By Ameer Ali –

Dr. Ameer Ali

In 2014, a report by the World Health Organization (WHO) revealed that Sri Lanka ranked fourth highest in suicide rate among a total of 172 countries. On October 2017, according to Tamil Guardian, a young mother with three children in the North, unable to cope with heavy debts, had committed suicide. A month before that her husband also took his life because of the same problem. On 16 may 2018, the same source noted seventeen suicides in the East, because of pressure from microfinance companies. Even though the reported incidents were from the north and east the plague of micro-finance-driven suicides is not endemic but threatening to become pandemic in the wake of increasing financialization of the economy. Already we see protest marches against the rapacity of microfinance companies. Perhaps, in realisation of this tragic development, in January this year, the Governor of Central Bank announced his plan to carry out an island wide household debt survey. How many more lives will be lost through suicide before this survey is completed and remedies implemented is anyone’s guess. While the country is sinking in national debt individuals are committing suicide and welfare of future generations is mortgaged to service debts incurred by short sighted economic policies drafted by corrupt politicians.  

Suicide is not something new and the causes of suicide are also complex. However, widespread debt driven suicides are relatively new and a product of financialized economies. This is an inconvenient truth that promoters of globalization and free market economics are not willing to concede. Yet, it is an ugly fact arising from the failure of the much touted trickle down benefits of free market competition, which in the name of economic rationalism is allowed to operate without any ethical and moral constraints. Sri Lanka after decades of welfarism and market regulation was dragged with vengeance into the free market swirl in 1977, and with frequent environmental disasters and a costly civil war, has now become a victim of free market capitalism.  Rising suicide rate is one of the negative sides of market propelled economic growth. Unregulated markets breed widening inequality, inequality breeds poverty, and poverty causes suicides. They are all systemic.     

One of the most momentous transformations witnessed globally since the 1980s is the increasing financialization of economies. Aided by revolutionary changes in transport and communication technologies, which broke down geographical barriers and squeezed the world into a global village, the financial sector, which until then played a subsidiary role as facilitator to the real economy overturned the structural hierarchy and usurped the role of the leading sector. The wealthy and their institutional financial care takers saw in this new world attractive and novel opportunities to earn higher rates of return by investing in financial products rather than in the real economy. Without getting into any extended explanation of this transformation one consequence of it should be pointed out that is relevant to Sri Lanka, i.e., the growth of finance companies that deal in financial products. According to one study an estimated 14,000 finance companies are providing microcredit in the country. Globally, microfinance is a growth industry that lends small amounts of credit to an estimated world population of nearly 2.5 billion who have no access to or the literacy required to deal with conventional banking. The Grameen Bank in Bangladesh founded by the Nobel laureate, Professor Yunus, was a microfinance and community development institution which greatly helped women in that country by providing an opportunity to get out of grinding poverty. No doubt, the idea of microfinancing is an applaudable invention but the way it operates in many places is utterly deplorable. 

Desperate families are enticed with charming offers and soothing words to fall into a debt trap, which instead of ameliorating their poverty often worsens it and becomes lethal. One needs only to fail one instalment of repayment to the company to realise how viciously the debt burden mounts. Incidents of suicide is an open manifestation of this insidious financing mechanism. The cure for this problem lies not in fine tuning regulations that govern lending institutions, which are the products of the financialised economic system, but to attack the system itself that creates poverty on one side while providing a remedy on the other which kills the patient. This is not to argue that Sri Lanka should give up the market and revert to dirigisme. There are economic areas where the markets can perform better and areas where the state can deliver a better and cheaper product or service. Ultimately however, even the market must be shaped to operate with a human face. In the context of Sri Lanka, we may call for a Buddhist compassionate face. 

Currently, the yahapalana regime and its joint opposition have completely wedded themselves to market fundamentalism and finance capitalism. They are prisoners of the IMF-World Bank-Wall Street complex. This is not a sustainable situation in the long run for a small island economy. The country and its economy cannot be insulated from the heat wave of global financial volatility and vagaries of international markets. Even in the Singapore economic model there are subtle constraints in the behaviour of markets and a safety net for the people. It is time the nation looks for a third way or a mixed model with greater role for the state in economic management and safety net for the people. Will the politicians wake up?                                        

*Dr. Ameer Ali, School of Business and Governance, Murdoch University, Western Australia