The death of socialism
Business Page last week suggested that amidst the cataclysmic dislocation to have rocked the capitalist world first manifested in the housing market in the United States, the response of the governments in the developed market economies is leading to a fundamental rethink of the role of ideology, and in the context of Guyana, raised the question playing on the word ‘left.’ Spreading like wildfire across industries and continents, the dislocation has made it obvious that the crisis goes far beyond the US or its housing market. It has raised troubling questions about the strengths and weaknesses of capitalism and the possibility of the revival of the socialist model of economic development which appeared to have been abandoned after the fall of the Soviet Union in December 1991.
So fundamental and vast is the problem facing the market economies that not even one trillion dollars has been able to calm the waters with the latest potential casualty being the car industry in the US, with the loss of over 2.5 million jobs directly and indirectly if the Big Three – Ford, Chrysler and General Motors – were to collapse. No longer is there any question of whether the state should get directly involved in the economy but only the extent of that involvement. For close to 20 years the world had this illusion that capitalism had solved the cycle of boom and bust, that regulation was the curse and deregulation and the market were a panacea for all the ills facing economies, that wealth in the form of derivatives could be created out of nothing and that socialism was dead.
Ideology
For some, perhaps simplistically, this all boils down to ideology, itself a misunderstood word that means nothing more that a set of doctrines or beliefs that form the basis of a political, economic or other system. Contrary to popular belief the word is not synonymous with socialism but is rather any underlying set of values and ideas and can embrace market capitalism, co-operativism or even religious fundamentalism. In last week’s column I indicated that at one stage the whole of Guyana, barring a small element, had been converted to socialist ideology by Jagan and Burnham and their respective political parties.
To get an understanding of whether those parties still subscribe to that belief I wrote their respective General Secretaries for answers and clarification about their commitment to socialism, and specifically to the PPP, whether the party gives any direction to the government on the kind of political and economic agenda it should pursue. My specific question to the PNC was whether it promotes and supports a socialist agenda. For whatever reason, neither responded to my letter.
It turned out that the PNC had long ago answered that question. In a letter published in the Stabroek News on January 12, 2002, General Secretary Oscar Clarke wrote that he could “think of no political party which can claim to have reversed itself so profoundly as the PNCR. It has changed its ideology and its economics.” That was as clear as one could be on distancing itself from the socialist agenda to which Burnham had committed that party.
Unclear
The situation with the PPP is far less clear. The party’s constitution defines it as Marxist but the party as government was all too willing to pursue the IMF-inspired Economic Recovery Programme inherited from its predecessor. The late President Jagan may have been uncomfortable having to reverse himself as much as he did in embracing the West to the extent he did, but for his supporters to selectively deal with his writings and his actions to show consistency is disingenuous, if not dishonest. I will respond separately to PPP member Rajendra Rampersaud’s letter in Thursday’s Stabroek News but for now he should refer to page 22 of Poverty Cause and Cure in Developing Countries by the late Dr Jagan. Calling for a “new economic planning strategy [which is] based on an anti-imperialist, pro-democratic and pro-socialist programme,” the late President identified the following ‘cures’:
1. nationalisation of the commanding heights of the economy – foreign and comprador capitalist-owned and controlled mines, plantations, factories, banks, insurance and foreign trade;
2. an almost total centralised planning and control;
3. expansion of the public and co-operative sectors;
4. rent, price and foreign-exchange controls.
These were obviously the very antitheses of the ERP which Dr Jagan’s government pursued on taking office in 1992 and no amount of manipulation of the records could explain this as anything but an about-face which has been taken to new lengths by Jagan’s successors. In this regard the PNC is less ambivalent. It would be more sincere if those who now want to protect or embellish Jagan’s reputation would simply explain that confronted with the prevailing international and domestic reality, he and his party had no choice.
Reversal
The completeness of the reversal by the politicians is seen not only in economic polices but in the legislative agenda; the subjugation of the interest of the worker to that of the employer; a tax structure that imposes low or no taxes on passive income while taxing earned income at punitive rates; the shift from direct to indirect taxes; concessions to business at the expense of the worker; and yes, the concentration of wealth to the business and political class.
Billions are spent annually on tax concessions to employers in exchange for their undertaking to provide employment, as though they do so for some philanthropic or altruistic reasons. The number of gas guzzling 4×4’s that are on the road, the majority with concessions, on a per capita basis is one of the highest in the world. But this practice is not only for the businesspersons. It seems that one of the first acts of a parliamentarian after taking the oath of office is to apply for duty-free concessions valued at millions of dollars to purchase a vehicle. At the exclusive community of the political elite in Pradoville the concentration of duty-free vehicles must easily be the highest in the country, with a one-car family being a rarity. These apparently trivial statistics are a measure by which it can be seen how far our society has been transformed. They are never issues that are ventilated.
Intellectual failure
It was suggested to me that one of the failures of socialism was its inability to respond at an intellectual level to the case made by Reagan and Thatcher for the market, and another was the fear of survival of socialist countries following the collapse of the Soviet Union. There is some merit in those suggestions but why have the economists and leaders of political parties not argued for an economic system, without label if necessary, that does not leave the market in charge or one that does not see the role of the government as being a mere facilitator?
Other than Cuba there are only two countries that have embraced state participation in the economy and those are right here in our region – Venezuela and Bolivia. Meanwhile we in Guyana proudly boast of how successful we have been in nationalising state entities which at the end of the day make us as a country poorer. The problem will come when we have exhausted debt write-off, when there is nothing else to privatize and when there is no further windfall revenue from VAT. For all his faults, when Burnham departed the scene, Guyana was owned and controlled by Guyanese. Now we have no control or influence over resources which have passed into foreign hands often with a bunch of goodies to go with them. To reverse that will not be easy, although we saw, as victims, some of that when CDC pulled out of GPL and Reynolds out of bauxite, leaving us to carry the can and the cost. Paradoxically, that is how it is happening in the developed world as well, as more and more businesses take public money in exchange for ceding some control to the government.
Agnosticism
It seems that Guyana’s policy response to the global economic crisis is to wait, see and hope it does not affect us. That is a naïve approach as we already see prices for our main commodities falling and we may soon see a number of Guyanese from the Caribbean returning as the construction job market dries up. In fact this seems an ideal time for a serious re-think of first the kind of society we would like to have, and second the formulation of the economic model that will take us there. That model will inform the investment policy, the regional and proportional development of the economy, the regulatory systems, taxation and the redistribution of wealth, planning and development and the provision of social services. There is no agnosticism in terms of ideology. A political party that seeks the support of the voters and the opportunity to govern has a duty, and ought to have the courage, to tell the public where they stand on fundamental issues.
The shenanigans of Wall Street, fascination with Fortune’s list of the richest this and richest that, greed and power at any cost have corrupted values and ideas. No longer do governments and parties think they need to believe in anything, once they can build a road here and create a few jobs there.
Conclusion
When a more objective judgment is made, the gains from IMF and neo-liberal policies are far from the impressive successes they seem to be. The benefits of free market liberalisation depend on who you are, your party affiliation and how much money or assets you had to begin with. There is no universal solution to begin with so rather than try to answer the question ‘Who is left now?’ I would prefer to see our political and intellectual leaders take the opportunity of the global meltdown to redefine their vision of our country and formulate a plan for taking us there.
Faced with real choices on issues and ideas I believe that our voters would be better disposed to renounce racial cleavages and start concentrating on ideas and policies. At the moment, the choice seems to be between persons of similar ideological persuasion distinguished only by their race.