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print versionDaily FT [Sri Lanka]
7 May 2021
The current regime in Sri Lanka continues to head deeper into crisis. Many are expressing growing concern about its authoritarian direction. There is increasing awareness of the fragility of liberal democracy. Democracy is no longer considered inevitable. But there has not been a similar public debate about the parallel transition away from the pre-pandemic era of globalisation.
Reckoning with the threat to democracy requires grappling with the ongoing transformation of the global economy. If we take the need for democracy seriously, the aim must be to understand the roots of the present crisis. Toward this end, pushing back against authoritarianism demands a different vision of Sri Lanka’s economy; in particular, one that embraces the possibilities of self-sufficiency.
The rupture
Many may assume that the present crisis is simply the effect of the COVID-19 pandemic and will end as soon as the virus is controlled. Besides the fact, however, that the pandemic is far from abating, it also occurs in a structural context. It has exposed the underlying fault lines in the global economy, especially the continuing dependence of poor countries on rich ones. India, for example, is in the throes of a world historical catastrophe, while the United States appears to be on the path to recovery.
Powerful global institutions such as the International Monetary Fund and World Bank have in turn argued that the US could pursue stimulus because of its fiscal space; the degree to which the baseline of its wealth could accommodate more generous policy. But this explanation is insufficient. The US did not always pursue the transformative options politicians are considering today. Instead, changes in policy are the outcome of a widening of the ideological debate.
Multiple political campaigns and theoretical critiques of the dominant economic orthodoxy laid the groundwork for the break from the austerity economics, which dominated the previous response to the Great Recession of 2008. The example of the changing priorities of state intervention in the economy shows that the limits of policy making are more often the limits of our own thinking. The material limit cannot be separated from the way in which we interpret it.
The fracturing of consensus
In the case of Sri Lanka, there has not yet been a similar root-and-branch rethinking of what is possible. Local experts and policy makers across the spectrum of Government and Opposition continue to frame their solutions in terms of attracting Foreign Direct Investment and fiscal consolidation. FDI has become a deus ex machina to avoid probing questions about the structure of the economy, especially domestic revenue mobilisation. And while it is important to re-balance the economy in favour of the poor and marginalised, fiscal consolidation too often becomes a tool of austerity.
At the same time, the global consensus within dominant institutions such as the IMF and World Bank is fragmenting. This is evident from contradictory statements put out about the need for “coordinated fiscal stimulus†versus “fiscal sustainability.†The fracturing of the global consensus should encourage us to think more deeply about the political economic contradictions that provoke the ramping up of nationalist authoritarianism as the dominant response from the right. This includes the recent proposed burqa ban in Sri Lanka.
If local experts and policy makers have found themselves flat-footed by rapid changes in the global economy, the current regime also faces its own challenges. Against the spectre of depression, it is forced to pursue its nationalist project with more intensity to keep its bloc together. Yet this approach cannot solve the underlying contradictions. The regime appears to have subordinated the sketchy developmental goals that it proposed in response to the pandemic to its overriding nationalism. Talk last year of import substitution now comes off as an empty slogan—or worse, a counterproductive, ad hoc system—in the absence of a serious, concerted attempt to mobilise across society to transform the economy.
Instead, the regime is attempting to mitigate the ongoing crisis by reverting to its old platitudes of “Vistas of Prosperity and Splendour†. This response only increases the potential scope for social disaster as the crisis grinds on. The most ideologically self-aware actors within the opposition meanwhile have come to accept that because democracy is not inevitable, they must work harder to justify its value. If the opposition—whatever the diverse political actors involved—however, is serious about preventing further democratic backsliding, it must extend the same critical eye toward reconceiving the economic framework of democracy.
Changing Contradictions
For the democratic opposition, that means revisiting the core assumptions around which a populist bloc was constructed in the late 1970s to promote the “open economy†as the positive successor to the “closed economy†. The open economy was initially a successful authoritarian populist reaction against social democracy. The right was able to exploit the contradictions that had accumulated within the latter. The left lacked a similarly effective response that could have worked through these contradictions in favour of popular democracy.
Around the same time, social theorist Stuart Hall argued in his brilliant analysis of Thatcherism in Britain, “Popular-Democratic vs Authoritarian Populism,†that Margaret Thatcher could “represent Labour as part of the ‘big battalions’, ranged against the ‘little man’ (and his family) oppressed by an inefficient state bureaucracy†. The political scientist James Jupp made a strikingly similar observation in the Sri Lankan context on the eve of JR’s victory. He noted in his article, ‘Democratic Socialism in Sri Lanka,’ that the UNP appealed to voters by arguing that: “If property through the country is widely dispersed in millions of private hands, the power which resides in the ownership of property is also dispersed and power cannot be used coercively.â€
At the same time, because the open economy has been so successful in tilting the balance in favour of capital over more than four decades, it has undermined the livelihoods of the working people and middle classes on which it depends for continued mass support. This is the space in which authoritarian nationalism now intervenes. It intensifies the crisis of the old order. Accordingly, attempts to revive economic liberalisation appear quixotic. They lack the support base that would make them an effective part of a reconfigured defence of democracy. In fact, they are more likely to be crushed electorally.
Put another way, it is not enough to replace J.R. Jayewardene’s authoritarian instincts with Mangala Samaraweera’s multicultural progressive attitudes while maintaining the same liberal economic dispensation. The contradictions of Sri Lanka’s political economy have changed. The successful bloc capable of defeating authoritarian nationalism and creating a popular-democratic base of support must break with the assumptions of the entire regime of accumulation represented by the open economy.
On a fundamental level, that means questioning the supposed inevitability of globalisation. The name of the alternative is self-sufficiency. Too often, the people most attuned to the ideologically salient debate about democracy versus authoritarianism have mocked self-sufficiency as backward-looking. The reality is that the question of state intervention in the economy, of which self-sufficiency is just one potential aspect, is incredibly complex. It continues to evoke new potential combinations that could provide a more effective basis for democracy.
Modes of state intervention
Discussions about the ways in which the state played a fundamental role in the economy have been central, for example, to the tentative construction of a developmental state model in the East Asian context. Chalmers Johnson, the scholar of Japan’s developmental state, pointed out that authoritarianism often backfires. We could draw a parallel with the failed attempts of the current regime in Sri Lanka to use circulars and directives to achieve top-down economic goals.
In contrast, as Johnson argued, the developmental state has historically required disciplining capitalist investment by pursuing shared belief in a social mission, which can avoid the worst pitfalls of authoritarianism. Or as he put it in his review, ‘The Developmental State: Odyssey of a Concept’: “In the true developmental state, on the other hand, the bureaucratic rulers possess a particular kind of legitimacy that allows them to be much more experimental and undoctrinaire than in the typical authoritarian regime. This is the legitimacy that comes from devotion to a widely believed-in revolutionary project.â€
In the historical context of East Asia, the pressures and opportunities were real because of both the communist example in the region and the overwhelming aid and access to export markets that the US provided, to facilitate reconstruction after World War II. These challenges provoked states to pursue redistributive measures, such as land reform.
In the case of Sri Lanka, we must reimagine within our own historical context what methods can effectively discipline capital. A framework of sanctions and incentives could include increasing domestic revenue mobilisation by punishing tax evasion among the rich and powerful. The money instead could be used for recurrent welfare expenditures. Incentives could include deficit spending on a comprehensive plan to revive critical areas of the economy, such as agriculture. These measures’ success pivots around countervailing social powers that set limits on coercive state action against the poor and marginalised, while strengthening the State’s capacity to pursue development.
In contrast to the prevailing assumptions about import substitution as it was historically practiced in Sri Lanka, especially during the 1970s, this may require a combination of State-led wholesale distribution of basic goods along with production organised through voluntary association. Thinking through this relationship involves complex questions about the autonomy of these social organisations, such as agrarian cooperatives, within the overarching goal of transforming society.
Sri Lanka’s great social scientist Godfrey Gunatilleke summarised this paradox in a short Lanka Guardian piece on ‘The ‘Mixed Economy’. He reflected on the muddle of the country’s post-independence trajectory. As he argued, the old left had needed to theorise “a longer intermediate phase in which the incentive systems and the framework of economic prospects had to create conditions for both the public and private sectors to function effectively over a considerable period†.
Nevertheless, the limitations of past attempts to transform society in an egalitarian direction can also inspire present solutions. The New Deal, which initiated the US’s recovery from the Great Depression of the 1930s, has become a springboard for collective responses to crisis in Western countries. Likewise, we can draw from Sri Lanka’s own historical example. Omissions and errors can be converted into solutions by grappling with the limitations of these experiments.
A New Order
The first step, though, requires genuine curiosity about the question of self-sufficiency. It further demands a much greater degree of intellectual scepticism toward conventional policy prescriptions. Broadly speaking, the concept of self-sufficiency is just a shorthand method for visualising a better future, versus the alternative scenario of increased suffering amid global unravelling. In the debate, there are of course variations in tone and emphasis, including ongoing arguments about whether globalisation in its current form can weather the storm.
True insight, however, comes from honestly acknowledging the political economic contradictions and working through them to establish, in broad ideological outline, the possibility of a new order. The alternative in Sri Lanka is to surrender to the nationalist response to global crisis; willingly or unwillingly (as the case may be), by continuing to back an unpopular economic program. The terminus is usually social disaster. In this regard, the trajectory of India under Narendra Modi should be a massive red flag.
Self-sufficiency, of course, has many shades. The scope of policies that can be proposed and enacted depends on the historically shifting balance of forces between capital and labour, though the balance has skewed to an extreme degree in favour of capital for decades now. But it is necessary to begin the conversation, to interpret these tasks within a comprehensive vision of what Sri Lanka could become. As Ahilan Kadirgamar and I, along with other members of our Combating Crisis column in the FT, put it last year, this includes the possibility of a new social contract.
Preventing extreme authoritarian takeover dovetails with the larger goal of achieving a better, safer, and more equitable society. Toward this end, we must grasp the underlying contradictions that the current regime is attempting to neutralise. Unfortunately, its preferred tools increasingly appear to be authoritarian nationalist measures. Just as democracy is not inevitable, neither should we assume that the pre-pandemic orientation toward the economy is an adequate vehicle of democracy.
The writer is an independent researcher who holds a PhD from the University of California, Los Angeles
