e-Con e-News

blog: https://eesrilanka.wordpress.com

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‘Before you study the economics, study the economists!’

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e-Con e-News 08-14 February 2026

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How the English colonial government imposed compound interest on Sri Lanka, & how this enabled the wholesale ‘legal’ robbery of land from rural Sinhala people – is a most fascinating tale. This ee newsletter’s muse, SBD de Silva, started to relate this story to us, before he passed away in 2018. We are sad to say we should have hounded him further on this subject but failed to do so. Certain reasons of mortality and other urgencies intervened, plus his heroic stubbornness to stick to whatever his intellectual priorities were at a time when his mortal days were limiting his earthly focus, held us back.

     The more humane Sinhala tradition, he recalled, was of charging simple interest on debts, which meant if you could not repay a loan on time, you could pay later without being entangled into greater bondage, and lifetime and next-life vassalage, while losing your land and means of production. But the English would not have it under their rule. And why would they! It is therefore no wonder the English bestowed upon the country & its economy, the most impoverished peasantry in Asia.

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Compound (verb) – 1) make up (a composite whole);

constitute; mix or combine; calculate (interest)

on previously accumulated interest.

2) make (something bad) worse;

intensify the negative aspects of…

– Oxford English Dictionary

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Did the English government machinery (corrupt officials, judiciary) in the Eastern Province conspire with Muslim traders to enforce compound interest? SBD wished us to pursue this research, warning that the subject was fraught, for we had to ensure we did not encourage solely communal interpretations. For behind this thorny trap crouches the colonial master in subterfuge, who has other deeper aims in mind. We did try to pursue this matter with various social scientists and lawyers as he asked us to do, but to no avail. As SBD noted, social science has become a big business, and our intellects have more interest (moreover a compound interest) in other trivialities, than the political economy of entrapment & mass murder.

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‘Microfinance companies & moneylenders…

have dispossessed over 2.8 million women

of their gold, household assets & savings.’

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We recalled SBD’s insights while reading Amali Wedagedera’s recent essay, ‘The Regulatory Assault on Community Credit’ (see ee Focus). Wedagedera points to the ‘acute agrarian debt crisis’ and wonders why access to finance has become a ‘market-driven privilege’. Governments, she records, have been ‘allies of big finance in jettisoning people’s right to organise community credit’, with the legal machinery in tow. Yet, is this new?

‘By 2021, over 200 women had committed

suicide due to unpayable debt.’

Wedagedera’s immediate target is the new Microfinance & Credit Regulatory Authority Bill. She says it ‘functions as a legal enclosure, denying age-old community practices for creating & controlling credit.’ How old are these practices? She does not say. But, it turns out this recent legislative Bill has been stipulated by a $200mn Asian Development Bank (ADB) loan!

‘It is ironic that a Government in debt distress

uses an ADB loan to undermine the very

foundation of community resilience.’

Again, not new. The ADB, the IMF, the World Bank, operate in not-so-mysterious ways, their not-so-miraculous shylocksmithery to perform. Indeed the media report that banks have been accumulating billions at the expense of everybody else, even while they sing the joys of ‘small’ (MSMEs, etc) business, which they are bankrupting:

In the 2023-4 financial year, total banking sector profits

before tax have recorded an estimated Rs762bn

Indeed, the Central Bank governor, who is eager to play the role of ‘optimist conjuror’, pumps out anodynes for the optics – ‘the operation is a great success’, while the merchants and their chartered accountants declare their performances in glowing superlatives, extolling their ‘transparency’, ‘accountability’, ‘governance’, ‘sustainability’, ‘integrity’, ‘excellence’, ‘trust’ and ‘innovation’ (see ee Who’s Who, Tax Evasion Mafia Awards). Other less-publicized reports diagnose, ‘The patient is almost dead’!

     Wedagedera also exposes the pernicious role played by the so-called Credit Information Bureau (CRIB), whose ‘credit histories’ seek to entrap over 90% of low-income people (who have no steady formal income). CRIB is targeting mutual aid & women’s societies. Rather than elaborating on our own traditions of collective control, such as ‘a fistful of rice’, which she curiously limits to ‘more than 30 years’, Wedagedera upholds ‘the right of communities to collectively organise credit’ in the 2018 UN Declaration on the Rights of Peasants & Others Working in Rural Areas (UNDROP), & other UN declarations, which ‘recognise communal rights to land, seeds, & financial self-determination’. The UN itself needs some spinal instrument to ensure its right to determine its own fate, rather than being a toothless tool of the imperialist countries.

     Wedagedera exposes the real aim of the international financial institutions: to dismantle communal rights, which are ‘the last bastion of resilience against a predatory economic order’. There is a need to also link this to the overall impoverishment of the cultivator, the prevention of monetization and commercialization of harvests, and the consequent obstruction of rural industrialization and the role played by Anglo-American (US & Canadian) and European ‘development banks’ who are fronts for their industrial conglomerates, and hide behind ‘local’ finance companies that claim to be Sri Lankan.

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After pursuing a ship across 2 oceans and 10,000s of miles, the USA’s Indo-Pacific Command intercepted & boarded the Suezmax tanker Aquila II in the Indian Ocean by Sri Lanka on 9 February, unreported by media in Sri Lanka. The vessel was carrying ~700,000 barrels of crude oil from the Caribbean. The US has already seized 5 other tankers in 8 weeks. The stolen oil will be sold under a program the US has branded the ‘Great Energy Deal.’

     Last week, the US got a Panama court to snatch back Panama’s ports from their HK-owned operators: CK Hutchison has had a signed, paid-up contract for over28 years, a pact recently renewed. This eviction ruling comes after the US government declared they would send in armed troops to grab the Panama Canal (see ee Random Notes).

     This week, a US-linked medium reported that the Singapore government (within which Rockefeller’s Exxon is a major ‘influencer’) is calling for more control over the Malacca Straits. So is it only a matter of time before the US, with India wagging its tail behind, demands further control over Sri Lanka.

The‘Straits of Malacca & Singapore handle approximately

one-third of global traded goods & more than 80,000 vessel

transits annually, making them an unavoidable gateway

between the Indian Ocean & South China Sea.’

– ee Sovereignty, Singapore Calls for Global Action

as Shadow Fleet Pressures Strategic Straits

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The imperialist media is thus pushing ‘for the [further] militarization of the Quad states – US, Japan, Australia & India – against China & Russia in the Indian & Pacific Oceans, and the Straits of Malacca connecting them’. All of this perhaps leads up to what the new US ambassador to Sri Lanka Eric Meyer (pronounced ‘meeya’, like retail gangster Meyer Lansky) meant when he told their Senate in December 2025, ‘Sri Lanka’s strategic location makes it a focal point for US efforts to promote a free & open Indo-Pacific…’

     And so it has come to pass, though we know not for how long, scurrying about like pissu kumbi on hyper methamphetamines, the USA & its killer poodles (England, EU, Japan, et al) are casing the oceans, enacting their frenetic dance of death, by bombing defenceless fishing boats & pirating flagged ships. They claim they are hunting down drug dealers & ‘rogue’ oil tankers across the world, even as they are stealing oil from Venezuela & Iraq & Syria, denying oil to Cuba to strangle it, and threatening ‘oil-rich’ Iran with annihilation. We are being provided with free & expensive lessons in real time – ‘coming to you live’ – politricks.

     The English and their Indian merchant sects turned the Indian Ocean into a massive maritime route for the most lucrative commerce of the 19^th century: the English opium trade enforced on China by war. The USA now, seemingly ready to spark another more worldly & deadlier war, seeks to deny fuel to China, to thwart that East Asian country’s longer-term industrialization as well as obstruct Russia from selling oil, even while imposing more expensive US-sourced oil on our countries, seeking to stick their fingers on the triggers of gas pumps. As we have noted before, these policies do not emanate solely from the brow of any orange clown, but from the studious intent of the North Atlantic’s ruling capitalist classes, led by the such luminaries as Rockefeller’s Exxon corporation.  

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ee continues our perennial call for the modern (machine-making-machine) industrialization of our country. We reproduce an essay which goes to great lengths to show how & why manufacturing is the only way for Sri Lanka to transform its economy. However, the deadly (some may call it farcical) scenarios we witness today on the high seas, shows that it is not enough to elucidate the need for modern industrialization, but also expose who or what is preventing the obvious route our economy should take, and why & how they keep sabotaging these plans, and how we may overcome them?

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‘Services are not a derived activity any more, they are not add-ons

to agriculture & industry. They are the glue that binds them.’

– University of Peradeniya Senior Professor of Economics

OG Dayaratna-Banda (ee Economists, Prof Indraratna Oration)

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‘Why Developing Countries Can’t Skip Industrialization’ is the main ee Focus this week, by Jostein Hauge. The many dizzying panaceas prescribed, and the fleeting fashions paraded by economists on their academic and media catwalks, seek to bypass the fundamental need for manufacturing. Indeed, these economists in the merchant media are ‘hired gunmen’ or ‘hitmen’ of the merchant cabal. The good professor Dayaratne-Banda mentions the glue but dares not elaborate on the word ‘manufacture’, let alone highlight modern (machine-making-machine) industrial production. Like others, he instead promotes services, exports, etc., etc. Hauge however describes the unique qualities of manufacture (mechanization & chemical processing, ‘one product leading to another’, innovation) and lists the countries that have transformed themselves, especially China & Vietnam. Importantly, he counters the current fears spread by capitalists that automation automatically leads to job losses. He takes on bugaboos about China crowding out other countries’ industrialization. He also lists the decline experienced by those countries, which have been deindustrialized.

     Haugeis a Cambridge professor of development who sometimes loosely uses indicators like ‘growth’ and terms such as ‘development’ (a term created by Unilever as a polite euphemism for ‘colonial’) and ‘job creation’. ‘Growth’ for what? SBD de Silva would ask, and what kind of jobs? Hauge is also a big fan of ‘exports’ leading to innovation.

     We recall Marx’s emphasis that modern industrialization is not handicraft or manufacture (assembly) but machine making machines. Someone should tell Cambridge, andeven better, tell our Colombo professors & columnists (of the 5^th variety) that the overwhelming priority for imperialism is the prevention of industrialization. Which reminds that this week saw yet another chapter in the US drama being enacted in North Africa’s Libya, with the son of previously (2011) murdered Muammar Qaddafi, Saif Al-Islam Qaddafi also being murdered. And here are his last words:

‘For the people whom you said they were martyred in 2011,

was it for this? Is it that we can’t dig a well in Sirte without the

permission of the Turks, the US Ambassador, English Ambassador,

& French Ambassador? Why didn’t you say that you wanted all

of this from the beginning without the 1,000s being killed &

the 500 billion that Libya wasted, and all this destruction resulting

in orphans and widows.’– Saif Al-Islam Qaddafi’s Last Message:

Another Tale of Imperialist Treason

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‘There is in capitalism an immanent tendency to stifle,

suffocate & push back the full realization of the

developmental potential of rival capitalisms.’

– SBD De Silva

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The mercenary preoccupations of ‘celebrated’ economists in the perpetual, daily & weekly news media can be understood more clearly by reading ee’s muse, SBD de Silva, and his 1982 classic The Political Economy of Underdevelopment. We continue Chapter 7, ‘Plantations & their Metropolitan Orientation’. He begins by pointing out that: ‘the dominance of merchant capital and the export-import bias were common to all countries of the periphery’. Merchant capital’s domination over absentee production capital enabled it to grab much of the surplus value from production, export & import in plantation economies, first implanted in Southern Europe & the Mediterranean, then the Americas (including the Caribbean) and Asia.

An official inquiry in Sri Lanka in 1923 reported that

the standard of food consumption among plantation

labour ‘compare [&] favourably with the jail diet’

‘With the plantations, the Europeans began to organize production overseas’, and this involved active underdevelopment of non-settler colonies, ensuring their clear divergence from the industrialized economies. Underdeveloped countries had to rely on more shipping, produce more valuable goods and consume more imported manufactures. Settler colonies, however, competed with England and produced their own substitutes, including modern technologies.

     Meanwhile, plantation economies, were forcibly turned into markets for manufactured goods, and this complemented the rise of industrial capitalism in Europe, which lived off the processing of raw materials from non-settler colonies. Plantations also precluded high wage levels, and higher productivity, and depended on their super-exploitation and oppression, reducing the incomes of all workers in the society. England also prevented the export of raw materials from their non-settler colonies to other countries to prevent development of local processing technologies, and thus increased political control. So much for free trade.

     Meanwhile, the purposeful ignorance of reality & history, leads to misuse of such terms as plantations & planters as symbols of status:

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‘The plantation was not a feudal remnant but a highly rationalized system

of labor extraction. Enslaved people were measured, monitored, disciplined

& coerced with extraordinary precision. Output quotas, time discipline,

surveillance & punishment were not incidental features of slavery; they were

its operational logic. Long before the factory perfected these techniques

under the guise of free labor, the plantation had already demonstrated how

human beings could be transformed into units of productive capacity,

driven beyond endurance in the name of profit.’

(see ee Quotes)

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Such deliberate ignorance leads to exaggerations of what English justice is all about. England, this week, announced, that it cutting off journalist access to English court records. English media are kept ignorant of most trials, and only certain trials are publicized (see ee Quotes, English Delay Justice). Court records are however one of the main ‘public’ sources of real data, as they can reveal information otherwise encrypted, disguised or concealed, especially when big thieves fight each other, the truth can emerge. There are therefore different categories of news, with most real news hidden away. ee News is largely a festeringgarbage dump of the weekly public news in English, mostly written about Sri Lanka – but it is also strewn with a few real jewels & some rare ‘found art’.

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We recalled this week, certain key words such as ‘class’, ‘political organizations’, and political parties:

• Marx on Class – ‘In 18^th Brumaire (Sect VII) Marx gave this negative definition of a fully constituted class: ‘In so far as millions of families live under economic conditions of existence that separate their mode of life, their interests & their culture from those of the other classes, and put them in hostile opposition to the latter, they form a class. In so far as there is merely a local interconnection among these smallholding peasants, and the identity of their interests begets no community, no national bond, & no political organization among them, they do not form a class’.’ – Tom Bottommore, Dictionary of Marxist Thought, 1991

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• In Class, for Class – ‘Economic conditions had in the first place transformed the mass of the people into workers. The domination of capital created the common situation & common interests of this class. Thus, this mass is already a class in relation to capital, but not yet a class for itself. In the struggle, of which we have only indicated a few phases, this mass unites and forms itself into a class for itself. The interests which it defends become class interests.’ – Karl Marx, Poverty of Philosophy, Ch2, Sect5

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• Early English Class Organizations – ‘On March 27, 1846 [2 years before the English genocide in Sri Lanka – ee], the House of Commons voted to repeal the Corn Laws by a vote of 327 to 229. The repeal of the import duties on corn (meaning cereals including wheat, oats, barley) was one of the most significant economic events of the 19^th century… The Anti-Corn Law League was the most advanced political organization that England had ever seen… The League was administered from its headquarters in Newall’s Buildings in Manchester, where a large staff was separated into a number of departments – the League Council, a cashier’s office, a publication office, and an electoral office being the most important. The League’s activities were highly centralized. All but the most routine expenditures were authorized by a vote of the League Council. The League employed over 800 people in 1843 engaged solely in the publication & distribution of tracts. Also, numerous salaried lecturers were employed who addressed mass meetings. The League substantially subsidized a number of newspapers in order to assure favorable reporting & editorials. Most important were the League’s extensive electoral activities. The legal qualification for voting was simply the presence of a man’s name on the electoral register, reflecting the appropriate property-owning qualification. The League devoted enormous efforts & funds both to challenging the voting qualifications of protectionists and to padding the registers with the names of League members by purchasing qualification. In short, the League functioned as a highly efficient, well financed, & pragmatic political organization.’ – ‘Ideology, Interest Groups, & the Repeal of the Corn Laws’, Gary M Anderson & Robert D Tollison

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• Marx Teaches Us to Value: When Thieves Fight – ‘The time just before the repeal of the Corn Laws threw new light on the condition of the agricultural laborers. On the one hand, it was to the interest of the middle-class agitators to prove how little the Corn Laws protected the actual producers of the corn. On the other hand, the industrial bourgeoisie foamed with sullen rage at the denunciations of the factory system by the landed aristocracy, at the pretended sympathy with the woes of the factory operatives, of those utterly corrupt, heartless & genteel loafers, and at their diplomatic zeal for factory legislation.

     It is an old English proverb that when thieves fall out, honest men come by their own, and, in fact, the noisy, passionate quarrel between the 2 fractions of the ruling class about the question, which of the 2 exploited the laborers the more shamefully, was on each hand the midwife of the truth. Earl Shaftesbury, then Lord Ashley, was commander-in-chief in the aristocratic, philanthropic, anti-factory campaign. He was, therefore, in 1845, a favorite subject in the revelations of the Morning Chronicle on the condition of the agricultural laborers. This journal, then the most important Liberal organ, sent special commissioners into the agricultural districts, who did not content themselves with mere general descriptions & statistics, but published the names both of the laboring families examined and of their landlords. The following list gives the wages paid in 3 villages in the neighborhood of Blanford, Wimbourne, and Poole. The villages are the property of Mr G. Bankes and of the Earl of Shaftesbury. It will be noted that, just like Bankes, this low church pope, this head of English pietists, pockets a great part of the miserable wages of the laborers under the pretext of house-rent.

     The repeal of the Corn Laws gave a marvelous impulse most extensive scale, new methods of stall-feeding, and of the artificial cultivation of green crops, introduction of mechanical manuring apparatus, new treatment of clay soils, increased use of numeral manures, employment of the steam-engine, and of all kinds of new machinery, more intensive cultivation generally, characterized this epoch. Mr Pusey, Chairman of the Royal Agricultural Society, declares that the (relative) expenses of farming have been reduced nearly one half by the introduction of new machinery.’ (Marx, Capital, Vol 1, Chapter 25)

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Contents:

US Threatens to Grab Malacca Straits – Is Sri Lanka Next?