{"id":224619,"date":"2021-12-28T15:24:28","date_gmt":"2021-12-28T09:54:28","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=224619"},"modified":"2022-01-03T09:11:01","modified_gmt":"2022-01-03T03:41:01","slug":"an-economic-roundtable-for-a-middle-path-through-the-crisis-reply-to-hema-senanayake","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/an-economic-roundtable-for-a-middle-path-through-the-crisis-reply-to-hema-senanayake\/","title":{"rendered":"An Economic Roundtable For A Middle Path Through The Crisis: Reply To Hema Senanayake"},"content":{"rendered":"

By Dayan Jayatilleka<\/a> –<\/strong><\/span><\/p>\n

\"\"<\/a>

Dr. Dayan Jayatilleka<\/p><\/div>\n

Mr. Hema Senanayake says<\/a><\/span> in response to me<\/a><\/span>: \u201cSo, he [Dr. Dayan Jayatilleka] argues \u201cmiddle path\u201d is the solution. In economic reforms, there is no middle path I can ever think of. There is only one way to do it, at least when we consider macroeconomic fundamentals on which the progress of whole economy rest upon.\u201d<\/p>\n

I beg to differ, not for the purpose of disputation but because of the dangerous consequences of Mr. Senanayake\u2019s supposition.<\/p>\n

Firstly, the call for the Middle Path eschewing the extremes was made by one of humanity\u2019s most advanced minds, namely Gautama, the Buddha. He was postulating the Middle Path as a universal truth. No realm of human activity or life was exempt from it. Not even economics.<\/p>\n

Secondly, the same point was made by another of humanity\u2019s finest minds, who has contributed to laying the foundations of thought in the human and social sciences up to this day. I refer to Aristotle and his doctrine of the Golden Mean. He too critiqued the extremes and argued that the best solution lay in the average, the median line, between any two extreme positions. Hence the Golden Mean.<\/p>\n

If I had to choose between, on the one hand, the \u201cmore erudite thinkers and true leaders\u201d who \u201cthink differently\u201d\u00a0as referred to by Mr. Senanayake, who does not name them, and on the other hand, the Buddha and Aristotle, I hope I will be pardoned for opting for the latter.<\/p>\n

It is my cultivated habit to look for the Middle Path or Golden Mean, and when I do, I find that this provides and has almost always provided the best solution.<\/p>\n

Let us move on to economics, or more precisely, economic reforms. Mr. Senanayake writes that \u201cIn economic reforms, there is no middle path I can ever think of. There is only one way to do it\u2026\u201d<\/p>\n

This I\u2019m afraid says more about the limits of Mr. Senanayake\u2019s preferences or knowledge than it does about economic thinking or economic policy. The economic paradigm of John Maynard Keynes is an excellent example of a middle path between free-market capitalism and state-controlled communism. If we move into the realm of economic reform at times of grave crises we have President Roosevelt\u2019s New Deal, which was a middle path between unreconstructed capitalism and Marxist socialism. While many countries were succumbing to the lures of either Fascism or Communism, the Rooseveltian New Deal saved US democracy from being rent by civil conflict and class struggle during the great depression.<\/p>\n

Keynesianism was the animating spirit of the Beveridge plan and the welfare state erected by the Labour government of postwar Britain.<\/p>\n

In the USA today, the economics of President Joe Biden represents, in his own words, a return to the philosophy of Roosevelt\u2019s New Deal.<\/p>\n

If Mr. Senanayake thinks that these are old-fashioned ideas, I would suggest he reads the writings of Nobel prize winner Joseph Stiglitz and Paul Krugman, not to mention Jeffrey Sachs and Robert Reich.<\/p>\n

Mr. Senanayake has obviously not heard of Social Democracy, which is a Middle Path between Right and Left, consisting of a synthesis of ideas of Right and Left.<\/p>\n

How has the Middle Path in economics and especially in the context of economic crisis, worked in Sri Lanka? At a time of devastation through civil wars and interventions, Presidential candidate Ranasinghe Premadasa deliberately struck a neo-Rooseveltian chord, entitling his 1988 election manifesto \u201cA New Vision & A New Deal.\u201d In his policy practice he eschewed the twin extremes of, on the one hand, the establishment thinking of rapid growth which awaits \u2018trickle-down\u2019, and on the other hand, and on the other, the crassly egalitarian socialism that the JVP stood for.<\/p>\n

The Premadasa paradigm was of growth with equity, which succeeded in reviving growth rapidly, attracting foreign investment, rejuvenating the stock market while simultaneously\u2014not sequentially\u2014reducing inequality through a plethora of programs such as Janasaviya, free school uniforms, free mid-day meals etc.<\/p>\n

In a recent speech on the ongoing economic crisis, Prof Howard Nicholas of the ISS at the Hague, and the University of Rotterdam, emphasized that industrialization was the only solution, and pointed to President Premadasa as the only leader who actually embarked successfully on that path.<\/p>\n

Premadasa consistently took a Middle Path and did so creatively. In 1992, he addressed the problem of loss-making plantations neither by maintaining the status-quo nor by selling the plantations to foreign corporates as President CBK did in 1995. Instead, Premadasa granted 5-year renewable management contracts to Sri Lankan private companies.<\/p>\n

Another example of the Middle Path in economics is that of East Asia, namely Japan, China, South Korea and ASEAN, most notably Vietnam. Theirs was not the path of relying excessively on the free-market to work its magic, as in the West. The role of the state is much greater in the East Asian model than in the neoliberal one. Therefore, the formulae of Lankan neoliberals, to slash state expenditure, has to be looked at more closely and with greater discrimination.<\/p>\n

To sum up, I would use the markers \u2018Keynes\u2019, \u2018Roosevelt\u2019, \u2018Social Democracy\u2019, \u2018East Asian model\u2019 and \u2018Premadasa\u2019 to demarcate the third space in economics and economic policy; the Middle Path which Sri Lanka should follow.<\/p>\n

At a moment when the JVP\u2019s Anura Kumara Dissanayake and the FSP\u2019s Pubudu Jayagoda and Duminda Nagamuwa have attacked the IMF as a solution, and given that these parties drive a powerful union movement, I would renew my call for an Economic Roundtable to arrive through consultation at a broad consensus, based on mutual trade-offs, so as to manage the economic crisis.<\/p>\n

The country must go to the IMF only having agreed on the parameters and red-lines as pertains to austerity measures which will impact upon the working people and the poor.<\/p>\n","protected":false},"excerpt":{"rendered":"

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