HOWARD M. WACHTEL World Trade Order and the Beginning of the Decline of the Washington Consensus I t is fair to say the Washington Consensus evinces some signals of decay, a very early state of frag­mentation, a fraying of its force at the edges with­out any significant challenge to its core principles, at least among opinion leaders and policy makers in the United States. Both major political parties support the consensus wholeheartedly. With rare exceptions, such as the former chief economist of the World Bank, Joseph Stiglitz, all those with access to the media and opinion formation look upon dissenters as strayers from the fold of free trade, closet protectionists at best, and at worst proponents of a return to some dreaded world that is characterized as revanchist, reactionary, and that most damning epithet of all: populist. Never­theless, we can mark the century’s turning as the beginning of the decline of the Washington Consensus. What Is the Washington Consensus? How does the Washington Consensus differ from a more general deference to markets in an econ­omy that predates this 1990 s phrase? It differs in three ways. First, it appears at the end of the Cold War and carries with it a sense of triumphalism that adds a dimension of hubris – a celebratory lap around the track after a victory in the marathon that lends an air of ideological certainty to what had previously been one of assurance but temper­ed by restraint. Coupled with the apogee of globalization that had started some two decades before, the Washington Consensus secondly extended the affirmation of markets beyond the economy to a wider range of society’s activities, heretofore sub­ject to economic as well as other forces, and to all societies, those in transition from central planning and to those in transition from etatist modes of economic organization. Markets became not just one of several instruments to achieve economic and social objectives but the only instrument. They became transcendent, over-riding boundaries established by the political process, answerable neither to a public through the political process nor to civil society. Markets set the rules and enforced them, as if a football match was played by the rules established by the players and the referees answered to the players not to an independent authority. It is this transcendence of markets, its application beyond what had previously been defined as the limits of its jurisdiction to non­economic aspects of society, and the absence of a »neutral« refereeing process that separates the 1990 s version of markets from its predecessors. Thirdly, the place where this appeared most aggressively, and in a form that can be described as bordering on revolutionary, was in the inter­national economy of trade, investment, and fin­ance. Here markets began to tear down what had been defined borders, regulated by states in a blend of market and political forces. The free trade argument directly and concretely challenged the sovereignty of countries, their authority to regu­late borders, evoking a confrontation between nation states and markets, where the market posi­tion was represented by the Washington Consen­sus. It is not surprising, therefore, that the mani­fest clash between the Washington Consensus and its doubters has occurred in the World Trade Organization( WTO ), precisely in this arena where a new globalization has organized the world economy around markets and by extension imposed that organization inside countries. The newly framed argument of»free trade« – which differed from the way this term had been used since the first quarter of the nineteenth cen­tury – was used to pry loose from a blended regu­lation of markets and governments not only the movement of goods and services, but capital movements, intangible intellectual property such IPG 3/2000 Howard M. Wachtel, World Trade Order and the Beginning of the Decline of the Washington Consensus 247