- A World of Passions:How to Think About Globalization Now
Recent events have been unkind to a doctrine that defined global economics and politics during the 1990s. That doctrine, often termed "neo-liberalism" or "the Washington Consensus," was defined by the belief that free markets and international economic integration would lead the world toward prosperity, liberal democracy, and peace. The failure of neo-liberal development policies in countries such as Indonesia and Argentina, and the new prominence of elite and popular nationalism and fundamentalism whose most vivid expression is terrorism, have together shown the insufficiency of the neo-liberal program. In Part I of this essay, I present the major features of neo-liberalism, as a program and as a view of development, and argue that it embodied a distinctly optimistic and rationalist theory of modernity.1 After sketching the events that led to the decline of neo-liberalism [End Page 1] in Part II, I proceed in Part III to describe a "New Consensus" among certain forward-looking economists and policy makers, which is less tendentious in its programmatic recommendations and much more open to the role of politics and public institutions in development. In Part IV, I argue that the New Consensus needs to be augmented by a view of the economic, social, and political discontents of modernization, and propose for that purpose the tradition of the passions, a line of social thought exemplified by Adam Smith, Alexis de Tocqueville, and Edmund Burke. This tradition portrays modernity as unstable, particularly in periods of transition, with great and interwoven potential for both peaceful liberty [End Page 2] and new forms of violence. In Part V, I survey the major, superficially contradictory features of globalization—the rise of a potentially liberal middle class and of pervasive political extremism—through this lens, arguing that they represent the competing tendencies of modernity, which the theory of the passions helps to illuminate. I conclude in Part VI with some strictures for policy that arise from this account.
I. What Was Neo-Liberalism?
A. The Neo-Liberal Program
In its most straightforward form, neo-liberalism, or "the Washington Consensus," was a list of policy measures held to produce economic stability and growth. These policies became standard recommendations for developing countries in the 1990s, and were often mandated as conditions of loans and grants from the International Monetary Fund (IMF) and the World Bank.2 John Williamson, the political economist who coined the term, identified the elements of the Washington Consensus as: maintaining fiscal discipline, with a rule of thumb that budget deficits should not rise above 2 percent of gross domestic product (GDP); cutting marginal tax rates while broadening the population of taxpayers; progressively liberalizing finance until interest rates are set by market forces; keeping exchange rates low to favor export industries; liberalizing trade by lowering tariffs on imports and exports; abolishing barriers to foreign direct investment; privatizing state-owned enterprises; reducing regulatory restraints on business; and establishing a clear regime of property rights.3 These prescriptions were widely echoed, perhaps most famously by New York Times columnist and globalism pundit Thomas Friedman, who listed them as the components of "the Golden Straitjacket," a formula for wealth that came at the price of surrendering free choice in setting national economic policies.4 Friedman's image captured [End Page 3] the mood of the time by summing up two convictions about the policies of the Washington Consensus: they worked, and there was no alternative.5
B. The Presuppositions of Neo-Liberalism
Beneath the mechanical program of neo-liberalism lay a set of presuppositions about political and social life: not ideas about the metaphysics of human nature, perfectability, or original sin, but pragmatic views about what one could and could not hope to accomplish with a given set of means. Perhaps foremost among these was the belief that political life could be subordinated to economic logic, replacing irrational and sectarian motives with rational and universal considerations. The theorists of the Washington Consensus recognized politics as their enemy, the vehicle for such anti-reformist sentiments as fear of change and attachment to existing comfort and privilege. Williamson even proposed inducing economic...