A State for development

Over last three decades, there have been concerns raised about economic distribution in Guyana, which highlighted the issue of distributive justice. Firstly, there have been concerns about the overall economic policy of the PNC and PPP favouring respectively African and Indian Guyanese at the expense of the “other”. Charges of “marginalisation” and even “economic genocide” were made by elements in the African Guyanese community during the PPP’s regime, echoing the similar cries of the Indians during the PNC’s rule between 1964-1992 and 2015-to the present.
What we have seen is that in severely divided societies, governmental policies will not be judged by intentions, but by results, and even in that case, results will be judged by very subjective criteria. Certain policies, which may appear facially neutral, can have differential ethnic impact. Take for instance, a key plank in the economic strategy pushed by the multilaterals – agricultural development in Guyana. From a standpoint of comparative advantage, it makes sense for Guyana to concentrate on agricultural development in the near term but since Indians dominate this sector, we can be sure that African Guyanese will have severe problems, as they demonstrated in the 60s, with a strategy that makes agriculture its central focus. It will be futile to argue that it is the most “economically feasible” choice. The economic policy of the government is then very important in securing justice, and ethnic peace in Guyana.
After a period of rapid growth engendered by the IMF/World Bank dictated Economic Recovery Programme, beginning in 1990 under the PNC, where the economy expanded primarily in the traditional areas that had collapsed, it flattened out. The growth rate since 1997 was far below the eight to ten per cent deemed necessary to make initiate a self-sustaining level of prosperity for all groups. The evidence has made it evident by now that the neo-liberal economic regime imposed by the Washington Consensus was insufficient to facilitate the requisite growth rate.
To stimulate such a rate the, creation of a Catalytic Entrepreneurial State (CES) is proposed: one which strategically supports home-nurtured private firms that can compete in the world market. As with many other third world states, we had a disastrous experience with state involvement in development during the 70s and 80s and this has obviously soured the IFI’s enthusiasm for dirigiste policies. Out of this experience has arisen a not unreasonable fear of a “strong” state. The flawed premise of this fear, however, is to assume that the form of the state itself has to be constant, as it is used to perform large and more varied tasks. The Guyanese state has always been a centralised one and this condition was an integral part of the problem of retarded development, even before the seventies.
Even with a centralised state, not all its actions are negative and in fact there may be the necessity for government interventions when the free market or community coordinating mechanisms are stymied for one reason or other – market failure or community breakdown. After our demonstrated experience with the failure of the market dominated approach since 1997, we propose that the State has to be transformed into one that is as small as possible but at the same time we have to insist that it should be as large as necessary to ensure that we move ourselves out of poverty in as short a time as possible with the onset of oil revenues. This expansion of the role of the State does not mean that Guyana has to repeat the mistakes of her past: the experience of the “Far Eastern Tigers” are a beacon.
Guyana’s development plans during the 70s and 80s were driven by State ownership of production, (State Capitalism) which destroyed the market and community— forces necessary for competition and other coordinating activities necessary for sustainable growth. Apart from the fact that there may be other, non-economic factors inhibiting investment – such as political instability – we need to nurture not just “local content” but local world-class firms.