By Dayan Jayatilleka –

Dr. Dayan Jayatilleka

Final Rejoinder to Hema Senanayake

The reason I write a final rejoinder to Hema Senanayake is that this country has seen far too much turmoil and bloodshed, and I have been in and around too much of it, that I tend to fight against anything that would cause more of it.

Economics is not a hard science. There are no scientific axioms in economics that can be universally accepted. It all depends upon the economic paradigm or episteme one operates with and within.

Economic policy is a matter of choices. There is no one, single, correct answer that is self-evident. It all depends on where you are coming from and want to get to.

Unlike in the case of hard science, where the correct methodology applied to the data points you in a certain direction, in the case of economic policy the choices you make can take you into the minefield of civil war.

In economics the kind of dogmatism that Hema Senanayake and his co-thinkers display, is profoundly risky. This rightwing liberal school of economic thought has never figured out what happened to the periods of Ceylonese/Sri Lankan history they approved of:

1. The UNP of the 1950s, which ended with the hartal of August 1953 and Sinhala Only 1956

2. The UNP of 1965-1970 which ended with the rise of the armed JVP and a two-thirds majority for the SLFP-led coalition;

3. The UNP of 1977-1988 which led to a massive Southern insurrection and the near-decapitation of the UNP (and had to be rescued by Premadasa through a shift to a very different economic paradigm);

4. The UNP of 2001-4 which ended with the Presidential ouster of the PM and the electoral victory for Mahinda Rajapaksa;

5. The UNP of 2015-2020, which ended with the electoral extinction of the UNP.

This is why I do not trust for a moment, the prescriptions of those who belong to that same school of economic thought and have made no public criticism of and rupture with the policies of those times.

When these successive experiments have ended in sociopolitical backlashes, it would be suicidal to approach the same doctors for the same diagnoses and prescriptions.

Sri Lanka has experienced twin disasters:

A. Statist closed economy/low growth (SLFP 1970-1977, SLPP 2019-) and

B. Open economy/rapid growth/trickle-down/free-market fundamentalism (UNP)

The JVP-NPP’s discourse and printed proposals so far, take as a starting point the denunciation and rejection of the Open Economy of 1977. That alone tells us that they cannot offer a solution to the present crisis or a better future for Sri Lanka. the JVP’s rejection of the Open economy instead of a progressive reform OF the Open Economy will lead us to the kind of abyss that has given socialism a bad name as an economic system.

Thus, three options we are offered, namely the current regime’s policy which is a throwback to that of Sirimavo Bandaranaike -NM Perera, the Ranilist UNP’s economic policy –summed up in the ‘IMF First!’ approach—and the JVP’s rejection of the Open economy, are all disastrous.

Based upon empirical evidence, it is only the paradigm of President Premadasa that gave us high growth including rapid industrialization, high inflows of foreign investment, a lively stock market and zero-socioeconomic polarization/backlash, because it also witnessed rapid decline in inequality. I do not trust anyone who fails to recognize that fact.

That is also why I insist that any discussion of exits from the crisis and an economic strategy for Sri Lanka’s future, takes as a start-line, the economic paradigm and policies of President Premadasa.

It is only that combination of ‘growth with equity’; of state-led social and economic intervention and an Open Economy, that can avoid social instability and ensure a better future. That is what Sri Lankan Social Democracy looks like.

Thanks to the Rajapaksa regime’s policies we are poised on a volcano. The wrong policy prescription will make the coming explosion far worse than it needs to be. The problem is not the IMF as such. The problem is the austerity program that will be presented as a solution either by the IMF or this Government or its successor.

Where should the cutbacks be? Where should they land? Those are choices. Who will make them and for what reasons? To put it bluntly, who should carry the burden of the crisis and the so-called solution? Is it the 99% of the citizenry or the 1%?

There are no axiomatic solutions. Take the issue of State-Owned Enterprises. From the neoliberal right to the regime’s tough Ministers such as Dilum Amunugama, there is an advocacy of privatization, but is this the only solution? The unions can help identify where the cuts can come.

Any attempt at slashing public expenditure without consultation and the coming storm will turn into a tornado. This in turn could provide the opportunity for the installation of military rule.