Shift from Neo-liberalist economy to Nationalist economy – an imperative need
Posted on November 24th, 2019

N.A. de S. Amaratunga Courtesy The Island


The countries which have benefited from Chinese assistance in Asia, Africa and Europe have not suffered a breach of their independence and sovereignty or lost any significant extents of resources.

The world economy, international relations, and geopolitics are at present influenced by two strong ideologies; neo-liberalism and nationalism. First let us see what these terms mean in the context of economic development and independence.

The basis of neoliberalism is the idea that the market is the prime determinant of not only prices of goods, matters related to trade and commerce but also social characters and human values. This would mean there is no need for the government to intervene on behalf of the people and market forces would most efficiently guide the economy with benefits to all stake holders. This theory was first mooted by Fredrich von Hayek and it was more or less a refutation of welfare capitalism advocated by John Maynard Keynes that had been in practice since the end of world war in 1948. These policies had virtually detached the government from the process of management of the economy and given the market a free hand to run the economy. The IMF, WTO and the World Bank were rearranged to serve this purpose with catastrophic effect on third world economies. The poor in the rich countries as well as in poor countries were more or less left in the lurch.

Nationalism is an ideology that promotes the interests of a particular nation and it holds that each country should govern itself without foreign interference. Nationalism could manifest in different forms according to the needs of the times. There had been anti-colonial nationalist movements the world over including Sri Lanka from ancient times. The military battles against South Indian and European invasions, the uprisings against the British occupation were good examples of anti-colonial nationalism. It may be said that several countries have evolved from anti-colonial nationalism to economic nationalism as new problems and the issuing situation demands. Several South American, African and Asian countries after successful anti-colonial nationalist struggles have started their policies based on economic nationalism. They have expropriated foreign owned land and redistributed it among the landless and they have nationalised multinational companies. China developed fast due to policies based on socialist nationalism and now it lends unobtrusive leadership to economic nationalism in the world.

It is no exaggeration to say that as a consequence of the depredations of neo-liberalism, a nationalist wave is blowing across the world. We have seen its effect, though bumbling at this stage, in the USA and UK in the form of Occupy Wall Street demonstrations, Trumpism and Brexit and nascent beginnings in other parts of Europe as shown by electoral results. People in these parts of the world are not happy being left behind by the surge of the super rich. They don’t want their leaders to be engaged in the exploitation of weak countries often spending enormously for military means while they are getting poorer. They would like their leaders to put their house in order first and then develop mutually beneficial relations with other countries instead of trying to dominate the world which has worsened the global problems.

This nationalism if it is to succeed locally has to be in the first place not chauvinistic, racist, aggressive or exploitative. Internationally it has to be mutually beneficial, non-interfering, and non-hegemonic. However, the big powers in this camp such as China may want in return for economic assistance, some loyalty vis-a-vis the opposing camp, a preferential treatment regarding economic programmes, extension of facilities for their transportation etc which by their nature may not be intrusive into independence, sovereignty and territorial integrity of the host country.

One could get an idea of what is enunciated above by comparing two programmes, one vigorously pursued by the US and the other more gently by China. The former was pressuring our government of the day to enter into ACSA, MCC, and SOFA agreements which obviously were designed to take our country into their economic and military grip. On the other hand the Belt and Road Initiative put forward by China has already found acceptance even in European countries in the G7 group such as Italy. Greece in the brink of bankruptcy may recover due to B & R I. Malaysia has already been benefited to the tune of USD 27 billion. In Africa Ethiopia, Kenya, Nigeria etc are recovering to some degree from their economic woes due to B & R I. In contrast some of these countries which had entered into MCC agreements with the US have lost large extents of their land to US companies, eg. Congo. And other countries have terminated the agreements when they realized the implications and the real US intentions (see; K.Wickramasinghe – The Island 13.11.2019).

A comparison of Chinese and Indian economies would further elucidate the difference between the two ideologies and the desirability of economic nationalism. China in the nineteen forties was struggling with its poverty, so was India. Now China has totally come out of the grip of poverty while India is still struggling though doing quite well and is expected to wipe out poverty in due course. China developed fast due to its nationalist programmes. They invested in their people first, developed their village economy as a priority, and agriculture based industry and after their people had come out of poverty they looked at more ambitious big industry. India on the other hand allowed to be controlled by the IMF, WTO and the World Bank and their rich became richer while the poor became poorer. Now India seems to have realized their mistake and is turning away from neo-liberalism and moving towards nationalism.

The countries which have benefited from Chinese assistance in Asia, Africa and Europe have not suffered a breach of their independence and sovereignty or lost any significant extents of resources. China has not dictated to any of these countries on how to run their country, how to change their constitutions, how to look after their security, or preached on democracy, human rights, minority rights and other internal affairs. China has not forced or pressurized any of the recipients of its aid to fall in line and join the B & R I. They have instead requested them to evaluate the pros and cons of the project and join if they agree with its broad principles.

China helped Sri Lanka during the war against the LTTE with no strings attached. After the war it gave substantial assistance to build our roads, ports etc and our economy recovered in every respect as shown by all parameters. They did not interfere in our internal affairs, constitution reforms, ethnic issues, during the war or thereafter. With the change of government in 2015 attitude towards China changed, their projects were stopped, and they were grossly humiliated. And they made us pay for it, we had to pay heavy compensation for stopping the Colombo Port City project and we were forced to agree to an arrangement on the Hambanthota Port that is very disadvantageous to us. Even after all that some of the comments made by our ministers on China were not at all friendly, for example the then minister of finance said their interest rates for loans were very much higher than that of other friendly countries. All this was done to please the west but the assistance we got from the west was negligible.

Countries that demonstrate a tilt towards nationalism as an ideology for developing an economic model seem to subscribe to a political philosophy that approaches all issues from the national point of view aimed at meeting national interests. For instance if the majority of people live in the villages and their vocation is mainly farming the village economy should be given priority and it should be based on agriculture. This view may not be to the liking of the imperialists and their institutions like the IMF. They would not approve for instance subsidizing fertilizer for the village farmers. On the contrary they may have design on the farmers’ land such as what is envisaged in the MCC agreement which proposes to build an economic corridor from Colombo to Trincomalee which may by devious means effect the acquisition of a large extent of land for US industry thereby totally destroying the village economy and reducing the land owning dignified farmer to perhaps a labourer in that industry. This clearly illustrates the difference between neo-liberalist imperialism and the more desirable policies based on nationalism. It is this kind of dubious hidden agenda that had made some African countries stop MCC projects in their countries.

Sri Lanka’s economy has been dragged into the doldrums. Its poor are struggling to survive. It needs USD 3 billion per annum to service the loans. Recovery would be impossible without shaking off the neo-liberal shackles and IMF fetters. Sri Lanka has to turn towards economic nationalism. However, Sri Lanka would need what Mao Tse Tung meant when he said “Communist China would look for genuine friendly aid only.”

N.A. de S. Amaratunga

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