Economies are shaped by politics, and development is intrinsically linked to democracy. With over fifty countries in the Global South facing severe debt problems, what does the future of democracy and development look like in these countries? 
This was the theme of a workshop organised by the International Development Economics Associates (IDEAs) network and the Faculty of Economics, Chulalongkorn University, in Thailand, titled ‘Democracy and Development in Less Developed Economies’. With over a dozen economists from Asia and Africa, this was an effort to consider the possibilities for substantive democracy with egalitarian policies.

In this column, I draw on my presentation at the workshop where I argued about the political shift in Sri Lanka, away from the authoritarian populism of the Rajapaksa regimes towards an authoritarian austerity that characterises the Wickremesinghe-Rajapaksa regime. The governments of Mahinda and Gotabaya Rajapaksa combined authoritarianism with populist appeal and largess, including hand-outs to their social base. However, the current government under the watchful eye of the IMF only offers austerity, but with the promise of great gains for the capitalist classes through wage repression and broader attacks on labour. 

Sri Lanka’s dependent economic structure was for long determined by colonialism and post-independence by a neo-colonial global order. However, the politics and policies of some national regimes provided the space for engagement to defend and demand social welfare programs and redistributive initiatives for working people to withstand exploitation, dispossession and economic crises. Which economic discourses should leftist economists challenge to confront the current neoliberal onslaught, and what alternatives should they generate to address the current crisis?

International Framing

The concept note of the IDEAs workshop was reflective of our context in Sri Lanka:
“The last few decades have seen low and middle-income countries (LMICs) being subject to two kinds of experiments. In the economic realm there has been a consistent and widespread experimentation with neoliberal polices - in some instances, and on occasions imposed by external agencies like the IMF and the World Bank, backed by the advanced economies, and in others openly embraced by domestic elites looking to drive inequalising growth riding on foreign capital dependence. In either case, a deeply subordinated integration with an unequal international regime and an extreme dependence on volatile capital flows into these economies is a common feature. Extreme volatility and periodic crises have not reversed this tendency, though on occasion governments elected to power, on platforms appealing to the victims of neoliberalism, have attempted to moderate (even if not abjure) austerity and raise social expenditures, including on social protection. But the fundamental structural features of neoliberal regimes remain largely unchallenged.

What is remarkable is that many of these countries still function within or have switched to the framework of Parliamentary democracy, even though the quality of that democracy and the fairness of elections are in question in some of these contexts. On the other hand, many countries function with authoritarian governments. In some contexts, authoritarianism is the means used to protect elites and sustain extremely inegalitarian and crisis ridden neoliberal regimes. However, the debilitating and destabilising consequences of neoliberalism have resulted in recent decades in the overthrow of some of these authoritarian regimes by protest movements. Yet there appears to be no noticeable retreat from neoliberalism as of now. In many parts of the Global South, especially in Africa, the hopes raised by political liberalisation have been dashed, to some extent, by the socially regressive consequences of economic liberalisation and globalisation.”

Indeed, Sri Lanka has been no different. Even though the tremendous protests of July 2022 chased away an authoritarian President, within weeks another authoritarian President was installed by the former President’s allies in Parliament to ensure their survival and reinstate the neoliberal economic trajectory. This illegitimate government uses the Prevention of Terrorism Act to suppress protests, indefinitely postpone local government elections, maintain a repressive order by tear-gassing protestors, and threaten to enact more laws to curtail rights and freedoms.

Governance and Corruption

The irony of the current political and economic dispensation in Sri Lanka is that despite the lack of legitimacy of the government in power, and it’s blatantly anti-democratic actions, the IMF and World Bank are congratulating the Government for taking forward reforms to address issues of governance and corruption. Although contradictory, the reality of the discourses of governance and corruption is that they legitimise a rule by experts that are aligned with the interests of the ruling class and to the detriment of working people’s democratic participation in determining their future. 

This is the case with the IMF’s Governance Diagnostic in Sri Lanka, which is the first of its kind in Asia, and now resulting in new laws. These are part of the proposed sixty new laws and amendments over the next year as mentioned in the Budget Speech for 2024.They consist of a whole array of repressive and dispossessing legal enactments including an Anti-Terrorism Act to curtail dissent, a Public Finance Management Law ensuring austerity with the state barred from providing relief even amidst economic shocks, and land laws that dispossess farmers while commercialising agriculture.

These laws reflect an ideological attack claiming that state-policymaking cannot be the domain of democracy. They reify experts and the so-called methodological individualism, where communities, social institutions and the collective concerns of the citizenry are disregarded. Only the interests of market-oriented private institutions and individuals as consumers are considered. Indeed, this perspective pervades the IMF Agreement of March 2023 and the World Bank Country Partnership Framework of June 2023, which frame Sri Lanka’s economic policies for the next four years with clear benchmarks and programs.  

Neoliberal Crisis and Alternatives

Neoliberalism itself is in crisis, as evident from economic crises and the rise of overtly racist regimes, including in the global centres of power. And in Sri Lanka, it is going to be virtually impossible to return to the economic trajectory from 2010 to 2019, with market borrowings and speculative investments in infrastructure and urban real estate to generate even fictitious economic growth. 

In this context, my presentation sought to look at the historical changes in regimes since Independence. I use the concept regime to mean both different regimes of accumulation such as the import-substitution development and particular ruling regimes such as an “intermediate regime” consisting of different classes. In the past some of those regimes provided greater space to demand reforms favourable to working people. However, some members of the IDEAs network, including Prof. C.P. Chandrasekhar, Prof. Prabhat Patnaik and Prof. Jomo Sundaram had some critical questions and responses. They pushed me to think about the distinction between the state and a regime in power as well as the changing role of the middle classes in supporting authoritarian populist regimes. The discussion included whether to focus on heterodox macroeconomic policies ignored by policymakers or substantive campaigns for universal education and healthcare. Indeed, these are much needed debates on the path of social change in this time of crisis.

In any event, the authoritarian austerity strategy of the IMF and the Government are unlikely to work, as resistance is bound to increase. However, this austerity push will do a lot of damage along the way, and may even create the conditions for fascism with a backlash. Thus leftist economists have the urgent task to expose these policies. Furthermore, there is also the larger task of constructing alternatives acceptable to broader constituencies and coalitions. I would also argue that this has to start with social welfare relating to public services and self-sufficiency in the food system. 

These alternatives have to speak to our local conditions but are also very much linked to the international order within which we have to work. However, under the hegemony of global finance capital backed by the IMF, World Bank and neoliberal experts, polarising processes of unequal global development continue with anti-democratic means. And when it comes to resistance, there are few signs of the political leadership that led to the Non-Aligned Movement during an earlier era. What we need now is more work, engagement and solidarity by progressive intellectuals, trade unions and social movements in the Global South to place larger questions of freedom and equality on the international agenda.