The Washington Consensus and Transition In Russia: History of a Failure

This document examines the impact on the Russian economy between 1992 and 1998 of the macro‐economic prescriptions arising from the “Washington Consensus”. After recalling the origin of those prescriptions and showing that they never truly constituted a consensus, owing to the criticisms both internal and external to which they gave rise, the author shows that their application in Russia has resulted in new and scathing criticisms. The obsession with fighting inflation and the neglect of the micro‐economic and institutional bases of any realistic macro‐economy has led to an economic disaster. The demonetarisation of the Russian economy, and the extent and duration of the depression, are for the most part the result of the implementation of economic policies directly inspired and influenced by the “Washington Consensus”. The existence of internal theoretical inconsistencieswithin the standard macro‐economic philosophy also explains the inability to correct the prescriptions once their negative effects have been discovered.