Our political parties seem to have no clue about what to do to boom the economy. The country’s economy is bankrupt. A reality covered up by borrowing even more money.
Foreign investors too are withdrawing from portfolio investments, especially after the recent bond scam (doing to the Central Bank, what imported explosives failed to do).
Constantly twittering 24-7 TV and newsprint, full of advertising the good life of imports, are unable to express these simple truths about our lives.
And despite ginormous state bailouts to the rich over the last few years, the media’s pet economists continue to promote rhetoric of laissez-faire – a daily whine against government interference, lack of FDI, call for cutting welfare to the poor, decry import-substitution, etc.
Welfare at best is a penance the rich pay for not developing the economy. Indeed, asking the rich to help the poor (after impoverishing them) is also a sick joke.
Yet can the private sector advance the country?
If the government is not supposed to plan our priorities, what is the capacity of the private sector, which controls vast resources, to transform the economy from stagnation and decline? Does the private sector have the ability and resolve? Can it employ people in any equitable and advanced manner that unleashes their creativity?
Are we instead fated to keep selling our real wealth – our workers’ power – abroad, with thoroughly unprotected migrant workers as our main foreign exchange? For those who cannot leave, will another round of annihilation be unleashed after using some pretext to provoke a 4th uprising, to ‘discipline’ workers?
Will 10,000s more be massacred to retain this precarious status quo?
Private companies are minting money by unproductive means – condominia, hotels, private hospitals, recreational vehicles, international schools. Buying substandard and toxic goods and selling them at exorbitant prices is far more ‘productive’ (i.e., profitable) for them. Fraud is their main order for the day.
They have privatized and destroyed vital nascent industries (Steel, Chemicals, Textiles, Cement, Paper, etc.) They now plan to privatize ground water as well, and steal the Employee Pension fund (EPF), the largest capital fund owned by workers.Entrepreneurs increase the size of the cake; rentiers only grab larger slices of a diminishing cake
Those who claimed to be ‘entrepreneurs’, promising to advance modernization through industry, have either been bankrupted, or seduced by cheaper imports.
Making money off money or natural resources – this type of ‘rentier’ wealth (finance, insurance, real estate, advertising, militarization, import of industrial products and export of primary resources) brings no sustained improvement in our lives. Sri Lankan economists have long known, whether we like it or not, we cannot continue this way, without ‘austerity’ being soon imposed.
How have other countries transformed their economies?
Many ‘developed’ economies, such as England, Germany and the USA, especially when facing economic depression and war, have achieved transformation by placing their economies on a war footing. The so-called Asian miracles – Japan, Singapore, Taiwan, South Korea – were all transformed by war, albeit to aid imperialist aggression in Asia.
After Killinochchi fell to the LTTE, the Deputy Finance Minister G.L. Peries announced Sri Lanka’s economy would have to be put on a war footing. This terrified a parasitic ruling class to bring an abrupt end to a needlessly protracted (and profiteering) war.
Meanwhile there was a much talk once of a peace dividend after the war (much of it a ‘phony’ war for those far from the frontlines). But there has been no such transformation wrought in the economy. Hence, another war, north and south, seems on the cards.
Yet Anglo-European countries always use their incessant wars to achieve a ‘war dividend’, fundamentally transforming their own economies.
How exactly did England and Germany carry out their war economy?
Frightened by the giant strides of Germany’s war economy, England’s first steps were to control wages and prices, cutting wasteful expenditure and consumption. England, the home of laissez-faire, co-opted senior company executives to work for the government. Crown agents negotiated long-term bulk contracts, and controlled essential foodstuffs for people and raw materials for industries. Total expenditure on food declined; yet workers’ health improved during the war (i.e., those not killed by it!) Rationing continued for a further decade.
They directed investment towards their central objective, to increase capital and worker productivity. They sought to develop a modernizing machine industry and agriculture, with advanced technology, boosting the levels of science and art among the people.
What of our traditional ‘money-makers’?
If tea plantations covered the entire country, and if tea prices reached an all-time high, would this transform our economy? No. In fact, should this occur, we could close down all schools and universities. For we would not need an educated workforce:
These plantations are neither modern nor capitalist, with little advanced technology applied. The vast majority of workers employed use the same simple yet exhausting methods – 2 fingers plucking 2 leaves and a bud – their ancestors used 200 years before. No power is added to their elbow.
If the tourist industry covered the entire country, and tourists filled every orifice, nook and cranny, would this transform our economy? Again, we could close down all schools and universities – there’d be no need for an educated workforce.
The hotels too resemble plantations. The majority of hotel workers are bed-makers and tea-servers, chiming “Yes sir, No sir” on cue, plus a few accountants. Again, most of the technology employed would be of a low level, with fittings, etc., all imported from abroad.
We have a celebrated literacy and catastrophic innumeracy
Anyone can be an economist: A walk on the pavement finds not one good made by us. Merchants are making so much money off imports of finished goods and exports of raw materials, they see no need to develop the country.
The English left Sri Lanka’s cultivators as the most impoverished in Asia. Over half the rice grown by tillers is consumed by themselves. The rest is paid in kind as debts to merchants, moneylenders and landlords. There is little monetization to develop a home market. They pay this year with next-year’s harvests to buy children’s clothes, pencils and books (graphite & wood), erasers and shoes (rubber). All these items are imported.
Political parties are promising to build fancy car factories, but what we need to produce are 2-wheel tractors, 3-wheelers and public transport, what most people could afford, with related supply chains, to create a dynamic home market, as all developed countries have done.
We sell raw rubber and buy tyres. We sell copra and buy masks with copra filters. We refine others’ petroleum and discard the byproducts, which could make plastics and synthetic rubbers. Our garment industry is not an industry. We do not make the machines that make a pin, needle, thread or textile.
Our merchants and related environmentalists tell us they do not wish to ‘dirty their hands’ with such matters. But look around, the country is a dump for other countries’ toxic plastics, noxious gases and pesticides.
What do the rich think rich means?
As long as merchants are making money hand over fist importing goods, with no investment in industry, no local innovation is possible. Economists keep harping that the (1970-77) attempt at import substitution failed. Yet import substitution, only making non-essential goods, was just pursued as an exceptional policy, not as part of a program of measures needed to transform domineering merchant capital into industrial capital.
That ‘70-77 government inherited massive unemployment from the previous 1960-65 incumbents, with an empty treasury, embodied in the new Finance Minister’s plaint to the Prime Minister, “Madam, the kitty is empty!” They then had to face the 1971 Insurgency, 1974 oil price hike and attendant food price increases.
The leading merchant families also subverted, via smuggling and deception, etc., even minimal protectionist policies. External interests had the IMF, World Bank, ADB, and commercial banks use the debt crisis to impose preconditions for multinational capital to enter. The 1977-94 government then famously declared, “Let the robber barons come.” And now those robber barons are trying to buy their way back!
Asia’s real miracles
Our economists seem totally unaware of what is happening in our own neighborhood. South India is becoming an industrial hub, and unless we industrialize we are being drawn into it only as a captive market. Bangladesh, Thailand, Vietnam are all industrializing their economies.
In China, village agricultural collectives were the basis of its ‘economic miracle’, transformed into industrial township enterprises, producing all the small and large components of an advanced economy. Through county technical schools, their students obtain a ‘producer education’, not the consumer education, we appear so proud of.
In Japan, tea workers drive to work and use mechanized shears, while their old cars are sold here as new to estate managers. While much of Sri Lanka’s agricultural labor is trapped due to the sporadic use of workers for rice cultivation, Japan’s industry developed by absorbing workers during downtimes in the agricultural cycles! In Germany, synthetic-rubber workers have high living standards, while rubber workers here are forced to work latex while sitting on the ground!
The issues of industry are opposed by well-funded lobbies citing economy of scale, pollution, monotonization, loss of jobs, etc.
As science advances, more absurd notions are replaced by less absurd notions.
When the white man ruled the country, he could not just bring his own private secretaries from England! There should be pools of trained cadre from which all public servants are chosen.
An immediate challenge for this election would be to strip ministers of the power to distribute money and jobs at will. This should be assigned to an accountable civil service in a system that prevents use of positions for private gain.
Another challenge is to retrieve our literacy and learn positive lessons from other Asian countries – learn about industrial revolution, first knowing what is meant by modern industry – which is not handicraft or manufacture – and next, what modern revolution truly means in today’s already too divided and complex world.
Blessed are the children for they shall inherit the national debt Everyone gets, like it or not, an equal share in the national debt, even if they did not incur it. There is no such equal access to national wealth.People claim that we do all we do and can for the children and their future. Yet we are heaping debt bondage on the next generations (the World Bank claims every child being born is already in debt to their banks for US$4,000!)
We don’t know what we have to do, and if we do, we don’t know how to go about doing it. We have no program. Yet we have to dismantle the vested interests. There are also large numbers of people who have no vested interests but no means outside of precarious participation in the schemes of vested interests. They too will lose their livelihood, so any true development must also incorporate them into new industries.
The domination of Sri Lanka’s economy by private merchants and moneylenders, by multinational corporations and their interlinked large international gangs involved in toxic chemicals, weapons and labor supply (human trafficking), cannot be overcome by even the best-written constitution! Likewise, we must reject imperialist ‘public relations’ companies that too easily airbrush or blemish the images of leaders and dominate our public and private life, including so-called democratic elections.
Our major task is the establishment of a pro-people industrialized society. The need of the hour remains: to forge a new industrializing class, whose values differ completely from the merchant bourgeoisie. A new class that does not hoard money wealth, like the landlord, merchant and usurer, but seeks to capitalize wealth within progressive capital-labor relations.
To do that we need to know the first steps required and the barriers to those steps, as well as the consequences of each steps, and how to then proceed. We may make mistakes, but we shall only learn by doing. These are bitter truths for a future yet sweeter.