The Post-Neoliberal Crisis

The recent historical record of the political centre-right is not particularly impressive. To define the centre-right in this contemporary period, it may be distinguished from the traditional conservatism of D. S. Senanayake, whose philosophy more closely resembled Stanley Baldwin’s “One Nation” conservatism than the neoliberal turn of his successors.

The United National Party (UNP) was conceived as a liberal-conservative party. Senanayake and his contemporaries articulated a moderate, pragmatic brand of conservatism distinct from today’s mainstream centre-right. Liberal conservatism emphasised the state’s role as an instrument of nation-building while respecting and sustaining cultural traditions and social norms. Intellectually, it drew on Edmund Burke, Alexis de Tocqueville, and the classical economic foundations of Adam Smith, David Ricardo, and John Stuart Mill, figures who tempered markets with moral order, gradual reform, and social stability.

A section of the Samagi Jana Balawegaya (SJB), now Sri Lanka’s main Liberal party, seems inclined towards a renewal or regeneration of the ‘right-wing’ or ‘centre-right’ of our politics; a “unite the right” movement from within. There is also a broader, external elite-liberal project to launch a joint-venture between the SJB and the UNP aiming for a more cosmopolitan and “business-friendly” party.

This is not an outlandish strategy, to frame the SJB as a centre-right antidote to the lacklustre performance of the National People’s Power (NPP) “left-progressive” government. Liberal parties like the SJB typically contain multiple factions: traditionalists, progressives, pro-business lobbies, unions, and activists; all contesting to define an ideological centre from which a politics of some value might emanate.

What began in 1977 as a bold experiment of liberalisation, gradually evolved into a system of privilege and exemptions. Instead of fostering competitive industrialisation, successive governments entrenched versions of a “license raj”, with multi-decade, unconditional protections for industries, generous tax holidays sometimes spanning 30 years, with no overarching strategy. The result was not dynamic market competition but elite rent capture, a pattern that work by Tisdell (2000) and Gunatilleke (2012) have described as forms of rentier capitalism, where economic policy served the interests of a small group rather than broader development.

This article seeks to argue that a realignment to the right or left will neither clarify the SJB’s ideology nor inspire its base and attract new supporters. Instead, Sri Lanka requires a party and an opposition of Progressive Centrism, a middle path that rejects both neoliberal retrenchment and populist overreach, without becoming a Clintonian/ Blairite ‘third way’ compromise.

 A Hegemonic Discourse

The global centre-right has long since shifted decisively away from Senanayake’s style of liberal conservatism and toward Ranil Wickremesinghe’s neoliberalism. Stanley Baldwin was British Prime Minister three times during the interwar period, pursuing policies to install or expand unemployment insurance schemes, pensions, housing, and even maternal health services. Under D.S. Senanayake, the newly independent Ceylon carried forward many features of the colonial-era social contract, institutionalising agrarian reforms by broadening land access, expanding the rice subsidy guarantee and investing in public goods.

By contrast, the UNP’s centre-right evolution was formalised in the 1990s by its joining the International Democratic Union, becoming an ideological partner of Thatcherism and Reaganomics, reflecting the broader global political takeover of the centre-right by the forces of neoliberalism.

For a sober, structural definition and analysis of this concept, take David Harvey’s ‘A Brief History of Neoliberalism’ (2005): “Neoliberalism is … a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterised by strong private property rights, free markets and free trade… The role of the state is to create and preserve the institutional framework appropriate to such practices…It must … set up those… legal structures and functions required to secure private property rights and to guarantee, by force if need be, the proper functioning of markets”.

 Harvey is precise in his definition of the role of the State; limited to the generating and preserving of institutions that safeguard the market and further, goes on to state that where markets don’t yet exist, such as in land, water, health, education, the State may create them. Once created, these markets must not be interfered with because governments cannot possibly hope to “out-perform market signals”.

 Susan George’s 1999 speech titled ‘A Short History of Neoliberalism’ (delivered at the ‘Conference on Economic Sovereignty in a Globalising World’ in Bangkok) describes the movement as an ideological project disguised as technical economics, designed to expand the power of markets and corporations while shrinking the State’s role in welfare and redistribution.

Sri Lanka rightly opted for liberalisation in 1977 to spur industrial growth and exports, yet the benefits were unevenly distributed, inequality increased and social protections lagged. Several studies confirm that while liberalisation spurred growth, it failed to deliver inclusive outcomes, especially in poorer and rural areas. For instance, S. Perera et al analyse trade liberalisation’s effects on welfare in South Asia, with specific reference to Sri Lanka, and find that gains largely bypassed rural and estate-sector households, reinforcing income disparities.

Dunham & Kelegama (1995) argue that it was only under President Ranasinghe Premadasa (1989–1993) that liberalisation was fully realised through a “second wave.” This period is praised for its dual approach: combining export-oriented liberalisation with targeted subsidies, welfare expansion, and poverty alleviation. Premadasa’s policies, described by Amaratunga (1999) as a “middle path,” represented a pragmatic model of balancing market reforms with social protections to stabilise growth and broaden its reach.

 Progressive Centrism

Much of Sri Lanka’s economic structural issues such as low tax to GDP, external debt for consumption, a significant ISB Portfolio, a deindustrialising external sector, decades of low investments in health and education, poor quality public services; all reflect outcomes of neoliberalism in other countries.

The SJB’s 2024 manifesto, the Blueprint, explicitly sought to frame a social market economy: capitalism with a human face, growth with equity. It was part of the SJBs evolution and point of departure, from the neoliberalism of the UNP; a more moderate political positioning. The Blueprint emphasised global production value chains (GVCs), FDI in high-technology manufacturing, and intellectual, physical and soft infrastructure for long-term competitiveness.

Progressive centrism will go further, insisting on coupling market dynamism with welfare systems designed for churn, not dependency; recipients must exit as new ones enter, ensuring turnover. Rather than retreating into austerity and orthodoxy, the SJB should support or sponsor legislation that reforms social assistance programs: cash-transfers, subsidies, and training, but with time-bound, hybrid welfare systems that build skills and compulsory savings, creating pathways out of dependency.

This is not utopian: large countries with complex societies, like Brazil and Mexico, have pioneered such models. Brazil’s Bolsa Família, a conditional cash transfer tied to school attendance, vaccinations, training, and micro-credit, lifted over 20 million people out of poverty. But Sri Lankan policymakers need not look as far as South America because the 1989 Janasaviya programme was one of the region’s first hybrid welfare schemes, linking transfers to savings and income-generation.

Launched by President Ranasinghe Premadasa, the Janasaviya programme (1989–1995) emerged as an ambitious poverty alleviation scheme that combined consumption support with a compulsory savings transfer to finance small-scale income-generating projects. Janasaviya was similar in spirit to today’s “graduation” models that link cash assistance to skills, training, and asset-building. High administrative costs led to Janasaviya’s replacement by Samurdhi in 1995, an entirely consumption-oriented transfer program that persists to this day under a different name, Aswesuma, with no graduation-linked policies.

A 2013 nationwide analysis published in The Lancet found that Brazil’s Bolsa Família conditional cash transfer (CCT) reduced child mortality from malnutrition, evidence that cash plus health/education conditionalities translate into real survival gains. Lancet Public Health (2025) estimates the programme prevented 713,000 deaths and 8.2 million hospitalisations between 2004-2019.

In Mexico, the PROGRESA/Oportunidades CCT raised preventive health visits and schooling in rigorously evaluated pilots that later informed national rollout. In Indonesia, evidence shows that Program Keluarga Harapan (PKH), a 2007 national CCT program, sustained gains in incentivised health and education behaviours even six years after launch.

These are not isolated cases, successful experiences are documented around the world from the Philippines to Ethiopia, but policy design matters, not just the quantum of investment.

 Sri Lanka exhibits the worst of all worlds, grossly under-funded, poorly-targeted transfer programs with rudimentary design. Progressive Centrism treats such public policy as instruments to deliver focused solutions instead of ideological radio transmissions. It represents a middle-path treatment of ideology, philosophy and thus public policy rather than a compromise between two sides of the spectrum.

 The Economic Middle-Path

Sri Lanka’s universities face well-documented challenges: oversubscription in arts and social sciences, limited STEM output (World Bank 2020), chronic underfunding, as well as entrenched issues like ragging and harassment. Quite apart from cultural and structural issues, Sri Lanka also exhibits a uniquely active, politically organised student population, with mobilisation capabilities at scale and official integration with established political parties.

This extreme politicisation of student unions is presented as a major obstacle to national progress, take two common issues: (1) The resistance to private higher-education institutions, and (2) The demand and pressure for state employment, post-graduation. Should we dispel these complaints as part of Sri Lanka’s so-called entitlement culture, or should we first try to understand the arguments?

Student activists correctly note that as the state under-invests in the public system, more private institutions are licensed, many unaffordable to low and middle-income families.

An OECD study from 2017 shows that families often take on debt or liquidate assets to afford tuition; an Indian study (Tilak 2020) suggests that expansions of private systems of education without simultaneous expansion of public sector capacity, inevitably leads to inequality and discrimination of access.

Research suggests that demand for public-sector jobs is partly driven by weak labor markets as much as skills-mismatches, which is certainly a major factor. When private sector jobs are scarce or low-paying, or do not provide pensions and job security, public employment becomes the safe and rational choice.

An IMF Report from 2014 notes this dynamic in developing countries; demand for public-sector jobs signal weak or under-developed private sector labor absorption.

A progressive centrist approach would recognize the validity of these grievances while charting reforms and policies: state-backed, contributory pension schemes to make private employment more attractive, or targeted social infrastructure, such as the state-funded childcare proposal modelled by Verité Research (2021), to ease labor force participation.

India’s 2004 National Pension System (NPS) offers a useful contrast. The NPS is a portable, state-backed defined-contribution scheme open to both public and private sector workers, and even the self-employed. It provides flexibility in investment choices and crucially converts part of the savings into annuities at retirement, ensuring lifelong income security.

Sri Lanka’s Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF), while portable across jobs in the formal sector, are limited to lump-sum withdrawals at retirement, with little flexibility, no annuity guarantee, and restricted coverage and excludes most of the informal workforce.

Ideological Caricatures 

Industrial Policy and Export Promotion have succeeded spectacularly in many economies but as policy-making tools, they require radical departures from an orthodoxy that is uncomfortable with the State picking “winners and losers”. This is a fallacy because most often, successful industrial policies are implemented in a context of strong market signals.

In the 1970s, South Korean conglomerates like Samsung and Hyundai identified semiconductors as vital to their survival and global competitiveness. Lacking the scale and technology to enter the industry alone, they worked with the government to secure targeted subsidies, tax breaks, development finance, and R&D support. By the 1990s, South Korea had become a global leader in DRAM chips, with Samsung and SK Hynix now dominating the semiconductor supply chain.

Such industrial policy, often dismissed as “statist” or “interventionist,” was in fact central to the growth trajectories of Germany, Japan, South Korea, Singapore, Vietnam, and China. These ideas have been around since Friedrich List and Alexander Hamilton, who argued that markets and states must work together to nurture strategic domesticated industries.

 The welfare state, likewise miscast as leftist, was forged in the post-WWII consensus when liberals and conservatives alike recognised redistribution as essential for stability and civic trust. From John Stuart Mill’s support for inheritance taxes to Friedrich Hayek’s acceptance of limited welfare. Today even the IMF and World Bank stress social safety nets (SSNs) and cash transfers, as foundations for sustainable growth; even the IMF has evolved, so should Sri Lanka’s policymakers.

By Kusum Wijetilleke ✍️