Saying ‘no’ to the ‘Robber Barons’

There was a time when privatization was considered a panacea for our economic ills. It was this line of thinking that prompted a former President of this country to say animatedly when the ‘open economy’ experiment was hatched some 30 or more years ago and when Direct Foreign Investment was a favoured tool of economic growth, that the ‘Robber Barons’ must be welcomed by the state with open arms.

If at all this comment was meant to be a joke, it was not one in good taste at all. The President concerned could have been misunderstood as meaning that all foreign investors are of the ‘Robber Baron’ kind. This, of course, is not the case and today we have come to realize that foreign investment is almost an essential for stepped-up economic growth. Profit is a primary motive of the investor, both foreign and local, but this is not an evil as long as it is legitimately earned and not all such investors are dishonest or unscrupulous. However, by using the term ‘Robber Baron’ loosely and generally, all foreign investors to this country were projected in a bad light.

Be that as it may, we now realize that although Direct Foreign Investment is integral to the vibrancy of a country’s economy, privatization and economic liberalization, as such, should not be looked upon as readily available panaceas for a country’s economic problems. As some recent developments indicated, not all state ventures, for instance, which were handed over to the private sector for reviving, were turned into economic success stories. If this were the case, the government would not have needed to take some of these privatized ventures under its wing once again for purpose of making them viable businesses. However, the secret of reviving these ailing businesses seems to be to hand them over to competent sections, with proven track records in sound financial and business management, and not to those who lack these qualifications and credentials.

Privatization of businesses could be seen as legitimate as long as the change over proves beneficial to the relevant concerns. If the businesses continue to founder under private management the state would have no choice but to take them under its purview to ensure financial viability and sound management. And the evidence is now before our eyes that such businesses could indeed be transformed into success stories by the state with little or no assistance from the private sector. There is the case of the Litro Gas Company, for instance, which is today seeing better times financially and this change in fortunes was brought about by the state. So remarkable has this recovery been that no less a person than President Mahinda Rajapaksa has commented glowingly about its business vibrancy.

Equally significantly, the President was quoted saying in connection with Litro Gas that a company which was seen as a burden on the people for some 15 years, has now been turned around into a profit-making concern. He also spoke of the inadvisability of bartering away the vital economic interest of the country to foreign businesses.

It is important that a Head of State defines, thus, the parameters within which a developing country’s economy should be operationalized. It is the public interest that should be of principal concern to the state and this policy should remain undiluted. There is no question of the state disregarding this principle and pandering unconscionably to the profit motive of exploitative sections of the private sector.

All this does not mean that the private sector should be seen as intrinsically anti-social and untrustworthy. This is certainly not the case. The private sector is an important component of the economy and things would remain this way. But, as just mentioned, private sector involvement in businesses, at one time owned by the state, should prove beneficial to the people. This is the criterion for the state engaging the private sector in business revival. If private ventures prove incapable of meeting this criterion, the state would need to take the concerns in question under its purview.

There is no question of the state engaging, therefore, with those who are seen as ‘Robber Barons’. This would amount to selling the public interest to sections which are both anti-national and anti-social. Rather, the over-riding concern of the state should be the people’s legitimate interests.