Economy Forward

  Article's Background As we all are aware, Sri Lankan Constitution is for Democratic Socialist Republic of Sri Lanka. The term "Socialist" is comprehensively interpreted across the globe against "Capitalism" born on the free market philosophy of Adam Smith in 1776. Therefore, by Constitution, Sri Lankan economic policies should be pro socialist. In addition, the Constitution contains a number of socialist-based directive principles of state policy and fundamental duties that guide the state in enactment of laws and governance of Sri Lanka for the establishment of a just and free society. However, the state policy package pursued at present seems pro capitalist and tends to violate such directive principles.  Therefore, this article is to highlight the said violation and to propose Constitutional amendments to promote pro capitalist policies in Sri Lanka. Pro capitalist policy model pursued at present It is no secret that the IMF-based policy model is geared for...

  I had the opportunity to read a book titled " WHAT WENT WRONG WITH CAPITALISM " authored by Ruchir Sharma and released last week. The CNCB and Bloomberg interviews with the author are attached here because they convey the key message of the new book  (Click here for the CNBC interview) . (Click here for Bloomberg interview) . The purpose of this article is to highlight the main message of the book and its relevance to Sri Lanka with the crashed economy at present. Origin of Capitalism As we all aware, it descends from the philosophy of Adam Smith presented in his book "The Wealth of Nations" in 1776 on human behaviour over the production and economic wealth. His view is that the society's economic welfare from free markets operating on self-interest is more than that of the economy regulated by the government. The invisible hand (or regulation of the market by market itself) is the natural force behind free markets to maximize the society's economic welfar...

  Article's Background The economic slogan of the country's top policymakers nowadays is the divine-driven stabilization of the economy after the crash in 2022. The two of few leading figures they cite are the foreign currency reserve of the central bank (CB) and the exchange rate. The media is full of news praising that the CB has now rebuilt the foreign reserve from almost zero liquidity to US$ 5.4 bn while the rupee has appreciated to around Rs. 300 a US$ from its historic lowest of Rs. 370 in April 2022 as compared to pre-crash rate of Rs. 200  (see Chart below) . The favorable BOP behind the two figures is cited as a result of the prudent monetary policy. This is not strange as Economics is such that any good thing under the sun can be attributed to the monetary policy and central banks whilst all bad are passed to the governments and markets. There is no controversy even  among  the  laymen that the crash of the economy was the direct result of the bankrup...