Questioning the Neoliberal Paradigm: a Critique of the Washington Consensus in Historical Perspective

This paper focuses on the controversial aspects of the policies conducted by the World Bank Group towards the debtor countries, including the neoliberal framework of the socalled Washington Consensus, implemented under the influence of the U.S. and leading Western economies. The author analyzes the historical context of the formation of international financial institutions’ recommendations and the neoliberal development model, promoted as a cure to socio-economic fallacies leading to debt crises. Since the 1980s, global IFIs have proposed a policy of reduced public expenses, low tariffs, and privatization of state-owned companies in place of high-government spending, protectionism and dirigisme. With the financial crises in subsequent years, the IFI-promoted agenda became the subject of rising controversies. The main critical orientations in the debate on the Consensus – liberal, social democratic and Marxist – are discussed in reference to ongoing attempts to reform the international fi nancial architecture on the basis of commonly accepted development patterns. Among the particularly significant points of the dispute are “market fundamentalism” opposed to etatism, as well as the clash between the priority of fast economic growth and a costly social agenda, including goals of poverty reduction, improving access to public services, etc. The presented cases of the International Monetary Fund’s questioned response to the Asian financial crisis of 1997-1998, as well as Chavez’s Venezuela and chavismo as a regional challenge to the Washington Consensus, reflects the dynamics of the free-market paradigm shifts.