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. Last Updated: 07/27/2016

Whatever Polls Prove, Reform Can Continue

Russian voters can go to the polls without at least one psychological burden looming over them. The fate of their economic reforms will not hinge on whether or not they elect an authoritarian parliament.


For the past decade and more, a conventional wisdom has emerged that free market economic reforms can only be introduced and made to stick by tough and even repressive governments. From the Pinochet model in Chile to the slow shift of South Korea from export-led growth to democracy, the moral has been drawn that the economy comes first and the political freedoms follow later - if the country is lucky.


Now the most influential think-tank in the United States, and the one that played the leading role in defining the package of effective reforms that has brought success from Poland to Peru, from Australia to Indonesia, announces that liberal and social democratic governments can be just as effective and reformist as the authoritarians.


The Institute for International Economics in Washington DC is just 11 years old, but has a track record of formidable political influence, including drafting the blueprint of the Uruguay Round of the GATT world trade talks, and formulating the master plan for the Asia Pacific Economic Conference.


John Williamson, the former British Treasury official who has been the institute's senior research economist since its foundation, calls the institute's new economics "the Washington consensus".


This is basically a list of policy priorities that include a legal commitment to the rights of private property; fiscal discipline; a free market liberalization of trade and foreign investment; privatization; deregulation and tax reform to broaden the tax base and cut high marginal tax rates.


From Australia to Chile, Poland to Peru, Indonesia to Turkey - and not forgetting Mrs. Thatcher's Britain - the broad strategies of neo-liberal economic reform have been uncannily similar. Indeed, in the IIE's forthcoming book, "The Political Economy of Policy Reform", edited by John Williamson and based on an IIE conference of half the world's technocratic reformers, the political ingredients for reform might have been written with Boris Yeltsin and Yegor Gaidar in mind.


"Determined leadership by a politician with vision for the future and willingness to accept short-run unpopularity" was vital, Williamson found, as was "the existence of a competent and coherent economic team, particularly if the leader of the team is elected to a position of political responsibility".


"It is NOT true that reform can be achieved only by authoritarian regime. In fact, even newly established democracies (e. g. Spain and Poland) have succeeded", Williamson argues.


The first comprehensive survey of the way that different countries and systems around the globe were able to launch their economic reform programs, concludes that the political difficulties encountered by reformers in Russia, India and Brazil "continue to cast a cloud over the prospects for a more prosperous and peaceful world. This new study tries to help them overcome these hurdles".


One final cautionary note as Russia goes to the polls. John Williamson and his fellow authors like Leszek Balcerowicz, the Polish finance minister who ran his country's reform program, add one more precondition for success: the politicians must be able to build "a supportive political coalition that permits the reforms to last long enough to yield positive results and thus become self-sustaining".