We live in an era of unparalleled affluence. More people enjoy better lives than at any time in human history. High priests of economic orthodoxy credit the diffusion of market capitalism for this bounty. Poverty persists, but the conventional wisdom is that time and the right policies will spread the wealth. And the right policies, assert the experts, are macroeconomic stability, market liberalization, privatization plus the use of market solutions to provide public goods, and the reduction of barriers to trade, investment and portfolio flows.

That policy mix goes by the name of the "Washington consensus," since it is championed by the U.S. government (and several latecomers) and the international financial institutions headquartered in that city. It has guided public policy for most of the postwar era, with remarkable results. It created affluence throughout the industrialized world, quite a feat given the devastation that many of those nations faced at the end of World War II.

In the aftermath of the Asian financial crisis, there have been growing complaints about the viability of that policy framework. Most focus on the "one-size-fits-all" prescription that ignores the particular history and economic circumstances of a given country.