3 March, 2024

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Sri Lankans Should Fight For Economic Freedom & Not For Economic Independence

By W A Wijewardena –

Dr. W.A Wijewardena

Quasi-political independence

Sri Lanka as a matter of routine habit celebrated the anniversary of independence from Britain on 4 February. This relates to the political independence in which Sri Lankans are empowered to elect their own rulers. The exercise of this power has happened on numerous occasions in the past 76 years. As such, Sri Lanka has been branded as one of the longest surviving democracies in South Asia, next only to India which has done so for 77 years.

To the credit of both countries, there had not been episodes of direct military rule in either country. Yet, critics have blamed that democratically elected rulers in both countries had acted from time to time undemocratically violating democratic norms and resorting to authoritarian practices. However, there had been a good part as well as a bad part to these undemocratic practices.

The good part had been that such rules had been short-lived because people had punished them for their crimes by routing them at the subsequent elections. The bad part had been that even those who had been elected to power on the promise of preserving people’s democratic rights had continued to follow those rulers voted out of power with no feeling of guilt at all. The people had been able to punish them only at elections if they are held, later. Till such time, those rulers too had been enjoying fully the authoritarian powers acquired by them. Hence, it had been a quasi-political independence which people have been afforded to in the two longest surviving democracies in South Asia.

Futile fight for economic independence

Amidst this popular contention about quasi-political independence, another perennial issue has been raised by many Sri Lankans. That has been whether Sri Lanka had got economic independence for its people since the departure of the colonial masters from the country. The argument runs as follows: During the times of ancient Sri Lankan kings, the nation was prosperous and was exporting rice – the country’s staple food which goes into shortages from time to time – even to the foreign lands. This self-sufficient and prosperous economy was destroyed by the colonial masters, it is claimed by the critics, for their own gain. After independence, this position got worsened.

Today, Sri Lanka is dependent on foreign countries for a simple paper clip at the low end to combat jets at the high end. But the supply of these products, including the prices, are being controlled by Western nations which are bent on imposing a new type of colonialism on Sri Lanka. That colonialism has been called neocolonialism. Hence, according to them, with this quasi-political independence, Sri Lanka has not got political as well as economic independence.

Suppression of economic freedom

At this stage, it is useful to distinguish between economic independence and economic freedom. Economic independence, according to critics, denotes self-sufficiency in almost everything which a nation needs without having to depend on others. Hence, the nation is free from being manipulated by others who have a vested interest in doing so. Accordingly, economic independence is concerned with a nation’s relationship with other nations. Economic freedom, in contrast, is a part of human liberty about which political thinkers have been debating for centuries. It is concerned with the freedom of choice of people and therefore, a subject matter coming within a nation.

On economic matters, freedom of choice is the ability of people to make the best or optimal choice for themselves, without being dictated by an outside party like the Government or the powerful corporate bodies. This choice has multiple aspects. One is the freedom to engage in an occupation which a person views as the best or optimal for him. Another is the freedom to choose a country for living so that he could optimise his occupation. A third is the freedom to choose the basket of goods and services that enables him to optimise his satisfaction. A fourth is the freedom to choose the method of spending his hard-earned moneys.

These freedoms are taken away from citizens by governments which claim that they do so in national interest. What this means is that a person living in a society should suppress his choice in favour of the bigger advantage of the people living within the territorial boundaries of his country. Governments do so by making public policies, imposing regulations on people, and getting their bureaucratic bodies to do the choice on behalf of the citizens.

The corporate bodies interfere with the citizens’ choices by arousing emotions – fears as well as biases – by bombarding them with commercials that promote their products. So, governments take citizens’ freedom of choice by coercion, while corporations do it by offering forced voluntary exchanges.

Goal of attaining self-sufficiency

The self-sufficiency goal attuned to the principle of economic independence is being cherished by many because of the convenience and the sense of power it grants to them.

Convenience is that a nation which is self-sufficient can manage its affairs without being subject to intimidatory actions of other nations. The geopolitics in the world today is such that a powerful nation or a group of nations can impose sanctions on another nation if the latter does not act according to the wishes and dictates of the former. If foods or other essential items are denied to that nation through sanctions, it still can survive if those items are internally available.

The sense of power is that the nation in question could command recognition and respect of other nations when global issues are being debated. A powerful nation always has a powerful voice in global affairs. Hence, self-sufficiency is a cherished goal amongst citizens of almost all the nations.

Economic interdependence

However, economies throughout history have brought in prosperity and wealth to people by being interdependent and not by being independent. That is because the goal of attaining self-sufficiency in everything which a nation needs is impracticable. There are limitations of resources, production techniques, and manpower needed for attempting to produce everything at home. In such a situation, it is always advantageous for a nation to produce what it can produce best at home and exchange the surplus with other nations which need them for goods which it needs. It is a win-win situation for all.

Consider a case at an individual level. If I try to produce everything by myself, say, teledramas, songs, medicines, healthcare, etc., it is practically impossible for me to do so within the limited time and expertise available. If I want to treat myself my illnesses, I will have to learn medicine as a profession and produce the drugs by myself. If I want to teach my children, I will have to learn the subjects of teaching myself and the art of teaching. There is a limitation to this. Hence, I may engage in one profession and engage the other professionals to have my needs satisfied. This amounts to producing a surplus by myself and exchanging the same with others for my other needs. It is trading in the crudest way.

At national levels, a nation too could benefit from the same strategy. During the Polonnaruwa period which is considered the golden era of Sri Lanka’s history, King Parakramabahu the Great is said to have established a special export processing zone called the Antharanga Dhura and exported the country’s products to earn money, possibly gold coins, to buy weapons to fight with other Lords and unify the country. This is trading and interdependence with other nations.

Production sharing networks

Today’s production system is such that no nation can produce a product alone. It should get the support of many other nations to do so.

In economics, following a terminology developed by the Sri Lanka born economist Prema-chandra Athukorala, this is called building production sharing networks. This is different from the commonly known supply chain networks which are only one-way exchanges of components of goods for final assembly in another country. Production sharing networks are two-way exchanges in which technology, training, and quality standards coming from the whole globe and the value of the product is shared by all the nations involved.

An example is iPhone which is manufactured by nine companies located in Japan, South Korea, Germany, USA, and China for which other components are supplied by many other countries. In this production system, all the nations in the world get together and share the value of a product that is produced by them. In 2010-11, as documented by Athukorala, about 51% of the total global manufacturing exports have been produced by using production sharing networks. The biggest users of this strategy have been the Developing East Asia (63%), China (57%), Taiwan (66%), South Korea (69%), and ASEAN members together (69%).

Of the ASEAN members, the Philippines (88%) and Malaysia (79%) have been super performers. South Asia’s manufacturing exports had used 12%, while India had done so up to 14%. As such, it is a new opportunity for countries in South Asia, specially, Sri Lanka, to adopt this strategy for wealth creation for its people. Hence, today as well as in future production models, it is the economic interdependence and not economic independence that matters.

Brain over belly

How will economic freedom help a country to join the global production sharing networks and thereby gain for the people of the nation? Economic freedom relates to the freedom of choice in learning, skills acquisition, choosing a profession, and consuming desired goods and services. It, therefore, denotes and connotes human wisdom. Wisdom comes from human thinking power. If thinking power is stunted, there is no economic freedom too. The Chinese philosopher of the 6th century BCE – Lao Tzu – said about this in his treatise, The Tao Te Ching, as follows: “The king and his officials will fill the bellies of people and take out the thinking power from their brains so that they will be totally pliable”.

Hence, economic freedom is concerned with people who think beyond their bellies. It is necessary to fill the bellies. But it is essential to retain the thinking power in heads so that a nation will have creative people. These creative people will have the capacity to play the game of global production sharing on par with other nations. It eliminates the possibility for the exploitation of one nation by another, an important requirement for a nation to maintain economic interdependence. Hence, thinking beyond the bellies, building a creative nation, enjoying economic freedom, and finally, economic interdependence are all interconnected. If one is broken, the nation will necessarily have to sacrifice the others.

Value of economic freedom

In a recent public discussion, the CEO of the non-state sector think tank – Advocata Institute –Dhananath Fernando summarised the global experience through history the relationship between economic freedom and overall development of nations. Using his exposition of humour, Dhananath said that wealth is inbuilt to the national anthem of Sri Lanka, but the country has failed to live up to that expectation. People in Sri Lanka are notorious for treading paths to quick richness. But they do not seem to be mindful of the necessity for fighting for economic freedom, a sure way to become a rich person. Accordingly, the poorest people in ‘most free’ countries earn on average 14 times more income than their counterparts in ‘least free’ countries.

The life expectancy at birth of people in most free countries is 80.4 years compared to 65 years in least free countries. In a similar vein, the mortality rate of children per 1,000 live births is 4.2 in most free countries, while that in least free countries is 39. Poverty is also significantly lower in most free countries than in least free countries. If one goes by $ 6.85 a day earning level, in most free countries, it is 5.5% of the population, while in least free countries, it is 71%. The happiness of people as measured by the UN Happiness Index is high at 6.76 in most free countries compared with 4.61 in least free countries. Hence, Dhananath opined that to generate wealth, one should have a market with economic freedom.

Sri Lanka’s low economic freedom

In the Economic Freedom Index compiled by the US based Heritage Foundation for 2023, Sri Lanka scoring 52.2 out of 100 is ranked at 136 out of 176 countries as a ‘mostly unfree’ country. It has lost 1.1 points in 2023 compared to 2022 losing its rank also by one notch. It is on the sub-components of the index Sri Lanka has fared very poorly. Sri Lanka has been a very bad observer of the Rule of Law. Its protection of property rights and judicial effectiveness are at midway at 51.6 and 49.7, respectively. Its Government’s integrity is much more to be desired scoring only 39.5. Because of the low tax revenue as a percent of GDP, Sri Lanka has done better regarding the size of the Government. But it is a very low performer regarding the market freedom: trade freedom at 67, while investment freedom and financial freedom are at very low 30. Except labour freedom, regulatory efficiency is at a better level.

Fight for economic freedom

Sri Lankans’ fight for economic independence is futile since modern economies are interdependent. But they should aspire to win economic freedom since it helps them to become creative and win over those who are moving forward fast in the globe. That will necessarily require them to worship brain over belly.

*The writer, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at waw1949@gmail.com

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Latest comments

  • 7
    0

    Normally, I don'[t challenge A Wijewardena. He is lovable. More than that he loves us more.
    Otherwise why would he cry that today, Sri Lanka is dependent on foreign countries for a simple paper clip at the low end to combat jets at the high end.
    Paper clips, I understand. Combat jets, I don’t.
    Do combat jets combat hunger?

    • 0
      6

      “Do combat jets combat hunger?”
      .
      Supposedly yes.

    • 1
      9

      Who needs the economic freedom of the Wild Ass to loot the country through Bond Scams?!
      This is an empty slogan to mislead folks like the false choice between Brian and Belly!
      Guess this Dodo’s brain is in his belly!

  • 1
    13

    Is there an actual difference between supply chains and production sharing networks that Dr. Wijewardena discuss in his essay or are they two frameworks to analyse the same thing?
    .
    Supply Chains or Value Chains they are better known as nowadays I thought are never one way in anycase. There’s always various types of integrations of insitutions involved in them, such as vertical and horizontal integration, providing routes through which technology transfer necessary for the production process occurs.
    .
    Upon Googling I came across the below article also written by Dr. Wijewardena: https://www.ft.lk/columns/Prema-chandra-Athukorala-Economist-Sri-Lanka-produced-for-the-world/4-724172
    .
    According to which the term Production sharing was first coined by Peter Drucker, but here Dr. Wijewardane himself states that it is a terminology developed by Sri Lankan born Economist Prema Chandra Athukorala.

    • 1
      9

      Continued…
      .
      Nevertheless it’s a good article that clearly explains the difference between economic independence and economic freedom. Why the former is outdated and impractical hence importance of pursuing the latter.

  • 14
    0

    Freedom from Corrupt politicians.????? Economic freedom 136 / 176. Corruption index above 💯. Debt / GDP 💯 1 / 3 children malnourished. Rambo is buying time in a private hospital after delivering fake life saving immunoglobulin. Our patriotic Politicians expolited crisis ( Covid, economic / food / medicine scarcity) to make more money. This author claimed he wrote more than 💯 articles on impending bankruptcy. 💯

    • 11
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      SHAM 💯

  • 2
    11

    It is absurd to say that Sri Lanka should not fight for Economic Independence from the colonial Club de Paris and the Washington Consensus Economic Hit men!

    Of course, Sri Lanka is interdependent, particularly, with other Asian economies and should move to join the BRICS Plus, New Development and other Global South Institutions.
    However, there should be a 10 year Moratorium and eventual BAN on all GOSL borrowing from Eurobond Markets and other predatory private creditors.Sri Lanka’s first ever Sovereign Default was as form of Hybrid Economic Warfare with Lawfare to once again DEBT COLONIZE the strategic island…
    Make No Mistake that the Arab Spring style CIA choreographed Aragalaya Chaos Strategy controlled on remote social media platforms was part of this operation to distract from and enable the Default.

    • 3
      0

      In author’s defence I don’t think when he defines Economic Independence and Economoc Freedom, he refers to the relationship with IMF. What he says is we can’t become economically self sufficient like we were said to have been at various points in time in the past. Therefore what ee strive for is Economic Freedom with an economy integrated with the global production sharing networks regardless of whether we follow IMF recommended path or not.

      • 0
        0

        *we should strive for is…

    • 1
      0

      But do you think BRICS Plus would be of any difference? Instead of future being choreographed by Washington, joining BRICS plus will lead to allowing Beijing & Delhi to choreograph. Delhi is already active and entertaining AKD these days.

  • 1
    0

    iPhone used for wealth creation is not practiced by royalty who do not work for a living. King Charles unselfishly uses his wealth to do good for all. Even the PM Sunak uses his father in-laws wealth for politics.

  • 7
    1

    Mr W A Wijewardena, The ship has hit the iceberg and sinking ………. You’re playing “Blue Danube!”


    Not a happy face in sight …….. Ranil looking and sounding more and more like Benito & Adolf: the final days …….. Ranil patting this man’s face reminds of Adolf patting a boy’s face in his Boy’s brigade when the Russians were just outside Berlin ……. couldn’t have happened to a nicer man! ……… 1:15 ……… https://www.youtube.com/watch?v=nKOyjc-9hiI

  • 5
    0

    “But it is essential to retain the thinking power in heads so that a nation will have creative people.” The thinking power of the General Public is controlled by Government Media and by the media that is controlled by Stooges of the rulers.
    Cardinal R Malcolm has finally woken up after the Easter Bombings after being in Deep Coma till 21/04/2019. Where was he when innocent civilians were being massacred for three decades? He too says that SL citizens are “treading paths to QUICK richness”.
    There is no honesty. SAD

  • 4
    0

    Just having the Elections, should not be considered as the only criteria for the country to be a democratic one. One need to check how POLITICALLY matured are the Voting public.If they are brain washed by DISINFORMATIONS or Bribed by the Candidates to vote for them, the election becomes not a free and fair one. Stuffing the ballot boxes or dumping the votes of the Opponent candidate becomes undemocratic.
    Election Commission should not be tampered by GoSL and their members be of HIGH STANDINGS.

  • 5
    0

    “Sri Lankans’ fight for economic independence is futile since modern economies are interdependent. But they should aspire to win economic freedom since it helps them to become creative and win over those who are moving forward fast in the globe.”
    I am sure that the Economic expert Dr.Wijewardena should be aware that the economic crisis of the country was mainly due to the corruption of the Politicians and officials rather than economy of the country. Unfortunately, the author wanted to keep the same system of governance and political culture and asking people to fight against economic freedom to give all the benefits to politicians and officials.

  • 2
    0

    “The king and his officials will fill the bellies of people and take out the thinking power from their brains so that they will be totally pliable”. What a contrast with the IMF, which explained its reason to grant Evil Administration the loan, even after having not sincerely worked for the loan restructuring plan with debtors, but only giving B/S without any hesitation or guilty feeling, for almost two years. The IMF predicted that there are going to be riots in Langkang because of the shortages the country is going to face by wasted import funds.

  • 3
    0

    This essay is written to brainwash and draw back the swing forward supporters of NPP back to the UNP-SLFP Union and keep them under control of created stories “Wonder of Asia ” which they never built with 75 years of borrowed loans. Langkang leader Mr. Anakaraikam (Uncivilized Person – a cunning and unnaturally efficient leading backward thinker, was exporting Sinhala Buddhism to America and West and guiding to import luxuries to those who were running the country with colonial masters, while Gandhi, in India was reviving the Dravidian secular Hinduism and guiding people to live with Indian products, instead of imported Wool, Taffeta and other British made luxuries. Three months ago, India banned exporting cheap rice varieties but freely allowed its very expensive Basmati because it wanted the poor to get better prices for their food items. The Shylock lender IMF expressed fear that they’re going to riots in Langkang because of shortage of poor people’s essential items, while this is how the Langkang Central Bank has been thinking: “keep our Modaya Machangs roasted with bogus explanation for unintelligible economic theories us, Evil’s Monster Child VAT 18 and with millions years old imported stupid religious preaching, while our corrupted political acolytes struggle with over filled bellies not being able to walk through the parliament’s doors”.

  • 3
    0

    Gandhi protested to import British tractors to prepare the country with proper economic footing. Now, while India keeps 80% of the rice export market, (one time dominated by Japan, China, Thailand) India exports all kinds of heavy machinery (no mention of others here). What went wrong with Gandhi’s preparation of India, i.e. teaching austerity to the rich until the poor come up and catch up with them?

    Which Modaya would compare an imaginary Parakramabahu time, to the current culture of this human export-deportation Langkang culture? There is no useful educated quality labor for any highly advanced AI factories to open production facilities in Langkang. If so, please tell me why, under theory of competitive advantage, no foreign factories are opening branches here to take advantage of (high quality-that is bogus talk) cheap labor? In Parakramabahu, (A south Indian Prince) kings, soldiers, traders, professionals, and subjects kept coming to Langkang. The King allowed the people to study, think freely, work hard, and flourish maximum on their own. They did not control through Sinhala Only and Standardization.

  • 2
    0

    This guy is only preaching to, while no foundation has been created in a usable manner by the governments, though they borrow loans for commission and at high interest to build white elephants. These white elephants’ infrastructures cannot be advantageously used by any non-existing industrial complexes, but they are handed over with additional lands to foreign countries. Recently Evil bragged that Western Province and Southern provinces are developing but Northern Province remains stagnant. That is one of his rare or accidental truths. But who did it? They are calling Tamil Nadu as Toilet Nadu, but this master economist refusing to build a toilet facility in Palali, where even without proper runway international flights are landing. But a billion-dollar facility built with loan in the Southern province sitting without even one regular scheduled flight there, but for years, Aanduwa wasted so much of incentive money to create interest for foreign Airlines to land there. Can this economist explain to us who is fattening whom? They do false interpretations of economic theories only to fatten them.

  • 2
    0

    For 100 years, after World War II, 74 =(99-15)99 massive oil tanks have been sitting and rusting in the China Bay tank farm. What would have happened if that tank farm was in the hands of a Singaporean company. Wouldn’t they have sunk south Asia in petroleum oils by producing and selling at extremely cheap prices at that facility. But what did the economic pundits of Langkang do? They wasted a fortune hiring Oil explorers from all over the world to produce oil from a non-existing oil bed in Mannar. Why do they do this crazy thing? Only because they couldn’t get along with America, so they don’t want to use the American Dollar to buy gas and oil like many other countries in the world are doing. But what is happening in the Southern Province? China is building a brand-new Oils refinery in the free lands it got over there. So how many of you think that borrowing over the unpaid loan is the only way to create economic freedom or economic interdependence for the mouthless Langkang masses?

  • 2
    0

    Why these Sinhala Intellectuals cannot think in the straightway but only cheating, cheating, cheating with their convoluted theories, for almost a century now. Why is this ugly technique of “Rice from Moon” and “SuperSat” for space being brought to label the empty stomachs of people describing them as excessively fattened by the government so the country has lost its brain power? If the Sinhala Intellectual pundits did not understand the basic economic theories they studied long, long ago that is fine. But after 85-90 years why are they still dipping their noses into the country’s politics and keep fattening the UNP-SLFP Union, with their fat overbuilt brains. What a horrible, merciless, insensitive, cruel wrong painting the 50% poor Langkang masses as the ones fattened by the Royals of UNP-SLFP kings!
    I had the facility to take only one point from the essay to discuss. The entire essay is biased, purposefully ill interpreted economic theories and the reality in Langkang, in order to glorify the Lankang 75 years of kleptocracy and borrow from Shylock on the forged signature of masses at elections conducted for the tyrannical racist constitution, with manipulated elections laws and conducting at selected auspicious time by feeling the pulse of the supper hungry people. What a monstrous bestial, brutal, lionistic community the Sinhala Intellectuals (Viyathmaha) to exploit the ignorant, poor like this.

  • 3
    0

    In order to get the Economic Independence, first and foremost we need to get rid of RACIST/RELIGIOUS activists be it clergy or lay people. Bring in a new constitution that safe guards the minorities.
    The Constitutional Council [CC] members should be High standing public figures from political or academic arenas. Election Commission members too be people with strong characters who can not be controlled by the rulers. Wonder WHY none of the Economists talk about the unnecessary civil wars over the last SEVERAL Decades???

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