Reza Hasmath

Australia is at the front line of debate over ‘new welfare’. Up until the turn of the century, Australia’s model of ‘wage earners’ welfare’ was commonly recognised as an Antipodean exception to Esping Andersen’s threefold typology of welfare regimes. Its characteristically residual approach to state welfare provision was explained not as evidence of a liberal regime but rather the result of an historical preference for a regulated ‘living wage’ as a substitute for welfare. However, in the 1990s the institutional basis of the model was largely removed by extensive labour market deregulation leaving Australia very much in need of a ‘new welfare’ architecture.

With its employment centred, wage based, productivist welfare tradition, it is not surprising that Australia has experienced a pronounced shift from ‘welfare’ to ‘social investment’ in keeping with the British and EU trend but also in line with the ‘inclusive growth’ thinking in development policy post the Washington consensus. Here, Sen’s capability framework has proved an important bridge in the reintegration of economic and social policy. While welcoming this rehabilitation of the productive value of social investment, the talk also observes the shadowy side of this policy renewal. This is found in the diminution of the ‘welfare’ roles of protection and compensation along internationally recognized lines in terms of the ‘great risk shift’. A rebalancing of the investment and protection functions is proposed as the basis of a durable ‘new welfare’ policy architecture for Australia.

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The current financial crisis is evidence of the difficulty that the world’s most advanced capitalist nations face with regard to returning to a more stable path of economic expansion. This debacle is yet another indication that there are currently very few solutions that can ensure continued technological advancement and the associated productivity gains. While there is a desperate search for quick fix solutions to the current problems such as trying to gain consensus on the Basel principles, these are far too minimal to address the fundamental discordances in the global economic system. Radical and innovative answers lies not in tinkering with the existing system, but in looking at the distinctive and systematically different manner in which new global players are engaging new principles to manage their domestic economy as well as the international stage.  

The crisis has led to a questioning of the current paradigm of economic development where the development experience of new players and the value of heterodox methods could be accorded new, as well as greater, value. The focus of this talk will be on the distinctive manner in which the national level development strategy in Central and South Asia has identified the particular arenas and mechanisms where the state is to take on the role of the regulator in the provision of goods and services. The talk will identify how these conceptualizations affect the form of partnership with regard to key features: the transfer of ownership from state-owned businesses; procurement arrangements to purchase private services; subsidies and franchises provided to the private sector; arrangements for use of knowledge and finance in the both public and private sector developed in each nation. The consequences of such classification will permit both a differentiation and comparative analysis of the economic development strategy in each nation to understand the key institutional features devised by each nation to upgrade and transform its economic production and human development.

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This talk will assess China’s development over the last thirty years and seek to understand whether its development experiences can be extrapolated as a “development model” for other developing nations. The talk will primarily examine the social aspects of China’s transformation – situated within the context of unprecedented growth – for example, the increasing role of civil society stakeholders. Corporatist and developmental frameworks have come to the fore at different points in time to explain China’s unprecedented economic growth. The corporatist framework suggests that the Chinese state remains in power through its coordinating efforts with social stakeholders, such as civil society stakeholders. By permitting some level autonomy, it does not erode the power of the state, rather, it is moving from state control to indirect state coordination. China’s economic success has also been likened to the East Asian developmental state model, where the central state is the director of industrialisation and modernisation efforts and subsequently leading to high rates of economic growth. However, with the developmental state model, there is little room to account for the influence of local forces, as it assumes that all stakeholders are beholden to the central state’s goals. Both models of development apply to different phases of China’s development. In essence, the talk will ask the question of whether we can establish a development model that is specific to China, with an eye on social and economic aspects of the nation’s transformation, and under what circumstances can such experiences become a model of development and replicated elsewhere.

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The Beijing Consensus represents an analytical dilemma. First, it lacks a codified set of principles and policy tools and as such, it can be a difficult model for policy makers to utilize in their deliberation. Relatedly, in the search for a concrete set of principles and policy tools, the literature has a tendency to simultaneously conflate the Beijing Consensus with the “Chinese model of development” – a red herring to say the least – with the relevant critiques following suit.   This talk suggests that the Beijing Consensus represents a philosophical movement towards an ultra-pragmatic view of development policy. Contrary to models of development which provide a subset of policy prescriptions at the policy makers’ disposal (e.g. Washington Consensus) or a fundamentalist adherence to a particular economic tradition (e.g. neo-liberalism), the philosophical intentionality of the Beijing Consensus is reflected in the infamous words of Deng Xiaoping “I do not care if it is a white cat or a black cat … It is a good cat so long as it catches mice”. In short, the Beijing Consensus inherently recognizes that each development scenario has a potential set of challenges that may require unique solutions factoring the social, economic and political environments. Ironically, this is aptly demonstrated using the recent development experiences of China, and select Asian nations.

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Pier Carlo Padoan, Chief Economist and Deputy Secretary-General, OECD.   

The recognition of widening income gaps within most OECD nations over the past decades has highlighted concerns that structural reforms may increase income inequality. Such concerns have gained further prominence in the context of the global crisis, particularly in nations where current reform action is being driven primarily by fiscal consolidation objectives. 

The distribution of income is not only shaped by long-term trends like changes in policies and institutions, technological change or globalization, but is also affected, sometimes durably, by macroeconomic shocks such as the recent financial crisis. Based on empirical analysis of 40 OECD and BRIICS nations over 30 years, we have explored the distributive effects of macroeconomic shocks on both income and employment, and the role of policies and institutions in shaping such policies. The analysis identifies who gains and loses, and sheds light on the articulation between risk-sharing and growth objectives. 

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Martin Ravallion, Chief Economist and Senior Vice President, World Bank.   

The developing world has made considerable progress against absolute poverty in aggregate terms, but with uneven progress across nations and regions. There are also rising concerns about inequality in many nations, and (related) concerns that the global growth processes have not been sufficiently inclusive.   There is a puzzling aspect in all of this: while the overall incidence of poverty is falling in the developing world, it is not falling any faster in its poorest nations. In short, we do not see poverty convergence. That is puzzling if we accept two widely-held “stylized facts” about economic development, namely that there is an “advantage of backwardness” – higher growth rates in nations starting out with a low mean – and that there is an “advantage of growth,” whereby a higher mean income tends to come with a lower incidence of absolute poverty. The advantage of backwardness should mean that nations starting out with a low mean income and hence, high incidence of poverty should see a higher subsequent growth rate and consequently, higher pace of poverty reduction. However, this is not evident in the data.   This talk will review the evidence on this issue and suggest a solution to the puzzle – a solution that throws new light on the importance of addressing inequality to making growth more pro-poor. Consistently with theoretical models of economic growth incorporating borrowing constraints, the talk will suggest that there is a direct adverse effect on the consumption growth process of high initial poverty incidence at a given initial mean consumption. A high incidence of poverty also entails a lower subsequent rate of progress against poverty at any given growth rate. Thus, for many poor nations, the growth advantage of starting out with a low mean income is lost due to a dynamic handicap associated with the high initial incidence of poverty. This dynamic “disadvantage of poverty” appears to sit side-by-side with other factors impeding poverty reduction, such as human underdevelopment and policy distortions. These new research findings point to the importance of both redistributive policies in poor nations and efforts to make markets work better for poor people.  

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Concluding remarks. 

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Commentary by Rachel Laforest (Queen's University). 

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Commentary by Nicholas Pope (Canada Fund in China).

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Commentary by Thomas B. Gold (University of California at Berkeley).

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