Where are Sri Lanka’s economists?

By Uditha Devapriya

Asoka Bandarage’s Colonialism in Sri Lanka (first published in 1983) follows a long line of books on the impact of British land policies in Ceylon. The best of these books remains S. B. D. de Silva’s The Political Economy of Underdevelopment, first published by Routledge in 1982. De Silva, easily one of Sri Lanka’s finest economists – though he would have detested the genericness of such honorifics – died five years ago. His death went by almost unnoticed. But in every book that has been written and every effort that has been undertaken to appraise the country’s impoverishment at the hands of British colonialism, one notices his influence, his life’s work.

De Silva came from a generation of economists – among his contemporaries he counted were G. V. S. de Silva, H. A. de S. Gunasekara, and Gamani Corea – who remained, to their last day, profoundly concerned about the plight of their country and of the masses. They were all convinced – and none more convinced than S. B. D. – that Sri Lanka’s future lay in industrialisation, or more specifically production. Taking the famous example of the pin from Adam Smith’s The Wealth of Nations – a tract that is regurgitated in toto by Sri Lankan economists today – he contended that Sri Lanka had failed to grow: it made and sold garments, but did not even manufacture a pin. In every aspect and in every corner, Sri Lanka remained dependent on imports.

A small state located to the south of a regional hegemon, in an ocean that remains heavily contested by a wide array of superpowers and major powers, cannot thrive without industry. Contrary to those economists who offer solutions in the form of liberalising or liberating the economy – the question can be asked, liberated from whom, or what? – S. B. D. de Silva’s generation did not limit themselves to abstract theorising. They were moved, on the contrary, by practical considerations – as all thinkers and economists must – and they were convinced that before undertaking any major reform, they had to first ascertain their impact on all sectors. They did not shy away from attacking or critiquing policy orthodoxies, because they knew that before everything, policies must work. If they did not, or if they risked destabilising the country and its society, there was no point pursuing them.

Indeed, all of them questioned these orthodoxies, and none with as much zest as S. B. D. His work targeted two assumptions – that Sri Lanka’s plantation sector was modern, and that Sri Lanka’s capitalists were progressive minded – and effectively debunked both. That the country’s plantation sector is stagnating today is evident enough: the situation is so bad that when the previous regime mandated a Rs 250 hike in daily wages, no fewer than 20 companies went to courts, seeking to quash the decision. Value addition has declined in the sector since the 1980s, and much of the money spent by companies has been on marketing and advertising. Yet, instead of addressing and arresting these declines, Sri Lanka’s capitalists seem content in letting things continue. This is the gist of The Political Economy of Underdevelopment: that unless those who can reverse stagnation steps in, Sri Lanka will continue to shrink, to remain the economic basket-case it has been for a long time.

Unfortunately, for some reason – for some not entirely unknowable reason – Sri Lanka’s economic sphere has been penetrated by influential think-tanks and ideological interests which have strayed from this approach. To put it bluntly, we no longer find economic thinkers who are ready to question policy orthodoxy, who can point out the fallacies of pursuing it, who, indeed, can show just how incompatible the needs of the country are with the implementation of such orthodoxies. When the country was urged to reduce its food subsidies in the mid-1960s, Gamani Corea, then despatched to represent Sri Lanka at the World Bank, argued that given the tiny military the country possessed at the time, welfare remained an important stabilising influence: to reduce them now, he argued, would be to incur higher defence expenditures later. If it’s impossible to think of economists today, basking in their think-tank-doms, making such statements, it’s because there aren’t any.

In the foreign policy sphere, the likes of S. B. D. and Gamani belonged to that breed of intellectuals who were convinced that Sri Lanka’s future lay in the Global South. Both Corea and de Silva hailed from elite and middle-class backgrounds, yet both saw and accepted the practicality of following these principles. Their intellectual descendants today – if they can be called as such – remain, as S. B. D. himself observed, beholden to powerful interest groups, to external funding and patronage. In such a context, it is easy to understand why policies which have failed in the West, which the West is abandoning in favour of full-scale industrialisation, are still being touted, still being promoted, still being idealised, in countries like ours: because they are easier to market in places where intellectuals and policymakers, not to mention officials, accept them without question.

The solutions prescribed by these interest groups remain predictable and utterly bland: from tweaking labour laws to privatising State corporations, from floating the rupee to closing State-owned factories, these reforms have been promoted for as long as one can remember. Yet it remains intriguing, if not perplexing, as to the relevance of such policies to countries which have never, since independence, grown as much as they should have. How relevant, indeed, are they to the affluent economies of the West, which are rejecting them on the grounds that, in the words of a former US Economic Advisor, the State “had to step in” where benefits no longer flow from “the individualised decisions of those looking only at their private bottom lines”?

Or to restate the question: how relevant are these policies at all? Free market orthodoxy, or market fundamentalism, of the sort advocated by Colombo’s economic circles today, no longer holds ground. It was rightly critiqued by the likes of S. B. D. de Silva, who saw such reforms as serving the role of maintaining if not entrenching the financial establishment, with hardly any benefits at all for the key stakeholders who mattered: the people of the country.

There is an obvious paradox here. On the one hand the world is waking up to the harsh reality that austerity will not put food on their fable, that if a country is to survive it must pursue industrialisation and ensure self-sufficiency in critical sectors, food being an obvious priority. On the other hand, multilateral agencies, even those whose mandate is to provide aid and assistance, are selectively enforcing such measures in the Global South, while not bothering to pursue them in the more affluent Global North.

In this context, it is interesting to note what US trade representative said in defence of the Biden administration’s pursuit of protectionism and of a trade war in the chips and semiconductor sector with China. When asked by Foreign Policy magazine as to whether such policies were at odds with the US’s advocacy of free and open markets elsewhere, she replied,

“There is a direct through line between the state and expression in the economy. And that is a really important aspect of another shared challenge we have with our European friends and other partners around the world in terms of a sustainable path to economic growth and development. In a version of globalization where the field is not level, we are having to figure out how to adapt.”

Countries like the US will always tweak the rules and break with orthodoxy, because it serves their interests to do so. It is questionable as to why Sri Lanka cannot do the same. To rephrase that famous adage by Munidasa Cumaratunga, a country which does not produce even a pin cannot be said to prosper, and a country which excludes production from its priorities cannot hope to prosper at all. 70 years ago, Joan Robinson pondered whether Sri Lanka’s trade unions would ever witness capitalists willing to share the fruits of their enterprises with them. 70 years later. we ponder whether Sri Lanka will ever see economists and thinkers willing to think beyond policy orthodoxy, willing to think, not of external interests, but of the country they live in, and the people they live with.

Where are these economists? Where are these thinkers? Five years after the passing of Sri Lanka’s last great economist and one of its last great thinkers, these questions remain unanswered. The writing is on the wall, but no one appears to be aware of it. Not even those foundations and think-tanks which so ubiquitously display the names of these intellectuals, which claim to speak on behalf of their legacy, yet which end up maintaining the same narratives their forbearers tried so hard and valiantly to question, reform, and make more relevant to their people. This is what it is, and it should be called out as such: it is a tragedy, a national tragedy.

The writer is an international relations analyst, researcher, and columnist who can be reached at udakdev1@gmail.com