Opinion

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

Summary

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.

The worst devils work from within

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.

The Central Bank, despite having “the largest number of PhDs in a single building in the country”, pronounced SBD de Silva, “has always opposed the independence of the country”

Two types of Yakku haunt the Central Bank. There are good Yakku, and there are bad Yakku. Both can teach us well. By positive and negative example. After all, science advances more through its failures than by its successes. Such is the Yaka dance of the dialectic.

The USA took over Englands’s colonies after their World War Two. But chose not to publicly proclaim them as such.

Nothing symbolizes this more than the first Yaka, US citizen John Exter – an Import-Export Plantation Yaka. Assigned by the US Treasury from the US Federal Reserve in New York, he established the Central Bank of Ceylon, and became its first Governor in 1950.

Exter Yaka’s Central Bank of Ceylon was born in controversy. Then Finance Minister JR Jayawardene aka Yankee Dicky had ‘requested’ the US government to set up the bank. The Bank of England was against a Central Bank for Ceylon. But they were now second fiddle. The US had forced England to open their colonial markets to US goods, after the English could not pay back the Lend-Lease loans the English had borrowed to win their pyrrhic World War 2.

Leftwing parties and academic economists, notably Professor HA de S Gunasekera, saw no reason for a Central Bank. For Gunasekera, a still colonial economy, “heavily biased towards international trade” would frustrate a Central Bank:

“An export economy cannot effectively pursue an independent monetary policy. Ceylon’s level of prosperity is determined by foreign demand for its staple exports. Its level of income is determined by the prices that these exports fetch in foreign markets. A policy of compensatory spending cannot stabilize incomes of prices in a country so utterly dependent on foreign trade as Ceylon is.”

Yet Exter Yaka, agent of the US Treasury, and new Governor of Ceylon’s Central Bank, enforced the international division of labor on Ceylon: capital-intensive production of advanced technology would be reserved for the imperialist countries, and labor-intensive production for the rest of the world.

The English had left us with the most impoverished peasantry in Asia, and Exter purposely pushed the country into further dependence and debt, affecting our transition from a plantation raj under the English to the import raj led by the US.

The genocidal US War on Korea “forced a massive use of natural rubber in the transport of US troops. Rubber prices soared. In Asia, the British Malay States and independent Ceylon benefited.”. In Malaya they invested profits in industry. “Ceylon wished to spend the sudden riches on expenditure. Governor Exter supported this, calling it a windfall… and brought in a new profligacy to national policy & politics.”

Exter Yaka intensified the spendthrift import-heavy lifestyle of the ruling oligarchy, keeping our necks firmly under the kneecaps of New York’s banks, where we only pay interest on the interest owed on a debt never to be fully paid back unless renounced. The white media instead points fingers at China

The CBSL loved Exter so much, in 2007 they named its International Conference Hall after Exter, and renamed its Anniversary Public Lecture as the John Exter Memorial Oration!

The Second Yaka – But then there’s this other lovely Yaka haunting the Central Bank: SBD de Silva. No CB brick or bouquet inscribes his name. Once Deputy Director of Economic Research, SB was hounded out of the Central Bank as a suspected ‘Communist’. But what was SB’s real crime? He, unlike Exter Yaka, was an ardent advocate of the industrialization of the country.

Our underdevelopment is not only a question of ‘dependence’ on the white man’s economy. The ample surpluses generated in Sri Lanka have long been stolen abroad. But even those surpluses left behind are never invested in revolutionizing production techniques or ‘widening’ capital – ultimately incorporating new branches of production, and truly transforming the economy. In building machines!

Instead, our ruling comprador merchants waste enormous sums on imported consumption. They make so much money from trading, they have no interest in advancing skilled employment. Hence, we lack a class dedicated to capital accumulation, which is why SB concluded: it is the state that must invest in modern industrial production.

SB Yaka later became secretary to the Minister of Industries, TB Subasinghe in that fateful ’70-77 government of Sirimavo Bandaranaike. It is here he watched how our import merchants sabotaged import controls & tariffs, leading SB to also conclude: “Industrialization requires a holistic political, economic & military strategy – for real sovereignty”.

Next: SBD de Silva & the Import-Export Comedy

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

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