For three decades, a set of ten economic commandments shaped how nations from India to Latin America organized their markets, their debts, and their governments. Now, fifty-five economists gathered at the London School of Economics have proposed something quieter and more humble in its place — five principles that acknowledge what the old consensus could not: that wellbeing is not the same as income, that place matters, that states must be capable before they can be bold, and that no policy survives without the consent of the governed. The London Consensus arrives not as a new orthodoxy, but a
'London Consensus' Offers Fresh Economic Framework Beyond Washington's Neoliberal Model
Principles that can be applied differently, depending on context.
Mark
So fifty-five economists from around the world sat down and decided the Washington Consensus was broken. What made them think they could do better?
Mimi
They weren't trying to replace one universal truth with another. They were saying: look, the world's problems have changed. In 1990, you had closed economies and runaway debt. Now you have stalled productivity, broken labor markets, and households with no protection against shocks. The old framework didn't address those things.
Luke
But here's what I want to know—who decided these fifty-five people were representative? They all have LSE connections. That's a pretty narrow filter.
Mimi
Fair point. But Velasco is explicit that they didn't try to build a monolithic consensus. They invited people from different schools of thought, different regions. Twenty of the fifty-five are from developing countries.
Mark
And the five principles—are they actually different from what came before, or just repackaged?
Mimi
They're genuinely different in structure. The Washington Consensus was prescriptive—ten commandments. This one offers five principles that can be applied differently depending on context. One principle says state capacity is essential. But that doesn't mean every state should do industrial policy. It means: if you're going to try industrial policy, you need a capable state.
Luke
That's smart, but it's also vague. How does a policymaker actually use "wellbeing is the key" when they're deciding whether to raise interest rates?
Mimi
You're right that it's not a formula. It's more like a framework for thinking. It says: don't just look at GDP. Consider what the policy does to community health, social ties, whether people have to uproot their lives.
Mark
So it's less about telling countries what to do and more about how to think about what to do?
Mimi
Exactly. And it acknowledges something the Washington Consensus didn't: that politics matters. A policy that's economically sound but politically illegitimate will fail.
Luke
But that opens the door to populism, doesn't it? If you're always thinking about political feasibility, don't you end up compromising on sound economics?
Mimi
Velasco says it's a delicate dance. You can't ignore political reality, but you also can't let populism drive policy. The trick is understanding why a policy might be unpopular and addressing those concerns directly, rather than just imposing it.
Mark
And the fiscal prudence part—is that still a core belief, or has that changed?
Mimi
It's still there. The principle about government as insurer of last resort explicitly says: only fiscally prudent governments can actually afford to protect citizens from shocks. So you still need discipline in good times to have capacity in bad times.
Luke
One more thing: nearly half the authors are from developing countries. But London is still a Western city, LSE is still a Western institution. Doesn't that matter?
Mimi
Velasco addresses it directly. He says it shouldn't be a concern because they're not speaking for any organization or country. They're offering scholarship. Whether people use it is up to them.
Mark
But does offering scholarship from London carry different weight than offering it from Delhi or Lagos?
Luke
That's the question nobody can fully answer. The framework itself might be sound, but the messenger still matters in how it gets received and implemented.
The Pulse
- The Washington Consensus, born in 1990, was built for a world of closed markets and runaway debt — but the crises of the twenty-first century, from financial collapse to pandemic to geopolitical rupture, have exposed its silence on the things that now matter most.
- Productivity has stalled, labor markets have fractured along lines of gender and youth, and households face catastrophic risks that markets refuse to absorb — the old ten commandments offered no remedy.
- Fifty-five economists, nearly half from the Global South, convened at LSE not as ideological allies but as scholars willing to ask what their fields had actually learned since Williamson wrote his famous list.
- Their five principles — centering wellbeing, place-based growth, government as insurer, political legitimacy, and state capacity — deliberately resist becoming slogans, functioning as guides rather than mandates.
- The framework is published openly and claims no institutional authority, distinguishing itself from its predecessor not by geography or power, but by its willingness to admit that one size has never fit all.
For three decades, a set of ten economic commandments shaped how nations from India to Latin America organized their markets, their debts, and their governments. Now, fifty-five economists gathered at the London School of Economics have proposed something quieter and more humble in its place — five principles that acknowledge what the old consensus could not: that wellbeing is not the same as income, that place matters, that states must be capable before they can be bold, and that no policy survives without the consent of the governed. The London Consensus arrives not as a new orthodoxy, but as an invitation to think more honestly about what economies are actually for.
Thirty-five years ago, John Williamson condensed global economic thinking into ten principles. The Washington Consensus became the template — carried by the IMF and World Bank across continents, adopted by India, restructuring Latin America. For decades, it defined how nations thought about growth, trade, and the role of the state.
But the world it was designed for no longer exists. The 2008 financial crisis revealed deep structural cracks. Productivity stalled despite technological leaps. Labor markets left millions — especially women and young people — without stable footing. Households faced risks that markets refused to insure. The old framework had little to say about any of it.
Fifty-five economists, twenty of them from developing nations, gathered at the London School of Economics. They shared no ideological program — only a connection to LSE and a willingness to examine what their fields had learned since the Washington Consensus took hold. The result is five principles they call the London Consensus: that wellbeing matters as much as income; that where growth happens is as important as growth itself; that governments must act as insurers of last resort — but only if they have been fiscally prudent enough to afford it; that policies without political legitimacy will fail regardless of their theoretical elegance; and that a capable state, with real revenue-raising and delivery power, is the precondition for any of the rest.
Andres Velasco, former finance minister of Chile and now dean of LSE's School of Public Policy, puts it plainly: trade liberalization and fiscal discipline still matter, but 2025 presents different puzzles than 1990 did. The London Consensus does not claim to solve them universally. On industrial policy, for instance, contributors agree such strategies only succeed where states are genuinely capable — making the principle a lens for thinking, not a blueprint.
Concerns that this is simply another Western framework imposed on the Global South are difficult to sustain when nearly half its authors come from developing countries, speak for no institution, and have made the work freely available to anyone. What separates the London Consensus from its predecessor is not its city of origin but its disposition — less a set of commandments, more an honest reckoning with what economics, in this century, actually requires.
Thirty-five years ago, economist John Williamson distilled global economic thinking into ten principles. The Washington Consensus, as it came to be known, became the template. The IMF and World Bank carried it across continents. India adopted it. Latin America restructured around it. For decades, it shaped how nations thought about growth, trade, and the role of government.
But the world changed. The 2008 financial crisis exposed cracks. Productivity stalled despite technological leaps. Labor markets left millions—especially women and young people—without stable work. Households faced risks that markets refused to insure. By 2008, economist Joseph Stiglitz was already asking whether a post-Washington consensus existed. The answer, it turned out, required a room full of scholars and a different city.
Fifty-five economists from around the world, twenty of them from developing nations, gathered at the London School of Economics and Political Science. They were not chosen for ideological uniformity. Their only common thread was a connection to LSE—some taught there, others earned doctorates there. What they shared was a willingness to examine what their respective fields had learned since the Washington Consensus took hold. The result is a book of essays, edited by Tim Besley, Irene Bucelli, and Andres Velasco, that proposes five principles for economic thinking in the twenty-first century. They call it the London Consensus.
Unlike Williamson's ten commandments, these five principles resist easy slogans. The first holds that wellbeing matters as much as income—that a person cannot be asked to abandon family and community simply because jobs exist elsewhere. The second insists that where growth happens matters as much as growth itself, requiring governments to nurture innovation through competition policy, strategic rents, and public investment rather than simply stepping aside. The third casts government as an insurer of last resort, protecting citizens from financial collapse, pandemic, and geopolitical shock—but only if that government has been fiscally prudent enough to afford it. The fourth acknowledges that good economics requires good politics, that policies lacking political legitimacy will fail regardless of their theoretical merit. The fifth demands a capable state—one with the revenue-raising power, legal-administrative machinery, and delivery capacity to actually function.
Andres Velasco, former finance minister of Chile and now dean of LSE's School of Public Policy, frames the shift plainly: the Washington Consensus answered the problems of 1990, when some developing economies were sealed off from trade and others were drowning in debt and financial instability. Trade liberalization and fiscal discipline made sense then. They still do. But 2025 presents different puzzles. Productivity growth has stalled. Labor markets are broken. Households lack insurance against catastrophic risk. The Washington Consensus had little to say about any of this.
The London Consensus does not pretend to be monolithic, nor does it claim universal applicability. Take the principle about state capacity. Several contributors discuss industrial policy—the idea that governments should strategically nurture certain sectors. But they agree such policies only work if the state executing them is genuinely capable, technically adept, and agile. A weak state attempting industrial policy will likely fail. The principle becomes a guide for thinking, not a prescription.
Concerns that this is another Western framework imposed on the Global South miss the mark. Nearly half the authors come from developing countries. They speak for no institution, no government, no bloc. They are simply offering their research and scholarship to whoever wants to use it. The framework is freely available online. What distinguishes it from its predecessor is not its origin but its humility—it offers principles that different nations can apply differently, depending on their own contexts, capacities, and challenges. It is less a set of commandments and more an invitation to think more carefully about what economics actually requires.
Notable Quotes
The Washington Consensus provided answers to the problems of 1990. We try to provide fresh answers to the fresh problems of 2025.— Andres Velasco, editor and contributor to the London Consensus
A capable state does not fall on our heads from the heavens. It is built. It is like an investment decision.— Andres Velasco, on building state capacity
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