One technique which one can hope to use to control capital movements without resorting to floating the exchange rate is to vary interest rates as in the original proposals for crawling pegs. An alternative is not to abandon capital controls while a country is still developing but to be prepared if necessary to discourage either inflows or outflows of capital (see the excellent quote by Pedro Pablo Kuczynski on p.52 of the Spence Commission report). But the Washington consensus has sometimes been interpreted as forbidding any government interferences in the free flow of capital, so Williamson was again a heretic. While I coined the phrase, it is commonly used in a sense other than that I had in mind.

On privatization, my paper said baldly that “state enterprises should be privatized”. One can interpret that as a dogmatic assertion that no state enterprise should be allowed to exist, and this doubtless seems to be a natural interpretation to those who regard the Washington consensus as stating a set of principles that apply always and everywhere. Or one can recognize that the paper I wrote was addressed to Latin America in 1989, and interpret it as asserting that every country in Latin America then had a range of enterprises under government management that would be better run in the private sector. Since there were many state enterprises in those days that were not utilities by any stretch of the imagination, this is consistent with recognition that in some utilities externalities or distributional concerns are important, and that the most efficient way of taking them into account may involve public ownership. If the Washington consensus is interpreted as adopting the first position and the second is Williamson’s, I am once again against the Washington consensus.