The first thing about which everyone agrees is engagement in the global economy. What I named in my original espousal of the Washington consensus as agreed policies for engaging in the global economy did not include capital account liberalization, but covered trade liberalization, the removal of barriers to the entry of FDI, and the maintenance of a competitive exchange rate. As conceded above, to believe the latter was uncontroversial was wrong (though Dani Rodrik himself might agree with it), but does he really think there would nowadays be a lot of controversy about the desirability of liberalizing rather than restricting trade? Does he think this would have been agreed by the architects of India’s import substitution policies, or by the average cepalista economist of the 1960s, even if one adds all sorts of qualifications about the speed of liberalization? Has there, in other words, not been a revolution in economic thought in this area, of which he is part?

Dani Rodrik says that all successful economies maintain macroeconomic stability. Reflecting the position in Latin America in 1989, I wrote in the Washington consensus of the need to maintain fiscal discipline, and to emphasize that this did not necessarily imply cutting expenditure I mentioned also the desirability of tax reform and of spending more wisely. If I had been writing the timeless piece that seems to have dominated the mind of critics, I would have been bound to write about monetary policy too, but the problems of Latin America in 1989 did not seem to me to stem primarily from inadequate monetary policies. But did the influential apologists for inflation known as the Latin American structuralist school regard it as distastefully as Rodrik evidently does? I know little of Turkish economic history, but presumably Turkey’s frequent bursts of sharp inflation occurred because some of his kin disagreed also with Rodrik’s judgment of the importance of macroeconomic stability. His view is the modern one, not one that has always dominated development economics.