chi-sigma STORM
PROLOGUE
1970s saw the collapse of the Bretton Woods neoliberalism monetary order with succeeding dual oil price shocks, and consequential stagflation, highlighting more than ever, that economic and political matters are intertwined. The economy is now high politics, and much of politics is about the national economy.
1 INTRODUCTION
Over the past 50 years, political economy has become increasingly prominent in both economics and political science, in three ways:
It analyzes how political forces affect the economy. Voters and interest groups have a powerful impact on virtually every possible economic policy. Political economists strive to identify the relevant groups and their interests, and how political institutions affect their impact on policy.
It assesses how the economy affects politics. Macroeconomic trends can boost or disable political elites’ chances. At a microeconomic level, features of the economic organization or activities of particular firms or industries can have an impact on the nature and direction of political activities.
It uses the tools of economics to study politics. Politicians can be thought of as analogous to firms, with voters as consumers, or governments as monopoly providers of goods and services to constituent customers. Scholars model political-economic interactions in order to develop a more theoretically rigorous understanding of the underlying features driving politics.
2 HISTORIES AS PRESENT
In Malaysia post-independence, the political management of the national economy had been dominated, and under the control, of neoliberalism process as witnessed by the lines of DASH-WORLD BANK-IMF-McKINSEY “consulting” the wellbeing of capital enclaves, whether as part of TNCs intrusion or retaining local compradore capital attainment to link, and collaborate, with Global North monopoly capitalism.
Sixty plus years, the consequential national debts are resultants of unequal exchange through Neo-Imperialism penetration is inevitably clearly felt by impoverished rakyat2 even within an urban environment more intensely than in the rural hinterlands as traditionally envisioned.
Encased within a feudalitic affiliation to royalty and reactionary oligarchs, the colonising of the rakyat mind had taken an immense impoverishment of the mass to the acute benefits of the minorities: ethnocapital, corporate capital and compradore capitalists.
Either the nation insists on a neoliberalism trajectory to enslave another century of poverty populace or choose a path working within a capitalism edifice, but envision towards community-base people-oriented movement with inspirational moments.
Or the politico-economy situation could possibly deteriorate so abruptly that a search for more radical approaches might appear. One likely outcome may see the promotion and emergence of socialist democratic political practice that encompasses an organic unity of the components of socialist democracy which entails that the people are masters in the house supervising the servants of society through the socialist rule of law and institutional guarantees.
When arriving in such a new society, the four processes shall have these key propositions:
(1) the world is unified in matter and matter determines consciousness, so policies would be developed in light of objective reality;
(2) since the movement of contradictions is a determining feature of matter, one should strengthen one’s awareness of such contradictions and seek to resolve them;
(3) the fundamental under such situation it is to think dialectically and develop the ability to deal with complex situations and problems; (4) theory has a crucial role in terms of the dialectical relationship between knowledge and practice, but theoretical innovation should always be based on practice, on seeking truth from facts.
In sum, since there are inherent contradictions in matter, nature, and human society, there is this need for dialectical analysis of such contradictions so as to develop appropriate theories, policies, and programs – including those of governance and economic planning.
Then, understandingably, what are our generation’s ambitions, and does it have a grand strategy to achieve them? If it does, what is that strategy, what shapes it, and what should the progressive new left do about it. It is the moment of great re-imaging of the Malaysia nation and possibly the greatest challenging changes to be seen in a decade. This is the basic starting point of all planning work and the tasks ahead. This is a moment of the momentum of a movement. The most important of these is the movement objectives, then the associated goals, and finally the policy plan.
After a cursory sweep on the neoliberalism narrative, a simple yet comprehensive assessment of this ongoing debate, we may point out that while there may be some elements of agreement on the political economy theoretical approach, it is still careless in some of the offerings in alternative or opposing frameworks to reflect that they are untenable. Instead, the new left alternative socialism framework would adhere to an approach of ‘agreement based on differences’ or ‘co-creation and complementarity’, that is, merging and co-existing western neoliberalism and eastern philosophical-political approaches to the development of economic development ethos and praxis.
To learn from histories, we may anticipate the following situations:
In China, even many of the landlords allied themselves with the Communists, because they were the most militant and consistent defenders of Chinese independence against the Japanese invasion (applied locally, our present ethnocapital and corporate capital allying consciously with monopoly-capitalists encroachment into our national economies). Meanwhile, local entrepreneurs wanted the overthrow of feudal constraints on their freedom to exploit; read as compradore capitalists trying to compete with ethnocratic clientel capitalism. Both, in fact, had became a force for capitalism encroachment undermining of socialist goals.
Then, there is a spectre of the intellectuals demanding a meritocracy free of corruption, but were indifferent to the peasants. Eventually, they all helped to make the revolution and push towards a socialistic direction. It is of interest to note that China’s modernization has this historical moments as recorded by Vogel, Deng Xiaoping and the Transformation of China. Deng had invited Fang Yi and Li Chang to his home, where they discussed what they could do to promote science and technology. Given the prevailing mood in China, Deng had begun by overcoming some lingering anti-intellectual views. Deng emphasized that people who worked with their minds would be considered members of the politically respected working class; these expressions were further concured by Boer, Socialism with Chinese Characteristics, in chapters 1 and 10.
Here, during the Tasik Utara 1974 movement is one moment when intellectuals like students and lecturers played their parts in the peasant protests, and later in the 2015 Bersih 4.0 electorate reforms’ campaigns; Meredith Weiss‘s Student Activism in Malaysia had documented the dynamics of students’ mobilization through the years in support of academic freedom and social justices. These activities sustained despite continous state rigorous attempt to curb intellectual containment and student activistism during the 1975 – 1998 period.
Within the 26th of July Movement in Cuba, there were professionals enraged at the regime of corruption and repression of President Batista. Only some of them rejected the subordination of the Cuban government to U.S. imperialism. Among those who did, only some wanted deeper social justice. The working class shared these objectives with their middle-class allies, but also aspired to social justice. This social justice meant, in the first place, jobs with a decent income, adequate medical care, clean drinking water, and education. For some, social justice went further to include gender equality, the abolition of racism, and even the abolition of homophobia. A few dreamed of reversing the deforestation and erosion of Cuba.
In Brazil, with a narrow salary spread and broad social consumption, but without a redistribution of ownership and state power, although with working-class participation in government. The petty bourgeois allies of the working classes are generally more educated, have more confidence in themselves, are more articulate, more comfortable with speaking up and writing, have had more experience in leading and managing. Therefore, they are often overrepresented in the early leadership of revolutionary movements. Starting in the early years of the revolutionary process, the components of the revolutionary block mutually influence each other. People, regardless of their class origin, see opening vistas of transformation, find their biases challenged, change their notion of what life should be like.
In Kerala, the general orientation of the Left’s approach toward her economic development has been ‘a kind of hop, step, and jump’:
The hop, the first stage, is redistributive politics. Kerala’s trade union movement has succeeded in having significant redistribution of income with the highest wage rates in the country. Further, the peasant movement has been able to redistribute landed assets through a very successful land reform programme. The social movements which pre-date even the Left movement in Kerala, and whose tradition the Left has carried forward, have pressurised successive governments which to provide education, healthcare, and for the other basic needs of everyone. Therefore, in Kerala, an ordinary person enjoys a quality of life which is much superior to the rest of India.
However, whereas a programme of social development had spread over more than half a century, there is now a serious infrastructure deficit in Kerala. Therefore, the government has began to build the state’s infrastructure and begin to pivot to another economic foundation. The amount needed to upgrade the infrastructure is staggering, about Rs. 60,000 crores (or $11 billion). How does a Left government raise the funds to finance this kind of infrastructural development? Kerala, as a state within India, cannot borrow beyond a certain limit, so the Left government set up instruments such as the Kerala Infrastructure Investment Fund Board (KIIFB). Through the Board, the government was able to spend Rs. 10,000 crores (US$1.85 billion) and ‘has produced a remarkable change in the infrastructure’. After the hop (redistribution) and infrastructural development (step), comes the jump:
The jump is on the programme that have placed before the people. The infrastructure is in existence like transmission lines, assured electricity, industrial parks for investors to come and invest, the K-FON [Kerala-Fibre Optic Network], a super-highway of internet owned by the state, which is available to any service provider. These infrastructure foundation has ensured equal treatment to everybody without anyone having an undue advantage. In short, the internet provision for everybody because it is the right of every individual. Indeed, in Kerala, all the poors are going to get broadband connectivity for free.
3 PRESENCE IN HISTORIES
It is at this juncture that rakyat2 have to re-imagine a distinctive path forward. More so when the COVID-19 has accentuated as never before the interlinked ecological, epidemiological, and economic vulnerabilities that the country is confronting.
It is at a time juncture when we have to make structural political economy reform comprehensively and accepting lessons from the preceding economic crises. We have to promote competitiiveness and efficiency within an renewed learning environment where wealth is equitably shared within an equality society infused with socialism with exceptional Malaysian characteristics.
That the country is rather unprepared for a public health threat of the magnitude posed by the novel coronavirus is a truism to mIsdirected economic management. Political elites tend to focus on the next election wasting opportunities to invest the time, money, and political capital requisites to address the abstract possibility of a future crisis.
As covid-19 pandemic spikes and spreads across country, the policy response has continued to be tempered by political realities. Some members of the public, and many a policymaker, have resisted the recommendations of public health experts, hoping for relaxed restrictions and a return to normalcy before the dangers would in due time be passed. At the same time, business interests, specifically clientel capital of political cronies and corporate capital, have pressed for exceptions to benefit themselves, and for substantial subsidies – read, bailouts – to facilitate themselves through these difficult times without any felt-need nor a deep consideration on rakyat2 due wellbeings.
Though any government is always confronted with difficult decisions about appropriate measures under unforeseenable situations or in a crisis: what restrictions to impose and when to loosen them, where money will be spent and how it will be raised, and how to coordinate tasks between states and enable community cooperation – this particular unelected, back-door entranced, dummy governance has all the elements of bodohness, see the various forseeable and aftermath analyses of what is known as the Sheraton Move that toppled an elected government in a country:(Shamsul 2018, Aliran 2020, newmandala 2020, malaysiakini 2020, Hew Wai Weng 2020, RSIS 2021, Welsh 2021, ADC 2021a & ADC 2021b: the Asian Democracy Chronicles’ reprint of People’s Democratic League Adam Adli paper on The lost tale of New Malaysia (Part 2)).
By good governance, political decisions have to take into account public health recommendations, economic considerations, and political constraints. Just as the preceding policy responses had varied – from the 2007–08 Global Financial Crisis, the dotcom 2002 burst and the Asian Financial Crisis in 1997 – so do national policy responses to the present COVID-19 pandemic should differ for health, economic, and political reasons.
However, the play of politics is the present par.
Why does the advice of independent consultants, analysts, and the academic go so often unheeded?
Politics may be the usual answer, but if that is too vague, it is not unrealistic in Malaysian context. A better understanding lies in political economy rationalism.
Political economy is about how politics affects the economy and the economy affects politics that Governments try to prime the economy before elections. However, business cycles are also creating ebbs and flows of economic activity and the circuitry of capital distribution around elections whence economic conditions have a powerful impact on elections. Politicians would manipulate these economic parameters to woo voters to gain political advantages, and corporate capital would support politicians who favour, and retain, their capital accumulation continuance processes.
4 MONOPOLY-CAPITAL WEB OF INTERESTS
Where are we now?
A simplistic understanding is that in basic economic principle it is to be any policy that is good for society as a whole can also – or should – be good for everyone in society, even if the policy creates winners and losers. It requires only that the winners be taxed just a bit to compensate the loser – and everyone is better off.
If eonomists are accepting learned techniques and applying powerful tools to clarify which economic policies are best for society, then why should economic policy be controversial?
A basic political economy principle is that in most cases, winners do not like being taxed to compensate losers. That the fight is not over what is best for society but rather over who will be the winners and losers. What is best for the country may not be best for my region, or race, or industry, or class – and, therefore so I will fight it.
In a Malaysia context, the special-interest groups, (kleptocrates and their cronies, oligarchs and kakistocrates) do seem to play an outsize, and enlarged (and, many would say, an endangered) role. These include wealthy individuals, powerful industries, big banks, pharmaceutical corporations, information technology infrastructural platforms owners and formidable ethnocratic entities in government-linked companies (GLCs) and (SEDCs) state economic development corporations are misdirecting the dangerous politico-econimics terrains ahead, (see the various topics on these encrusted entities in STORM; and Capitalist Class undermining Socialisation).
As an instance, to consider implementing a windfall tax on industries that benefit greatly from the Covid-19 crisis, as once Khazanah Research Institute senior advisor Professor Dr Jomo Kwame Sundaram had proposed.
“This is precisely the time when you must reform taxes as you have it (windfall tax) all the time amid extraordinarily high petroleum prices or palm oil prices.
Institute of Malaysian and International Studies research fellow Dr Muhammed Abdul Khalid has also pointed out that policymakers tend to ignore the imposition of capital gains tax when it comes to the issue of tax reform.
“Taxes must be fair … and we never talk about the urgency of imposing capital gains tax, maybe because it is going to affect the very well-off in Malaysia,” he has said.
Therefore, the common denominator of political economy is that concentrated interests had won over diffuse interests. The top grove producers and pharmaceutical conglomerates are often the organized identities that work hard to influence politicians. If they do not get favorable government treatment they would kerugian. Therefore, it is of prime importance for corporate capital, and especially from the ethnocapital businesses, to lobby and fund politicians.
Capitalism can be defined as the extraction and distribution of surplus labour in the form of value. The class positioning of the capitalist fundamental class processes are productive workers (performers) and productive capitalists (extractors). Capitalists appropriate surplus value from the consumption of labour power during the production of commodities. The surplus is distributed among occupants of subsumed class positions associated with say the state, merchants, financiers, landlords, managers and monopolies. Therefore, class position is determined by the relationship of the individual to the appropriation and distribution of surplus value :
where the economic power emits identifiable from the stronghold of clientelism and the ensuring political clientel relationship where present ruling elites by the Sheraton Movers [place] had aligned with clientel capitalism and corporate capital economic oligarchs [positions] in adopting rentier capitalism to maintain, and sustain, their hold on political [power]
On the other hand, political economists do not like to complicate moral and ethical issues on economic issues. They try to understand why societies choose to do what they do. The fact that oilpalm or rubber plantation owners have much more at stake and are much better capital endowed than ordinary consumers may help to explain why ruling regimes’ policies favour vested interests over consumers, and overall, the rakyat2.
For instance, there are plenty of powerful interests in favour of international trade and foreign investment. The world’s transnational corporations and global international banks depend on an open flow of goods and capital. These are the monopoly-capitalists and the financial capitalists of the global world.
This is especially the case today, more than ever, when the world’s largest companies depend on complex global supply chains. A typical transnational corporation produces parts and components in dozens of countries, assembles them in dozens more, and sells the final products everywhere. Trade tariffs create barriers with these supply chains, thus the world’s largest companies are biggest supporters of freer trade.
Politicians only care, and pay attention, to the next election – otherwise they are likely to cease being capital clients. This explains why ruling regimes have difficulties to formulate policies whose benefits will be realized only in the long run – such as pandemic prevention and preparedness – whence a political position might be well foregone.
That is why there is a need for encouraging and encouraging the mass of special and civic interests in society so that these social institutions play a major role in national policymaking. The ways in which societies organize themselves – through and by economic sector, state, ethnicity, and importantly at this juncture of our political awareness, the class factor, shall affect how we would like to restructure our politics.
Definitely, poitical institutions have to mediate the pressures constituents bring to bear on them; even oligarch rulers have to pay attention to at least some part of public opinion. Political economists call this the “selectorate,” that portion of the population that matters to policymaking politicians. In an authoritarian regime, this could be an economic elites or the ruling class or the armed forces. In an electoral democracy it would be voters and interest groups. No matter who matters, policymakers need rakyat2 support to stay in office.
In a multiparty parliamentary system, the pivotal voters may be the supporters of a small party that can swing back and forth between coalition partners and such pivotal influences are likely to have outsize influence over politics and policy.
Institutions like GLCs and ethnocratic bodies matter because they affect the weights that ruling regimes politicians give in to these groups in our country. Political economists analyze the interests in play and how the institutions of society transmit and transform them into government policy.
by second-besting the best
All above-stated matters to politicians, policymakers, observers, social groups or even just ordinary rakyat2 who care about the economy because it can profoundly change the way we – as citizens of this country – think about policy matters and policy advisory.
The policy that economic analysis indicates is best for the economy may not be politically feasible. To go back to free trade, virtually all economists would recommend that a small country’s best bet is to remove all trade barriers unilaterally. Yet it is almost certain that a government that attempted to move to unilateral free trade would face massive opposition from special interests and from many in the public who would regard such a move as dangerous. The result might well be the collapse of the government and its replacement with one that could be relied on to maintain and even expand trade barriers. In this case, pursuit of the first-best policy could lead to a much worse outcome.
Politicians, analysts, observers, and just regular people who are interested in economic policy are well advised to evaluate not only the economic implications of policy initiatives but also their political feasibility. If the pursuit of a first-best policy is bound to fail and perhaps provoke a backlash, then truly the cure may be worse than the disease. It makes more sense to consider the political realities the government faces and to structure policy with those realities in mind. It is better to settle for second-best than to insist on first-best and end up a worsen economy, and the ensuing political instability.
5 SUMMARY
Political economy is the integration of political and economic matters of our community, society and country. That politics and economics are intricately and irretrievably interwoven – that politics shall affect the economy and that the economy affects politics – this conceptual approach should be of interest to those in understanding governments and societies; it can also be a powerful tool for those interested in changing governments and societies, too.
In short, we need to modify, adapt, and contextualize our preceding political-economic reform agenda, and while trying to calibrate the sequence of, and the dimensions of economic reforms that were introduced, we need to ask the pertinent question: have we really restructured the Sudhave’s stagnated, and a STORM’s doomed, national economy, ever ?
EPILOGUE
It’s because the route to socialism with distinctive Malaysia characteristics is hard, it is more than ever to harden our resolve to overcome challenges ahead to make a society serving humanity a reality.
New Left Malaysia 