What neoliberals they are: Reply to Advocata

By Avocado Collective

Avocado’s analysis (‘What kind of liberals are these?’, 29 June) inspired retort from ‘Fellows of the Advocata Institute’ (‘The kind of ‘liberals’ we are’, 24 July). These Fellows accuse us of “casting aspersions on their motives”. 

Advocata wear the neoliberal dogma of their masters on their sleeves. Yet generous funding from the US Government’s Atlas Foundation and National Endowment for Democracy (set up by Reagan to fund former CIA projects) – not to mention petty cash collected as membership fees – cannot hide the poverty of their philosophy.

These Fellows model the same fashion-lines the emperor claims to wear, and rather kinkily, insist we all do too. But the designs of global oligarchic centres don’t necessarily fit their peripheries – our underdevelopment is not a straitjacket we were born with, but the result of processes that Advocata’s advocacies would only accelerate.

Private corruption

Advocata believes, “Poor policy and governance are at the root of our problems.” But is it only public sector governance that frustrates our development? Isn’t it private accumulation, not public planning, that drives inequality and the “development of underdevelopment” in Sri Lanka and beyond – even in the crisis-ridden homelands of Advocata’s sponsors?

Advocata’s raisons d’etre is State-owned Enterprises (SoEs): “a major area of research”. But do they wish to improve SoEs, or to grab these assets for private liquidation? Their only practical criticism is corrupt management, and lack of parliamentary oversight. If so, why release such assets to an even more corrupt private sector, instead of strengthening democratic control?

In colonised and imperially-stunted countries, merchants have not been the wellsprings of innovation and creativity of Advocata’s utopian dreams, but textbook examples of corruption, inefficiency and “rent-seeking behaviour”. Eminently liberal INGOs such as Transparency International acknowledge this, pointing the finger at private-sector corporate directors skimming off contracts and robbing shareholders, thereby not “getting the prices right.” 

Such blatant defalcation is highlighted in Weliamuna’s 2015 report:

“This is precisely what is avoided even by purported good governance activists and the media in Sri Lanka. Although they talk the hind legs off a donkey on the evils of corruption, they fail to bite the bullet in regard to ‘naming & shaming’ professionals and bigwigs in the corporate sector.”

Capitalism needs the State

 The modern state, e.g. in England, emerged in tandem with capitalism’s self-destructive anarchy, which makes life, “nasty, brutish, and short”, as Hobbes said. Intelligent liberals, from Smith to Keynes to Picketty, recognised the state’s role in human survival under capitalism. Only in this light can we assess the logic and history of SoEs and challenge underdevelopment.

The market cannot replace the state in matters of public interest. Many of our SoEs were set up for strategic reasons because the local elite, paralysed by colonial trader/rentier ideology, never dared venture into areas needed for the country’s economic independence. Our Steel Corporation, for example, was set up as stage 1 of a 3-stage project to enable steel manufacture using local ore. Post-privatisation, this has been reduced to a steel rolling mill. 

SoEs also helped alleviate poverty, where our private sector failed. The Paddy Marketing Board was established to buy paddy from the peasant sector at guaranteed prices (which the English ensured when fearing WW2-Japanese invasion!), as did the Marketing Department for vegetables and fruit. Sathosa, Salu Sala and similar trading bodies provided essential commodities inexpensively to working people, breaking the middleman-stranglehold on both producers and consumers. The State Council set up the Bank of Ceylon to break the monopoly of Chettiar moneylenders operating as fronts for English banks. The People’s and other state banks were to reduce usurers fleecing the population.

Advocata sees all this as detrimental – their libertarian ideology demands privatisation, despite the disastrous history of such attempts in Asia, Africa, Latin America, and Eastern Europe. Our Fellows have no conception of the decisive role played by the (especially US) state in “Asian Miracles”, strategically positioned on Cold War frontlines.

The poverty of privatisation

Former-diplomat Tamara Kunanayakam notes Advocata’s report on privatising or closing down 55 SoEs predates the Institute itself! She also points out that, after 1980-2009 European privatisation, SoEs performed worse than when they were public. For example, London’s Metronet Rail cost taxpayers £400 million. 

Thatcherism privatised SoEs and undermined England’s industry and services. Unemployment exceeded three million, forcing several million to emigrate to Europe, Australia and Canada, even as the definition of “unemployment” was rigged to exclude those who’d given up looking for jobs. In the housing sector, privatisation amounted to mass murder – see Grenfell Towers. 

More damning are Sri Lanka’s privatisations. The East-German-built Thulhiriya textile complex is now reduced to a hulk, used by MAS for warehousing. Private owners sold as scrap, the machinery accumulated over 20 years by the Werahera CTB workshops – South Asia’s largest workshops, capable of manufacturing buses and overhauling and rebuilding engines completely.

The estate sector had to be nationalised, as foreign-owned companies were divesting for decades; shortfalls in replanting reduced productive bushes to about 40%. State corporations began a replanting programme to replace all bushes by 2000, which re-privatisation virtually stopped, leaving only about 50% productive. The Finance Minister’s 2017 budget speech acknowledged privatised estate companies’ failure to invest after: 

“Almost 25 years… performance has been erratic, with investments in modern equipment and agricultural practices in [plantation companies] being inadequate, with misuse of the assets and hence productivity remaining… a worrisome issue.”

Advocata’s demands for the private looting of existing SoEs may help the 1% get richer quickly, clogging our overcrowded streets with luxury vehicles enroute to malls and hotels that 99% of us cannot afford. It would debilitate the public sector and lead to economic disaster, just as neoliberal policies have always done.

Before you study economics, study the economists

Advocata lives in coy denial, when it contra-factually claims that the dominant economic discourse opposes state control. 

Economic “analysts” in the media harangue us daily to hand over public resources to private capitalists. Business managers, chartered accountants, and students are fed this numbing neoliberal drivel. Even universities, meant to encourage critical thought, have followed suit.

These economists also claim that attempts at industrialisation failed, ignoring the sabotage from within and without. They preach “comparative advantage”, and “economies of scale.” The less-shameless ones point to the enormous mounting import bill, but even they avoid words like “import substitution”.

Should we listen to the likes of Alan Greenspan, former US Federal Reserve Chairman who, post-2008 capitalist crisis, publicly confessed to not knowing what went wrong. Or should we listen to Karl Marx, who knew?

The “free market” – in practice, the rigging of markets for dominant private interests through tariffs, quotas and other open and hidden regulations – will not save us from impoverishment, inequality or the end of nature (likely before history) as we know it. Only commons sense will.

We do not need to wear the Empire’s ill-fitting kinky garments! We need to make our own protective coverings, and not just sew them, but make pin, needle, thread and textile, as well as make the machines that manufacture them.

(Read more at avocadocollectiveblog.wordpress.com.)