THE US is having second thoughts about the Washington Consensus it had evolved in the 1990s. At that time, the Cold War with the Soviet Union had just ended, and the world had moved into the phase of globalisation and interdependence. It seemed then that the Western governance model of liberal democracy and market economies had prevailed. The Washington Consensus proposed a policy prescription of ‘deregulation, privatisation, and free trade’ as a recipe for the economic modernisation of a globalised order.
Nearly three decades later, the US is questioning the assumptions underlying the Washington Consensus. Speaking at the Brookings Institution last month, US National Security Adviser Jake Sullivan explained how no assumption had delivered the desired results for the US, and had, instead, benefited China. Sullivan argued that the first assumption: ‘markets know best’ undermined the US industrial base as manufacturing and supply chains of strategic goods moved overseas to China along with jobs.