ECONOMYNEXT – Ethno-religious fascist forces are again in the ascendancy in Sri Lanka helped by an economic downturn triggered by money printing, inflation and socialist policies like price controls, in the first two years of the current administration cemented by un-ending currency depreciation.

Though a recovery is under-way – as it usually happens after a credit bubble bursts – most of the damage has already been done.

The new finance team is fixing some of the problems, despite some obstruction by President Maithripala Sirisena.

In the North Vijayakala Maheswaran has said that rule by Tamil Tigers was preferable, after a little girl was brutally raped and murdered.

In the South, Venduruwe Upali Thero, a senior Buddhist monk, said there was a wish among the people for a military-religious dictatorship in the style of Hitler. He also cited a rise in crime.

"We want a leadership with Buddhism. A leadership linked with Buddhism and Sinhala is needed (Baudhakamath, Sinhalath ekka bandunu nayakathwayak).

He said Gotabhaya Rajapaksa has been called a Hitler. Even by becoming a Hitler or even through military rule, he wanted a strong Sinhalese -Buddhist rule.

It seems that there is little understanding about who Hitler is. Nobody who has gone through Sri Lanka’s education system has any clear idea what fascism is. Students hear about fascism only from their Marxist friends.

European Ideology

Post independence Sri Lanka is a European style nation-state with the same tools and the same ideologies that emerged in Europe. There is nothing particularly Sri Lankan about any of the warring philosophies, since the island was a monarchy until the Europeans came.

The same ideologies that emerged in Europe came to Sri Lanka during British rule and are still at play.

The overwhelming ideology in this country after independence had been nationalism with some socialism thrown in, after liberals set in motion universal franchise and ended slavery with no real domestic struggle.

In any country there are nationalists who value some glorious past based on some (usually imported) religion and a majority ethno-religious polity, while denigrating and dehumanizing others. The nationalists’ utopia does not correspond to the actual demographics of the country in the present, and may not have done in the past also.

As a result internal and external conflicts are the usual outcome.

Liberalism was based on ideas like individual freedom, rule of law over rule of man, free trade, giving equal status to women and ending slavery especially of black people with NGOs like the Abolition Society and Africa Society actively campaigning.

The latter two particularly infuriated nationalists (especially in Eastern Europe) who said that Western civilization was becoming ‘decadent’ as a consequence.

There are also socialists who do not care about religion or ethnicity but have impractical ideas about the economy and through their (often well-meaning) interventions like price controls and nationalization, drive a country to economic ruin.

When state interventions lead to economic collapses people will listen to the nationalists. It is happening in Europe now and it happened during the Great Depression when Hitler came to power after the hopeless mess of hyper inflating socialist Weimar Republic Germany.

Linguistic Nation States and Fascist-Nationalism

In Europe in the mid 19th century several linguistic nation-states were built out of mainly former city states, where ethno religious fascist nationalism took root. Prominent among these are Italy (Italian-Florentine), Germany (German-Prussian) and Spain (Spanish-Castillian), which later led to some of the most visible cases of fascist rule.

In other areas of the former Austro-Hungarian Empire (Hungary and Romania in particular later sided with Hitler), anti-minority nationalist hate was strong and liberal philosophy lost out. The violence in Yugoslavia after communism broke down is a case in point.

Liberal philosophy is extremely fragile and can be easily outdone by unreason and religious bigotry and state intervention, leading to dehumanizing of all citizens in the end.

Fascism, like Marxism was imported to countries like Sri Lanka along with the popular vote and freedom of speech. Fascist-nationalism, which speaks to the tribalism of a majority, is the easiest path to power in a popular vote.

Backed by tribalism or religions, a leader courting nationalism can do no wrong in the eyes of the base. It can now be seen in the US how Donald Trump came to power. His base, fired by white nationalism and evangelists are prepared to support any action that undermines freedom and ignore corruption.

However a leader backed by liberals will not be able to keep their support when they engage in corruption or other arbitrary actions.

In Sri Lanka activists like Anagarika Dharmapala spread many nationalist ideas. Spreading nationalism against minorities is not the same as preaching Buddhism or bringing to the people who did not know about it before, the philosophy of the Buddha, and converting them.

Ethno-religious fascism which blossomed in Europe has always been associated with Christianity and Catholicism in particular.

Italy’s Mussolini was a Catholic.

"The Fascist State is not indifferent to religious phenomena in general nor does it maintain an attitude of indifference to Roman Catholicism, the special, positive religion of Italians," says Mussolini’s Doctrine of Fascism.

"The Fascist State sees in religion one of the deepest of spiritual manifestations and for this reason it not only respects religion but defends and protects it."

Anti-Semitism existed in Europe long before Hitler.

It is quite obvious that the ideas spread by political or religious activists and the clergy that leads to hate and dehumanization of minorities is incompatible with both Christianity and Buddhism.

As a result, some followers of the original philosophy disagreed. But in countries where nationalism triumphed over other ideas, they were either unsuccessful or there were not enough of them to speak out.

While Hitler was a Catholic, the Catholic Church in Germany was not supportive of him and later opposed his killings. But the Lutheran and some other protestant churches backed the Nazi party. In Germany, the Centre Party, which was aligned to the Catholic Church, was banned.

The Catholic Church and the Vatican authorities were later instrumental in building escape lines for the Jews. On the other hand some priests in Europe also built ratlines.

The so-called protestant Confession Churches in Germany were openly against Nazism. Eventually many priests especially in countries like Poland ended up in concentration camps, and were exterminated.

Obviously Nazism and fascism in general is against the teachings of Jesus, who was himself a Jew.

However these matters are apparently of little import to the nationalist.

The Nazis promoted a ‘positive Christianity’, which sought to say that that Jesus was not a Jew and was an Aryan.

"The Party as such upholds the point of view of a positive Christianity without tying itself confessionally to any one confession," noted article 24 of the 1920 Nazi party platform.

Hitler did not come to power through a military take-over but through the vote which he then consolidated through force.

But one country where the Catholic Church openly supported a fascist military dictatorship was in Spain, where perhaps, more similarities can be drawn.

Cardinal Goma and Upali Thero

In Sri Lanka there has long been an idea that the island has been entrusted with safeguarding Buddhism and that it is under attack and in decline due to minorities and foreign action.

All over the world with the spread of science, there was a movement towards secularism, over the last century.

There were also attempts to reconcile religion with science, which also ended up re-inforcing nationalist hate.

It must be noted that nationalists widely twisted science with pseudo-science in various disciplines to scapegoat and target ‘foreigners’ and minorities. They also misrepresented history through nationalist revisionism.

Aryanism is one example. ‘Aryan’, an Eastern term which was used by linguists as a label to describe a language group, became a description for a supreme race.

The Secret Doctrine written by Helena Blavatsky of the Theophysical Society, is thought to have influenced (Ariosophy) the original ideologues who eventually gave rise to the National Socialist party according to some writers. The Thule Society was also another related occultist influence on Nazism and Aryanism.

In Spain due to the spread of secular ideas, the Church was feeling threatened. The Spanish Church felt that ‘Christendom’ was under threat and a new leadership was needed, just like Buddhist monks like Upali Thero are now saying that Buddhist value based leaders are needed.

A Republican (non-Monarchist) administration came to power in Spain the 1930s and a secular constitution was established. The administration was also backed by leftists, and there was land reform and other interventions. Unfortunately socialist experiments do not help get a country out of depression.

Eventually a military uprising was launched, backed by nationalists like the far right Falangists, against the Second Spanish Republic, which had the support of secular activists and also leftists.

Both Hitler and Mussolini backed the nationalists in the Spanish Civil War. After the death of the original generals who launched the military uprising, Francisco Franco became dictator.

The leaders of the Spanish Church openly supported the military rebellion, and spoke out against the criticism by foreign Western media that war crimes were taking place.

The leftists or ‘Reds’, apparently backed by the Soviet Union, also attacked Churches, priests and nuns, as well as other civilians, in the mayhem of the civil war, making it difficult for Republicans to get wider support.

The Spanish Catholic Bishops released a formal letter (The Collective Letter of the Spanish Bishops, 1937), led by Bishop Isidro Goma y Tomas which is illuminating. Only a few Bishops refused to sign it.

Among ideas expressed by the clergy were: The natural organ of this spiritual interchange is formed by the Bishops, who were put by the Holy Ghost to rule over the Church of God.

Amongst the causes of this aberration are perhaps the anti-Christian spirit which has seen in the Spanish struggle a decisive struggle for or against the religion of Christ and Christian civilization; the opposing currents of political doctrines which aspire to supremacy in the world; the tendentious work of hidden international forces; the anti-patriotic force which has had recourse to misguided Spaniards who, shielding themselves behind the name of Catholics, have caused an enormous harm to the genuine Spain.

And what hurts us most is that an important part of the foreign Catholic Press should have contributed to this mental deviation, which might prove fatal to the most sacred interests which are being contested in our country.

…we affirm that the civic-military rising has taken a double grip on the depths of the popular conscience: that of the patriotic sense which has seen in it the only means of raising up Spain and of avoiding her definite ruin; and of the religious sense, which considered it as the force necessary to reduce to impotence the enemies of God, and as the warrant of continuity for her faith and the practice of her religion.

In the Second World War, Franco did not become part of Hitler’s Axis powers amid diplomatic moves by the West. As a result he was able to rule till 1975 while other fascist leaders ended up being prosecuted for War crimes.

Unlike the rest of Europe which was destroyed, Spain did not get Marshall Plan aid and followed self-sufficiency as nationalists usually do, leading to economic stagnation.

After World War II, West Germany promptly abandoned it’s Nazi-autarky (self-sufficiency) and strengthened the currency with the sound monetary policy during Bretton Woods, eliminating labour unrest, becoming an export powerhouse and engaged in free trade, and even paid reparations.

This was called the German Economic Miracle.

Later, helped by his opposition to communism, Franco was able to get US and IMF support. Franco also abandoned its autarky and re-opened the economy, initially in fits and starts. The country even earned the accolade the ‘Spanish Miracle’ for its boom in the 1960s, which ended with the break-up of the Bretton Woods in 1974.

Socialist-Statist Failures will lead to Hitler

It has been well-demonstrated that central banking and socialist economic interventions, which cause currency depreciation and economic problems will lead to calls for dictatorship. If economic conditions are bad enough, people will listen.

This was seen in Weimar Republic Germany and was well-documented by Austrian economist Friedrich von Hayek, in his work, The Road to Serfdom.

The Road to Serfdom was graphically condensed into cartoon form in a magazine called ‘Look’.

The key takeaways are as follows:

In a post war era there is a fascination with planning and force. Many think that there is an ‘economic war’ that can be won by planning.

While a war of destruction can be won by planning and coercion, it is not possible to have economic prosperity without free exchange. That is why 5-year plans failed in both the USSR and India.

After the war in Sri Lanka, investments failed to come with expropriation and socialist measures putting investors off.

In the 2015 administration, Finance Minister Ravi Karunanayake also proposed several damaging state interventions, including retrospective taxes, expropriationary taxes, minimum wages and threats of further land reforms. Ironically these measures were against the past ideology of the United National Party and they undermined investor confidence.

There were sweeping price controls, licenses to even import cars.

There was a 100-day plan, which was largely financed by money printing. Money printing led to balance of payments pressure, which then led to credit controls on vehicles like three wheelers, and led to a general slowdown as the bubble ended.

Planners wanted people to work in factories and export hard goods, but many people wanted to work in services instead.

This is captured graphically in the Road to Serfdom in Cartoons.

President Maithripala Sirisena objected to some of the measures of the first two years. People inside Karunanayake’s own party could not agree to some others.

Now, President Maithripala Sirisena is objecting even when bad policies are being corrected, creating confusion.

There were many mis-steps. Taxes on beer are one example.

The glyphosate ban, the asbestos ban, the tea insect, the kerosene fiasco are all examples.

The ‘War on Sugar’ in a country with malnutrition is another.

There are more plans to impose carbon taxes, disrupt people’s lives and engage in social engineering.

A 35-year age limit proposed for three wheeler drivers is a sign of planning.

The failure to fix Sri Lanka’s soft-dollar peg, which has led to import controls is also a sign of planning.

These disruptions make people tired and force businesses to engage in firefighting.

"The more that planners improvise, the greater the disturbance to normal business," notes Road to Serfdom in Cartoons.

"People now feel rightly that ‘planners’ can’t get things done.

Then there are calls to a strong man.

The Strong Man

Upali Thero was not the first person to call for a Hitler.

After the disastrous socialist and self-sufficient experiment of the 1970s, JR Jayewardene also set up a constitution to get near dictatorial powers.

People welcomed the idea thinking that strong leadership was needed fix the economy.

Though some progress was achieved, and employment increased, the currency depreciation and high inflation of the 1980s undermined stability, and institutions of liberty were broken and rule of law deteriorated.

In Sri Lanka liberalism is derided and fascism is glorified by vocal urban intellectuals.

People may not know how to use freedom for their benefit. Urban intellectuals use this phenomenon to rob freedoms.

Hitler also recognized and played on this psychology.

"The psyche of the broad masses is accessible only to what is strong and uncompromising," he wrote.

"…the masses of the people prefer the ruler to the suppliant and are filled with a stronger sense of mental security by a teaching that brooks no rival than by a teaching which offers them a liberal choice.

"They have very little idea of how to make such a choice and thus they are prone to feel that they have been abandoned.

"They feel very little shame at being terrorized intellectually and they are scarcely conscious of the fact that their freedom as human beings is impudently abused; and thus they have not the slightest suspicion of the intrinsic fallacy of the whole doctrine.

"They see only the ruthless force and brutality of its determined utterances, to which they always submit."

This column is based on ‘The Price Signal by Bellwether‘ published in the August 2018 issue of the Echelon Magazine. To read Bellwether columns as soon as they are published, subscribe to Echelon Magazine at this link. The i-tunes app can be downloaded from here.