The “Cornish Consensus” is here


Three years ago, the British economist John Williamson The term “Washington Consensus” was coined to describe a series of free market and globalization ideas promoted by American leaders (and others) around the world.

However, there is now a new label: “Cornish Consensus”.

do not laugh.This is really a headline Advisory Memorandum Distributed before the G7 leaders meeting in Cornwall on Friday. It was written by a committee of scholars and policy makers from seven countries, and set an “ambitious agenda to better move forward from the pandemic.”

This Documentation Contains vague and ambitious ideas, such as “Achieve greater equity and solidarity in the global health response.” But it also made more detailed recommendations, such as the creation of “a Financial Stability Board-like’Data and Technology Committee'” to oversee the global Internet and a “CERN (European Organization for Nuclear Research) climate technology”.

Either way, the memorandum indicates that the recent G7 corporate tax agreement should herald a new phase of Western cooperation along a new ideological line.

What conclusions should investors draw? Many people may sneer. After all, G7 meetings are often purely ceremonial affairs, and the accompanying memo is only a ceremonial symbol. In any case, the “Cornish Consensus” proposals are unlikely to be adopted in the near future, no matter how wise they seem.

But for any company or investor, it would be foolish to ignore this ceremonial display. As anthropologists often point out, symbols are important, even if they seem “empty” or out of touch with reality, because they reflect and reinforce group assumptions about how the world should function. Therefore, this latest memo provides a thought-provoking snapshot of how such assumptions have changed.

This is important, especially because some investors and corporate leaders are struggling to cope with the changing spirit of the times, and they started their careers when the Washington Consensus prevailed. We humans have always been creatures of our cultural environment, but we treat our beliefs as if they are “natural” ways of thinking.

There are five key points to note here. First, today’s Western leaders are afraid of political pitchforks. Thirty years ago, politicians such as Margaret Thatcher and Ronald Reagan believed that the globalization of a free market would benefit everyone for granted. Today’s leaders worry that the distribution of fruits in the free market is so uneven that it has triggered strong opposition from the people (and even populism). “Tolerance” is one of the new buzzwords.

Secondly, G7 leaders now also acknowledge that globalization and free market competition will create loopholes and efficiency. Previously, they hoped that individual business incentives could create an optimized cross-border supply system. Now they know that global supply chains are threatened by collective action issues, because companies tend to focus their activities on nodes that are meaningful to everyone, but if they are interrupted, they will cause serious damage. Therefore, “flexibility” is another buzzword.

3. Troubles in the G7 debate Fear of China. The name of Beijing is not mentioned in the Cornwall Consensus Memorandum. However, people have repeatedly called for diversification of the global supply chain, not only advanced technology, but also medical equipment and minerals. Western governments have long admitted that it is a terrible strategic mistake to concentrate global chip production in the center of Taiwan. They don’t want to repeat the same mistakes.

Fourth, the relationship between enterprises and the government is undergoing a subtle and profound reset. In the Washington Consensus, companies are seen as independent participants in competition with each other, and no country participates. All conversations now are about the “partnership” between government and business.

Free enterprise is still praised, but the “partnership” is a framework for responding to today’s major social challenges, whether it’s finding a vaccine, climate change or competing with China’s technology.

Finally, economics is being redefined, in Biden’s White House And other places. No longer narrowly focus on refined quantitative models, but instead emphasize issues that were previously regarded as “externalities”-such as environmental, health, or social factors.

Cynics (or free market enthusiasts) might say that all this reflects only a temporary left shift in American politics or a short-term response to the pandemic.

Possibly, but I suspect it is not. After all, it is not only Covid-19 that is driving this ideological shift, but also the rise of China, the threat of climate change, and the disappearance of the West’s arrogance surrounding the idea of ​​a free market after the collapse of the Soviet Union. Supporters of this new system can be found throughout the political arena.After all, this is a conservative British government Organized The advisory group that produced the Cornwall Consensus Memorandum.

Therefore, whether you like or hate the spirit of the new age, you cannot ignore it. History shows that when intelligence assumptions change, they move in a slow, elliptical pendulum swing that can last a long time. Sometimes ritual artifacts are important. The Cornish Consensus Memorandum may be one of them.

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About the Author: Agnes Zang