This article is the second in a two part series that examines the transition from the private to the public model of accumulation during the immediate post independence period. The first article explored the reasons behind the changes implemented and listed the new features of Guyana’s political economy. This instalment will examine the specifics and impact of the public model of accumulation in Guyana.
The first feature of cooperative socialism that will be examined is nationalisation. Guyana’s nationalisation programme started in 1970, with Burnham’s declaration that the government was committed to pursuing a policy of ownership and control of the country’s resources. By 1976, 80 percent of the economy had been nationalised.
Guyana’s economy at the time of independence depended on the production and export of three primary commodities: sugar, bauxite-alumina and rice. Sugar and bauxite-alumina accounted for 90 percent of export earnings and 33 percent of GDP. These two industries which were foreign owned and controlled were also the largest employers in the country. Bookers Bros. McConnel and Co. Ltd., a UK based transnational corporation (TNC) owned over 80 percent of the sugar plantation assets and also owned a number of other businesses in the retail, shipping, manufacturing and fishing sectors. Demerara Company Holdings Limited, a smaller UK registered company owned and operated two sugar factories and was also engaged in some manufacturing and retailing. Bookers Ltd. and Demerara Company Holdings Ltd. controlled all the processing facilities.
Meanwhile, two TNCs, Alcan of Canada and Reynolds of the USA controlled the production of bauxite-alumina. Alcan, through its subsidiary DEMBA, dominated local bauxite production, while Reynolds, which operated much smaller concessions acquired in 1951, was DEMBA’s only competitor.
Of the two major foreign owned industries, bauxite was the first to be nationalised. The government of Guyana purchased the Alcan subsidiary for G$53 million to be paid at 6 percent interest over twenty years. On April 15, 1971, the Guyana Bauxite Company was created. Although the logical first choice in the nationalisation programme seemed to be the sugar industry, the composition of that industry’s labour force – overwhelmingly East Indian and PPP supporters – made nationalising this industry first a risky endeavour. With PPP charges that the government rigged the 1968 election, the PNC regime would have exposed itself to possible economic subversion by anti-government forces in the guise of industrial unrest. DEMBA meanwhile was located in a PNC stronghold with a population that was over 90 percent African and the union representing bauxite workers was clearly aligned with the PNC. Consequently, nationalising this industry first was not considered to be risky politically.
Demerara Company Holdings Limited was nationalised in May 1975. Booker-McConnel, anticipating nationalisation, had been reducing its dependence on the local subsidiary and by 1976, only 20 percent of its operations was still located in Guyana, as compared to 80 percent a decade earlier. Booker’s 22 subsidiaries that directly employed 23 000 workers were nationalised in May 1976 under an agreement that the state would pay approximately G$500 million in compensation out of future profits.
Another feature of co-operative socialism was that the national development strategy as embodied in the 1972-1976 development plan, would entail a programme to feed, clothe and house the nation. This strategy had the aim of substituting the ‘private profit’ motive with the social goal of rendering ‘the small man the real man’. Ultimately the goal was a socialist transformation to create a society that was self-reliant, economically independent and egalitarian. This development strategy was a dramatic departure from the first capitalist oriented development programme implemented by the PNC-UF coalition prior to and immediately after independence. The high amounts and associated costs of food imports were deemed inimical to this cooperative socialist agenda and in 1972, the government announced the adoption of policy measures to reduce food imports in order to provide “…within the economy, services and commodities which hitherto had to be imported.”
Along with conserving needed foreign exchange, a vital aspect of the FCH plan was the promotion of economic liberation and self-reliance by stimulating local substitutes and decreasing consumption of ‘luxuries’. Thus the government declared a ban on certain food imports into Guyana in order to support the food component of the FCH programme and thereby boost agricultural development and, save limited foreign exchange.
A third characteristic of co-operative socialism was that the cooperative sector would be the dominant one within a trisectoral national economic programme comprised of the private, state, and co-operative sectors. The PNC argued that co-operative ownership and control would lay the socialist foundations for a new Guyana. The government acknowledged however that in the initial stages of the implementation of this trisectoral strategy, the state sector would have to assume the major role in the economy until the co-operative sector matured sufficiently to function as the dominant sector. Moreover, even among organisations functioning under co-operative principles, provisions were made for them to operate under customary commercial principles since the intention was to deemphasise not completely eliminate the profit motive.
The nationalisation and FCH plans adopted by the PNC regime did not generate a society as anticipated that was self-reliant, economically independent and egalitarian. Moreover, the plans were not successful in introducing a nationalist/socialist identity to challenge and ultimately replace ethnic identification. On the contrary, they were severely criticised by the leading opposition party, the PPP, which argued that the massive sums spent in the public sector were intended to compensate and protect the interests of the PNC’s largely urban-based Afro-Guyanese supporters to the detriment of the agricultural sector, which was dominated by Indo-Guyanese. Consequently, Indians under the leadership of the PPP, periodically engaged in conflict with the state, although not always openly and generally in their rural, plantation based strongholds.
The fourth feature of co-operative socialism in Guyana was the policy that as part of ‘socialist doctrine’, the governing party (the PNC) was ‘paramount’ over the state and all other political parties. The Office of the General Secretary of the PNC and the Ministry of National Development (OSG PNC MND) was consequently established in 1973-74 while the PNC party office became a department of the state and was financed using state funds.
Accompanying these features of co-operative socialism were several ‘radical’ foreign policy initiatives including the formalisation of diplomatic relations with socialist states in Eastern Europe and Asia including Hungary, Vietnam, Bulgaria and the Democratic People’s Republic of Korea. Guyana also recognised China and supported the 1972 decision by Caricom to establish diplomatic relations with Cuba. The government also extended support to the MPLA in Angola, adamantly spoke out against apartheid and, supported the Arab ‘cause’ in the Middle East. The Guyanese state also played an important role in the Non Aligned Movement and joined with other third world countries in demanding a New International Economic Order.
Several prominent Guyanese scholars, including C.Y. Thomas pointed to the very capitalist rather than cooperative socialist strategies the state employed to manage the domestic economy and insisted that the seemingly radical domestic and foreign policies of the government were not reflective of a deeply principled ideological position but were instead opportunistic and propagandistic. The PPP, though not entirely convinced that the PNC regime was embracing a radical socialist stance and rejecting western imperialism and exploitation, nevertheless extended ‘critical support’ for the ‘radical turn’ taken.
In theory, the adoption of a socialist policy had the potential to heal the political wounds between the two main political parties and ethnic groups although it conflicted with the interests of domestic and foreign capitalists. However in practice, adoption of a socialist policy most coincided with the welfare of those who historically populated the government service, namely the African middle class. State employees, at all levels, benefitted from the growth in state activities and the emergence of numerous state owned industries. The number of government ministries had grown from 12 in 1964 to 18 in 1973, and there was a corresponding growth in government corporations. The PNC’s socialist policies were in essence extremely favourable to the African upper middle and lower middle classes.
The nationalisation of all four multinational subsidiaries in the bauxite and sugar industries meant that the majority of Guyanese workers became state employees. After the nationalisation of the sugar industry in the early 1970s, the majority East Indians workers relied on the state for employment. Most educated East Indians in the urban sectors also relied on the public sector for employment while the enlargement of the role of the state made the local private business sector heavily dependent on the government for its survival. Meanwhile in the third export industry, the success of mostly East Indian rice farmers also depended on the state since farmers were forced to rely on the government-controlled rice board which was responsible for grading, blending, packaging and marketing. The rice board also supplied fertilizers, seeds, weedicides and insecticides. Further, capital required for cultivation and harvesting, procurement and repair of agricultural equipment was granted by two state financial institutions: the Guyana Cooperative Agricultural and Industrial Development Bank and the Guyana National Cooperative Bank. The government also provided other forms of support and assistance to the industry including drainage, irrigation, infrastructural works and technical and engineering expertise.
In other words, with the enormous growth of the public sector under cooperative socialism, the welfare of all political and labour groups became greatly reliant on the political elite who in turn depended on the African middle class who managed the government ministries, agencies, the security services and the public corporations. This group consequently had the greatest scope for upward mobility and had effective control over a great portion of the nation’s wealth. Essentially therefore the African middle class succeeded the British as the Guyana’s privileged elite.
