After the election, what next?
Ian Boyne, Contributor

Boyne

THE MOMENT is imminent. The man of the moment will stand before the screaming thousands in Half-Way Tree this evening, and amidst a crescendo of sounds and high drama, will announce the date of the next general election.

His "horses" will be ready for the starter's orders to "Go!"

In just a matter of a few weeks it will be all over: It will be time to get back to Reality - with the capital R. All the fancy talk, promises and propaganda will be over. And whoever wins - and the polls and popular perception are indicating it will be the PNP - it will be crunch time. Those doing the "Log On" this evening, or "wining down" to soca music, or thrusting their hands in the air to some really moving gospel music will themselves face the music very soon.

Be it known that the people who have the real power over our lives - the International Monetary Fund (IMF), the World Trade Organisation (WTO), the World Bank, the power brokers in Washington - are intent that whoever we elect toe the line of their Washington Consensus. The IMF itself has already made known its "Consultation" to the Government and has grumbled that "the national minimum wage has been increased by 125 per cent in the past two and a half years - most recently by 50 per cent in January 2002. Average wages increased cumulatively by about 20 per cent in the period 1999 to 2001".

Among one of the "Six Structural Impediments to Growth" identified is that : "Strong trade unions push for high minimum wages growth despite unemployment. The growth in real labour compensation has exceeded the growth in real output per worker in six of the last ten years. Encouragingly, the trend was reversed in 1999". You workers of Jamaica are overpaid!

Also, the IMF, in its 70-page Consultation document issued on September 11, slams Jamaica's trade protection for farmers and identifies that as one of the six impediments to growth. The agricultural communities all across Jamaica and the working class who are excited about the elections are oblivious to the kinds of pressures being brought on the Jamaican state to have them tighten their belts further rather than see an expansion in income, which is what they are obviously voting for. Encouragingly, our Finance Minister this week told us with firmness in his expression that he told the IMF fellows bluntly that they could put whatever they want to put in their consultation but that he and the Government rejected their view that the dollar should be further depreciated to strengthen competitiveness. Edward Seaga in the 1980s also famously rebuffed the IMF's so-called Fresh Eyes Team who came here to lecture us about fiscal and monetary conservatism and further devaluation. Seaga told them in effect to go to hell.

I suggest that progressive elements within civil society will have to step up their campaign after this general election to ensure that the interests of the poor and marginalised are protected and that our Government is not held captive by powerful Western interests who control the multilateral institutions. Unknown to many Jamaicans is the fact that an intense intellectual struggle is being waged - interestingly, among largely influential Western economists - over the economic and development strategies which should be pursued in this globalised era. Jamaica has to be a part of this intellectual ferment and our media and other elements of civil society ought to be au fait with the best development thinking and controversies in political and development economics.

Especially at a time when our two main political parties have bought into the neo-liberal economic strategy. The two manifestos pay allegiance to the basic tenets of what has been called the "Washington Consensus" (based on the policies of the IMF and the World Bank) and the "Augmented Washington Consensus". Among the key features of this neo-liberal Washington Consensus are financial and trade liberalisation, fiscal discipline, tax reform deregulation, reorientation of public expenditures, privatisation, flexible labour markets, independent central banks/inflation targeting, unified and competitive exchange rates and openness to Direct Foreign Investment. This is the new Gospel of Economic Development, which it is heresy to question.

But there has emerged some rather prestigious heretics. Like Dani Rodrik from Harvard University, a thorn in the side of the neo-liberals. In a June 2002 paper titled After neo-Liberalism, What, Professor Rodrik says: "After more than two decades of the application of neoliberal economic policies in the developing world, we are in a position to pass unequivocal judgment on their record. The picture is not pretty." He says that in Latin America, which has eagerly adopted neo-liberal policies after years of following statist, import-substitution policies, "only three countries have grown faster during the 1990s than in the 1950-1980 period". The 1980s are called "the lost decade". One of those three countries which grew, incidentally, was Argentina. In the developing countries on a whole, " this record on growth has been accompanied by worsening income inequalities in most of the countries that adopted the Washington Consensus".

It is indisputable that the Marxist economies of the past were spectacular failures and that statist control has been disastrous. What the critics of the neo-liberal model are calling for is a pragmatic, flexible , development-oriented, prudently interventionist thrust by the state; a state that works in partnership with the private sector; which facilitates growth rather a state which is minimalist and which simply "gets the fundamentals right" and get out of the way. The empirical studies on the countries in the developing world which have grown and which have created jobs and boosted exports have shown that the state played an activist, developmental role. So while the present PNP Government has been generally prudent in its management of the macroeconomy and while it has adopted fiscally responsible policies and has wisely adopted market strategies, it must not assume that macroeconomic stability will automatically produce growth. The party is right as it boasts in its manifesto: "These hard-won gains have created the platform for a dynamic and competitive market-driven economy which can now generate long-term economic growth and employment opportunities".

But the PNP will have to move to a more activist, facilitatory state if it hopes to do better with job creation and export growth in the expected fourth term.

The Article 1V Consultation issued on September 11 notes that with all the gains in the macroeconomy, "Jamaica suffered a significant loss of competitiveness-of between 40% to 60% -- between 1995 and 1998, from which the economy has yet to recover". The PNP had better understand that as Dani Rodrik says in his After neo-Liberalism paper, "Encouraging foreign investment or liberalising everything and then waiting for things to happen will not work". Laissez-faire capitalism, on other words, cannot deal with our production and crisis and cannot create the jobs needed.

An intellectual assault must be made on the assumptions of the Washington Consensus. The Consensus and neo-liberalism must be stripped, or "deconstructed", of its sense of being "the only alternative to socialism" and the "End of History Economic Theory of Everything".

In a seminal 1998 paper on "Moving Beyond the Post Washington Consensus", the former Chief Economist to the World Bank and Nobel Prize Winner Joseph Stiglitz says, "successful development requires, or at least is enhanced by, appropriate policies that go well beyond simply getting out of the way of the market. The choice is not whether the state should or should not get involved. Instead, it is a matter of how it gets involved. More importantly, we should not see the state and markets as substitutes. The Government should see itself as a complement to markets, undertaking those actions that make markets fulfil their functions better".

Just at the time that our political parties are displaying their fascination with the Washington Consensus, with the JLP vowing to create an independent central bank and legislating the full backing of the Jamaican dollar, thus reducing the flexibility and manoeuvrability of the state, there is a growing momentum ­ even called a new consensus ­ toward more pragmatic state interventionism. In his paper, Neither the Washington Consensus Nor the post-Washington Consensus: An Introduction, Dr. Ben Fine refers to the growing progressive thinking within the World Bank and even the IMF: "From anti-market, through market-confronting, to market-friendly, the state has been seen more positively, if cautiously so" . In the book by K. Ohno and I. Ohno, Japanese Views on Economic Development: Diverse Paths to the Market, we read the following interesting statement: "Most Japanese aid officials find such obsessions with finance and the macroeconomy narrow and unbalanced. True, inflation must be dealt with but not at all costs to the society, especially when the country is distressed by collapsing output, joblessness, political instability, ethnic conflicts, lawlessness and public discontent ­ These real concerns take precedence over money, budget and inflation".

Try telling monetarists like John Jackson, Charles Ross and Basil Buck that! A coalition of progressive opinion has to be built against this narrow view, especially when it seems to be winning the day with political opinion. Let's be clear: fiscal and monetary irresponsibility and recklessness, autarky, and statism are recipes for disaster. We must embrace market economics and some of the key elements of the Washington Consensus. Jeffrey Sachs has shown conclusively that the countries which have followed statist policies have failed miserably. But strictly narrow economic concerns have be balanced with broader social goals.

This is why the JLP manifesto proposal for the establishment of a Social Governance Council is one of the most progressive ideas on the table today. If the PNP wins the election, civil society must press them to adopt this highly enlightened policy suggestion, in the spirit of non-tribalism. According to the JLP manifesto, "The Social Governance Council will allow for formal participation in place of the present ad hoc practice of representation of view to Government which is often too late to affect policy." Membership of the SCG would be drawn from civil society representatives such as churches, youth and environmental groups, trade unions, "organisations for ethical governance", NGOs etc. Significantly, the Social Governance Council would be chaired by the Prime Minister himself and comprised of ministers with responsibility for social policy. Already, the business class has its Production Council with the Prime Minister. Why should the interests of the broad masses of the people not be given this high-level representation and voice by the state? Brilliant recommendation, JLP. This forum would allow civil society to ensure that no one sectional interest is able to hijack national economic policy. Whoever wins the next elections, I shall be lobbying for the adoption of this progressive governance model.

Through this Governance Council, if the JLP wins, we would be able to show why Seaga's three money bills would be disastrous to the interests of masses and would unnecessarily straightjacket the Jamaican people. The World Investment Report, just released last week says, "There is no doubt that an active state has been a central factor" in Costa Rica's phenomenal success in attracting investments and boosting exports. A recent New York Times Magazine feature on globalisation talks about Chile's remarkable economic and social success and says: "Its success story shows that poor nations can take advantage of globalisation ­ if they have Governments that actively make it happen". And Business Week magazine (August 19-26) in its article, " Lessons from the Fastest Growing Nation: Botswana?" points out that Government plays a major role. In Mauritius, another fast-growing developing country, the story is the same.

Half-Way Tree and Spanish Town will be pulsating with excitement this evening. But after the carnival season is over, will the Jamaican people win?