“My main message is by all means to follow the logic and imperatives of a flexible, resilient, and open economy, but adapt and modify such logic to reflect the imperatives of our own society, the level of development it has come to, and the way it can evolve then or 20 years from now. What is needed today should not be jettisoned in the name of some textbook argument that comes from institutions in the outside world. I would say to people to take a closer look at classical economic theory, rather than the so-called laissez-faire economic theory that is put before us today. Classical economic theory did have a place for protection and intervention in the commodity markets, and it did find a role for the Sate in combating private monopolies, particularly in the field of infrastructure. In all these and other areas, classical economic theory provided exceptions to the rule of the operation of free markets. We should not jettison all these, but rather look to these arguments and use and adapt them to our own needs.”
Dr. Gamani Corea, 1998
A fresh encounter with Dr. Gamani Corea’s work late in life has provided me an opportune moment to reflect on the ‘politics of jettisoning’ in the teaching and policy-making of economics in Sri Lanka. Not only that, the undergraduate economics degree curriculums have ignored the intellectual legacies of the ideas and thinking of Sri Lankan economists like Corea, S.B.D. de Silva, G.V.S. de Silva, Buddhadasa Hewavitharana, H.A. de S. Gunasekera, I.D.S. Weerawardena, Jayantha Kelegama, Ian Vanden Driesen, and Victor Gunasekara. The political economy-based approaches that these first and second generation of economists embraced in their teaching and research on economics have also been abandoned.
The lack of critical reflection on homegrown economic ideas to generate policy responses to development challenges has left us dependent on dump-downs of the World Bank (WB) and the International Monetary Fund (IMF) and incompetent in “exercising the degree of pragmatism” that Corea instructed. In the absence of a political economic understanding, Sri Lankan policymakers in the Treasury and the Central Bank have tended to ignore the urgency of correcting the asymmetric power relations inherent in the international order and distorted market conditions. As a result, Sri Lanka is a marooned nation – deep in debt, at the risk of recurrent defaults and entangled in neoliberal geopolitics, as a destination for cheap labour, cheap resources and a satellite.
The key ideas of Corea contributed to consolidating the structural power of developing countries, such as commodity price controls, the New International Economic Order (NIEO), and the United Nations Trade and Development (UNCTAD) inter-governmental organisation. While commemorating the 99th year of his birth anniversary and 11th death anniversary, I propose to revisit the works of Sri Lankan economists like Corea to formulate a Sri Lankan school of economic thought to inform policy-making that promotes Sri Lanka’s interests towards development.
Southern order
Dr. Corea was the third Secretary General of the UNCTAD between 1974 and 1984. His career at the UNCTAD began as an expert engaged in the preparatory work for the first session of the UNCTAD in 1964. A former Secretary General of the UNCTAD, Rubens Ricupero captures the significance of Corea to the UNCTAD when he said that Corea contributed to the preservation of the UNCTAD as “the moral and intellectual conscience of development”. Corea’s involvement in developing institutions and platforms that further the collective power of the third world transcends the UNCTAD to the South Commission and later to the South Centre.
Through years of engaging developing countries and promoting North-South dialogues, Corea had realised that “problems of the newly de-colonised countries in the third world were not in the front ranks of ‘developed countries’ concerns”. Hence, he advocated collective actions of the South to highlight “unity among nations of the South and their position in multilateral negotiations”. The period in which Corea joined the UNCTAD marked a jubilant period for developing countries. With peak oil, Organisation of the Petroleum Exporting Countries (OPEC) countries, along with a Group of 77 countries, had come together with demands for a more responsive international order – the NIEO that was founded in 1974. To use Corea’s own words, the NIEO consisted of “two strands – the insistence on structural change as a necessary ingredient of the evolution of international economic relations and the concept of collective self-reliance”. The developing countries were calling for fundamentally transforming the mechanisms and relationships that constituted global economic relations while advancing their shared strength to mobilise collective bargaining power. It also meant that the domestic economic structures of developing countries, such as plantations and mining, reflecting a character of the colonial era, should change.
Corea plan
On the eve of their independence, the postcolonial countries discovered that they lacked the political influence to maintain commodity agreements that ensured stable prices, unlike the colonial powers. The changed relationship with consumer States, which used to be the colonial powers, eliminated the newly independent nations’ ability to maintain stable prices. Except in some cases, where the consumer States like the United Kingdom and the United States believed that offering stable prices was essential to the political stability of a few favoured regimes in Africa and Latin America, the consumer States too were not willing to offer stable prices. With falling prices, developing countries heavily dependent on primary commodities like tea, natural rubber, sugar, cocoa, tin, copper, iron ore and jute for national income were at the brink of economic collapse and were facing balance of payment crises.
The instability of commodity prices was a major point of deliberation at the Havana (Cuba) Conference in 1946. The agreement to form an International Trade Organisation as an outcome of the Havana Conference shows the urgency of attaining price stability from the developing countries’ perspective. Discussions lasted until the UNCTAD IV meeting in Nairobi (Kenya) in 1976, which assembled “a new constellation of forces”, as Corea called it, to capture the rise of OPEC countries and the configuration of Global South forces along the NIEO. The UNCTAD Secretariat proposed the Integrated Programme for Commodities to create a framework to strengthen and stabilise international commodity markets. Instead of an ad hoc approach to negotiation, the new programme proposed an overall framework of principles which look at commodities as a whole. It also entailed the establishment of the Common Fund, an international institution with a greater voice and representation of developing countries, to raise finance to facilitate buffer stocks in developing countries, enabling them to stabilise prices and promote research and development to improve structural conditions in commodity markets. The Common Fund was also expected to provide “compensatory financing to provide loans for shortfalls of export earnings from the expected levels”. In subsequent meetings at the UNCTAD V in Manila (the Philippines) in 1979 and the UNCTAD VI in Belgrade (Serbia) in 1983, more resolutions were adopted to progress the programme for commodity stabilisation. As the history of reforms in international trade, finance and development reveals, the non-committal and agonistic behaviour of the developed countries has been an impediment to the progress of both the integrated framework and the Common Fund. In his writings, Corea also exposes “old and familiar demons” that composed the attitude of the developed consumer countries and transnational companies ranging from the idea of the free market, producer cartels, consequences of rising commodity prices, and intervening in the private grain and minerals trade markets. Devoid of comparative facilities available to the Organisation for Economic Co-operation and Development (OECD) and the European Economic Commission, the developing countries also demonstrated a sense of unpreparedness and lack of confidence that they had any influence on international negotiations on commodities.
The challenges that Corea recognised as affecting developing countries, particularly the prices of agricultural commodities and minerals, continue to this day. His vision for stabilising prices also lives in the dissent and contention of developing countries and peasant movements in the World Trade Organisation processes.
SL school of economic thought
Corea, even though he hailed from the planning era, was not a Marxist or a Leftist economist who advocated for import substitution policies and State control of the economy. Neither was he a neoliberal economist who blindly believed that the market cures all ills, the private sector is sacrosanct, and that the IMF and the WB are god sent.
Resurrecting the intellectual legacies of people like Corea, who are globally reputed for their work towards strengthening the positionality of developing countries by alleviating negative terms of trade through rules and systems of the Global South, is important as there is a call for greater cooperation between developing countries. These ideas amount to the soft power of Sri Lanka that we should project to the rest of the developing world by integrating them into our diplomacy and taking the leadership in lobbying and building consensus on debt relief, stabilising commodity prices, and attaining overall development aspirations.
Corea’s work was grounded in the everyday problems of developing countries. He drew connections to developing countries’ experiences, from Sri Lanka to El Salvador to the Solomon Islands. His praxis was closely aligned with the rise of the dependency school and the influence of Raúl Prebisch. Unfortunately, thinking of underdevelopment is almost non-existent in Sri Lankan Departments of Economics, which also explains the sense of paralysis in economics teaching, failing to connect to the everyday experiences of people. Sri Lankan economics teaching also contrasts with the new waves in Europe – rethinking and new economics thinking, emerging to encounter challenges posed by the 2008 global financial crisis. Corea also had the advantage of the interdisciplinary eco-system that Economics Departments offered in the early years before being compartmentalised into different disciplines. The intellectual tradition and historical approach afforded by interdisciplinary thinking made Corea what he was.
My generation of economics undergraduates, even younger generations now employed either as school teachers, university lecturers, researchers, civil servants, private sector professionals or Central Bankers, would have certainly felt the limitations in our training when attempting to address the current challenges. Our training in neoconservative economic theory decapitates our skills to bring about the ‘structural change’ that a developing country like Sri Lanka needs. Nurturing a renaissance in economics teaching in Sri Lanka by incorporating the ideas and thinking of people like Corea into the curriculum could be a first step in the right direction.
(The writer is a feminist political economist. She works as a senior researcher at the Bandaranaike Centre for International Studies – BCIS)
The views and opinions expressed in this article are those of the author, and do not necessarily reflect those of this publication