04 October 2016

The intoxicating relations of (yahapalana) production

No, it's not only about Hydrogen, Carbon and Oxygen 
Here’s a nice Marxist definition of ‘relations of production’:  The objective material relations that exist in any society independently of human consciousness, formed between all people in the process of social production, exchange, and distribution of material wealth.  

Admittedly it is far more complex a phenomenon than the way in which an individual or collective relations to that other often-used Marxist category, ‘means of production’.  It’s not as simple a yield of observing whether or not an individual or collective owns a factory, for example, which gives us owners on the one hand and labour on the other.  

For our purposes though it suffices to focus on the word ‘relations’.  In the context of the ‘phenomenon’ that we shall comment on here it is about someone being related one way or the other to someone else who can move and shake so that the former can profit.

That should be enough by way of preamble.  Here’s a story about how not to handle an economic crisis.  In a word, and one that this Government has uttered often by way of excuse and to pin blame on the previous regime – that is ‘debt.’  

The commonsense understanding of debt is that if you owe something you have to find ways of generating income to pay it off. That’s how VAT was marketed.  If you keep borrowing, your crisis will get worse.   If you waste money it doesn’t help.  If you forego income earning opportunities, you are being masochistic.  If you allow your assets to be plundered, you are a moron.  

This is the problem with governments.  They are supposed to be custodians, but they act like owners who have the rare privilege of enjoying ownership privileges but not having to pay for it.  The bill is passed on to the people.  This is why the baby that we are left holding is called public debt, never mind who borrowed how much at what interest rate for what purposes.  

The Prime Minister commenting on the state of the economy pointed out many glaring errors (kind word) committed by the previous regime.  He gave us the numbers related to indebtedness.  He painted in number the inefficiency of state-run entities and flagged issues such as nepotism, corruption and abuse.  He also said that if not for negative factors in the global economy, things could be managed.  However, as he pointed out, the ‘global’ cannot be wished away.  To make matters worse, he has acknowledged that the true extent of the debt since the previous government used state-owned enterprises to borrow on its behalf, is not yet known.

Drastic and even unpopular measures had to be taken, obviously, but the Prime Minister promised that the poorer sections of the population will be protected.  Good intention notwithstanding the Government mulled a VAT regime that would do nothing by way of cushioning those in lower income earning categories.  And it got worse.  Domestic debt, according to Forbes, has grown by 12% and external debt by 25% without starting any new large-scale infrastructure projects. It’s almost as though key individuals at the commanding heights of the economy are scandalously navel-gazing.

The government has done a poor job of communicating the true nature of the crisis to the people.  What we hear mostly is blame-talk. Repeating what is known doesn’t gain any ground, political or otherwise.  When it is treated as a substitute to corrective measures, however, it can result in loss of ground.  

We’ve seen little coherence in this government by way of sorting things out.  The Prime Minister has offered reasonable analysis but when it comes to solutions there is manifest lack of agreement among various sections of the regime, those responsible at least in part being retained in key positions, incompetent and even corrupt ‘friends’ being accommodated, a continuation of wasteful practices, blind-eyes to malpractices and scandalous foregoing of revenue earning opportunities. 

One example would help us understand the situation. Among the many issues of corruption flagged by those opposed to the Rajapaksas during the previous regime was ‘ethanol’.  Politicians were named and shamed, quite rightly so.  It has now been reported that favored individuals have been allowed to import ethanol surreptitiously without declaration or rather that Customs was prevailed upon to release the consignment without prosecution as prescribed in the rule book.  In another case import duty amounting to Rs 6 billion on alcoholic products imported by a brewer has been exempted.  [We need not elaborate on the billions made by Perpetual in the Central Bank Bond Issue scam and the fact that recommendation of the Committee appointed by the Prime Minister to probe the matter are gathering dust; or that COPE is indulging in scandalous foot-dragging in the release of its findings]. 

We must say in fairness that the brewer had to stop production because of recent flood damage and had to import to meet the market deficit, but why then didn't the Government explain?  And how did the brewer become a privileged citizen (over the flood-affected thousands made to queue up for relief).  The brewer's tax tab is high, they've since said, but that's a law that is common to all, and as importantly is an indication of the massive profits made over the many, many years of flood-free operations.  Surely, the bucks couldn't have evaporated or taken away by the swirling waters?

The question is simple: how can you expect the people to take you seriously about a debt crisis and the need to tighten belts when you are letting possible revenue slip through your fingers and looking the other way when officials and politicians bend the rules so friends and family can profit? 

What we are seeing is ‘relations’ of production in its most disgusting manifestation.  Sure, we are playing a little with the Marxist notion here, but it’s still about the process of social production, exchange and distribution of material wealth that is marked (less by location in production, exchange and distribution structures) than by who is who and where.

If the debt deserve the tag ‘public’, the theft or malpractice that inflates the debt should be called ‘public theft’ not in the sense that the citizens as a collective steals but that they (the people) are being robbed.  

And they call this ‘good governance’!  It’s not even ‘better government’ which would have been a consolation.  It’s same old, same old beer, ethanol and other intoxicating products that allow some people to accumulate immense wealth without having to pay relevant dues to the people.