A new framework for a fractured world

When The London Consensus: Economic Principles for the 21st Century was published in October 2025, it set out to do something both ambitious and restrained: to rethink the foundations of economic policy for an era defined by inequality, repeated shocks, climate risk, technological disruption and political fragmentation, without pretending there could be a single, universal formula for success.

Edited by Tim Besley, Irene Bucelli and Andrés Velasco, and published by LSE Press, the volume brings together more than 50 leading economists, political scientists and policy practitioners. Their collective aim is not to replace one orthodoxy with another, but to assemble the best available evidence and ideas into a coherent set of guiding principles for policymakers operating under real political and institutional constraints.

That approach has resonated. Since publication, The London Consensus has attracted significant attention across academic, policy and media circles. It has been launched and debated in cities including Delhi, Washington, New York, London, Brussels, Rome, Montevideo and Buenos Aires, and discussed within institutions such as the World Bank, the Inter-American Development Bank, the Group of 30 and Italy’s Ministry of Industry. Media coverage in outlets including the Financial Times, The Guardian, The New Yorker and Project Syndicate has positioned the book as a serious and timely alternative to austerity-driven economic thinking.

At its core, the volume defines itself in contrast to the so-called Washington Consensus of the late twentieth century. Where that earlier framework treated growth as the primary objective, assuming that politics, distribution and institutions could be addressed later, the London Consensus argues that wellbeing, resilience and state capacity must be central from the outset. It elevates human welfare beyond GDP, recognises the political economy of reform, and emphasises the need for policies that are socially sustainable as well as economically sound.

London Business School is proud to see Professor Hélène Rey contribute to this collective effort. Her chapter, on monetary and financial policies, addresses one of the most pressing challenges facing modern economies: the limits of monetary independence in a highly integrated global financial system.

Professor Rey’s analysis explains why the long-held assumption that free capital flows naturally support stable and effective policy no longer holds. She shows how global finance now moves in powerful, synchronised waves, the global financial cycle, driven largely by shifts in risk appetite and by US Federal Reserve policy. These forces shape credit conditions and asset prices across countries, often overwhelming domestic monetary decisions, even in economies with floating exchange rates and credible inflation-targeting regimes.

The chapter’s conclusions are pragmatic. Rather than rejecting open capital markets, it argues for governing them more carefully, through macroprudential regulation, stronger financial frameworks and, where appropriate, targeted capital flow management. In doing so, Professor Rey’s contribution fits squarely within the broader spirit of the London Consensus: evidence-based, politically aware, and focused on building resilient economies rather than pursuing growth at any cost.

The breadth and quality of the volume have drawn strong praise from across the profession. Commentators including Janet Yellen, Kenneth Rogoff, Carmen Reinhart, Paul Collier and James A. Robinson have described the book as timely, pragmatic and essential reading for policymakers navigating an unusually uncertain global landscape.

As further events and engagements are planned across Europe, Africa, Asia, the Middle East and Latin America, The London Consensus is fast becoming a reference point for contemporary policy debate. For LBS, Professor Rey’s contribution reflects the School’s wider commitment to rigorous, globally engaged scholarship, and to shaping economic thinking that speaks directly to the challenges of the 21st century.

To learn more about The London Consensus: Economic Principles for the 21st Century , click here