Historically, all known definite forms of the state have been particularized by their individual political economy. This is true of the capitalist state, the social democratic state, the fascist state, the colonial state, the imperialist state and even the city states and feudal states of long ago. The political economy of the criminalized state I had previously described as “backward capitalism” in these Sunday columns. (April 2003) This political economy describes the economic logic or rhythm that forms the material basis or substratum on which social, political, and cultural structures of the society operate and are elaborated though time. This political economy constitutes the fourth distinctive feature in the architecture of the state as it is being reconstituted into a vehicle for criminal enterprise in Guyana.
To remind readers the other three constituent elements that I have introduced so far are (1) the ruling cabal, in which factions of organized crime bosses play an important role; (2) a large phantom economy, which I have used as a proxy for the economic might of organized crime; and (3) corruption, which serves as the willing and able handmaiden of organized crime. It is important to note here, as it has a bearing on what follows later in the presentation that, in describing crime as being organized, I mean being “well-developed, systematic and making full use of all the opportunities that globalization provides for it to thrive.” (April 20, 2003)
Why capitalism?
I had previously described the political economy of Guyana as “backward capitalism” first and foremost, because the economy of Guyana functions within a global capitalist framework that in recent decades has been reshaped by two central forces. One is the objective technological, financial and other developments which we normally associate with the effects of globalization. And the other is the global policy shift towards liberalization, deregulation and the relentless narrowing of state involvement in productive economic activity. Under global capitalism private profit is the dominant driver behind most economic transactions, which are also increasingly governed by the principles of competitive private markets. In this environment production, consumption, distribution, and accumulation in the economy are expected to optimize dynamic efficiency, paving the way for continuous invention and innovation. In this context the economic system does not directly address issues of social justice and equity. These concerns have to be brought into the equation through the activities of social and political movements. Survival and advancement are only guaranteed to the fittest. One disturbing result of this commercialization of the economic basis of livelihoods is that it encourages the blurring of lines between legality and illegality and has opened the floodgates to corruption. Again it is only the vigilance of social and political movements that can contain these intrinsically propelled deformations.
.Why backward?
If the above is a rough characterization of the global capitalist features within which backward capitalism functions domestically, we find in the official economy many features which explain why I use the adjective backward. First, the economy is highly dependent on pre-globalization forms of economic specialization; natural resources intensive primary products dominate the production and exports of commodities. The services sector is extremely rudimentary and is dominated by low technology, low skills and low value-added services. Second, private markets in Guyana are small, thin, weak and therefore easily cornered. The numbers of buyers and sellers are minuscule by competitive market standards, and information costs are therefore extremely high.
Market abuses are more the norm than the exception, and expired goods, recalled items and even rejects are brought into the country and passed on to the local consumers. In some instances these have included life-threatening items, for example, expired drugs, products containing poisonous substances, and equipment which can injure consumers when they attempt to use it. After-sale services, product guarantees and title warranties are often not offered and when they are, frequently honoured in the breach.
Third, the criminal capital accumulated in the phantom economy is constantly seeking to transmute itself into legitimate capital. This has fostered a series of ‘front’ enterprises in some sectors, some of which are either well known or identified in recent US Narcotics Control Reports. Some of this criminal capital is seriously endeavouring to become socially respectable. Many of these activities are concentrated in the services sector (retail, finance, real estate and property development, hospitality and entertainment) and the natural resources sector (forestry, mining, and other activities utilizing extensively marginal agricultural lands). Unlike other countries, little of the criminal capital goes into high value-added, high technology manufacturing and industry. It appears as if few Guyanese criminal bosses aspire to be ‘captains’ of industry.
Fourth, it is widely perceived that several of the prudential and regulatory authorities have been held hostage by the enterprises they should be regulating. Fifth, the incentive framework is distorted by the effects of crime and corruption. Sixth, economic governance, which we shall elaborate on later, is extremely poor. Last, but by no means least, the International Financial Institutions (IFIs) exert a strangulated hold in key areas of economic policy-making, in particular macroeconomic bench-marking and policy, public sector reform, the elaboration of the tax structure (VAT), the direction of public expenditure, and wage policy setting for state employees. As a rule the IFIs seek to ensure that all markets with the exception of labour are liberalized and deregulated so as to encourage world market prices to rule throughout the economy. The statist policies of the previous PNC authoritarian state had in fact separated key local prices from world market prices, particularly the wage rate, foreign exchange and interest rates.
Next week we shall continue the discussion emphasizing the interface between organized crime, corruption and this political economy.
