Development strategies
As we enter the final week of the commemoration of our Jubilee Independence observation, many citizens have striven to answer the question of what has “independence” actually delivered to the people of Guyana. It is a rather bleak question since it presupposes that not much has actually been achieved.
At the time of independence in 1966, the goals and expectations were quite clear: to catch up with the developed countries, represented then as Britain and the US in living standards. These countries had been the first to industrialise, followed by European countries such as Germany. They did so under what was to be described by the “capitalist” mode of production in which the motive to increase profits to private owners of “capital” was the dominant driving force.
After the Russian Revolution of 1917, the resulting USSR provided a new, “socialist” strategy of development in which the State rather than private individuals owned and organised production that was supposed to be shared equitably among the populace. Both the capitalist and socialist paths of development assumed that increased economic production was the paramount criterion and was a component of an underlying “drive towards modernisation”.
In 1960 Harvard based WW Rostow, in the heat of the Cold War between the US and the USSR for world dominance, used the analogy of an aircraft (a “modern” artifact) going into flight to describe the “stages of economic growth” that all countries would have to undergo to move from their “traditional backwardness” to “modern prosperity”. This was situated in the “capitalist” system, now positively renamed as the “free enterprise system” and intended to counter the Soviet model.
There were five stages: the “traditional society” with subsistence farming and limited savings; the “preconditions for take off” when agriculture is mechanised, savings increased; the “take off” in which political and social institutions intensify the economic development spurred by industrialisation; the “drive to maturity” when economic development spreads and integration into international markets develops and finally the “drive to maturity” where mass consumption for the masses is widespread.
In 1962, under “internal self government” the People’s Progressive Party (PPP) invited the English socialist economist Nicolas Kaldor to prepare his budget that was supposed to balance increased agricultural output with industrialisation. He proposed a tax to prevent the multinationals from siphoning off their profits which left the country in a permanent deficit. It was never implemented since it became the trigger for CIA sponsored riots to remove the PPP from office.
West Indies Nobel Prize winner in Economics, Sir Arthur Lewis, had proposed an “industrialisation by invitation” model, for “lift off” in which foreign corporations are invited to bring in technology and capital through the inducements of tax holidays and concessions. Jagan had rejected this model explicitly but Lewis was brought in by Burnham, and made architect of the “1966-1972 Development Plan” as a gesture to the US which had ensconced him into office.
There was also the notion of “aid” by the developed countries and the World Bank to fill the “investment gap” between the domestic savings and capital needed to deliver a sufficient growth rate for take off. While the People’s National Congress (PNC) used the US aid to develop highways and other infrastructure, not enough foreign companies responding to the “invitation” to make a difference. In 1974, in its “Declaration of Sophia” the PNC announced Guyana was “in transition from capitalism to socialism” and would complete the task under the “cooperative socialist model”, which was borrowed from the Ujaama Socialist model of Tanzania. The PNC nationalised “the commanding heights of the economy” and ended up with 80 per cent of the economy under its control. By the end of the decade however, Guyana could not service its debt and under IMF sanctions, the economy imploded.
After 1989 with the acceptance of the IMF “conditionalities” to re-negotiate our US$2.1 billion debt, we were inducted into the latest version of “industrialisation by invitation”. (To be continued)
