Wanted : Home grown
economics
Economists
rarely agree. Disagree ment and controversy are the very stuff of
economics. Sri Lanka's economists who met for their Annual Sessions
on June 15, exemplified this. Views on the theme " Policies for
Accelerated Economic Development in Sri Lanka" drew some sharp
disagreements. Two schools of thought were clearly evident. The one
echoed the "Washington Consensus". The other pleaded for
a middle path. In the process of this controversy a view emerged that
there was a need for a home grown economics.
The "officials"
who presented papers predictably echoed the views of the Washington
institutions. They preached reform on the lines of the IMF and World
Bank. Privatisation, more privatisation and liberalisation of this
that and the other. The academics were critical of this approach.
They criticised the dependence on, and uncritical acceptance of,
the doctrines of the Washington gurus - "The Washington Consensus"
(WC). The Doyen of Sri Lankan economists Dr. Gamani Corea, the Patron
of the Sri Lanka Economics Association and guest of honour for the
occasion, pleaded a middle path. He argued that there must be a
balance between free trade and protection.
He argued that
the classical economists "infant industry argument", of
protecting your industries and agriculture for a period till they
found their feet, had a relevance for developing countries like
Sri Lanka.
He pointed
out that even the developed countries that preach free trade practice
protectionism in selected sectors of their economies. He urged the
need to adapt theory to our purposes and conditions, pointing out
that many economic theories were based on assumptions that were
non existent in our particular economic context. The view of the
former Secretary General of UNCTAD, Corea, was that the World Trade
Organisation's new framework was not sufficiently adapted to developing
country needs. He went on to point out that liberalisation was not
equal to optimisation in developing countries and that our development
was not only based on our own efforts, but also on what happened
in the world outside. Professor W.D.Lakshman, former Vice-Chancellor
of the University of Colombo was strongly critical of the Washington
Consensus contending that " IT PUT PROFITS BEFORE PEOPLE".
He argued that the IMF policies were negative: deregulate and eliminate.
Deregulate
the financial sector; eliminate price controls and tariffs and so
forth. It did not care for the condition of poor people. Efficiency
and growth, WC contends would in due course reduce poverty, but
how long that would take did not matter. Most of the poor of today
would be dead, he contended. Professor Lakshman made an insightful
observation that institutional reforms must also look at the indigenous
institutions, not merely the central organisations; that they must
not ignore the structure of indigenous organisations and supportive
institutions. " There must be institutional adjustments and
adjustments to institutions", he argued. This controversy found
a response among the economists. What was required was not merely
the WC reforms but reforms in thinking.
Sri Lankans
were either wildly critical of the WC or accepted the dictates of
the WB and IMF without examination of their appropriateness. Consequently
the country lacked skills in negotiating with the multilateral institutions
and donors. WC policies were therefore thrust upon us and we adopted
them without adequate contextual consideration and their appropriateness.
Economists
in Sri Lanka, an economist argued, had not developed a body of economic
thought based upon the factual situation in the country and appropriateness
for our economic and social structures and aspirations.
A home grown
economics, appropriate for our conditions, it was pointed out, was
a crying need.
The question
that now remains is whether we could expect the Sri Lanka Economics
Association, with its galaxy of economists, to perform this task,
or at least to make a start in this direction, before its next Annual
Sessions next year.
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