Economic nostrums

One of the most distressing features of the political campaign launched by the opposition (the governing party appears to be keeping its powder dry for the while) has been their dearth of ideas on the economy in general, and the economic system in particular. At the most, they have simply resorted to taking pot shots at the government, invariably after the fact. This cannot do. In this fast- paced, globalised world, to be reactive in the economic arena – and it is an arena – inevitably means national stagnation and eventual death.

For a country that had to swallow the bitter economic nostrums of the neo-liberal Washington Consensus, we hoped the politicians gallivanting about the country promising milk and honey to all and sundry would have shared their opinions on the PPP’s efforts to chart a new course following our exit from the ministrations of the IMF/World Bank. We offer some pertinent observations of Cambridge economist Ha Joon Chang, from his recently released book, “23 Things They Don’t Tell You About Capitalism”, on the subject to (hopefully) stir some local reactions.

Chang, firstly, rejects the notion that economic ideas can be “disjunctured” from political ones: in other words, that the economy can be guided without an overarching political ideology. He declares bluntly, “All economic choices are also political ones and it’s time for us to be honest about them.” We expect, therefore, that those who want to capture executive office in Guyana would be somewhat clearer in the articulation of their political philosophy than the weasel-like, “We’re for the people”. We were firmly instructed that “government must never interfere with “the free market.” Chang disagrees, and asserts that modern economies would collapse without numerous forms of government intervention. Smart capitalists know very well that “there is no such thing as a free market.” From one end of our political spectrum, we have heard some who disagree, for instance, with the government’s retention of ownership of GuySuCo, and declare they would privatise it forthwith if they were to assume office. One wonders if they actually believe that governments have no responsibility for the social impact of their economic/political decisions. Would they, in another instance, not regulate the financial sector as was proposed in the U. S., and which led to the collapse of that economy? There have been vociferous criticisms of the government’s tentative initiatives towards public/private partnerships (e.g. the Berbice Bridge and the upcoming Marriot Hotel project) so as to jumpstart investments into a sustainable pattern).

The criticisms appear grounded in the neoliberal dogma that “poor counties need to adopt “free market” policies to achieve sustained growth”. Chang painstakingly refutes this by showing that the world’s richest nations – the ones who preach neo-liberalism to the rest of the world – rose to ascendancy in the past “through a combination of protectionism, subsidies, and other [state- and not market- led) policies that today they advise developing countries not to adopt”. Not realising that they are at least a decade behind the reality of what has catapulted the Far Eastern Tigers and now China and India into the fastest growth trajectories of the world, some misguided politicians are also preaching the corollary to the above doctrine. To wit, that governments lack the ability (including the required expertise and information) to make intelligent business choices and thereby “pick winners” through state-led industrial policy. This is just simply and egregiously wrong. The aforementioned governments regularly chose winning firms and industries over and against “market signals”, and in ways that can and do “improve national economic performance”. And lastly, that the big government welfare state, such as the present administration has fostered, damages economies by depriving the rich of the incentive to create wealth and by making the poor lazy. Chang shows that by providing second and third chances and a safety net to the poor, the welfare state encourages workers to be more open to (inevitable) change.