Post-Global Financial Crisis: The Measure of a "Beijing Consensus"

by M. Ulric Killion 
 
Commencing with the 1992 southern tour, Deng Xiaoping became  officially recognized  as “The chief architect of China’s economic reforms and China’s socialist modernization.” This is the famous billboard of Deng in Shenzhen, one of the most successful Special Economic Zones created under his leadership; Photo by M. Ulric Killion. 

China’s seemingly quick recovery from the US sub-prime mortgage crisis, or post-global financial crisis, is amazing to some, the envy of others. In the midst of the post-global financial crisis, though China admits that its economy still needs tweaking (China Daily, 2009), on Dec. 2, 2009 (Xinhua), Yao Jingyuan, chief economist with the National Bureau of Statistics, announced, “China will, without any doubt, be able to achieve the 8 percent growth in gross domestic product (GDP) this year.” This has also led to conjectures by many of the consequence of China's economic resilience, especially as other (both developing and developed) countries still appear caught in the fangs and claws of a global financial crisis.

Then there are those who would lend superlatives to describe China's recovery. Such as Martin Jacques, who titled his recent book When China Rules the World. Seth Faison (2009) wrote a book review of Jacques’s book. While noting that Jacques presented “a compelling and thought-provoking analysis of global trends that defies the common Western assumption”, he still opines that Jacques “stumbles badly when trying to describe what a new Chinese-led international order might look like.” Although Faison generally perceives that any “books about the future never get it right”, the critical issue of what China presents to a western world may need additional clarification, or simply, a new measure.

In the context of China, there are the issues of whether there is still a western consensus such as the American consensus or Washington consensus, and even whether there is Beijing consensus. There is also the forward-looking issue of whether there are new evolving forms of modern political economy. All of which will prospectively affect all models of development. Such as what Shaun Rein (2009) characterized as The New Post-Lehman Capitalist World.

As for the Washington consensus, it is a concept that many attribute to the British economist John Williamson, though there has always been disagreement about the existence of such a consensus. Then there those who earlier prescribed to the consensus that now declare the consensus as dead. For instance, at the 2009-G20 summit in London, British Prime Minister Gordon Brown did declare the consensus as dead. For Williamson the Washington consensus is still alive so long as there is a successful disassociation from the neo-liberal development model. During his interview or conversation, Williamson actually employed the words “a neoliberal tract” (Washington Post, 2009).

Generally, “an American consensus or Washington consensus that assumes adjusting firms, governments, employees, farmers, and citizens serve the greater good in general to the exigencies of competition within increasingly deregulated and global markets. The American consensus or Washington consensus refers to the policies of neo-liberal economists, which are, essentially, policies for promoting economic growth in Latin American countries and other countries, by promoting free market oriented economic reforms” (Killion, 2007).

Then there is the issue of a Beijing consensus, though also a subject of controversy. An emerging Beijing consensus, as Barry Sautman (Hong Kong University of Science and Technology) explained, “takes seriously some aspirations of developing states often ignored or opposed by the West,” such as “a more equitable international distribution of wealth and power” (Cha, 2009). The problem from a western perspective, however, is that what many describe as a Beijing consensus associates with China's creative international finance methods; i.e., loans to developing, least-developed (LDCs) and third world countries.

For instance, an early perception that China was employing international finance as a tool of international diplomacy so alarmed a western world that, in September 2006, a statement from the G-7 group and a US Treasury report warned China against overloading developing and least-developed African countries, and other developing countries, with “high-priced loans” they cannot avoid to pay. The US Treasury report described loans to African countries such as Ghana, Mozambique and Sudan as opportunistic loans (China Reform Monitor, 2006). It is perhaps a matter of a Beijing-form of creative international financing as opposed to a familiar Washington-form of capitalism.

A problem for both an American or Washington consensus and a China or Beijing consensus is that neither a Washington nor Beijing consensus seems subject to definitive substantiation, thereby still leaving us with controversial topics. Contrary to the beliefs of many, it is difficult to verify the existence of a Beijing consensus. There is not even an accord on the idea of a distinctive “China Model” of development. For instance, in 2009, the Study Times, which is a newspaper run by the Party School of the Central Committee of CPC, to the surprise of many published four articles that directly address the issue of a “China Model”. All the articles conclude for various reasons that the “China Model is not a good saying” (China Daily, 2009).

Additionally, assuming a Beijing consensus is opportunistic or even mercantilist (a term [mercantile] that the physiocrat or economiste Marquis de Mirabeau coined, (Cole, 1965)), it would hardly be distinguishable from a Washington consensus. This is because both forms of consensus, ultimately, intend to influence state or organizational behavior and models of development, though the methods, goals, policies and inherent ideological meanings are distinguishable.

The contrasting ideological meanings, admittedly, present a problem. This is because the issue of how socialist or capitalist “they” are becomes an issue of how socialist or capitalist “we” are, and vice versa. In a post-global financial crisis world, there are no pristine models of either socialism or capitalism and other adjectives intending to describe the polities and economies of the world. But then again, this was a truism that held true as early as the beginning of the twentieth century. For example, even what Williamson characterized as “a neoliberal tract” evidences an earlier evolutionary change in capitalism, notwithstanding other earlier evolutionary changes (i.e., the marginal revolution, Keyesianism, etc.).

Moreover, it is critical to understand that in the twentieth century the classical model of capitalism experiences an evolution (i.e., Darwinism). This is because capitalism evolves from its earlier origins, such as that of Weber’s rational bourgeois capitalism or Adam Smith’s modern capitalism. The evolution did not commence (e.g., 18th-century France, Pierre-Francois Tubeuf and proto-industrialization, (Lewis, 1994) and then end with the advent of the nineteenth century-form of capitalism, which many also hail as modern capitalism. In terms of a historiography of modern capitalism (the 20th-century form), capitalism actually continued to evolve into new and different forms.

As many now recognize, especially those economists who remain proponents of the varieties of capitalism theory, modern capitalism (commencing in the 20th-century) defies description of being a model in the singular sense. For instance, Michel Albert (1998) described the development of two competing models of capitalism or, borrowing from the title of his book, Capitalisme contre capitalisme or capitalism against capitalism. This is attributable to the ending of the Cold War, which produces an Anglo-Saxon model of capitalism (i.e., short-term profit, shareholders, etc.) and a Rhine model (i.e., long-term interest, capital-labor linkage, etc.). Additionally, there are scholars (e.g., Ronald Dore, William Lazonick, Mary O'Sullivan, Meng Jie and others) that have explored and continue to explore varieties of capitalism or the varieties of capitalism theory.

If ever there was moment in time ripe for the crystallization of new thoughts and new forms, it is in the wake of the present global financial crisis. Thus, it seems not only reasonable but also genuinely conceivable that new forms will inevitably emerge from the forces of nature and society. The unpristine ideals of socialism and capitalism and their variety will sway to the evolutionary forces of nature and society. This is because the present forms and shapes of socialism and capitalism hardly represent a beginning, middle and ending for the evolution of new thoughts and new forms. At the end of the day, or post-global financial crisis, these emerging forms will reshape all models of polities and economies of the world, and their attendant old and new concepts and approaches to development, including what hails as a Beijing consensus.

All of this demonstrates the growing irrelevance of issues such as a Washington or Beijing consensus, notwithstanding that neither a Washington nor a Beijing consensus is subject to substantiation as existing in reality. Moreover, as earlier mentioned, in the post-subprime crisis world, it is reasonable to suspect that capitalism, or modern capitalism, will experience further evolutionary changes. As Shaun Rein observed, “In fact, if anything, capitalism is at its strongest right now, with hungry and hardened executives emerging from the panic to guide their companies into a new world. We are in a very Darwinian period, with the smartest and the cash-rich, like Kraft, scooping up assets on the cheap, while the weak and overleveraged, like Linens 'n Things, collapse. This is capitalism at work.”

In the end, in a new world, which Rein described as The New Post-Lehman Capitalist World, old and new concepts and approaches to development, including what hails as a Washington consensus or Beijing consensus, by reason of the necessity of survival, will experience the influence of changes necessary in a post-global financial crisis world. In other words, assuming there is a Washington or Beijing consensus, in a post-global financial crisis world, they now present dual or competing consensus that grow increasingly irrelevant. A so-called Washington or Beijing consensus, admittedly, could garner relevance in the post-global financial crisis era. However, it is relevance necessarily contingent on change or adaptation to the new era, and prospectively, a new model or models of capitalism (e.g., in the post-Cold War era, the World Bank has been attempting to do so by a more pragmatic approach to development or a more pragmatic neo-liberalism, (Killion, 2007)).

Sources:

He Fan, Economy needs some tweaking, China Daily, Dec. 21, 2009.

China’s 8% economic growth goal achievable: economist, Xinhua, Dec. 7, 2009.

Martin Jacques, When China Rules the World (2009).

Seth Faison, Book review: ‘When China Rules the World’ by Martin Jacques, Washington Post, Dec. 20, 2009.

Shaun Rein, The New Post-Lehman Capitalist World, Forbes, Sept. 15, 2009.

John Williamson Conversation, Washington Post, April 12, 2009.

Ulric Killion, Modern Chinese Rules of Order (2007).

Ariana Eunjung Cha, The Beijing Consensus, Washington Post, April 23, 2009.

WSJ, China blasted for “opportunistic” African loans, China Reform Monitor No. 641, Oct. 2, 2006.

Senior officials and scholars challenge “China Model”, China Daily, Dec. 10, 2009.

Gwynne Lewis and Michael Ed. Lewis, The advent of modern capitalism in France, 1770-1840 (1994).

Charles Woolsey Cole, French mercantilism, 1683-1700 (1965).

Michel Albert, Capitalisme contre capitalisme, (1998).

Ronald Dore, William Lazonick and Mary O'Sullivan, Varieties of capitalism in the twentieth century, Vol. 15 Oxford Review of Economic Policy (1999).

Meng Jie, The hypothesis of economic man and Marxist economics, Social Science in China, Feb. 2008.

Copyright © Protected - All Rights Reserved M. Ulric Killion, 2009.