (and many others) would need to have their own “axis”. Nomothetic and ideographic refer to the purpose of a historical research paper, which would require a third axis.  

a. Conventional vs suggested model

a. Conventional vs suggested model

Let’s try, for example, to fit “Colonial Origins of Comparative Development” into Tilly’s model: a paper that is clearly nomothetic. (Model b.) It might seem a coherent model but, the problem is that it looks the exact same way Wringley & Schonefield’s paper was modeled by Tilly himself. One cannot tell the difference as the model ignores the purpose of the paper. Incorporating an additional axis representing purpose, would change the way Acemoglu & Robinsons’ paper is modeled and would allow more accurate classification of historical papers. In a nutshell: Tilly’s model is a good starting point but can and must be built upon. 

b.  “Colonial Origins of Comparative Development”  in conventional vs. suggested model 

b. “Colonial Origins of Comparative Development” in conventional vs. suggested model