18 August, 2022

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Managing The Crisis: A Social Democratic Realist Approach

By Dayan Jayatilleka

Dr. Dayan Jayatilleka

The more radical the reform, the more radical the reaction. The more radical the economic reform, the more radical the ideological, social and political reaction. Therefore, the liberal policy intellectuals who advocate radical reforms as the only way out of the crisis, had better be prepared for a radicalism of the Right or a radicalism of the Left as outcomes. More correctly, they had better be prepared for Right and Left radicalism as responses and one of the two radicalisms as the outcome.

The crisis is mounting and has to be managed before it explodes, triggering a chain reaction of a larger explosion. There are a few ideas already out there. My problem with them is that they may exacerbate the crisis, and cause it to escalate into sociopolitical conflict. That’s hardly the intention of crisis-management.

I also wish to suggest some alternative ideas for crisis management based on Realist principles and my own experience.

If I may put together a grab-bag of the ideas for crisis-management already out there, it would contain a National Government, a rush to the IMF, privatization of State-Owned Enterprises (SOEs), the scrapping of SriLankan Airlines, reversion to the 19th amendment, abolition of the executive presidency and restoration of a parliamentary system etc.

Don’t those who make these proposals know that Sri Lanka has the most ‘woke’ mass protest movement that it has seen in a half-century, and that the mass movement is spearheaded by the trade-unions? What do the votaries of the privatization of the SOEs think the trade unions are going to do if there is the slightest sign of privatization? Will the resultant wave of strikes not dissuade foreign investors? Will the strike wave not cause the kind of social instability that will exacerbate and deepen the economic crisis, not attenuate it?

The same goes for the slogan of rushing to the IMF and sticking to the course of whatever stabilization program is agreed to, through to the bitter end. But what if the bitter end is an indefinite General Strike and a mass uprising as the austerity measures bite? How will sociopolitical destabilization help the cause of economic stabilization?

The radical reform proposals of those who suggest crisis management packages, just have not been logically thought-through. There is a reason that the Buddha urged a Middle Path and Aristotle, the Golden Mean. Surely the most prudent solution to the burden of Air Lanka is not to scrap the national airline (as a boy I was proud of Air Ceylon), but to restore something along the lines of the agreement with Emirates?

Haven’t those who urge a national government and a national consensus, not reflected on the failure of Yahapalanaya which culminated in one of the two constituent parties becoming electorally extinct and the other splitting, with the official party becoming a splinter?

Broadening the political participation in the national government cannot take place on the basis of the privatization program that is envisaged. Why should the JVP join such a government and subscribe to economic shock therapy which will only hurt its social base and cause its unions to defect to the rival, radical FSP?

The JVP isn’t going down the ruinous road of the LSSP-CPSL in the 1970-’77 coalition government and impose hardship on the people, so that a rival party can do to it, what it did to the LSSP-CPSL. Who can blame it for not being that dumb?

Those who propose measures of crisis management seem to have confused two agendas, unintentionally or cunningly. The two agendas are those of (a) economic crisis management (cutting public expenditure etc.) and (b) political transition (restore 19A etc.). It is possible that one agenda is being slipped surreptitiously into the envelope of the other.

It won’t work, and in fact such a wish-list would only harden regime opinion, strengthening the hawks who warn that going to the IMF would set the regime down the path of self-dissolution. The liberal and left-liberals who make such a mix of proposals are repeating their errors of 2015, namely, treating Sri Lanka as a one-party state or military junta, and regarding themselves as the eastern European or Russia reformers of the late 1980s and 1990s. The mix of proposals is straight from that dated playbook.

It is perfectly reasonable to state that the hyper-centralization of the system with the 20th amendment has become an impediment to crisis-management and perhaps one of the causes of the crisis. It is quite legitimate to seek a consensual recalibration and rebalancing of powers. Calling for the restoration of the 19th amendment which was soundly rejected by the electorate is another matter altogether. That demand is neither democratically legitimate nor is it enforceable.

Furthermore, the excessive bipolarity or multipolarity that the system witnessed during the 19th amendment is every bit as dysfunctional to the task of crisis-management as hyper-centralization and unipolarity via the 20th amendment. Once again the answer is a Middle Path solution: a version of the 17th amendment, perhaps.

History teaches us the following lessons about economic depressions:

1. A strong-enough executive is necessary to introduce a viable economic solution. No   President Roosevelt, no New Deal. No New Deal, and either anarcho-communism or fascism would have been strengthened.

2. An excessively decentralized or multipolar system that doesn’t permit effective crisis-intervention, leads to the rise of ultranationalist-militarist strongmen (e.g, the Weimar republic yielding Hitler).

3. Neoliberal economic shock therapy combined with liberal political reforms cause such state-weakening and social breakdown that the backlash culminates in a strong state, which stays durable because of the trauma that neoliberalism has inflicted (e.g., Russia’s programs under Gaidar and Shatalin in the 1990s which cemented a “never again’ consensus in that country, creating and embedding Putinism).

Is there no way out of the crisis? There is, but that would have to be a rational, reasonable and balanced way which the neoliberal ‘solutions’ for crisis management are not. I would suggest a three-component solution:

1. The principle of broad consultation of all stakeholders, leading to compromise and consensus, i.e., President Premadasa’s ‘Three-Cs’: Consultation-Compromise-Consensus.

2. The International Labour Organization (ILO) model, which is tripartite, bringing together governments, workers representatives and employers. Sri Lanka’s crisis-management should be based on this model, in which no measure that is not agreed upon by all three sectors, after comprehensive debate and negotiation, is adopted.

3. If crisis-management is not to be based upon measures urged by big corporates and neoliberal economists, which then cause social upheaval, the workers, peasants, student and all other stakeholders have to be consulted and trade-offs have to be made, which result in a broad social consensus undergirding the reforms.

The solution has to be negotiated, not unilaterally decided upon.

It has to be negotiated NOT firstly with the IMF but with the organizations of the working people.

The national consensus must be a social consensus, not a top-down elite consensus of the local establishment with the international establishment.

It is a comprehensive, socially all-inclusive People’s Plan that has to be put before the IMF or a consortium of creditors, or indeed implemented by any kind of national government.

Radical economic reforms as foolishly urged by the liberals will only generate illiberal outcomes.

*Dr Dayan Jayatilleka was elected Chairperson of the ILO, 2007-2008  

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Latest comments

  • 1
    0

    There is no catastorophic failure of the econmy due to happen any time soon. The Indian govt is spooked about the history that underpin their country being exposed. They invited a govt delegation to India. This was to discuss ways to reinforce within respective populations the established history of Gothama Buddha. The Indian govt has commited USD 3 million to educate Sri Lankans of this false history. This progam is currenly underway. The PR machine said GoSL went there to seek help to get out of economic doom. This is what started this fake news.

  • 1
    1

    After 75 years of development processes, Lankawe is submerged into crisis management. Thero declared the current circumstances as a crisis, and he is propagating his wedging politics as a crisis solution. There is , anywhere in the essay, any shadow of management, political, economic and financial problem solving is not discussed in depth as he is not any kind of specialist in any schools of thought in these fields. All his definition of the problem and the solutions only revolve around SJB, his new Thaneer Panthal (watershed) except borrowing from the IMF issue. All IMF experts are well versed in the latest economics and financial ((and probably the latest IT & technological) developments. The CT PhDs and Badiudeen doctorates only oppose this solution. IMF is not a crisis management consultant organization. So, their solution, specifically for those circumstances. So, if a highly market-oriented economy faces problems, the solution could be based on new product inventions, technology modernizing and capital investment in the economy with fresh new loans. If a well-fare economy is suffering without consumption supply, pumping loans will not solve anything. The whole loan will be consumed by people immediately.

  • 1
    1

    Now China is lending $1.5B in yuan to purchase Chinese goods with the condition it has to be paid in dollars. China is forcing Lankawe to consume the loan immediately. Once this new loan is consumed in the first two or three months of next year, Lankawe will suddenly be in stand still. That is not, just not an IMF solution, not anyone else who has learned A, B,C of economics. Rather, the IMF will put opposite conditions to the Chinese loan, for its loans, i.e., its loans have to be used in areas that can improve the production and trade of the country’s traditional and unconventional, but have competitive advantage, new industries, which are needed inside and outside for consumption. Here, where the consumers are forced to go belt tightened, it is too hard for Royals and its acolytes to split 40% and deposit in foreign banks. So, they supply Biryani and arrack for Sinhala Buddhist Modaya and set them up to protest against the IMF. Then these projects turn out to be very successful achievements in Thero Class’s wedging jobs. It was Don who destroyed the lucrative tea industry and deported Up Country Tamils to India.

  • 3
    1

    As a first step get rid of provincial councils and local government bodies. These have close to 9,000 politicians, their support staff, expenses, corruption, elections, etc.

    There are 10 ministries in SL for everything!! 9 provincial, 1 national!! How can you run a country like this!

    The small nation does not need them.

    Removing them will reduce the public sector by at least 50% without affecting anything. Total government spend will reduce by 50% immediately.

    Only the 226 can run the country at a cheaper cost. People lose nothing.

    Float the rupee. $1 will get 400 rupees. Imports will be expensive but foreign income earners will earn more and more. They are very poor people in SL today.

    Lease out Trinco port to Saudi Arabia and USA together for military purposes. Lease out KKS and Jaffna ports to India for military purposes.

  • 1
    1

    What is the crisis in this country and what factors contributed this country? Have the loans helped Sri Lanka to improve the economy? Why this country depend loan and why couldn’t this country repay the loans? Are the loans used to produce financial and social benefit?
    We initially put the blame on the war because the country need more military power in terms of resources (personnel, equipments, vehicles, ) for higher expenditure but the war ended in 2009. There was lot of opportunities and help for investment and development, stability, peace since 2010. Have we used this period all these opportunities profitability be reducing the expenditure, increase the efficiency , stability, and peace to increase the productivity and profitability? During this period, not a single gun violence in this country but there was number of political coups. Loans were used in unproductive investments. Corruption growth exceeded the investment. God thought I gave 10 years to bring instability and peace but they misused it and now face Corona enemy and economic crisis. Will this make any change? I don’t think!

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