UC Santa Barbara

This dissertation explores the business and policy origins of the “Washington Consensus”—the phrase that since the 1990s has served as a sort of shorthand for the much maligned free-market economic reforms that have been instituted across the Global South at the behest of the International Monetary Fund, World Bank, US Treasury department, and other Washington-based economic policy bodies. The Washington Consensus, as a set of ten policy prescriptions including privatization, deregulation, and trade liberalization, was first codified by economist John Williamson in 1989 as a way of navigating out of the Latin American debt crisis of the previous decade. A central focus of the dissertation is the commercial banks in the middle of that debt crisis, and the explosion of bank lending to developing countries in Latin America and the wider Global South in the late 1960s and 1970s that would contribute to the severity of the 1980s debt crisis. While there has been considerable debate around the scope and impact of the Washington Consensus, there is even less agreement about its origins. Some accounts emphasize the role of IMF/World Bank connected development intellectuals, while others, argue that these policies were homegrown, emerging first from Latin American economic and policy circles. From Crisis to Consensus, in contrast, explores the largely overlooked role of the US commercial banking sector, which I argue played a critical role in setting the stage for the crisis and the consolidation of what is now recognized as a foundational policy response to the problems of contemporary capitalism .In examining the origins of the Washington Consensus, the dissertation seeks to understand its deeper roots stretching back to the emergence of the Eurodollar market in the late 1950s and 1960s. The dissertation recognizes that the Washington Consensus was not built by a single group of actors acting in concert from on high, as previous scholarship on the consensus suggests, but from a highly contingent set of improvisations and policy decisions made in a context of escalating crises. From Crisis to Consensus’s intervention is to provide a fuller and more nuanced account of the process, players, agents, and lasting consequences of what is often treated as economically obvious. For the Washington Consensus to work, the New Deal-era regulatory restrictions on American finance had to be undone, and the power of the IMF had to be expanded to become the chief source of financing for developing countries. While scholars have illuminated the role of free market ideology and political conservatism in making the post-Reagan political economic order, the dissertation considers the role of the business elites who stood to benefit the most from the new order. It argues that the Washington Consensus was built in piecemeal fashion in response to the needs of banks. By demonstrating how the US banking sector helped create this new regime of inequality at home and abroad, From Crisis to Consensus seeks to enrich our historical understanding of free-market ideology.