A Brief Colonial History Of Ceylon(SriLanka)
Sri Lanka: One Island Two Nations
A Brief Colonial History Of Ceylon(SriLanka)
Sri Lanka: One Island Two Nations
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Thiranjala Weerasinghe sj.- One Island Two Nations
?????????????????????????????????????????????????Thursday, August 3, 2017
Reflections on four decades of neo-liberalism: 1977- 2017
By Sumanasiri Liyanage-August 2, 2017, 8:31 pm
Senani and Kalpa, two of my former students, gave me a wonderful gift
when they returned to Sri Lanka for a summer vacation from the New
School of Social Research in New York. The gift that is a copy of
Arundhati Roy’s second novel, The Ministry of Utmost Happiness, provided
me loads of thought on the subject that I intend to deal with in this
essay. Of course her narrative is about India. The following quotation
appears to be equally applicable to Sri Lanka’s journey in the last four
decades through neoliberalism. On page 105, she writes: "The summer of
the city’s resurrection had also been the summer of scams-coal scams,
iron-ore scams, housing scams, insurance scams, stamp-paper scams,
phone-licence scams, land scams, dam scams, irrigation scams, arms and
ammunition scams, petrol-pump scams, polio-vaccine scams,
electricity-bill scams, school-book scams, God Men scams, drought-relief
scams, car-number plate scams, voter-list scams, identity-card scams-
in which politicians, businessmen, businessmen-politicians and
politician-businessmen had made off with unimaginable quantities of
public money." If one wants to Sri Lankanize the list she may do some
additions and subtractions like karunka scams, pepper scams and of
course bond scams.
However, a political economist should and also could not be so nasty and
sarcastic as a fiction writer. In 1977, with five-sixth majority in the
Parliament, President J R Jayewardene might not have projected that the
drastic change of economic policies introduced by him and his new
government would have given rise to so many scams by his successors that
also include his nephew. His projection was to build a vibrant
market-based capitalistic economy emulating Singapore. Since all the
governments irrespective of their political colorings adopted the same
policy framework with or without minor changes, we have witnessed
continuous 40 years of neoliberalism at work. How has this model worked
in the last 40 years, 1977- 2017? Does it build a vibrant capitalistic
economy in Sri Lanka? In this essay, I shall try to assess the
performance of the Sri Lankan economy in the past four decades with
regard to the objectives listed by the designers of 1977 policy
framework. Nor attempt is made to examine the 1977 policy framework from
my personal normative position.
Although 40 years is not an adequate timeframe to make an assessment on
that period’s place in nation’s history, it is an adequate time to give a
fairly accurate verdict on the success and failure of the
politico-economic policy package. If we look at the capitalistically
developed countries in the post World War II period, two decades were
sufficient to give a fairly accurate verdict as to if those countries
were on the path of capitalistic development. President Park Chung-Hee
introduced a new policy package in South Korea in 1960. In the 1970s it
was very clear where it was heading. Development whatever the setting
involves structural transformation. It is a historically proven fact
that market in itself is not in a position guiding this structural
change. The directionality of capital movement regulated by the
government had ensured the movement from light industries to heavy
industries, from cheap labour to skilled labor. In some areas, direct
foreign investments were virtually banned. In heavy industries, the
state came forward as the principal investor of capital. Hence, one may
conclude that in modern set up, two to three decades are an adequate
timeframe to give a reasonably accurate verdict. For example, waiting
till 2000 was not needed in the case of Taiwan or South Korea in order
to characterize those economies as developed economies,
What are the crucial criteria that have to be used in forecasting the
success or failure of the policy package? There are multiple factors,
but I would list most important ones only. Here, I do not include the
growth rate and the change of per capita income. They are outcomes not
causal factors. However, since many economists used them as significant
indicators, I may say something on the subject. When I joined the
University of Peradeniya in 1970 as an assistant lecturer, my all
inclusive monthly salary was Rs. 705. Today, a newly recruited lecturer
gets about Rs. 70,000 all inclusive. So 100 times increase in the last
40 years. Do these figures give a realistic picture on the performance
of the economy? My answer is categorical, ‘NO’. If we transfer this
money value into real value, what we can see is surprisingly opposite.
Assume, as it was in 1975, our main meal today consists of rice, two to
three types of vegetable curry and a small amount of fish or meat. In
1975 such a meal was 60 cents. So the real value of my salary was equal
to 1,175 meals a month. Today, a similar meal is between Rs. 100- 150.
If we take Rs. 100, the real value of the monthly salary of a newly
recruited lecturer is only 700 meals! Around 40 per cent reduction in
real terms after 40 years of so-called economic growth! It is
interesting to note that this simple indicator demonstrates that we have
wasted forty years by adopting a neoliberal policy package by all the
parties in power.
What are the crucial factors that should be operated in synergy in order
to achieve economic development? (1) the direction of the movement of
capital; (2) the proportion between productive labour and unproductive
labour in favour of the former; (3) the way in which the surplus
generated in the production process is used; (4) the change of low
skilled low paid labour to high-skilled well paid laboor; (5) preference
given to national actors over foreign actors; (6) gradual shift to
growth-augmented industries.
Since the neoliberalism policy package was first introduced in 1977 none
of these critical causal factors were not put into work adequately.
Instead of focusing on these factors, almost all the governments in Sri
Lanka focused mainly on the policy reforms imposed by the IMF, the World
Bank and the ADB. By 1975, the Sri Lanka had a production structure
which was to a substantial extent complex. There were many basic
industries (iron and steel, metal, clothing, cement, paper to cite some)
owned by the state and light industries owned by the private sector.
Instead of having based on this foundation and reforming them addressing
their weaknesses, what was done in 1977 was to destroy this structure.
The 1977 policies were based on four pillars, namely (1) large state
investment in infrastructure in agriculture and energy fields; (2)
increasing export of light industrial goods (3) export of unskilled
labor especially to West Asia and (4) using low-paid unskilled labor. Of
course, it may not be incorrect to argue that these pillars are bad for
a country that is in its initial phase of economic development until
stronger and advanced pillars are built. It is sad to note that even 40
years after, Sri Lanka continues to depend more and more on the same
pillars. In Latin America, the 1970 decade is known as a lost one
because many countries in that part of the world adopted neoliberal
policy packages. It may not come as a surprise if a future historian
brands this period as Sri Lanka’s lost four decades.
In lieu of conclusion, I wish to quote once again from Arundhati Roy’s
second novel. What she wrote on page 101-02 is a correct assessment of
the Sri Lanka experience under neoliberalism the absence steel factories
or missiles notwithstanding. "The world rose to its feet, roaring its
appreciation [especially after January 8, 2015]. Skyscrapers and steel
factories sprang up where forests used to be, rivers were bottled and
sold in supermarkets, fish were tinned, mountains mined and turned into
shining missiles. Massive dams lit up the cities like Christmas trees.
Everyone was happy."
E-mail: sumane_l@yahoo.com