{"id":105573,"date":"2013-09-15T00:06:47","date_gmt":"2013-09-14T18:36:47","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=105573"},"modified":"2013-09-19T01:27:23","modified_gmt":"2013-09-18T19:57:23","slug":"characterisations-of-rajapaksa-regime-political-economy","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/characterisations-of-rajapaksa-regime-political-economy\/","title":{"rendered":"Characterisations Of Rajapaksa-Regime Political-Economy"},"content":{"rendered":"

By\u00a0Kumar David<\/a><\/span> –<\/strong><\/p>\n

\"\"<\/a>

Prof Kumar David<\/p><\/div>\n

Characterisations of Rajapakse-regime political-economy:\u00a0Futility of dated economic categories<\/strong><\/p>\n

LSSP leader Professor Tissa Vitarana has since the IMF began to underwrite economic policy described it as a trend to neoliberalism. More recently he has taken a harder stance: the PBJ-Basil-Amunugama-Mahinda economic model, drafted in consultation with the IMF, is a substantial, if not wholesale capitulation to neoliberalism. I can\u2019t recall public domain pronouncements by Tissa, but it is no secret that he has argued this position forcefully in the LSSP Central Committee and Political Bureau. I am aware that the views of the Communist Party are similar; while Vasudeva\u2019s position is nuanced; he believes the Rajapakse regime has not capitulated to neoliberalism but that there are forces within the government pulling that way; he thinks there is a tussle whose outcome remains to be seen.<\/p>\n

A similar debate has spread in the business community and economic pages of newspapers and journals. Bourgeois analysts refrain from lefty terms like neoliberalism, populist-capitalism, but grumble that the government does not encourage the private sector, is not market friendly or growth oriented, and the like. The terminology, like all argot, is the vehicle of an ideology – I say this without prejudice. In recent weeks we have also had a debate between Ahilan Kadirgamar<\/a><\/span> and Muttukrishna Sarvanandan<\/a><\/span> in the Colombo Telegraph website, the former laying the blame for our economic woes on neoliberalism and \u2018financialisation\u2019, the latter arguing that the government is not neoliberal enough. \u201c(T)he lack of neoliberalism\u201d is the cause of Lanka\u2019s \u201ceconomic and political\u201d downfall; maybe that\u2019s what a naughty succubus keeps whispering in Sarvi\u2019s ear.<\/p>\n

Another perspective<\/strong><\/p>\n

There is a need to intervene in this debate from an entirely different perspective since the categories in which left leaders, the business community, bourgeois economists, Ahilan and Sarvi, speak are dated, dead and irrelevant. Crucially, tangible neoliberalism no longer survives anywhere in the world; its classic form died when the IMF abandoned hard positions in the early 2000s and it was finally buried by the global New Depression that commenced in 2008.<\/p>\n

The core of neoliberal economics, privatisation of primary economic activities and the public goods sector (electricity, railways, the telecommunications backbone, water supply, public education and universities) has stalled and is no longer preached as creed by any serious economist. Aggressive anti-working class legislation (pseudonym, \u2018labour market reforms\u2019) has been abandoned for a soft more inclusive approach for fear of a backlash of strikes and protests that can unseat governments. Corporate and personal income tax reductions, and capital gains and inheritance tax concessions, have been scaled back to balance revenue requirements to sustain subsidies and social services be it India, Brazil and sub-Saharan Africa. Neoliberalism has been toned down by the IMF and developing country governments into a shadow of the belligerent proclamations of two and three decades ago. The struggle has been costly. In Bolivia alone thousands paid with life and limb before multinational raptors encouraged by IMF programmes, who tried to seize and profit from the people\u2019s water were driven off. Waliveriya is a faint echo.<\/p>\n

This is not to deny that the income gap between the top quartile and the lower 50% has widened in developing countries \u2013 the middle classes have sometimes gained and sometimes lost, comparatively. However, everywhere this has been accompanied by an improvement in mass living standards thanks to absolute growth till 2010. In China some 680 million people have been pulled out of poverty in three decades and economic growth in sub-Saharan Africa (thanks to the rejection of neoliberalism) has been encouraging. (En passant. The World Bank proclaims that more than a billion people have escaped from poverty since 1980; it fails to add that 680 million are in just one country!) Neoliberalism as in Pinochet\u2019s Chile, Sukarno\u2019s Indonesia, Banana Republic South America and JR\u2019s Lanka has been defenestrated by determined opposition. Michelle Bachelet in Chile, Brazil\u2019s Lula and Rousseff, Hugo Chavez, Susilo Bambang Yudhoyono, Manhohan in full retreat, and the cranky Rajapakse regime, are living manifestations of the rolling back of neoliberal pipedreams all across the developing world. Tissa, the CP (and Ahilan) are wrong to say Lanka has capitulated to neoliberalism; the creature has died a natural death. The pinning of the bourgeoisie and Sarves for full throated neoliberalism is futile; they seek for the resurrection of the dead. There was a pronounced drift in that direction for a long time from the late 1970s, the Regan-Thatcher era, but the point is that this was resisted and turned back in subsequent decades.<\/p>\n

The developed world<\/strong><\/p>\n

Thus far I have focussed on neoliberalism in relation to the political-economy of developing world. If you want a watershed, the defeat in 1996 of Congress where Manhohan Singh served as Finance Minister, or the Chavez presidency starting 1999 are turning points \u2013 I think the former more significant. The demise of neoliberalism in the economically advanced countries, however, did not happen in the same way; mass protests and working class mobilisations did not materialise in the last quarter of the Twentieth Century or the first decade of the Twenty-first. Rather, capitalism caved in on itself; the motion of its own internal dynamics spiralled into calamity. Capitalism self-destructed; neither workers nor protesters had the gall or the power to checkmate it. Marx will be disappointed with his chosen class; but can take comfort from the validation of his theories beyond expectation. The New Depression (2008-date) is not of anyone\u2019s doing; it was as unavoidable as an earthquake when pressure in tectonic plates builds up beyond endurance.<\/p>\n

Regan-Thatcher-Blair style neo-capitalism, market genuflecting economic neoliberalism, and neoconservative politics (think Bush-Blair and the obscenity of Iraq) soon got into trouble. The rise of China, the Clinton nuance, the dotcom bubble-burst, nine-eleven, defeat in Iraq and alarming increase in public and private debt, signalled a twist. It was not neoliberalism but capitalism that crashed in 2008; it has still to rise from the ashes. As a consequence of the catastrophe, capitalism threw itself at the feet of the state and begged intervention. Gone was the panegyric to the miracle of the free market and on capitalism\u2019s funeral pyre neoliberalism found an incendiary niche. State capitalism rose from the ashes. State intervention saved the American (and later the EU) banking system, pulled Detroit out of bankruptcy and bailed out three of the largest mortgage and insurance houses in America; \u2018Fannie May\u2019 (assets $3 trillion), \u2018Freddie Mac\u2019 (assets $2 trillion) and AIG (assets $500 billion). Fannie and Freddie, the two largest in the world, are US government sponsored but publicly traded companies with private sector cultural ethos.<\/p>\n

The point of all this is that the great debate between intellectual giants, decrying or championing neoliberalism, is a tussle over a coffin. The schism concerns the innards of a vacuum. Neoliberalism is not the reason for Lanka\u2019s economic predicament since it is not on the menu, and it is not the way out either, unless you believe in Easter Sunday and the resurrection of the dead.<\/p>\n

What has not changed in the rich world, despite the New Depression, is the supremacy of finance capital, and the abandon with which it continues to craft risky instruments and derivatives. Some regulatory provisions have been introduced but clearly inadequate; critics warn of a second crash to come. This is not neoliberalism per se, but the stratosphere of finance capital; as such it is not relevant to the purview of this essay.<\/p>\n

What is Rajapakse-economics?<\/strong><\/p>\n

Instead of dated labels (neo-liberal, not neo-liberal-enough) let us concretise, as best as we can, the economic potpourri of the Rajapakse state. What concoction makes up the PBJ-Amunugama-Basil-Mahinda model? The IMF occupies only a part of the storyline.<\/p>\n

a)\u00a0\u00a0\u00a0\u00a0\u00a0 It is, to a degree, a populist model because the regime is reluctant to impose austerity and enter a confrontation in political space. But for how long?<\/p>\n

b)\u00a0\u00a0\u00a0\u00a0\u00a0 It will become a capitalist austerity model in the coming years, because, the regime agrees with the IMF that mounting debt, a budget deficit that it cannot control, and an external trade deficit that shows no sign of turning round, spells disaster in the medium term.<\/p>\n

c)\u00a0\u00a0\u00a0\u00a0\u00a0 Pipe dreams of making Colombo a global financial centre in the image of Singapore, Hong Kong and Tokyo to the east and the Gulf cities to the west is the hallucination element in the model.<\/p>\n

d)\u00a0\u00a0\u00a0\u00a0\u00a0 It is a model embroiled in a serpentine relationship with China that will entail desperate begging for more concessions from the PRC when debt servicing and interest payment grace periods run out.<\/p>\n

e)\u00a0\u00a0\u00a0\u00a0\u00a0 It was an attempt to install a Corporatist State under Rajapakse hegemony, but the signs are that this strategy has suffered a setback in recent months due to international pressure against authoritarianism, and to a lesser degree, due to local opposition.<\/p>\n

f)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The economic model is so deeply interwoven with corruption, abuse of power, and political impunity for cronies, that it is not sustainable in the long-term without a near dictatorial whip. For so long as the devotion of the Sinhalese electorate in gratitude for the defeat of the LTTE holds, however, the regime can survive with moderate abuse of the electoral system, holding back from blatant dictatorship.<\/p>\n

It is absurd to stick inappropriate labels on this political entity. \u2018Neoliberal\u2019, \u2018not neoliberal enough\u2019; can\u2019t these chaps, I mean they\u2019re younger and brighter than I, do better? There is no one-shot label to stick on this creature; it is a model without a name. It is an ad hoc economic order, cut, patched here and there, and tailored to suit the venality, corruption and power hunger of the leaders. It must simultaneously induct sufficient populism without which it is impossible to retain power. There is an international dimension too which conditions the model. The West and human rights lobbies are breathing down the neck of the government about war crimes; hence there is an enforced special relationship with China without which the regime would already have been badly burned. All the commentators I have referred to say that the government will have its feet held to the economic fire soon; but they analyse the roasting differently.<\/p>\n","protected":false},"excerpt":{"rendered":"

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