“Fruit of the tree that was planted”
View(s):“Ceylon has tasted the fruit before she has planted the tree.” This is a famous statement that Joan Robinson wrote about Sri Lanka as far back as in 1959. Since then, the statement has become an “attribute of the nation” so that, even today many Sri Lankans know it and refer to it in different contexts.
Joan Robinson was an influential British Economist born in 1903 and passed away in 1983. In the 1950s, she and some other contemporary economists such as J.R. Hicks, Nicholas Kaldor, Gunar Myrdal and others from Britain visited Sri Lanka. While staying in Sri Lanka, they carried out their research work in association with the National Planning Council of the Ministry of Finance.
A collection of research papers written by these economists were published by the Planning Secretariat under the title “Papers by Visiting Economists”. Joan Robinson’s above quotation is from her paper titled “Economic Possibilities of Ceylon” as it appeared in the same publication.
A recent trade union protest.
Trade unions
Today, many Sri Lankans refer to the above quotation to describe people’s demand for extensive welfarism without any consideration to government revenue or the national habit of spending lavishly without earning adequately. Although the use of the statement in such contexts is not incorrect, Robinson, however, said it referring to the “trade union protests” in a “growing welfare state” at the time.
As reflected in her research, Robinson seems to have recognised two important developments in the Sri Lankan political economy: one is the population growth and the other, trade union movement. Both were unsustainable for a country which has not yet planted the tree to grow the necessary fruits.
The former, high population growth was a result of “modern death rates combined with primitive birth rates”. Modern death rates are low (due to higher health standards), while primitive birth rates are high (due to lower socio-economic status of the society), which were the then features of Sri Lanka. The result was high population growth, which was running at 2.6 per cent annual rate at the time. The second was the development of the working-class movement led by trade unions.
Let me quote the rest of the paragraph of Robinson’s paper which explains the planting of trade unions in the absence of capitalist economic development:
“Her [Ceylon’s] trade unions are anxious to share in profits but the energetic, enterprising and thrifty capitalists for them to share with have not yet appeared, while the welfare-oriented policy of the authorities has failed to evolve an adequate substitute for private enterprise”.
No investors there!
With respect to the trade union movement, Robinson must have noticed and was inspired by the new developments in the second half of the 1950s. Perhaps, she must have even witnessed some of the trade union protests with her own eyes during the time of her visit to Sri Lanka.
The post-colonial government of
Sri Lanka led by the ‘centre-right’ UNP was defeated at the 1956 general elections giving victory for the first time to the newly-established ‘centre-left’ SLFP-led coalition (known as MEP).
The victory of the 1956-government was backed by the strategic mobilisation of electorate under a new campaign known as the ‘five-fold great force’ – Buddhist monks, indigenous physicians, teachers, peasants, and labourers. Alas! There were no investors or entrepreneurs included in the five-fold great force depicting its political economic ideology.
Sri Lanka’s nationalisation programme emerged under the 1956-government, expanding the public sector on the one hand, and penetrating business activities on the other hand. A notable state of affairs developed during the 1956 regime in influencing the state and the economy was the unprecedented trade union protests and strikes.
Pre-industrial stage
Sri Lanka imported the trade union movement from the advanced “industrialised” countries in the West – particularly England where it was born during the stage of industrialisation. As per Robinson, their business was to keep profits in check and secure an acceptable share of output for the workers.
The advanced capitalist economies were once under-developed, and they have a long history of enterprise development and wealth accumulation. In fact, it was also through a ruthless exploitation of labour which provided impetus for the birth of the working class movement and trade unions.
Here in Sri Lanka where there was no industrialisation, even an industrial capitalist class had not emerged as yet. Apart from the domestic subsistence agriculture sector, the British had introduced a capitalist mode of production in the plantation agriculture and related service and commercial activities.
In the absence of industrialisation, the working class movement was planted in the plantations as well as services and commercial sectors. While it was imported from the Western advanced countries by the Marxist political leaders, who organised the working-class movements in these sectors, other political parties without any exception followed suit.
Fertile ground
Along with the nationalisation programme extended in the 1960s and the 1970s, and the resulting contraction in the private sector expansion, public sector and its employment grew disproportionately. This development was further buttressed by the Business Undertakings (Acquisition) Act No. 35 of 1971 which provided the necessary powers to the government to acquire any private business and property.
The government had already passed the Ceylon State Plantations Corporation Act No. 49 of 1958 to manage plantations. During 1972-73 the government acquired 502 privately-owned, and mostly the British-owned tea, rubber and coconut plantations. In addition, the government also carried out a land reform programme, acquiring land in excess of the specified private ownership ceiling.
Acting upon these Acts, the government became the “main entrepreneur” of the country in doing business in almost all areas of agriculture, industry and service sectors. By implications, the “main employer” of the work force was also the government. Accordingly, the trade unions in individual business entities now became unified against the government as the employer but divided along the political party lines.
Main job provider
As the development of the private investment was effectively curtailed by the government which became the main job provider in the economy, people must also look up to the government for employment. It gave another opportunity for the politicians to exercise their political power and become the job providers.
Trade liberalisation began in 1977, but as I have often argued it was a “half-done” programme which has also got distorted and reversed subsequently. Even though private sector-led economic growth was facilitated, it is difficult to suggest whether the public sector retreated from being the main job provider. In fact, it continued to be so, while people too expected to find job opportunities in the public sector.
The government continued to maintain about 400+ state-owned enterprises (SOEs) which were established mostly during the pre-1977 period, in addition to its traditional ministries and departments. Public sector jobs continued to be one of the major promises of the election campaigns even up to, today.
When there was no more space in the government, the politicians created new cadre positions. The Development Officer (DO) service created in 2012 was one of the major steps in this respect. Since there were no specific duties and responsibilities for the DO service, the abbreviation “DO” has been hilariously interpreted as “Dena-Onadeyak” which literally means “whatever it is given”.
Crisis and decent living
While Sri Lanka has become one of the countries with the highest number of public sector employees among its peers, the unproductive nature of the work continued to add meaningless numbers to the GDP. Finally, as I have discussed on many occasions previously, the country witnessed an unwarranted expansion of the public-sector-dominant “non-tradable” production against private-sector-led “tradable” production. As a result, crisis built up slowly, and collapse was imminent and sudden.
Crisis has wiped out more than half of the people’s real incomes due to inflationary pressure in 2021-2022. Inevitable policy responses to the crisis through tax hikes and cost-recovery prices further eroded a portion of the incomes. Income is not enough for decent living for the people, including the public sector.
It is not surprising that in a crisis-ridden economy the government too has the challenge of facing trade union protests. Nevertheless, the government has no immediate solution to the problem that it has nurtured in the past until the time that the economic recovery and progress take place. But over-grown public sector itself is a major bottleneck for the recovery and progress.
(The writer is Emeritus Professor of Economics at the University of Colombo and can be reached at sirimal@econ.cmb.ac.lk and
follow on Twitter @SirimalAshoka).
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