The Extractive Turn: The Question of State Form in Sri Lanka’s Conjuncture

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The crisis in Sri Lanka has both immediate and distant origins. In 2020, the country experienced a sovereign debt crisis. The pandemic caused a collapse of tourist inflows and migrant remittances, which previously helped cover imports and service external debt. In the years since the liberalisation of its economy in 1978, Sri Lanka’ s import bill continued to outpace its foreign receipts, including exports in commodities such as garments and tea. But the sudden drop in key sources of foreign exchange meant that the country had to draw down its roughly $7 billion in foreign exchange reserves. Consequently, credit ratings agencies downgraded Sri Lanka on the expectation that the country would find it extremely difficult to service its external debt over the subsequent years. 

Sri Lanka was locked out of international capital markets, preventing it from rolling over the significant external debt it owed. Debt included not only loans from bilateral and multilateral creditors such as China and the Asian Development Bank, but also the sovereign debt that Sri Lanka had issued since 2007, owned by private creditors such as Western hedge funds. At the beginning of the crisis, sovereign debt constituted around a third of Sri Lanka’s roughly $54 billion in external debt, which in turn was roughly 65 per cent of its GDP. Eventually, in April of 2022, Sri Lanka’s policy makers chose to undertake a premature default on the entirety of its external debt. 

These and other measures provoked major political upheaval, insofar as they ran parallel to the dramatic impact of the crisis on people’s livelihoods, which became unavoidable in early 2022. From kilometres-long queues for fuel and milk powder to hours-long blackouts, everyday life was disrupted. After an initial protest at then-President Gotabaya Rajapaksa’s home on the night of 31 March, protestors began occupying the seaside Galle Face Green, adjacent to the Indian Ocean, in the heart of Sri Lanka’s commercial capital on the Western coast, Colombo. The people’s movement became known as the ‘struggle’ (aragalaya in Sinhala, porattam in Tamil). Eventually, and for the first time in Sri Lanka’s long parliamentary democratic history, the country’s ruler was ejected from power outside of elections, through a popular uprising. Rajapaksa fled the island on the day of the great revolt of 9 July. Droves of people broke through barricades to occupy the official Prime Minister’s Residence, the President’s House, and the Presidential Secretariat. Media from around the world circulated iconic images of protestors enjoying the amenities of the President’s House, including its luxurious swimming pool.

The events were dramatic. As Balasingham Skanthakumar pointed out in an editorial for Polity, they appeared to echo Lenin’s apocryphal dictum: ‘weeks when decades happen’. But, in addition to signifying an immediate event, whether political or economic, the term ‘crisis’ can also describe a much longer, often imperceptible process of change. To understand the ‘origins of the present crisis’ in Sri Lanka, we must return to the moment in which its laws of motion took effect, thereby anticipating their most potent and visible expression in the breakdown of 2022. The maturing of the crisis can be linked to the country’s initial adoption of neoliberal policies in 1978. Sri Lanka’s crisis reflects changes in the underlying rhythms of capital accumulation. But, following Althusser, a conjuncture of crisis is overdetermined by the historical dynamics of a social formation. In the interplay of forces on different levels, multiple ways of resolving a crisis may reveal themselves.

The Origin and Maturing of Crisis Tendencies Within the System

In Sri Lanka, the adoption of the neoliberal programme – especially trade liberalisation, cuts to welfare, the floating of the rupee, and a major push to attract direct foreign investment by attacking organised labour – coincided with a dramatic increase in ethnic tensions in the late 1970s and early 1980s. The resulting conflict between nationalisms representing the Sinhala Buddhist majority and Tamil minority reshaped the state in fundamental ways, especially by hardening its repressive apparatus. This process has had long-term authoritarian implications for relations between state and society. But to understand why neoliberalism provided the political economic framework for this dramatic reconfiguration, we must understand the internal contradictions of the Left. These tensions weakened it internally and created an opening for the Right to impose the neoliberal solution in the late 1970s. 

Sri Lanka gained independence from Britain in 1948. After a brief period, the country embarked on the path of import substitution industrialisation. But the state acquired a clear sectional bias towards the Sinhala Buddhist community because of majoritarian nationalist mobilisation. It resulted in outcomes such as the 1956 ‘Sinhala Only Act’. Nevertheless, the Left – primarily represented by the world’s most successful Trotskyist party, the Lanka Sama Samaja Party (LSSP, or Lanka Equal Society Party) – became convinced that this sectional consciousness was a precursor to national consciousness. Key figures within the movement believed that a national identity would ultimately subsume ethnic particularism. Towards this end, the Left assumed that accumulation oriented towards domestic needs – whether through alliance with the ‘national bourgeoisie’ or a radicalised petty bourgeoisie, as represented by the Sri Lanka Freedom Party (SLFP) – would create the material basis for a unified nation, thereby enabling the proletariat to achieve socialism. 

Instead, the Left’s hopes were crushed. Its junior partnership in the coalition government (1970-1977) led by Sirimavo Bandaranaike and her SLFP ended in failure and recrimination. The LSSP was expelled from the coalition in 1975 amid the raging global economic crisis of the 1970s. Meanwhile, that crisis and the consequent delegitimisation of the Left in government provided conservative forces an opportunity to mobilise. They did so by renovating tradition through authoritarian populist manoeuvring. As Stuart Hall observed, the articulation of a bloc in which the ‘little man’ would be freed from the overbearing social democratic state found echoes all over the world. But the real relevance of this ideological manoeuvring in the context of Sri Lanka was its sharpening of the national question, which transformed the trajectory of the state. A decades-long civil war followed devastating riots against Tamils in 1983, backed by senior elements in the government led by JR Jayewardene. The riots resulted in the deaths of thousands of Tamil civilians. The war further reshaped relations between Colombo – the urban centre on the Western coast of the island – and the rural hinterland. The rural South provided the reserves for mass mobilisation to fight Tamil separatists in the North and East.

Meanwhile, in the South, a nationalist reaction to neoliberalism, or the ‘open economy’ as it is known in the local parlance, also took place. It resulted in the terror of the Janatha Vimukthi Peramuna (JVP, or People’s Liberation Front) and the state in the late 1980s. Tens of thousands were killed in a brutal, dirty war. But the civil war in the predominantly Tamil and Muslim North and East continued to overdetermine the political trajectory of the South. In this regard, the war could be likened to ‘passive revolution’. The failure of the Left to transform Sri Lanka’s predominantly agrarian relations over the long 1960s, including via measures such as land redistribution, resulted in a series of ‘molecular’ changes that occurred under neoliberalism during a time of civil war. Migration under economic compulsion – whether to work in export factories in coastal enclaves or even abroad in places such as the Middle East – impacted the gendered basis on which rural households could reproduce themselves. The economic process created new pressures on working people’s livelihoods. Meanwhile, the war effort required the mobilisation of the population, thereby diverting its attention from intensifying economic constraints, including the rising cost of living. 

Nevertheless, the war could not fully submerge the many issues affecting working people in the South. These surfaced in key junctures. Specifically, in 1994, the United National Party (UNP) – which had originally ushered in Sri Lanka’s neoliberal transformation under Jayewardene’s and later Ranasinghe Premadasa’s leadership – was finally dislodged from power. As SWR de A Samarasinghe pointed out in a commentary on the elections, immediate factors included the demand to restore the fertiliser subsidy that had been cut on the recommendation of the World Bank, along with a write-off of loans to farmers. The winning electoral coalition led by Chandrika Kumaratunga championed ‘capitalism with a human face’. Kumaratunga drew from elements of the formula that her late predecessor, Premadasa, had pioneered to temper the effects of neoliberalism. That included a new cash transfer programme, Janasaviya, which was replaced by Samurdhi under her tenure. Meanwhile, Kumaratunga also privatised more public assets, including telecommunications. But her primary focus was on finding an effective constitutional compromise to settle the national question. 

Her inability to achieve this goal meant that the battlefield logic of ‘militarised nationalisms’, as Ahilan Kadirgamar put it in a forceful piece for Kafila at war’s end, continued to overshadow social and class struggles. There was a dawning belief that an outright strategic victory over Tamil separatists was impossible. They were now dominated by the Liberation Tigers of Tamil Eelam (LTTE), which had wiped out their fraternal rivals, further regimenting Tamil society from the late 1980s onwards. The impasse on the battlefield encouraged the government’s tentative recognition of the LTTE under the terms of a Ceasefire Agreement signed in 2002.

The Signal and Terminal Crises of Neoliberalism in Sri Lanka

Ranil Wickremesinghe, then leader of the UNP, who as Prime Minister worked in uneasy cohabitation with Kumaratunga, linked strategic concessions to the LTTE with a neoliberal agenda of privatisation. This equation triggered a massive mobilisation against the Ceasefire Agreement in the South. The leadership for these protests came from a rehabilitated JVP and its militant Sinhala Buddhist ally, the Jathika Hela Urumaya (JHU, or National Heritage Party), along with a cluster of affiliated extreme nationalist factions. But the political beneficiary was Mahinda Rajapaksa, who took over the SLFP from Kumaratunga. Rajapaksa managed to win the Presidential Election in 2005 against Ranil Wickremesinghe, who championed the neoliberal peace process. 

Rajapaksa’s real source of power was his ability to play upon social and class contradictions in the rural South. He commanded the ‘auxiliary forces’ to the ‘fundamental classes’, as Gramsci put it, namely the military and small cultivators. Moreover, Rajapaksa represented the medium and small rural bourgeoisie, which has historically constituted a key social base for reaction. Both its rise through the ranks of the bureaucracy and its fear of working people’s demands in the rural economic space, where profit margins are generally small, meant that this stratum not only benefited from continued nationalist mobilisation against the Tamil and Muslim communities. It also remained anxious over any looming sign of autonomous peasant mobilisation in the South. This possibility had been revealed in moments such as the farmers’ protests of the early 1990s. Instead, the ‘state’ remained an emotive symbol representing a pathway for social mobility, while private actors such as powerful millers and wholesale traders retained effective control over the rural infrastructure of food processing and distribution.

Consequently, the class struggle in the countryside remained in the background. Instead, militarised nationalisms – manifest in Sinhala Buddhist majoritarian mobilisation and the LTTE’s suppression of dissent in the Tamil community – predominated. The deepening polarisation mediated what Giovanni Arrighi may have called the ‘signal crisis’ of neoliberalism in Sri Lanka. This turning point occurred in the mid-2000s when the process of economic liberalisation began to run out of steam. The method of resolution was a ‘Bonapartist’ regime that Rajapaksa constructed in the aftermath of his government’s pyrrhic victory against the LTTE in 2009, which resulted in the deaths of upwards of 40,000 Tamil civilians. Rajapaksa’s hegemonic formula involved repression, patronage, and nationalist mobilisation. Even after the war concluded, the Rajapaksa regime facilitated xenophobic forces such as the Bodu Bala Sena (BBS) that began targeting the Muslim community. Rajapaksa – playing up his family’s origins in the rural South by donning the maroon shawl representative of farmers from his region – also imposed direction on the predominantly urban comprador bourgeoisie. 

This class came to appreciate, however, the ‘stability’ that Rajapaksa provided for investment, including the post-war construction boom. Moreover, the Rajapaksa regime began an unprecedented financialisation of the state, especially by issuing sovereign bonds in 2007 to cover the persistent gap in external financing. This shift coincided with the flood of speculative investment in emerging markets after the Global Financial Crisis of 2008. The emerging crisis of neoliberalism, however, meant that the masses remained relatively detached from the traditional parties, whether the UNP or SLFP. While the government’s defeat in the war was averted, the masses had indeed ‘passed suddenly from a state of political passivity to a certain activity’, as Gramsci put it when describing the conditions for ‘organic crisis’. The conclusion of the war and Rajapaksa’s consolidation of a Bonapartist regime, especially during the second phase of his tenure (2010-15), meant that it could also become the object of popular anger. The passive revolution had created a national terrain on which forces of opposition could mobilise in explicit resistance to the Rajapaksa regime, and implicitly in opposition to incipient austerity.

At the same time, with the spectre of dictatorship emerging out of Rajapaksa’s run for an unprecedented third term as President in 2015, the mainstream opposition parties banded together once again. Swift intra-elite manoeuvring included Kumaratunga’s effort to secure the defection of one of Rajapaksa’s cabinet ministers, Maithripala Sirisena. Sirisena and other breakaways from the SLFP formed a coalition with the Wickremesinghe-led UNP. Sirisena managed to defeat Rajapaksa in the 2015 election, recapturing the SLFP and eventually forcing the Rajapaksa family to create a new political vehicle for its ambitions, the Sri Lanka Podujana Peramuna (SLPP, or Sri Lanka People’s Front). Rajapaksa’s downfall was a great moment for working people. Growing frustration with initial attempts to impose austerity under the Rajapaksa regime built on post-war tendencies of mobilisation in the Tamil and Muslim communities, sweeping Rajapaksa from power. In addition to protests in the North and East by families of the disappeared and the war-displaced demanding the release of lands from military control, resistance in the South manifested in workers’ protests opposing pension reform in 2011, fishing community opposition to fuel hikes in 2012, and university teachers’ protests opposing measly funding for public education 2012. But given its continued reliance on the same neoliberal policymaking establishment, the new coalition government led by Sirisena and Wickremesinghe predictably lacked the foresight to impose a new organic equilibrium. 

Instead, the partners – the Wickremesinghe-led UNP and Sirisena-led SLFP – continued to bicker among themselves, while economic issues including a rural crisis caused by drought festered. The fracturing of the coalition provided another opening for the Rajapaksa family, this time reconstituted under the SLPP led by Mahinda’s younger brother and former Defence Secretary, Gotabaya. Rajapaksa fully embraced a platform of ‘national security’ in the aftermath of the devastating Easter Sunday attacks in 2019. They were carried out by a local faction of the Islamic State in Iraq and Syria and are still shrouded in mystery. But it was Rajapaksa’s reliance on the proto-fascist forces such as the BBS and newer factions that engaged in riots against the Muslim community that imbued Rajapaksa’s campaign with a far more aggressive authoritarian populist dynamic. In this regard, Gotabaya Rajapaksa might have envisioned himself as Sri Lanka’s Modi, relying both on his technocratic image – as someone capable of ‘transcending politics’ – and his masculinist posturing as the militant protector of Sinhala Buddhism. 

Rajapaksa’s project, however, was derailed by what initially appeared to be the ‘terminal crisis’ of neoliberalism, for which the COVID-19 pandemic was the proximate cause. The resulting sovereign debt crisis put unprecedented pressure on Sri Lanka’s economy and eventually turned into a full-blown depression in the absence of remedial measures to stimulate domestic production. The emergence of popular opposition in response to the government’s failure was unprecedented in Sri Lanka’s history, perhaps only comparable to the Great Hartal of 1953. The fact that, for the first time in the country’s long parliamentary democratic history, the ruler was ejected outside of elections was a testament to the raw anger of the people with the Rajapaksa regime. The phrase ‘Gota Go Home’ epitomised popular frustration. Nevertheless, the people’s movement experienced many of the challenges faced by similar ‘movements of the squares’ in places from Cairo to Athens, Madrid to New York. Namely, the constitutive inability of the resistance to generate a coherent leadership capable of pushing further. In the context of Sri Lanka, that meant the failure of the movement to turn the revolt into a political revolution.

Though successful in ousting Rajapaksa, the movement was unable to obtain, at a minimum, general elections under a tightly bound caretaker government in tandem with a referendum to abolish the Executive Presidency, which was created by JR Jayewardene in 1978. The failure of the movement to achieve this minimum programme meant that the old regime was able to reconfigure itself under the leadership of Ranil Wickremesinghe. Despite his ostensible years of opposition to Rajapaksa rule, Wickremesinghe was perfectly willing to rely on the parliamentary support of the disgraced family’s party, the SLPP, when the opportunity emerged. A delegitimised parliament elected Wickremesinghe President on 20 July 2022, eleven days after the great revolt of 9 July.

The Nature of the Regime’s Response

Wickremesinghe has since pursued a devastating austerity solution backed by the International Monetary Fund (IMF). The supposed purpose for the creation of the IMF at the Bretton Woods Conference in 1944 – along with the predecessor to the World Bank, the International Bank for Reconstruction and Development (IBRD) – was to help avoid balance of payments crises. The IMF was meant to guarantee a new international financial order after World War II. Instead, by the 1980s it became the arbiter of austerity in the global South, under the guise of ‘structural adjustment’. In return for lending to resolve crises produced by systematic imbalances in the capitalist world system, countries had to agree to dramatic conditionalities to balance their public expenditures with revenue. These measures resulted in deep and painful cuts.

 Since the Global Financial Crisis of 2008, however, it has been suggested that the IMF has regained a measure of humility, even publishing documents critical of ‘neoliberalism’ through its own research department. But the reality is that in practice, the IMF remains committed to austerity in the implementation of policy. For example, the IMF Managing Director’s praise of Far-Right Argentinian President Javier Milei as ‘very pragmatic’ at the most recent World Economic Forum in Davos, Switzerland in 2024, is evidence that the IMF in fact remains a hard Right institution. In the case of Sri Lanka, abiding faith in ‘sado-monetarism’ is evident in the IMF agreement, which was inked in March 2023. The agreement proposes that the country achieve a primary surplus, meaning more revenues than expenditures, by 2024. Forcing people to pay more taxes from their incomes, cutting their savings through domestic debt restructuring targeting retirement funds, and reducing the quantity and quality of public services available in the middle of an economic depression is no less than a recipe for disaster.

Surface economic indicators such as foreign exchange reserves may appear to have improved since the depth of the crisis in 2022. But the permanent hike in the cost of living caused by the devaluation of the rupee and dramatic interest rate hikes in the same year – also recommended by the IMF – have meant that many families continue to remain on the economic precipice. From 2021 to 2022, Sri Lanka’s poverty rate roughly doubled to a quarter of the population. All previous aspirations embodied in the country’s achievement of ‘middle income’ status have been abandoned. Sri Lanka’s policy makers now want to obtain a downgrade for the country to unlock concessional aid from multilateral donors, even as they maintain the same policies – such as trade liberalisation – that led Sri Lanka into the crisis. Accordingly, despite the profound shock of the sovereign debt crisis, the fundamental neoliberal trajectory remains unchanged. In fact, it appears to be accelerating with the Wickremesinghe-Rajapaksa government’s attack on the state sector. The government’s agenda includes new attempts to encroach on free education and healthcare, once the pride of Sri Lanka’s welfare system, by means of the extension of ‘Public Private Partnerships’ and other measures oriented towards privatisation. 

At the same time, to grasp the potential consequences, we must move beyond the economic framing to understand the political and ideological dimensions of what remains a terminal crisis for neoliberalism in Sri Lanka. As Nicos Poulantzas pointed out, the question of state form is especially pertinent for grasping the potential variation in response to the crisis dynamics of capitalist accumulation. The most effective strategy for resisting the current Wickremesinghe-Rajapaksa regime cannot be discovered only through economic analysis, although a critique of the inner workings of the IMF solution is also necessary. 

Instead, strategy must also be tied to an understanding of the regime’s innovation in authoritarian methods to secure its rule. In this regard, the Wickremesinghe-Rajapaksa regime represents one variant of a ‘Caesarist’ response to the crisis. That means a way of resolving a conflict between the ruling class and working people – in which neither side can triumph through open combat, and therefore faces ‘catastrophic prospects’ – by deferring to a powerful actor that can claim to stand above the fray. In many ways, the governments led by Mahinda and Gotabaya Rajapaksa represented a Bonapartist turn. Gramsci called this political response a ‘reactionary Caesarism’, in which opposing forces are incapable of ‘reciprocal fusion and assimilation’. But if we are to render ourselves consistent with Gramsci’s analysis of Caesarism, then we must extend his framework to encompass the variation now present in the Wickremesinghe-Rajapaksa regime. It also represents a form of reactionary Caesarism, but not necessarily one that is Bonapartist.

In this regard, trying to determine the type of exceptional state that the Wickremesinghe-Rajapaksa regime appears to anticipate is a difficult task. There is no compelling analogy. First, the reason that the Wickremesinghe-Rajapaksa regime cannot be said to be Bonapartist is that it lacks a social base similar to the one that Marx originally analysed with reference to Napoleon III’s regime in France, and which was the social base for the Rajapaksa regimes as well: namely, a rural constituency. Instead, the Wickremesinghe-Rajapaksa regime is far more narrowly based on the elite and urban professional class that is predominantly located in Colombo. The regime’s primary leverage in the present crisis is the international support it receives, especially from the ‘Quad’ (the US, India, Japan, and Australia), which it exploits to the maximum. Taking up Gramsci’s line, we could argue that there is room for development within what would otherwise appear to be the exhausted ‘social form’ of neoliberalism, thanks to Sri Lanka’s subordination to a world system, in which no alternative appears possible. In this context, the fact that the IMF’s ostensible bailout package – a measly $3 billion spread out over four years – has come at a tremendous price to Sri Lanka’s working people is only the starting point for analysis.

Another issue is that the Wickremesinghe-Rajapaksa regime also does not fit very well within the framework of authoritarian populism. As Stuart Hall put it, such ideological manoeuvring appeals to a version of the ‘people’ that embraces authoritarian measures. But it also continues to depend on rituals of legitimation, including elections. The same could be said for any number of authoritarian populist projects that have been spawned in the years since the Global Financial Crisis of 2008, including regimes led by figures such as Recep Tayyip Erdogan in Turkey or Narendra Modi in India. 

In contrast, the Wickremesinghe-Rajapaksa regime has repeatedly aired arguments for postponing presidential and/or parliamentary elections in 2024. Already it has indefinitely delayed local government elections, and it continues to rely on a majority within a delegitimised parliament to pass its sweeping legislative agenda. Even if the regime does proceed with elections, through a raft of repressive measures along with legislation passed by a delegitimised parliament, it intends to ‘ringfence’ its agenda, as veteran policy analyst Dushni Weerakoon has acknowledged in a recent piece for East Asia Forum. In a deep theoretical sense, then, the Wickremesinghe-Rajapaksa regime does not appear interested in persuading the ‘people’. Its ostensible audience is a group of hard-headed policymakers willing to take unpopular yet necessary measures. 

Finally, this line of inquiry leads us to the ever-present question: must we then call the regime fascist, to the extent that it suppresses dissent with austerity? Here too there is no conclusive answer, because of the specific tendencies involved. Jamie Allinson has argued that the spate of uprisings over the decade since the Global Financial Crisis of 2008, especially the Arab Spring, must be understood not only in terms of the defeat of progressive forces but also the success of reaction. By turning to Arno Mayer’s classic work on counterrevolution, Allinson poses the question of the power bloc that embraces reaction against popular demands. For Mayer, counterrevolution – which he tends to conflate with interwar fascism in Europe – depends on a ‘cartel of anxiety’. This cartel has included elements such as reactionary landowning elites. Historically, it was fearful of the consequences of modernisation, while also incorporating forward layers of the capitalist class, namely its monopoly section. 

In contrast, in the case of Sri Lanka, the ruling class backing the Wickremesinghe-Rajapaksa regime is embedded in class fractions that are the most dependent on the external sector: the corporate sector, which benefits from wage repression, and rentiers, who pursue continued speculation in real estate and luxury consumption. To understand the modern cartel underpinning the counterrevolution in the Southern periphery represented by Sri Lanka requires shifting our analysis beyond the coordinates offered by Mayer. Allinson poses this question in the context of the Arab Spring in terms of the national security elites and other elements that emerged from modernisation, as opposed to classes initially perceived to be opposed to that historical process. The same can be said for the elites backing the Wickremesinghe-Rajapaksa regime in Sri Lanka. But there is a key difference with the counterrevolutionary regimes that emerged in response to the Arab Spring. While the repressive apparatus of the state has played a key role in buttressing the Wickremesinghe-Rajapaksa regime – including quashing protest after the great revolt of 9 July – technocratic elites represented in the country’s economic establishment are the driving force behind the government’s programme. 

Though not a traditional ‘party’, they represent the economic sectors compelled by their subordination to financialised global capitalism. Sri Lanka’s government is not the same as the military regimes in places such as Egypt and Pakistan, which continue to exercise significant control of the economy. Instead, financialisation has inspired a hitherto unprecedented degree of callousness in Sri Lanka’s ruling class. To tweak Mayer’s formulation, it is not so much a cartel of anxiety as it is a cartel of indifference to popular suffering. Consequently, technocratic elites, such as former Central Bank Governor, Indrajit Coomaraswamy, are eager to argue that any potential elections must not ‘distract’ from the neoliberal reform process. Though Coomaraswamy later qualified his statement to explicitly reject unconstitutional attempts to delay presidential and parliamentary elections scheduled for 2024, it is clear where the impetus lies. Regardless of whether the Wickremesinghe-Rajapaksa regime is replaced, the goal of the ruling class in its current configuration is to hold any future government hostage through various constitutional and extra-constitutional tactics. That includes shifting the centre of policy making to a sado-monetarist Central Bank by guaranteeing its ‘independence’ through an Act passed in 2023.

The Deepening of the Crisis through the Extractive Turn

Accordingly, if the Wickremesinghe-Rajapaksa regime cannot be understood in terms of existing variations of the ‘exceptional state’, we must outline the possibility that a different shift is occurring within the state. In other words, an extractive turn. This provisional concept must be specified both in terms of the rhythms of capital accumulation and its wider effect on the level of state form. While the idea of an extractive turn might appear to imply the same dynamics as the ‘extractivism’ that predominates in resource-rich countries, the difference in our case is that we use it to cover a much broader economic terrain. Specifically, working people suffering the most in Sri Lanka’s crisis have watched the real value of their incomes practically halve. Prices have increased not only because of the devaluation of the rupee but also because of specific policy measures including raising indirect taxes and slashing core subsidies, which had previously enabled working people to survive.

The Wickremesinghe-Rajapaksa government has, for example, increased the cost of electricity and fuel, following the IMF’s guidelines for ‘cost recovery energy pricing’. These price hikes have resulted in double, triple, and even quadruple the costs in some cases for essential goods and services. The practical effect is that more than 500,000 households were disconnected from the grid in 2023 alone. The specific economic form of extraction occurs under the mandate of the IMF agreement. It requires the government to balance its budget and expenditure for the purpose of covering the costs of servicing debt owed to external creditors. In addition, the extractive turn creates space for capital to raid the country, including enabling new private actors to enter markets for essential goods that previously were under public control, if in name only. The Wickremesinghe-Rajapaksa regime seeks to impose the logic of the market on the core foundations of the welfare relationship that had previously held between state and society. Accordingly, even the World Bank – in its Country Partnership Framework for Sri Lanka – appears to imply considerable opportunities for extraction through the intervention of private enterprise in the health and education sectors. Even though domestic demand is collapsing with the depression, there is room for profit. This brute economic fact is why China’s Sinopec entered the local fuel market, and India’s Adani Group, most recently backed by the US International Development Finance Corporation, eyes possibilities in ports and energy.

This process is distinct from, though related to, what has come to be known as ‘accumulation by dispossession’. The working people who are forced to bear an ever-greater burden are not necessarily the same as, for example, peasants who are dispossessed through land grabs. Instead, many sustain their livelihoods through the market. The patchwork of subsidies, including for inputs such as fertilis er for cultivators, previously offered a degree of respite amid the otherwise harsh changes imposed by neoliberalism. The food subsidy that had been in place since the late colonial era, for example, was replaced by a food stamp scheme after liberalisation, in the early 1980s. But continued efforts to develop self-sufficiency in rice through, for example, expansion of the fertiliser subsidy partially compensated for this move, although it also engendered continued socio-economic differentiation within the class of cultivators. Now, however, the Wickremesinghe-Rajapaksa regime’s extractive turn appears to be threatening the very basis of the food system by undermining even the most indirect support mechanisms for Sri Lanka’s working people. 

Regardless of whether this tendency is sustainable on an economic level – and already social indicators such as child malnutrition paint a haunting picture of a likely ‘lost decade’, much like other countries, such as Greece, have had to endure – the extractive turn also requires attention on a political level. The decisive aspect in the overall viability of the Wickremesinghe-Rajapaksa regime is, indeed, what Gramsci called the ‘immaturity of progressive forces’. The extractive turn works by hardening perceptions of an apathetic state divorced from people’s lives. It frames the crisis as a question of ‘governance’ and ‘corruption’, as opposed to an economic depression that requires a complete break with the neoliberal paradigm. The turn prioritises a critique of the supposedly wasteful government expenditure to pay public sector workers who allegedly engage in frivolous protest over petty concerns while working people suffer. But this rhetorical strategy, as mentioned above, does not necessarily rely on renovating tradition by bringing to the surface previous logics through which the people have been constructed, including as smallholders or owners of property. Instead, the approach relies on an obsolete image of the state that redirects popular anger away from the predatory capitalist state now prevailing. In this regard, progressive forces must quickly shift their theoretical and discursive attention to the question of state form, both to remedy their own weakness and to expose the Wickremesinghe-Rajapaksa regime’s apparent strength as a disadvantage.

The Wickremesinghe-Rajapaksa regime’s unyielding effort to construct a ‘Moloch-State’ in fact aligns with the long neoliberal decades of the state’s penetration by capital. The decline in the quality of public services, for example, is far more a reflection of under-investment than the supposedly shoddy work of public sector employees. In parallel, the resistance that appears to be emerging in the network of associations to cope with the economic crisis, including cooperatives, must also develop an alternative understanding of the relationship between the state and popular organisations. That means recognising the extent to which state intervention must be disciplined by popular mobilisation, precisely to bend capital to its will, including directing investment to critical areas such as the food system. 

Here, decades-long debate about the concept of a developmental state confronts the question of the parallel state network that has emerged over the decades of Sri Lanka’s experience with neoliberalism. Poulantzas originally used the concept of the parallel state network to describe a method for insulating economic decision-making from popular accountability, manifest in an ‘authoritarian statism’ that emerged in the 1970s. In today’s context, Sri Lanka’s Central Bank, the site of a new wave of reaction, is an exemplary instance. But the idea has become even more relevant to understanding the extent to which the IMF insinuates itself into Sri Lanka’s polity, with a clear interest in rejecting popular demands for relief and stimulus. The extractive turn radicalises the pre-existing tendency of neoliberalism to insulate policy from democratic accountability, transforming it into a qualitatively different type of regime. At the height of the country’s worst economic depression since independence, it appears mind boggling, for example, that the IMF would demand what economists call ‘pro-cyclical’ adjustment. Yet it is precisely the hollowed out, deadened logic of stabilisation that now actively prevents what is in fact required for a true economic recovery.

The Significance of Struggle Against the Parallel State Network

Thus, confronting the extractive turn in Sri Lanka requires far greater coordination among the country’s progressive forces. By and large, they remain wanting compared to the massive break with the neoliberal paradigm that is urgently needed. But any potential opposition that may nevertheless consolidate has implications for the global trend of popular uprisings. Progressive forces must radically reconceive the relationship between state and society. That means demystifying the state. From this vantage point, for example, welfare appears less as a reflection of benevolence from above and more as an entitlement won through struggle. The fact that the need for a new public distribution system has even emerged as a demand with potentially wide popular appeal to cope with the food crisis is because of an informal network of collectives and intellectuals such as the Feminist Collective for Economic Justice. They have turned it not only into a demand for a measure of relief, but a potential angle of attack on the Wickremesinghe-Rajapaksa regime itself.

Moreover, in a time of severe crisis, elections are not only a symbol of intra-elite bargaining. They come to represent a potential turning point, in which the very demand for popular participation in economic decision-making is fused with the unveiling of an alternative that can overcome the terminal crisis of neoliberalism – now extended indefinitely into the future. The extent to which the Wickremesinghe-Rajapaksa regime, backed by the dominant section of the ruling class, is trying to frame the protection of its IMF-driven agenda from elections – regardless of whether they are held – raises the stakes of this struggle to an unprecedented degree. Accordingly, any revived Left movement must incorporate the question of dissent and formal liberties and move well beyond it. That means turning the need for elections, and representative institutions responsive to popular economic demands in general, into a question of the very survival of working people. The corresponding solution will also reflect the long history of the need to incorporate responses to multiple forms of oppression, especially the national question and a potential new wave of feminist struggle.

In this context, initial attempts by the extra-parliamentary Left at the height of the struggle in 2022 to push the crisis into a dual power scenario by promoting people’s councils as an explicit alternative to parliament backfired. The Wickremesinghe-Rajapaksa regime used a protest at parliament in the aftermath of the 9 July uprising to claim that the people’s movement threatened the constitution. Accordingly, it substituted legitimacy with legality. In response, progressive forces must think much more carefully about the need to articulate radical democracy with existing representative institutions. There is no doubt a need for institutional innovation to strengthen popular oversight. But this focus must be combined with hard-headed awareness of the many ways in which the ruling class will try to manipulate the economic apparatus, such as the Central Bank, to lock in its austerity agenda, regardless of the next government that comes into power. At the same time, the scale of the crisis also introduces an element of uncertainty when attempting to anticipate what will provoke popular anger. For example, the fishing community’s protest opposing the fuel hike in 2012 was not repeated in 2022, even though the Wickremesinghe-Rajapaksa regime roughly quadrupled the price of kerosene, which fisher folk and cultivators require. The argument that austerity is in some sense unavoidable this time around seems to have prevailed, dulling popular enthusiasm for social transformation. 

 Yet the apparent quiescence of the population at the deep level of organising masks the fundamental changes in livelihoods that are creating the potential basis for a much wider front of resistance. The reconfiguration of social and class forces means that there are new potential alliances, just as much as there are tensions, among working people. The resulting complex and often contradictory process compels us to think carefully about a programme that can appeal, for example, both to small cultivators demanding financial support from the state along with informal sector workers, especially from marginalised communities, who have long struggled to obtain welfare. The current regime exploits these divisions, turning working people against each other. But in addition to unifying the people it will also be incumbent for the Left to identify both the strengths and weaknesses of the regime in a much broader sense. They must convert more of the former into the latter. To do so requires understanding the political and ideological dimension of the extractive turn, namely the belief that there is no alternative to IMF-mandated austerity. This assumption draws its rhetorical force from the Wickremesinghe-Rajapaksa regime’s deceptive portrayal of Sri Lanka’s ‘unsustainable’ welfare state, which may even be adopted by its supposed opponents.

Meanwhile, the current period of global unravelling proceeds apace. But there needs to be an equivalent attempt to strengthen our awareness of the domestic reconfiguration of forces that is occurring in countries such as Sri Lanka. Working people in the Southern periphery are experiencing some of the worst effects of what Neil Smith called ‘dominant but dead’ neoliberalism, evidenced by the more than fifty countries experiencing some form of debt distress. Our present need is to understand not only the Wickremesinghe-Rajapaksa regime’s potential room for manoeuvre at the level of international relations, but also its work in stalling, if not preventing, the creation of an alternative bloc. Working people’s suffering is apparent. But even the middle classes along with domestic sections of capital are being hit hard by the increase in the cost of inputs, in addition to the obvious contraction of demand. 

Yet to produce an understanding of the counter-hegemonic bloc that can underpin a true economic recovery, and by extension reconstruct the state on more egalitarian grounds, requires deepening the vision implied by actors such as rural cooperatives. They are improvising with immediate solutions to the crisis, including methods of distributing essential goods such as rice. The Left’s goal should be to generate a deeper, more critical awareness of what is possible by making visible the process immanent within these dynamics. That includes the broad cooperative ethos capable of opposing the Wickremesinghe-Rajapaksa regime’s emphasis on hyper-individualism, including its critique of ‘lazy’ Sri Lankans supposedly dependent on welfare. Only in this way will we be able to base ourselves, as Gramsci put it, on ‘effective reality’. 

In this sense, a developmental state is not simply one among a range of pre-existing models that Sri Lanka can adopt. Instead, the state that emerges depends on an active struggle against the parallel state network, engendering a change in the very grammar of development. Specifically, what are the possibilities for accumulation within the relative framework of self-sufficiency? What would it mean to increase Sri Lanka’s leverage in negotiations with external creditors by prioritising imports? What would this process require in terms of transforming agrarian relations? How would it map onto the socio-spatial reconfiguration of relations between rural and urban areas, including new possibilities for rural industrialisation? How can this process build on historical demands for land redistribution, including the need to prioritise marginalised groups? And on an international level, can the very financial instability that has been engendered by deepening trade liberalisation be reversed in a moment when global finance capital is experiencing its own contradictions? Meanwhile, what are the dangers in adopting a national security framing of global unravelling, and how too does this reinforce the potential fascist appropriation of the discourse of self-sufficiency? Moreover, while a critical return to planning is no doubt required to overcome the crisis, mobilisation is also necessary. In this regard, popular organisations such as cooperatives, and even tacit strategies of household self-provisioning, offer the terrain on which this solution can and must be envisioned. 

The Wickremesinghe-Rajapaksa regime may indeed be strengthening the most predatory aspects of the state. Not merely in the sense of undermining the capacity of the state to pursue policy goals on behalf of working people. But also in terms of eagerly subordinating itself to the accumulation strategy of global finance capital. Nevertheless, the extractive turn itself simply extends the crisis of neoliberalism into the indefinite future. As Gramsci might put it, it is ‘only [the state’s] “evolution” of the same type along unbroken lines.’ Its duration is unknown. In addition, it could incubate forces capable of carrying out a fascist break within the state ‘following lines that have already been traced in its present configuration’, as Poulantzas memorably put it. These uncertainties should no doubt give the Left pause regarding the specific way in which the crisis of neoliberalism will ultimately be resolved, including the long-term social and political effects of unprecedented austerity in the middle of an economic depression. 

The battle is far from won. But in the mutations of social and class forces that have already occurred – no less than the decisive phase of struggle to come – the battle is also not yet lost. Consequently, an open-ended moment of this tremendous scope requires no less than the Left’s strongest efforts to discipline its thinking when it comes to understanding both the Wickremesinghe-Rajapaksa regime and what it represents in terms of the broader reconfiguration of the ruling class. Namely, the distinctive positioning of Sri Lanka within a wave of reaction that is taking place amid an extremely disruptive, chaotic, and often brutal period of global unravelling. Current prospects may be bleak. But at least in the context of Sri Lanka’s crisis, even the seemingly unstoppable force of neoliberal austerity can be confronted by strengthening the relationship between theory and organisings

Devaka Gunawardena is a political economist and independent researcher. He is a regular contributor to Polity (published by the Social Scientists’ Association in Sri Lanka), in addition to writing for other South Asian forums including Economic and Political Weekly and the Wire.