Ultimately, both the Government’s proposed solution and those of its neoliberal Opposition are wrong-headed in ways that mirror each other
There is no longer any doubt that Sri Lanka stands on the precipice. Across the ideological spectrum, people recognise that the current crisis is extremely profound, and that it requires exertions to match. The direction of the force that is applied will shape the solution. In the case of the current Government, of course, as many observers have pointed out, it seems to have convinced itself that its strenuous boosterism alone will re-inspire business confidence, and that the country’s economy will accordingly revive.
In the meantime, the Opposition, across left and right, sees this blind emphasis as extremely reckless, because it is postponing a solution to the problem. The challenge, however, and thus the deeper ideological explanation for the Opposition’s persistent weakness, is that actors within the Opposition space cannot agree on their own proposal for recovery. A few more self-aware commentators have put forward elements for a national consensus that respects the need to distribute the burden more evenly across all sectors of society.
But too many within the Opposition still believe that a different application of past neoliberal policy will be enough to pull Sri Lanka out of crisis. To really get a handle on the resulting impasse—between a bloody-minded Government and a divided Opposition—we must understand what is driving, in their own respective ways, those ideologues across Government and Opposition. Too many among them are fundamentally unwilling to grapple with the profound uncertainty of our moment, and thus unable to draw out what it really means.
Misunderstanding the current crisis
On the pro-government side, some are working overtime to frame its manoeuvres in a more ideologically palatable way. Going beyond the superficial emphasis that everything will be fine, the more self-aware backers of the Government acknowledge that Sri Lanka is indeed in a deep crisis that cannot be solved through sheer self-belief alone. But, they argue, only a nationalistic government willing to defend Sri Lanka’s sovereignty can facilitate the country’s recovery. At best, they believe that the attacks by neoliberals in the Opposition on the Government’s monetary policy, for example, reflect the failure to appreciate the need for more State intervention in the economy. At worst, they assume they are simply a cat’s paw of Western imperialism.
Of course, going by the Government’s own budget released this year, as other astute commentators have pointed out, the Government is still not taking the required solutions to the crisis seriously enough. Its proposed willingness to intervene in the economy to ensure self-sufficiency is not reflected in actual concrete measures. Nevertheless, among those who take the Government at its word, they believe that the Government’s official rejection of IMF help is an indication of its willingness to break with the neoliberal consensus.
The Government, however, is simply creating monetary room for increased speculation, rather than directly helping the masses. We can see the evidence in the booming stock market, which increased in value by 80% this year, despite the sharp increase in the cost of living for ordinary people. Accordingly, the Government’s position is austerity by default. Its delay is simply making the crisis worse.
Neoliberal elements within the Opposition, on the other hand, claim to sympathise with the ordinary consumer. But they push the explanation that the crisis itself is a product of Government intervention in the economy, money printing, and so on. Thus, for them, slashing public expenditure and recreating a clean image of Sri Lanka’s economy, is enough to attract the type of productive, long-term investment that has historically bypassed the country, despite over four decades of open economy reforms. The added forex crisis has created more pressure to enact what these neoliberals believe are “necessary reforms,” especially privatisation.
The reality here as well, however, is that over and above privatisation’s inevitable tendency to exacerbate inequality, whatever scope for such measures that there once was, while the global economy, was booming no longer exists. Instead, the extremely uneven recovery from COVID means that countries are being left to fend for themselves as new barriers emerge.
Privatisation in Sri Lanka would more likely become an outright fire sale. The underlying tectonics of the global economy are shifting away from the heady 1990s rhetoric of outsourcing and globalisation. In addition, heterodox economic researchers in the US, for example, have pointed out that recent inflation is not the result of increased aggregate demand, so much as the reflection of supply constraints that in fact demand far greater public investment, to incentivise new production.
Ultimately, both the Government’s proposed solution and those of its neoliberal Opposition are wrong-headed in ways that mirror each other. They both express the same flawed analysis that manifests in wishful thinking that investors from abroad will come; whether under a government that is strong enough to openly defy the IMF and chart a supposedly non-aligned course, or one that accepts its own fallibility and welcomes external help to re-impose “fiscal discipline.”
Is there a way forward?
For the Left Opposition, both inside and outside of parliament, which is still developing its own program and capacity, it is extremely unlikely that it can unilaterally lead the way out of crisis. Moreover, by focusing more on holding elites accountable, it can avoid certain risks involved in being associated with unpopular measures implemented by a potential successor government to the current one. To put it simply, the Left cannot and should not attempt to take ownership of the crisis.
Instead, the Left must prioritise advocating on behalf of the interests of working people. Whichever sections and groups that identify as Left must push to make sure that whatever sacrifices are made are borne first and foremost by those who have long profited from the arrangements that led Sri Lanka into crisis. If a national consensus is to emerge through dialogue with working people’s organisations, it will be because working people have been forced onto the streets. The disruptive power of protest creates a barrier that no government since independence has yet been able to cross. The most emblematic example, of course, was the Great Hartal of 1953, in response to the curtailing of the rice subsidy.
In the current moment, however, even Opposition to the current Government is not enough to completely rule out the ongoing dangers of an existential transformation of the relationship between State and society in an extremely dangerous direction. We must understand the root causes of why this is the case. Although the Rajapaksas must be held accountable, blame does not lie solely with them. The reality is that speculators, for example, also made a massive profit in the debt bubble that was generated after the civil war ended.
Sri Lanka’s capitalists may be tentatively willing to acknowledge that any form of austerity imposed on the masses will likely generate profound resistance. But they are still unwilling to accept their share of responsibility for the country’s crisis. The spirit of solidarity that pulls countries out of depression through a process of economic recovery requires a deep degree of humility; both among the capitalists who benefited from the policies leading to crisis and the intellectuals whose flawed analyses have shaped the underlying beliefs and attitudes of policy makers up to this point.
Failure to engage in self-criticism, and thereby accept the need for a new order, will only create space for the most xenophobic, nationalistic, and demagogic forces on the right waiting in the wings to capitalise on the people’s sense of frustration of despair. It is not yet clear the specific way in which these forces may coalesce. But evidence from both the distant and the recent past points to the fact that when the political, economic, and cultural establishment experiences a profound crisis of legitimacy, it often generates revolution from the right, as opposed to the left, which faces a far steeper uphill battle when attempting to transform society.
Initially, capitalists may be willing to accept the devil’s bargain of severe restrictions on their civic rights if they can continue to make a profit. Eventually, however, the totalitarian transformation of relations between state and society leads to greater destruction and despair, whether through external conflict, internal breakdown, or both. The most famous historical example, of course, is Nazi Germany. In Sri Lanka’s case, such an extreme parallel may not apply directly because of many reasons, including the fragmented nature of capitalist interests and Sri Lanka’s peripheral geopolitical position. Regardless, new forms of fascist ideology are emerging around the world in the contemporary era, including in the heartland of the US. It is not at all impossible that a similar pattern can take hold in a place such as Sri Lanka. Whether radical monks, military, or demagogues come into power, ultimately everyone across the board will suffer.
In the meantime, capitalists may not yet be able to make clear, broadly acceptable decisions to resolve the crisis. But as many historians, sociologists, and other academics have pointed out, they can be forced to organise themselves in response to powerful movements of the masses that demand change. This was the thrust behind the New Deal, which enabled it to become a viable alternative to both capitalist breakdown and totalitarianism.
The most advanced and self-conscious elements of Sri Lanka’s Opposition, both left and centre-left, must grasp the meaning behind these parables from world history, and act accordingly. The alternative would be disaster for Sri Lanka, and one more step backward for the rest of the world, while we struggle to conceive the transition out of the current crisis into a new era.