22 January, 2021

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Economic Rightism Versus Economic Nativism: Alien Versus Predator 

By Dayan Jayatilleka 

Dr. Dayan Jayatilleka

The economic crisis of 2021-2022 is inevitable because the regime’s economic doctrine of a ‘self-sufficient national economy’ is the equivalent of the ‘Dhammika Paniya’, the syrup of the Shaman from Kegalle. 

It is inevitable also because of the intellectual poverty of the economic debate in the political sphere. 

The government’s doctrine of “self-sufficiency” is constantly invoked but has no internationally recognized intellectual authors or texts invoked as points of reference. The only references from the Government ranks are strictly local: former Prime Minister Sirimavo Bandaranaike and former Finance Minister, Dr NM Perera. That’s like invoking the Titanic as a model for sailing. 

The Sri Lankan economic policy debate among the political elite takes place in a time-warp, with the references dating back to the 1970s and 1980s. There is no grasp of the pandemic, its economic consequences and the changes in economic thinking the world over.

Progressive economic thinkers and policy makers have responded to two shocks, firstly that of the neonationalist-unilateralist backlash against neoliberal globalism, a backlash which weakened the old globalist model, and secondly the Covid-19 pandemic. The pandemic broke the global supply chains, necessitating nationalist economic strategies centering on domestic production. The pandemic also proved that the model which leaves much to the market and private profit, exposed its weaknesses in protecting public health and safety and therefore the economy. 

Thus, there has been much new thinking and suggestions for rational, progressive reforms of the domestic economic orders and the global economic order.

Typically, Sri Lankan politicians, academics and ideologues have been behind the curve. Some make the error of regarding domestic production not as a necessary adaptive policy and desirable corrective to and within globalization, but as a model in and of itself. The Sri Lankan government belongs in that category. Others in politics, think-tanks and respected websites, hanker after the restoration of the old model of neoliberal globalization. 

While the neoconservative Alt-Right Gotabaya regime has no international intellectual underpinnings or examples for its ‘Jathika Arthikaya/self-sufficiency’ doctrine, the neoliberal globalist Right in Sri Lanka, as I have noticed from its spoken/published/posted discourse, absurdly spends its firepower today attacking the policies of an intellectual giant, Raul Prebisch. 

The neoliberal Economic Right is unaware that the place of a thinker in any realm, including development economics, depends on what he meant in his /her time and place, how he/she advanced the state of thinking and policy at that time; the contribution he/she made to the history of thought in that particular discipline or domain. That assessment must not be confused with the issue of whether that economic doctrine should have been continued beyond a certain period, still less with the question of whether or not it should be returned to under very different circumstances.  

So it is with Raul Prebisch, a titan of development thinking; a man whose ideas emancipated and revolutionized thought. He brought into view the fundamental phenomenon of dependency of the Latin American and other Third World economies which functioned as the ‘periphery’ of the world economy, on the ‘centers’ of the global system, the North; dependency that had been created by violent colonialism and neocolonialism; dependency that ensured a continued outflow of ‘surplus’ through multiple means to the North thereby causing the loss of surplus necessary for industrialization and resulting in underdevelopment as a continuing process.  

The policy intervention of Prebisch and the Economic Commission of Latin America (ECLA) was intended to reduce the outflow of surplus and retain it for industrialization, which it did with relative success for a period. In some cases, it was overthrown after rightwing military coups and in others grew outmoded as does any economic policy regime. However, the great positive contribution to the history of ideas—in contradistinction to the continued relevance as policy– of Prebisch and ECLA is recognized by every serious economic thinker, teacher or student. 

What makes the demonization of Raul Prebisch by the Sri Lankan neoliberal Economic Right which persists today despite the fall of the Ranil-Mangala administration, a cause for sadness and incredulity, is the sheer ignorance of the history of the serious development policy debate in Sri Lanka and the internationally recognized contribution of Sri Lanka to the development policy debate.  

The two Sri Lankans most respected internationally in the realm of development thinking were both very conscious of the path-breaking contribution of Raul Prebisch and ECLA to the struggle against underdevelopment. 

These two personalities did not by any means belong to the United Front administration of Prime Minister Sirimavo Bandaranaike and Dr NM Perera. These two Sri Lankans were the brains of the economic planning process of the UNP government of Prime Minister Dudley Senanayake– though it was the top politicians rather than they who decided the dominant economic policy overlay. 

I refer to Dr. Gamani Corea, later Secretary-General of UNCTAD and later still, head of the South Center in Geneva and his cerebral deputy, Godfrey Gunatilleke. 

At UNCTAD and the South Center, Gamini Corea continued in the great tradition of Raul Prebisch who had been the founder Secretary-General of UNCTAD, grappling with the issue of ‘unequal exchange’ (Arghiri Emmanuel) through the terms of trade. Upon return from Geneva, Dr. Corea was founder-chairperson of the Institute of Policy Studies (IPS) in Colombo while Godfrey Gunatilleke had founded the MARGA Institute for development studies in the 1970s.

Many international roundtable conferences on development thinking were initiated by the MARGA Institute and presided over by its chairperson Godfrey Gunatilleke, including a conclave which had luminaries from the global South, Rodolfo Stavenhagen and Juan Somavia. This effort resulted in an intellectually path-breaking volume standing in precise paradigmatic contradistinction to the thinking of Milton Friedman and the Chicago Boys who were advising the Pinochet military dictatorship and advocating policies of which the contemporary Sri Lankan rightwing economists are descendants. This landmark volume was unambiguously entitled ‘Another Development: Approaches and Strategies’ (1977) edited by leading ‘dependency’ economist Fernando Henrique Cardoso, who as President of Brazil went on to establish a stellar economic record of macroeconomic stability.

Sri Lanka’s neoliberal Right takes unwarranted pride in the UNP’s economic track-record. Unwarranted, because the polarizing character of the economic policies of UNP governments taken together with the no less polarizing ethnic and economic policies, combined in a toxic cocktail which always caused a populist backlash which was often, but not always nationalist or even xenophobic. The UNP in 1952-1956 triggered a mass uprising (the 1953 Hartal) and then, Sinhala Only. In 1965-1970 it caused the rise of the JVP and an electoral landslide for the SLFP-Left coalition. In 1977-88, it contributed to a violent Southern uprising. In 2001-2003 it led to the ouster, electoral defeat and the first Rajapaksa victory. In 2015-2019, it produced Gotabaya Rajapaksa and a parliamentary tsunami which drowned the UNP.  

The weight of evidence shows something radically wrong in the UNP’s economic orthodoxy. The sole exception to this rule was the Premadasa Presidency which achieved the economic miracle of combining high growth, high foreign investment, a vibrant stock market, reduced inequality and a real transfer of income to the lower income groups. Radically course-correcting the Open Economy while based upon it, Premadasa scornfully rejected the SLFP’s Closed Economy model. His was an alternative development discourse. 

Here’s an example:

“The exploitation which leads to poverty is endemic in the structure of international economic relations today. That is why this structure has to be changed. That is why we talk of a New International Economic Order. It is an order where human rights are respected; where economic inequalities and poverty are eliminated; where malnutrition and illiteracy are removed. 

I am not talking of a new order which must exist between nations and nations only. We have to institute this order in our own countries…We cannot have a New International Economic Order abroad and an Old Economic Order of exploitation at home. We cannot ask for the removal of exploitation and inequalities among nations and allow economic oppression and disparities to flourish within our nation. 

The emancipation of mankind from exploitation must take place both nationally and internationally. The structural imbalances and inequalities within nations are linked together. That is as true for the South as it is for the North.”

(Ranasinghe Premadasa, Udagam Udanaya, June 23rd 1987)

This extract from a speech by Prime Minister Premadasa contained in Udagam Udanaya, the publication distributed at the commencement of every Gam Udawa to the hundreds of thousands who attended. The discourse sounds to me much more in the tradition of Raul Prebisch and the school of thought he founded, than Hayek, Friedman and Hausmann. Premadasa was the policy practitioner par excellence of the paradigm of ‘Another Development’. 

Ranasinghe Premadasa’s pitch for an equity-based new domestic economic order also accords perfectly with the ideas urged on Prime Minister Wickremesinghe in 2015 by Nobel Prize winner for Economics, Prof Joe Stiglitz, while sharing a platform in Colombo. His presentation on taking equity as the key link of a post-conflict economic development strategy for Sri Lanka was reproduced on his website at Harvard. The UNP and its supportive civil society economists ignored this economic doctrine in 2015 and adopted a contrary economic vision which contributed to the party’s extinction. Even today, para-UNP economic ideologues avoid reference to the Stiglitz episode. 

Columnists have remarked on restiveness on the neonationalist flank of the Opposition, signaling a possible New Right ‘spoiler’ presidential bid. This is a reflex-action of impatience, frustration and (typically) ego-centric adventurism provoked and permitted by the stubbornly persistent free-market fundamentalism of some Oppositionists. 

The new Opposition must educate itself about the history of the development discourses in Sri Lanka, including those of our finest developmental minds, all three of whom either served under a UNP administration or headed one: Gamani Corea, Godfrey Gunatilleke and of course, Ranasinghe Premadasa—whose son leads the UNP’s successor party and the new Opposition. 

A good start would be ‘Towards a Sri Lankan Model of Development’ a collection of writings (1975-2015) by Godfrey Gunatilleke, especially Part 5, entitled ‘A Vision for Sri Lanka 2025 & 2035: Sri Lanka’s Transition from High Human Development to Very High Human Development’. Given that today’s New Opposition should aim to win the Presidency and the Parliament by 2025, this text would outline a progressive goal and roadmap. 

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Latest comments

  • 6
    4

    Economics is not a science.
    It if were there wouldn’t be any poor countries.
    Only a collection of useful statistics.
    No two economists agree -even within IMF.
    There are as many economists as there are people
    Top most economist of any country is the head of the government of that country.
    .
    Then what makes some countries poor , some others rich?
    It is the culture. Rather cultural inhibitions in adopting science and technology and copying from others.
    And how deep a society is mired in religion and superstition.
    Take for instance the bullock cart, Covid ‘peniya’ and the cremation issue.
    Which economic theory can address that and offer solutions?
    .
    I am an engineer by profession
    I envy so much the salaries of Central Bank ‘economists’.

    Soma

    • 3
      2

      … There are as many economists as there are people.
      Soma,
      You have engineered your way to establish that you are an economist yourself; You are no ordinary engineer!

      • 0
        1

        I could go wrong. But, I am going to bet my money on it!
        Soma, Is the thumb showing down yours?

        • 0
          0

          Nathan
          Soma, Is the thumb showing down yours?
          N O.

          Soma

    • 1
      0

      Soma,
      “Then what makes some countries poor , some others rich?
      It is the culture. Rather cultural inhibitions in adopting science and technology and copying from others.
      And how deep a society is mired in religion and superstition.”
      What’s got into you these days? Please leave it to people like me, Native, SJ, etc to condemn religion and superstition. You are undercutting us.

      • 2
        0

        Old codger
        I can leave them to you provided you strive to develop the capacity to view them from a totally unbiased standpoint like a scientist.
        You must take off your coloured glasses provided free of charge by your political masters.
        Above all if you guys promise me to attend a class on elementary logic.

        Soma

        • 1
          1

          soman

          “Above all if you guys promise me to attend a class on elementary logic.”

          You have a psychological problem, you are the psycho and we are logical.

          • 0
            0

            So I heard when I visited Angoda.

            Soma

            • 1
              0

              soman

              “So I heard when I visited Angoda.”

              Did you visit Angoda in straitjacket or as an out patient?
              How long did you stay there?

              • 0
                1

                Native
                I visited when I heard that your condition has turned from bad to worse. You couldn’t even recognise me.

                Soma

      • 2
        1

        old codger

        I reiterate that I condemn all religions X times.
        Value of X falls between 0 and ∞

        Perhaps soman is trying to get behind us to stab us from a vantage point.

        • 0
          0

          NV
          0 for your religion and ∞ for our religion.
          Right?

          Soma

    • 3
      1

      soman

      “I envy so much the salaries of Central Bank ‘economists’.”

      You envy everything.
      Isn’t it why you go on looting the people intermittently, and the state regularly, ….. in order to supplement your modest income ?

    • 2
      1

      soman

      “And how deep a society is mired in religion and superstition.”

      And how deep a society is mired in myth, nationalism, hatred, bigotry, stupidity, ignorance, greed, irrationality, short memory, false pride, ….. living off on state handout, ……….

      • 1
        0

        Native,
        .
        I wish you a happy and healthy new year to you and your family !

        Srilanka is naturally beautiful, but pepole ‘s mind set is almost like garbage dumps. THey dont care about anything. Their representatives (politicians) are almost like those market “kunukandha/garbage dumps for their political survivials”

        See what is better today than prior to the ELECTION of former alleged high criminal Gotabaya as the president of the country ?

  • 4
    2

    Dr Jayathilake has a point,
    Government policy should be based on tried and tested economic models.
    Touting Dhammika “paniyas” will not help Sri Lanka , Great again.

  • 4
    0

    A refreshingly different analysis with some credible references compared to mere rhetoric in many other articles on this forum. Great for learning !

    • 0
      0

      L. S.
      Forgive me for troubling you.
      What is ‘rightism’ and what is ‘nativism’?
      Google was no help.

      Soma

  • 3
    4

    DJ,
    Have you heard about the Sufficiency Economy philosophy of His Majesty King Bhumibol Adulyadej in Thailand? He promoted this in the wake of a major economic crisis hitting Thailand and many other countries in the region that laid off hundreds and thousands of workers who worked mainly in export oriented industries. Many of them who came from rural areas returned to their homes. The idea behind Sufficiency Economy philosophy was to promote production in rural areas to generate employment opportunities and reduce unnecessary expenditure. Prime Minister Thakshin Shinawatra supported this by channeling funds to rural areas. In few years, Thakshin turned the economy which was in doldrums to a double digit growth economy.

    • 2
      2

      Eagle,
      One of the pillars of the economy of Thailand is sex tourism, which grew out of servicing the US military in the Vietnam era. Do you think our hamuduruwos will be as forward-thinking as the Thai hamuduruwos? What an opportunity we missed by not signing a new SOFA.

      • 0
        0

        OC,
        It was ‘Para’ people who came with Bible in one hand and gun in the other who made prostitution illegal in Sinhale. Thailand was not ruled by those dong keys.

  • 4
    3

    Dayan is right. But not sure he follows what he preaches!

    Provincial councils are white elephants. Make no economic sense. It only added another layer of politicians, corruption and waste.

    Rebuilding the north was a waste of money. They don’t pay tax. So the government cannot repay loans they borrowed to rebuild the north. Debt trap.

    Socialism/communism makes no economic sense. Bankrupt policies.

  • 0
    0

    Dr. Dayan Jayatilleka – Dayan what about Port City?
    The land reclamation to build
    A Global Finance Centre
    A Global Tax heaven
    A Global Tax Free Luxury Retail Park
    A Global Luxury Playground for the rich
    ========
    Is the rumour that the port city may be turned in to a massive
    Paddy field
    coconut estate
    turmeric farm
    onion farm
    due to lack of foreign investment to build the city?
    ========

    • 2
      0

      Rajash

      “A Global Luxury Playground for the rich”

      Does it include “Thai” massage, Kandyan Hospitality, a sanctuary for beach boys, …..?
      You know what I mean.

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