e-Con e-News

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‘Before you study the economics, study the economists!’

e-Con e-News 12-18 January 2025

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‘The crucial importance of gasoline as a raw material, of

the airplane as a weapon, and of the machine-tool industry

as the industrial basis of modern warfare, points to the possibility

that a tight control in a few strategic points within a country’s economy

might paralyze its power to prepare for war without impairing

its capacity to produce for the purposes of civilian consumption.’

– Albert O Hirschman, National Power

& the Structure of Foreign Trade, 1945

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‘US lifestyle magazine Vogue has given Sri Lanka a glowing

endorsement by claiming it is this winter’s hottest travel destination.’

– Shivanthi Ranasinghe (see ee Economists, Is Our Economic Crisis Over?)

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‘Only 3 months before he began work on The Prince, Machiavelli wrote

in a letter to his friend & colleague, Florentine diplomat Francesco Vettori:

‘Fortune has decreed that, as I do not know how to reason either about the art

of silk or about the art of wool, either about profits or about losses, it befits me

to reason about the state.’ The Machiavellians of today would probably be

astonished by this, since it reveals the complete failure of Machiavelli to perceive

any connection between economics & politics.

A textbook for the Modern Prince should indeed contain, in addition

to Machiavelli’s classic chapters, extensive new sections on the most

efficient use of quotas, exchange controls, capital investment, & other

instruments of economic warfare. In this respect, practice has preceded theory. The

extensive use of international economic relations as an instrument of national power

policies has been, together with the ‘war of nerves’, one of the main characteristics

of the period preceding the outbreak of the present war.’ – Albert O Hirschman,

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It must be one of the strangest news items to inhabit the make-believe world of the merchant media in Sri Lanka: headlined: ‘No room to renegotiate IMF program’, the Wijeya Group’s Financial Times (FT) simply, or baldly, asserts, without stopping to take a breath:

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‘Senior Economic Advisor to former President Ranil Wickremesinghe,

Dr RHS Samaratunga speaking at the Daily FT – ACCA & ICC SL

webinar ‘IMF Agenda: Opportunities & Challenges for Sri Lanka

Post-2025’, responded to a question about whether there is room to renegotiate

the current IMF program given the tough conditions in the agreement.

He noted there is very little space to make changes to the broader program

targets, the program has progressed satisfactorily so far. The program

was mutually agreed upon, and therefore, there is no room to revisit it.

Dr Samaratunga emphasised that it is in Sri Lanka’s interest to stay the course

within the broad parameters of the program.’

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So there it is. The word made flesh. ‘There is no alternative’. So says the Daily FT – ACCA & ICC SL. FT is the Financial Times owned by Ranil Wickremesinghe’s relatives: Wijeya Group. The ICC = International Chamber of Commerce. The ACCA = Association of Chartered Certified Accountants. What else is new? At any given time on any given day, turn on your news device and they will be saying the same thing. Have been saying so since the end of history was declared in New York in 1989. Or was it 1848? There is no end to their endings. Otherwise, why tell us: There is no alternative?

            Sri Lanka has been further encoiled in the embrace of the US government. Yes. Media are even quoting Marx & Lenin (but not Stalin or Mao), left and right. Yes. The JVP are suspected of biding their Bolshevik time. Red-baiting is digging new depths. Oh wait, with AKD in Beijing, Mao reemerges like a terracotta warrior as crafty inscrutable despot. Others claiming themselves instant ‘Leftists’, ‘Neo-Leftists’, ‘Real Leftists’, ‘AI Leftists’, are also declaring the inauthenticity of each other’s claims. And speaking of false accreditations and awards, examine the titles taken on by local agents – merchants, moneylenders, importers really – our ‘Symbolic Capitalists’? The most high apparently is CEO/Chairman… then there are the latest breed of ‘Independent’ bankers & ‘Independent’ directors…Independent of what, and of whom?

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     The media always lags behind its own revelations: long before US President D. Trump claimed Greenland, that sod of ice had already issued its first licenses for oil and gas exploration off the western Greenlandic coast, to Chevron & Exxon-Mobil. Trump’s first Foreign Secretary in 2017, Rex Tillerson, was an Exxon CEO, who refused to accept office until bribery was allowed! ….

Way earlier, in 1903, US President Theodore Roosevelt engineered a phony ‘revolution’ in Colombia, creating the new state of Panama, taking over the Canal Zone. The Panama Canal Co’s lobbyist, JP Morgan-related New York attorney William Nelson Cromwell directed the ‘revolution’ while sitting in the White House. Old French Panama Canal Co shares had already been purchased by a US financial syndicate of JP Morgan, Rockefeller, etc…

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The media & academic system go to great lengths of fiction and assorted facts to declare the ‘independence’ of economics from politics, and the politics of economists.

     Albert O Hirschman’s 1945 book – at the height of the mass slaughter of WW2 – is still cited, 80 years later, as an authority on economic warfare – on ‘power policy’. This ‘silent war of penetration’ involves maintaining a monopoly over industrial processes, their initiation, operation and destruction. A prerequisite for control over such processes involves sovereignty over a territory, Hirschman’s study being funded by the Exxon Rockefeller Foundation, as part of a Trade Regulation Project under the University of California, Berkeley’s Bureau of Business & Economic Research, perhaps made Hirschman choose to misunderstand (Ha! Ha!) that Machiavelli’s main interest was in the unification of an Italy divided into warring principalities. After all, Machiavelli dedicated his book to a merchant banker prince, of the Medici family (Michelangelo painted a Medici heiress as their Virgin Mary), to describe the bald doings of a rival merchant family of Borgias, one of whom as Pope, had just divided (in 1494) the world between Spain & Portugal, sending them to assail us from the West (see ee Random Notes).

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Indeed, the world prior to the entry of the Portuguese into the Lakdiva Sea saw Lankans relatively unhindered travel East & West. This ee Focus, in the wake of the Sri Lankan President’s voyage to the People’s Republic of China, continues our attempt to depict Sri Lanka’s long and ‘enchanting’ historical engagements with China. We continue from the 3^rd-5^thC AD, with its major irrigation and architectural complexes. 317-419 is when formal Chinese links with Lanka presumably begin, after the first Qin Dynasty was set up, and Anuradhapura unified under the Hela language and Buddhism. By the Wei Dynasty (386-458), Lanka is famed for its Buddhist statues, and many countries send artisans here to study. Fa Xian (337-422) traveled the Southern Silk Road, and in 426, Lankan nuns arrived at Guangzhou port. In 520, Egyptian geographer Cosmas Indicopleustes, merchant from Alexandria, was calling Lanka an active ‘Emporium Mediatrix’ of the Africa-China trade.

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In the last few years, even as our economists and media faithfully bellow the NATO version of free trade, while further entrapping Sri Lanka in their coils, many of their governments have put forward Economic Security Strategies to ‘derisk’ their economies ‘from foreign dependencies’. G7 governments in 2023 issued their Economic Resilience & Economic Security. Japan’s Economic Security Protection Act was announced in Oct 2023. The European Commission recommended ‘advanced semiconductors, artificial intelligence, quantum technologies & biotechnologies’ be classified as ‘critical technologies’. England’s National Security & Investment Act ‘gives the government powers to scrutinise and intervene in business transactions, such as takeovers, to protect national security’. The Future Made in Australia initiative highlights the country’s valued minerals and energy resources, while South Korea in Oct 2022, announced the National Strategic Technology Nurture Plan… (see ee Focus).

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While media promotes US President Trump’s trade sanctions, the ‘US grip on global financial services’ provide the USA with ‘another source of leverage’. China apparently ‘has hegemonic power over global manufacturing, via its dominance of many supply chains’, while the USA has hegemonic power, in finance, ‘via the dollar-based system’. Meanwhile, Trump’s Treasury secretary nominee Scott Bessent says countries with military protection from the US should be forced to buy more dollar debt. He also says the world is heading for ‘Bretton Woods Realignments’ – perhaps ‘to weaken the dollar in order to help US exporters’ with ‘an attempt to replicate the 1985 Plaza Accord.’ (see ee Random Notes)

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• We used to be so enthralled about SBD de Silva’s xray-sharp insights into SL economic malaise, thrilled by his vision for transforming Sri Lanka’s economy. We would bug him to share his views with the media. He without saying much just laugh grimly with a curl of whimsy in his cheek, ‘Let me interview them. Let’s find out what they actually know about the economy. Have they chosen to investigate?’  When we would mention that so-and-so wished to interview us, he would curiously ask, again with a smile, ‘Did they bring a camera!?’ Fake media: All about ego? Grim reality of tinsel!?

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Another tactic by the media called ‘local’ is to fake modernity, as if turning on a computer is the same as making a computer or its parts. Fake claims about fake ‘industrialization’ are a regular feature in a fake Sri Lankan media. Handicraft, manufacture, assembly are all labeled ‘industry’. The latest car importer press release parading as a news item claims that ‘Sri Lanka’s local assembly and automotive component manufacturing sector has become a significant pillar of the nation’s economy’. Really! All this while the media is full of wailing about taxes on car imports. Meanwhile, it turns out the buses plying the roads are built on lorry chassis ‘not in conformity with modern mass transportation standards in terms of passenger comfort…’ Meanwhile, here’s another lovely….: SL makes groundbreaking entry into region’s luxury yachting market”… Parking lot? Cargo cult?

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Indeed, as colonized Japan advocates censorship of the publication of its latest and edgiest patents on technology – their public curtailment of such statistics is not new – this ee looks at the latest moves by the white powers to wage war by economic means: through the prevention of the diffusion of the latest technology, and the destruction of competitive industries. A recent ee 28 December 2024 looked at how US & European Universities Block Asian & African Students from Advanced Technology programs…

     Albert O Hirschman described ‘silent economic penetration’ as including the intensive study of consumer habits (see Unilever’s Kantar, ee Random Notes) to control a country’s home market.

     Of course, his example of such economic warfare at that moment in 1945 was Germany – the object of English sabotage prior to the outbreak of real war in 1939.  Protectionist forces had the media portray the encroaching evil as economic aggression & penetration rather than call it ‘foreign competition’, which would have exposed their rhetoric about ‘free trade’.

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‘In times of war between the People’s Republic of China & the West,

the knowledge that comes with economic presence & knowledge of the [Panama]

canal zone & its vulnerabilities could be exploited to shut down the canal in

‘deniable’ ways, from the sinking of container ships in key locations, physical

or digital sabotage of the locks themselves (&) threats from mining, (to) threats

to shipping at the entrances to the canal.’ – Evan Ellis, US Army War College

(see ee Sovereignty, US can’t hurt China’s interests in Panama & Greenland)

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     Without referring to English colonial practices where the destruction of economic power ran parallel with real warfare, Hirschman is candid enough to divulge, that what the Germans were accused of by their enemies was what the English & the USA themselves practiced as ‘business as usual’. Due to a lack of ‘systematic analysis of the connection between national power and international economic relations’:  ‘All these arts and practices are nothing else than an intelligent seizure of legitimate business opportunities’:

     ‘Export subsidies, import certificates, emigration measures (of skilled workers, machinery, etc), came to be used not as normal methods of economic activity, but as an active means to suffocate rival nations. From the dumping of goods at low prices to crush domestic industries; to buying ‘exports’ at high prices at first to then acquire a monopsonistic position to later lower prices; by direct intervention or by manipulating exchange rates. Then there is the ‘export of enterprises & scientific personnel’, with the penetration of German capital into local enterprises, by controlling the country’s most important banks & key industries, particularly textiles, metallurgy, and shipping, and through industrial espionage by preventing credit facilities to ‘hostile’ local establishments, control investment, instigating industrial strikes…

     In Hirschman’s book, countries were divided into agricultural & industrial (destined to exchange natural commodities, including their bodies, for manufactured goods). After they instigated war against Germany, the 6 Allied nations – England, France, Italy, Russia, Belgium, Japan – met at a ‘Paris Economic Conference’ in 1916: Allies also deliberately made ‘encroachments upon the rights of neutrals under the guise of measures against Germany’. They took ‘drastic measures’ ‘to prevent as far as possible the rebuilding of industries & commerce (of the Central Powers) after the war…  Though they claimed the opposite…

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Contents:

US Economic Warfare & Power Policy in Sri Lanka