The Wall Street Consensus

Abstract

The Wall Street Consensus is an elaborate effort to reorganize development interventions around partnerships with global finance. The UN's Billions to Trillions agenda, the World Bank's Maximizing Finance for Development or the G20's Infrastructure as an Asset Class update the Washington Consensus for the age of the portfolio glut, to 'escort' global (North) institutional investors and the managers of their trillions into development asset classes. Making development investible requires a two-pronged strategy: enlist the state into risk-proofing development assets and accelerate the structural transformation of local financial systems towards market-based finance that better accommodates portfolio investors. Ten policy commandments forge the 'de-risking state'. They create a safety net for investors in development assets, protecting their profits from demand risks attached to commodified infrastructure assets; from political risks attached to (progressive) policies that would threaten cash flows, including nationalization, higher minimum wages and, critically, climate regulation; and from liquidity and currency risks. These risks are transferred to the balance sheet of the state. The new 'development as de-risking' paradigm narrows the scope for a green developmental state that could design a just transition to low-carbon economies.

State Capitalism and the New Global D/development Regime

“…However, we argue that notions of the “death of Development” (pace Carroll 2015 ) only imperfectly capture the extent of such redefinition. Similarly, it may be reductive to characterise such re‐articulation as the unequivocal narrowing of the scope for state intervention to the mere “de‐risking” of private financial capital (pace Gabor 2020 ). Our sympathetic critique to these arguments is that they potentially downplay the extent of the discursive and ideological work at play in the redefinition of the role of the state, and its complex relation to geographical capitalist restructuring and geopolitical reordering, as we show in this article.…”

“…It normalises and relies on novel financial instruments such as development impact and infrastructure bonds; debt, equity, and mezzanine financing; guarantees, swaps, and so on, opening up new circuits and places of risk and reward (Mawdsley 2018b ). As such, it has been interpreted as another step toward the global advent of an increasingly assertive “Wall Street Consensus” (Gabor 2020 ), which succeeds the Washington and post‐Washington Consensus, and pushes developing countries to become more attractive to private financial capital, at the expense of state‐led industrialisation and development strategies. In sum, the MFfD agenda and its promotion of state‐supported private capital may well signal the “very death of Development itself (the latter understood as a process/set of processes attached to modernist notions of material progress)” (Carroll 2015 :140).…”

Reparative accumulation? Financial risk and investment across socio-environmental crises

“…Contradictory ratings by ESG funds show that this is an emerging and contested process. Using a derivative logic, ESG creates opportunities to profit from risk spreads that emerge between socionatures that have been rated in different ways (Gabor, 2021). In the process, socionatures become increasingly shaped by what and whose risks are, and are not, commodified.…”

A People’s Green New Deal: Obstacles and Prospects

“…5 These proposals share several traits: one, statecorporate partnerships; two, rhetoric about corporate-state-community co-partnership; three, embrace of the "national security sector"; four, effusion about technological salvation; five, ripping open new frontiers of land-based accumulation in the South through financializing nature or turning such landscapes into carbon farms; six, the hollowing out of Third World sovereignty. Many also gesture at the Wall Street Consensus, which seeks to reorganize "development interventions around selling development finance to the market…escort[ing] capital" into bonds, remaking Third World governments as "de-risking states" by demanding that they and their treasuries take on the risks of investment, removing them from the currently more-or-less idle capital those plans mean to "crowd in" (Gabor, 2020).…”