Hon. K.D. Lal Kantha

¶ 01 Clearly, our Government is engaged with the economy. Throughout our Budget, it is set out how the Government engages with the economy. Yesterday, Karl Marx was mentioned. Marx’s Capital emerged because Adam Smith’s ideas proved insufficient. It was Smith who, in effect, laid the foundation for Marx’s Capital. That is the reality. Even Smith was later challenged by his own intellectual lineage.

¶ 02 I raise these points because liberal economics was invoked in this august House during the Budget debate. I did not come prepared to deliver a lecture, but since the discussion has arisen, I will address it. Toward the late 1800s, those in Smith’s own tradition began speaking of social liberalism, arguing that the state should have a limited role in certain aspects of the economy. Social liberalism arose because Smith’s classical liberalism failed to answer social questions. Therefore, our Budget does not adhere to Smith’s classical liberalism. We have set that aside. Nor does it adopt social liberalism. We have set that aside as well.

¶ 03 Alongside social liberalism, Europe advanced the idea—rooted in the Soviet model—that the state should comprehensively run the economy. We do not accept that either. If you look at our Budget, it clearly states that the Government will not take over the entire economy. That is evident from our programme of work. The Government will intervene where necessary—no more, no less.

¶ 04 Next, some speak of neoliberalism. Some say this is a neoliberal Budget. Others outside claim the Government is deeply involved in many areas, and yet call it neoliberal. If it is neoliberal, how does the state take part so substantively in the economy? We have increased the Government’s share in certain activities. What did J.R. Jayewardene’s version of neoliberalism entail? A systematic, total withdrawal of the state from the economy—completely. From J.R. to Ranil Wickremesinghe, the objective was to return to Smith. People say this is Ranil Wickremesinghe’s Budget. Did Ranil’s programme expand the state’s role in the economy? No. He rolled it back. Our Budget explicitly shows we are not rolling back the state. We are not shrinking the state’s role.

¶ 05 Yes, people complained the public service is bloated. That is true. How did it become bloated? Various Ministers recruited in their own areas for their own needs. Still, we have made it clear: we will recruit to essential posts and fill essential vacancies. In this cycle alone, we have a plan to recruit 30,000 public servants only to fill essential shortfalls.

¶ 06 What, then, are our economic fundamentals? Some social liberals say they are happy—citing post–World War II West German social market ideas. Let me be clear about our doctrine: our foundation is economic democracy. That is the principle running throughout our Budget.

¶ 07 For a long time, there was no democracy in the economy; it was run by monopolies and cronies. Opportunities—like importing coconut oil and running key businesses—were given to a select few: “elephant friends,” cronies. We will integrate everyone into the economy. That is the principle of economic democracy. Therefore, the Government will participate and take a fair stake where appropriate. The state will take a just share. That is what we mean by economic democracy.

¶ 08 Hon. Deputy Chairperson of Committees, foreign investors are also welcome. We have never rejected them. When they invest, they are entitled to a fair share of returns, and we will take our fair share. Under economic democracy, anyone can participate—individuals, cooperatives, the private sector, the Government, and foreign investors. All participants will receive their fair share. On that basis, the Minister of Finance—the Hon. President—has presented this Budget. I can further substantiate this if needed.

¶ 09 Why did we increase public sector wages? Because for years wages were neglected while the cost of living soared. A public servant cannot unilaterally raise his or her wage; therefore, the state must intervene. We raised the basic salary; when the basic goes up, many other components rise accordingly. The private sector’s basic wages are also being raised because they, too, contribute to the economy. That is economic democracy: those who contribute—public or private—must get a fair share. For too long, neither public nor private employees received their fair share.