Life is never a straightforward process and even in the period of euphoria as neoliberal policies dominated economic thinking in the past decades one still has to be prepared for unusually bad weather. The neoliberal economic policies that manifested in the famous Washington Consensus were considered the blue print for success in developing countries. This blue print was fully endorsed by the seat of orthodoxies the International Monetary Fund (IMF) and the World Bank in the world of economic and development policies. Today after more than three decades of policy implementation the nation states have slipped in a condition of financial and economic crisis. These policies are now being subjected to the most rigorous debate and critical analysis as the righteous policy maker now feels the burning need to do something even more radical. In this regard it is rather appropriate to revisit the call for a New Global Human Order (NGHO) made by late President Dr. Cheddi Jagan in the period when the neoliberal policies reigned supreme in the mid 90’s.

The early success of neoliberal policies by the Anglo American axis allowed for the Multilateral Financial Institutions to feel justified in imposing on developing countries what they considered the absolute truth- stabilise, privatise and liberalise in order to develop. This mantra became the centrepiece for a wave of economic reform that gripped Eastern Europe, Sub-Sahara Africa and Latin America and the Caribbean. In the financial sector, the liberalisation process went much faster and even further than Williamson the intellectual author of the Washington Consensus has initially conceived. Many developing countries that went along this route found themselves in the middle of a traffic jam in a one way street.

One conclusion has become universally accepted by both skeptics and proponents of the Washington Consensus after decades of policy implementation and advice from the epicentre is that things did not work the way they had expected.

Dani Rodrik (2006) summarises the results of these reforms after consulting the IMF and World Bank publications and data as follows –

First – there were deep and prolonged collapses in the output of countries making transactions from communism to market economies. Decades into transition and many countries had not even caught up to their 1990 levels of output.

Second – Sub-Sahara Africa failed to take off despite significant policy reforms and continued generous foreign aid. The few successes – Uganda, Tanzania continued to remain fragile and vulnerable.

Third – Latin America recovery proved short lived – 1990 as a whole saw less per capita GDP growth than in the 1950-1980 periods despite the dismantling of state led, populist and protectionist policies of the region. Argentina the poster boy of Latin America economic revolution came crashing down prematurely in 2002.

The list of failures of the countries that jump started and overtly impose market fundamentalism on its people is quite remarkable. On the contrary, the success story that is being alluded to by International Agencies has been countries that did follow the Washington Consensus policy landscape. While it is true that China, India, Chile, Costa Rica, Botswana, Vietnam etc have all increased reliance on market forces, however, their policies remained highly unconventional with high levels of protectionism, selective privatisation, extensive industrial policies and fiscal interventionist policies that supported employment and output.

Another good example of independent home grown economic policies has been the case of Malaysia during the well known Asian Crisis (1997). Then President Mohamed Mahathir of Malaysia sent both the IMF and World Bank packing and rejected out of hand their policy advise and money. Interestingly Malaysia imposed capital control defended its exchange rate and conducted expansionary monetary and fiscal policies during the crisis. The end result was that they recovered much faster than those countries that took IMF/World Bank prescription and did not suffer economic, social and political disintegration.

Currently as the world economy is besieged with the Global Financial Crisis , the salient feature of this crisis being unlike past crisis this one had its origin in the developed world especially the US consider the bastion of financial sophistication. No blame can now be laid at the feet of the administration of developing countries. Furthermore, the contagion effect of this crisis is now badly affecting developing countries. The IMF/World Bank describe the crises as having first round and second round effects after initially refusing to accept that a global crisis was in the making. The first round will badly affect emerging market economies that are integrated in the world capital markets. The second round will affect the Less Developing Countries that will suffer from lower export earnings, decline in FDI flows and remittances. The fall out from this crisis is expected to cost developing countries some US $700 billion in 2009 according to the World Bank. Countries that are able to put safe guard mechanism in place to deal with the fall out from this crisis are those with the fiscal space that did not follow conventional wisdom.

Dr. Jagan passionately argued for NGHO in the mid nineties as a safeguard mechanism to any unpredictable crisis and to put developmental issue at the centre of a country’s economic strategy. The NGHO envisages; the creation of a new partnership between developed and developing countries based on full cooperation for their mutual benefits, a development strategy centred on people, increasing production and productivity with equity through the application of science and technology, the creation of a global development fund – financed by cuts in military expenditure, tax on pollution and speculative capital. The issue of a tax on speculative capital popularly known as the Tobin’s tax would have provided much security to house hold savers who invested their life long saving for a good retirement. However, speculation and the raid on the pension funds have reduced pensioners to a status of destitution as highlighted by the investigation of 401K savings plan on 60 Minutes some weeks ago. A full analysis of the Tobin tax on speculative capital is beyond the scope of this article.

The NGHO concept developed by Dr. Jagan was to address market failures. Economic theory is now backed by empirical evidence that clearly show how market will always be subject to crisis and distortion. Market will always be prone to crises because of externalities, asymmetric information (Stieglitz and Weiss) and economies of scale (Paul Krugman). Further the policy framework developed by the IMF/World Bank with the underlying philosophy of one size fits all clearly was disastrous. The underlying economic order on which it is based tended to be crises prone, encourage speculation, and highly volatile.

Finally the call by Dr. Jagan for the NGHO is a work that has to be on going and only a means to the end and being adopted in different forms and concept else where. It cannot be considered a blueprint for all circumstances. But the general idea can be developed to fit the country’s specific circumstances. Moreover it will give people a sense of purpose and free them from the begging bowl syndrome and reorient them towards the concept of self reliance. It was very much the performance and vision of Dr. Jagan during his tenure in office that Guyana was considered the bread basket in the Caribbean and the concept of the NGHO is very much a forward looking idea especially given the current global economic environment.