John Williamson, who defined the “Washington consensus”, died on April 11th

IT WAS IN January 1947, with a song thrush, that John Williamson began the list he kept of the birds he had seen, which would go on to number some 4,000 species. His father, a rose-grower in Hereford, England, was an avid birder too, but Mr Williamson brought to the pastime the focused effort and aptitude for the collection of information that also characterised his work as a macroeconomist and expert on exchange rates. Birding was an understated hobby for an understated man. Yet Mr Williamson gained a measure of fame that eludes most economists when he outlined the “Washington consensus”: a description of policy orthodoxy in the late 1980s that became a flashpoint for intense global debate. Mr Williamson, who died on April 11th at the age of 83, sought merely to gather a list of macroeconomic best practices, the better to boost the welfare of people in developing economies. In that he succeeded, the furore that followed notwithstanding.

Though Mr Williamson had notions of becoming an engineer, a schoolteacher suggested that his maths was too poor, and that he should pursue economics instead. As an undergraduate at the London School of Economics he was inspired by William Phillips, who showed him a draft of a paper describing a relationship between unemployment and inflation—or the Phillips curve, as it would become known. At Princeton University as a graduate student he rubbed shoulders with giants of the profession like William Baumol and Oskar Morgenstern.

Mr Williamson’s academic work focused on exchange rates. He began his professional career as the post-war monetary system (in which many currencies were pegged to the dollar, which in turn was pegged to gold) began to creak under the pressure of an overvalued greenback. Mr Williamson believed that persistently over- or undervalued currencies were a source of economic damage. But he was also sceptical of radical reform proposals: to allow exchange rates to float freely, for example, or to save the system by turning the IMF into a global central bank. Instead, he advocated what he saw as a pragmatic idea: a crawling peg, in which countries with persistent current-account imbalances realigned their exchange rates in a slow, methodical way. He gained a reputation as an exchange-rate guru, with work taking him to Britain’s Treasury, the IMF, and universities in America, Britain and Brazil.

It was the Washington consensus, though, for which he was best known. Its original context is often forgotten. In the 1960s and 1970s, booming Latin American countries borrowed heavily to fund infrastructure projects and industrialisation. When interest rates soared in the early 1980s, those debts became unpayable and a wave of defaults threatened. American politicians, fearing for their country’s heavily exposed banks, introduced a series of plans to coax as much repayment as possible from the region. They grew frustrated, however, at what they took to be Latin American governments’ lack of interest in structural reform. Mr Williamson—who by then had moved to what is now the Peterson Institute for International Economics, a think-tank—knew better, and proposed convening a conference to correct such misapprehensions. He wrote a document to help frame the proceedings; the Washington consensus was described within.

The paper sought to capture what Washington’s intelligentsia agreed were broadly sensible policies. There were ten planks, which Mr Williamson later summarised as encompassing “macroeconomic discipline, a market economy, and openness to the world”. Wild-eyed radicalism it was not; the list was intended after all to reflect only the policies that almost everyone in Washington thought wise. Mr Williamson did not endorse knee-jerk austerity; he emphasised redirecting industrial subsidies towards education and health. Exchange rates should be competitive, but not necessarily freely floating. Openness meant acceptance of imports and direct investment, but not full capital mobility. Deregulation meant liberating sheltered sectors, not gutting environmental and labour standards. It was more a practical guide to avoiding disaster than a manifesto.

The consensus soon came to mean something else entirely, though. Critics associated it with the ideological revolutions of Ronald Reagan and Margaret Thatcher, which they interpreted as fierce hostility to any state intervention. When financial crises racked the developing world in the 1990s, its woes were blamed on the consensus, which was caricatured as a foolhardy attempt to impose orthodoxy on vulnerable places regardless of local conditions. The term became a catchall for neoliberalism, its excesses and failures, real and imagined. Economists found themselves asking whether and how the consensus had gone wrong; Mr Williamson himself acknowledged in 2002 that the term had become a “damaged brand name”. Yet he was also philosophical about his brainchild’s tumultuous public life, and continued, quietly, to explain what his creation was and was not meant to include.

Flight of the concord

There is not much consensus to be found today in Washington, and many old orthodoxies are being questioned. Still, countries that hewed more closely to Washington consensus policies in recent decades—like Chile or Colombia—have kept clear of big crises while others, like Argentina and Venezuela, have not. Discipline and openness alone may not unlock a growth miracle; yet if they help countries avoid costly setbacks that is no small thing.

Indeed, purposeful pragmatism is not a bad way to approach daunting challenges of all sorts. The developing world will have more than macroeconomics to worry about in years to come, as Mr Williamson, who long advocated for action against climate change, well understood. He was a committed environmentalist, a sentiment deepened by treks through woods and fields in search of his birds. That sensible sacrifices should be made to protect such things: on this, surely, reasonable people can agree. ■

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