Q: You criticized "The Washington Consensus." From
reading your book, I see that you summarize that set of
doctrines as "1) Fiscal Austerity, 2) Privatization, and
3) Market Liberalization." What are, in your view, the
central weaknesses of the policies that flow from the
Consensus?
JES: It didn't work. I mean, the weaknesses are not
that these are necessarily bad in their own right, but
it's the balance. Fiscal prudence is a good thing. But
they pushed it beyond where it ought to have been. Market
Liberalization is a good thing, but not if it's done too
fast.
Q: Would you say, then, that there is a structural
flaw in the market system?
JES: There are many limitations. We all know that
there are lots of examples where markets fail, and you
need a role for government. So where the structural
problem is, it's their belief that there's not a role for
government to play. And that markets can solve every
problem. That's the structural failure: "Markets are
perfect, and can solve every problem."
Q: For this interview, I also read George Soros' book,
On Globalization, which I know you reviewed in the New
York Review of Books. In it he states, "It is market
fundamentalism, which holds that the social good is best
served by allowing people to pursue their self-interest
without any thought for the social good — the two
being identical — that is a perversion of human
nature" (p.179).
JES: Yes, George and I are very similar in our
views.
Q: Don't you think we need to go deeper and look at
the rules that govern the unequal bargaining power
between the rich and the poor? Isn't that what really has
to be attacked?
JES: Yes, that's what I'm saying in the book. The
underlying problem is the way the rules are made. If the
rules are bad, you need to ask the question, "how did
those rules get established?" And it's the processes by
which the rules get made that is the underlying source of
the problem. ...
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