Opinion

SBD de Silva and the Import-Export Comedy: A Great Guru, Part 4

Summary

The historic role of a Central Bank allowing a Mahaveli-size diversion of investment and scarce foreign exchange away from industry and agriculture into wasteful consumption, continues.

Professor SBD de Silva passed away 2 years ago. We recall his near-40-year-old suppressed classic, The Political Economy of Underdevelopment, and stories from the blog eesrilanka.wordpress.com, dedicated to him.  This series was denied publication by all the Sri Lankan media, from the mainstream to the so-called alternative.

Not a day goes by with the media wailing against import controls, wailing for exports and foreign direct investment, with not a word about the home market.

The present government proclaims it’s curbing wasteful imports and promoting local production. Yet, SB’s classic, The Political Economy of Underdevelopment, tracked how ingenious traders sabotaged import controls, 1970-77, while masquerading as a “pseudo-industrial class.”

Ronnie de Mel, Finance Minister from 1977-88, recently starred among a rash of polemical US-funded Advocata videos, complaining about the 1970-77 period. Yet after JR Jayawardene beckoned “robber barons” to come hither, de Mel ushered them in, soon destroying nascent national industry with a vandal’s delight.

The present government will soon face similar if not more daunting challenges than what the 1970-77 government faced. That government inherited a bankrupt treasury, and was soon rocked by an insurgency in 1971 that killed thousands.

Further, the international climate turned grim. Multinational corporations with budgets larger than most countries’ economies were now dominating global trade. In 1973, the US bloodily couped the socialist government in Chile, killing tens of thousands.

By 1974, adding to Sri Lanka’s economic woes due to dependence on food imports, there were massive worldwide harvest failures, famines, rocketing food & oil prices, drought from poor monsoon rains for the 3 years before, falling prices for exports, and imported inflation.

Traders manipulated a weak industrial policy to enrich themselves while undermining and eventually destroying industrialization after 1977.

The dominant foreign investors, multinationals and banks, exercise political control over colonial territory, preventing production that competes with the imperial economy. They refuse to nurture our “own impulses to development”.

The colonial import-export plantation game is our samsara, our broken record. We are only allowed to respond to the empire’s needs, with them controlling access to markets & technology.

Not a day goes by without craven media reminders about GSP+ and our dependence on white markets. They continually cry for FDI & exports, with the Central Bank unable to prevent the massive robbery of foreign exchange by multinationals like Unilever etc, via transfer pricing and inflating accounting costs to minimize local tax liabilities.

These multinationals control the home market, so valuable as a basis for industrialization, and through their control of advertising, monopolize the media, preventing debate on our actual needs.

The Central Bank has also been accused of failing to expose the causes of our discontent at its root, with its socioeconomic data and analyses kept at a shallow empirical level. CB officials end up working for private banks and companies, dreaming of careers with the World Bank, IMF, etc, instead of defending the country’s interests against these supranational financial behemoths.

Dedicated Central Bank officials like SBD de Silva, however, dared ask deeper questions about the continuing domination of English capital. SB showed how a feeble Central Bank was unable to control the plantation agency houses & the banks, to prevent the bleeding of money and smuggling of goods abroad.

Even after independence, Sri Lanka’s surpluses were lost to the centres of financial control not only as dividends, profits, trade commissions, etc. The financial reserves of expatriate companies were held abroad. Foreign-exchange assets of colonial governments were invested mostly in their own government or municipal securities.

Despite 1948 ‘independence’, plantation companies refused to remit to Sri Lanka, the interest & other income from their current reserves held abroad. “By the transfer of these funds the government hoped to foster a short-term money market. However, the companies refused to comply. In 1961 many of the companies removed these funds from any possible control by the Central Bank by shifting them to holding companies in England.”

SB also noted in 1964, 16 years into ‘independence’: “The agency houses… when called upon by the Central Bank to make available for examination, for exchange control purposes, their service agreements with the plantation companies, declined on the grounds that they were not legally obliged to do so.”

These agency houses are now the so-called local ‘conglomerates.’ Fattened by the privatization of public goods, white men in brown skins still underdevelop the economy on behalf on the multinationals that dominate world trade and the so-called free market.

The historic role of a Central Bank allowing a Mahaveli-size diversion of investment and scarce foreign exchange away from industry and agriculture into wasteful consumption, continues.

As another capitalist crisis engineered by Anglo-America looms on the horizon, it’s salutary to recall’s SB conclusion: only a powerful state-backed socialist industrial policy can resurrect the country.

Next : SBD de Silva & Trader Sabotage   

Two Yakku Haunting the Central Bank, John Exter & SBD de Silva: A Great Guru, Part 3

SBD de Silva, China & the Central Bank: A Great Guru, Part 2

SBD de Silva & the Flames of ‘Cold War’: A Great Guru, Part 1

Leave a Reply

Your email address will not be published.