The Burmese Way to Socialism beyond the Welfare State

Author(s): Mya Maung

Source: Asian Survey, Vol. 10, No. 6 (Jun., 1970), pp. 533-551
Published by: University of California Press
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THE BURMESEWAY
TO SOCIALISMBEYOND
THE WELFARESTATE
/ Mya Maung*

In some countrieswitha colonialheritagethe optionfor socialismhas

effect
been made underthe impactof nationalismand the demonstration
oftheSino-Soviet modelofeconomicgrowth. The choiceis madeon grounds
ofbothequityin incomedistribution of a planned
and therelativeefficiency
socialisteconomyoverthecapitalistone.An ideologicalaversionto capital-
ism,born out of experiencesundercolonialrule and sociopoliticalindig-
nationoverthepotentialthreatof alien economicintrusion, has been the
sin quo non foradoptingsocialismof the evolutionary and revolutionary
type.The statismof socialismnotonlyseemsto fitpoliticalnationalism but
also providesthepsychicincomederivedfromdiscrimination againstaliens
in general.'The generalpreference forstateenterprisesand publicowner-
ship of themeansof production, a commonphenomenonof development
planningin manyunderdeveloped countries,is an aspect of moderniza-
tionthatcannotbe dissectedsolelywithrespectto its economicor non-
economicaspects.This article,however,does not concernitselfwiththe
politicaland ethicaljustificationof "theBurmeseWay to Socialism,"but
ratherwithits economiceffects.
At theoutsetit mustbe notedthatthesourcesof statistical data and in-
formation on thefunctioning oftheBurmeseeconomysince1962 are rather
limitedand unreliable.It is essential,however,to recordand analyzethe
seriesof economicactionstakenby the militarygovernment. With that
in mind,thisstudywill scrutinize theeconomiceffects of theBurmeseex-
periment witha commandeconomy.
The mainhypothesis of thisstudyis thata "simple"transfer of owner-
ship and controlof resourcesfromtheprivateto the public sectorin the

*The authoris indebted to ProfessorsE. E. Hagen, E. Kane, H. Rosovoskyand R.

Meagher fortheircommentsand criticism.All views expressed in this paper, however
are the responsibility
of the authoralone. Thanks are also due to a numberof Burmese
scholarsand friendsforprovidingwhat the Burmese call "mouthhistory"(pasat yaza-
winor thamhine.)
'Cf. HarryG. Johnson,"A Theoreticalmodel of Economic Nationalismin New and
Developing States," in H. G. Johnson (ed.), Economic Nationalism in Old and New
States (Chicago: The Universityof Chicago Press, 1967), pp. 3-4.

533

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MYA MAUNG 534

nameof equityand justicedoes not automatically createefficiencyor ele-

vatetechnology, and thatinefficiency mayemergedue to theinflexibility of
large-scalepublic programs,bureaucraticdelays,institutional disruption
of themarketmechanism, inactionsand conflicts amongthe governmental
agencies,loopholesand evasionassociatedwitha systemof directcontrols
and thedisincentiveeffects ofsocialization.Althoughon thefunctional level
all economicsystemsmay be viewedas plannedor deliberately organized
bythestate,theidealsand methodsofplanningdiffer. Whilethecontroversy
over the relativeefficiency of a plannedeconomyversusan unplanned
economyis staleand confused.2 I wouldarguethatthebasic dilemmacom-
monto all underdeveloped countriesis theissue of the typeand extentof
stateeconomicactionsin themodernization process.This dilemmais crit-
ical fora countrylike Burma,whoseaversionto capitalismhas led to the
adoptionof inappropriate economicpolicieswhichhave totallyabandoned
thefunctioning of marketmechanismand privateenterprise. Perhapsthe
economicsof socialismwrittenby economistssuffersfromthe defectof
"whateconomists taketo be theend of economiclife-the maximization of
outputin termsof preferred productscomparedwith satisfactionsacri-
ficed-and confined to thewaysin whichownership of land and capitalby
thestatecan facilitatethis."3Equally pronouncedis thedefectof theeco-
nomicsof socialismadvancedby thenationalistsocialistleadershipof de-
velopingcountriesin subjugatingthe principlesof efficiency to those of
ideal equity.The Burmeseexperiment withsocialism,particularly the re-
cent experiment witha commandeconomyunder "the BurmeseWay to
Socialism, exemplifies a case ofeconomicdisastergenerated by theneglect
of whateconomists considerto be theend of economiclife.
THE PYIDAWTHA PLAN

The attemptsat development Burmahave beencharacter-

in independent
ized by two fundamentalfeatures:the incrementalsuperstructuring of
governmental enterprisesand controls,reachingits apex underthe eco-
nomicpolicyof "theBurmeseWay to Socialism,"and thedegeneration of
theeconomyfroma relativelyprosperousstateto a depressedone, from
Pyidawthato Pyidawcha.4The dawnof independence broughtsuchvision-
aryobjectivesas a plannedsocialisteconomyof self-sufficiency
and justice,
a Burmanizedeconomy,and a Pyidawthaof peace, prosperity and hap-

2See: W. A. Lewis, The Principles of Economic Planning (London: Allen and Unwin
and Dennis Dobson, 1949), p. 14. Also: Gunnar Myrdal, Beyond the Welfare State
(New York: Yale UniversityPress, 1960), Chap. I.
'Henry Smith,The Economicsof Socialism Reconsidered (London: OxfordUniversity
Press, 1962), p. 95.
'The term Pydawtha, associated with the Pyidawtha Plan (1952-60), means in
Burmese a happy and prosperouscountry,while its variant,Pyidawcha, connotes the
opposite.Even under the U Nu government, Pyidawcha was commonlyused as a politi-
cal satire on the economic achievementsof the Pyidawtha Plan.

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535 THE BURMESE WAY TO SOCIALISM

piness.The choiceof socialismwas made on thegroundsthatit is not only

a desirablesocioeconomicsystemcompatiblewiththetraditionalBurmese
cultureand Weltanschaung, butalso thequickestroadto development. From
theearliestDeclarationoftheNaythuyein Conference in 1945,throughthe
launchingof the PyidawthaPlan in 1952, to the proclamationof "the
BurmeseWay to Socialism" in 1962, the abuses of the colonialheritage
and capitalismhave been unshakablememoriesbehindthesocial and eco-
nomicphilosophy ofdevelopment. In 1947,at theSorrento-Villa Conference
in Rangoonundertheleadershipof thelate GeneralAung San, a general
programforbuildinga socialisteconomylaid down a policyof national
planningvia large-scalestatecontrolsof theeconomyas themosteffective
strategy for the development of the Burmeseeconomy.Thus, withinde-
pendencein 1948,theLand Nationalization Act,a Two-YearDevelopment
Plan, and theConstitution of theUnion of Burmagave thestatetheright
to own and controlresourcesand regulatethenation'seconomiclife.5
The Two-Year DevelopmentPlan was formallylaunchedin 1948 but
was not implemented until1951 due to the chronicpoliticalcrisisfollow-
ing independence. The Plan called forthenationalization of land and the
socializationof industry, but this was only partiallyaccomplished.The
Land Nationalization Act had to be extendedinto the 1950's and the so-
cializationof industrywas not achievedeither.By 1951, the planning
machinery of theBurmesegovernment had been organizedwiththe assis-
tance of foreignexperts(a groupof Oxfordeconomists, UnitedNations'
specialists,and theAmericanfirmof Knappen,Tippets,Abbett,and Mac-
CarthyEngineering Company).The U Nu government's socialisteconomy
may be termeda welfarestatewithheavy emphasison large-scalestate
interferences and controls.By 1952 a host of governmental departments,
boards and corporationswere createdto run the Burmeseeconomy.Al-
thoughmostof the foreignfirmswerenationalized,privatetradeand in-
dustrieswereallowedto operateunderthedirectcontrolofthegovernment.
Toleranceof the privatesectorand recognitionof its importancewere
evidentunderthePyidawthaPlan. For example,withrespectto grosscapital
formation the Plan anticipatedthatthe relativesharesof the public and
privatesectorswouldbe equal at K. 559 millioneach by theend of 1959.0
It declaredthat"to someextent,therate of rise in totalexpenditures will
dependuponthe degreeto whichthe Government createsan environment
favorableto privateinvestment."7 It was furtheranticipatedthattherela-
tiveshareof theprivatesectorin thegrosscapitalformation wouldexceed

5See: The Constitutionof the Union of Burma (Rangoon: GovernmentPrinting&

Stationery,1948), p. 93. Also: The Land NationalizationAct, 1948 (Rangoon: Govern-
mentPrintingand Stationery,1950), pp. 33-39.
'Kanppen, Tippets,Abbett,and MacCarthyEngineeringCo., ComprehensiveReport,
Vol. I (London: Hazel Watson & Viney Ltd., 1953), p. 50. The officialexchange rate
of Burmesekyatsfor dollars is K 4.763 to $1.00.
7ibid., p. 40.

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MYA MAUNG 536

thatofthepublicsectorby morethan15% bytheendoftheplannedperiod

in 1960. The anticipation provedwrong,however:by theend of 1960 the
government's sharewas morethan56% insteadof 34%.8
The mostconspicuousfeatureof development planningin Burmaduring
the 1950s was thecongestionof governmental agenciesand enterprises set
up to launcha massivestatecontrolof theeconomy(the catchwordsfor
development were "the mass movement" -mass education,mass welfare
and masscooperation).In thefieldof agriculture, forexample,therewere
the Departmentof Agriculture, the State AgriculturalMarketingBoard
(SAMB), the StateAgricultural Bank (SAB), theAgricultural and Rural
DevelopmentCorporation(ARDC), the Land DevelopmentCorporation
(LDC), the Co-operative SocietiesDepartment(CSD), the DistrictCom-
missionOffice,and the Civil Supplies Department. All of theseparallel
agenciesdirectlyor indirectly dispensedeconomicand technicalaid to cul-
tivators,whichproducednot onlyfunctional conflictand tensionbut also
inefficiencyand economicwastedue to lack of managerialcoordination.,
There was misallocationof both humanand non-humanresources,since
government officials
in chargeof variouseconomicactivitieswereusually
untrained fortheirspecificfunctions. The role and powerof each of these
agenciescame also to dependuponthenation'schangingpowerstructure.
For example,therole of theCSD relativeto the SAB diminishedwhenU
Ba Swe becameinterimpremierin 1956, whilethatof theARDC grewby
leaps and boundsundertheCaretakerGovernment (1958-60).
The economicphilosophyand development strategythat underlaythe
PyidawthaPlan endorsedthe balancedgrowththeoryand the thesisthat
large-scalestateeconomicactionsare notonlynecessarybutalso conducive
to thedevelopment of privateincentives in savingand investment. But the
actual performance of the Burmeseeconomyin the 1950s betrayedthese
premisedin termsof capitalformation of theprivatesector.Massivestate
controlsand aid createda spiritofdependency amongthecultivators, which
seemsto confirm thecase againstthefamiliarinfantindustry argumentin
economics.The neteffect of large-scalebutineptstateinterference withthe
marketmechanismwas themisallocationof resources,sometimesin such
simplematters as pricepolicyand marketing ofproducts.One oftheclearest
examplesofinefficiency citedby Dr. Hla Myingwas SAMB's uniform price
policyofoffering a fixedpriceforricethroughout theyearto all cultivators,
regardlessof seasonalor regionaldifferences. Government warehousesbe-
camefloodedwithrice,and in thefaceofinadequatestorageand marketing
the resultwas economicwaste.10U Hla Myingfurtherstates:

8TheEconomicSurveyofBurma,1960 (Rangoon: Government Printing& Stationery,

1960), p. 11.
9See: I. L. 0., Report to the Governmentof the Union of Burma on the Development
of Co-operatives(Geneva: 1. L. O., 1955). To.12.
`0U Hila Mying,"Economic Theory and UnderdevelopedCountries,"The Journalof
Political Economy,Vol. LXXIII, No. 4 (1965), p. 486.

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537 THE BURMESE WAY TO SOCIALISM

Many economistsvisitingBurma in the 1950s characteristicallyover-

wastefulmisallocationof resources
looked this"simple" but extremely
in theirpreoccupationwiththe moreelaborate developmentplans, in-
cluding the expansion of investment
in 'infra-structure.11

Althoughthisassertionmay be slightlyoverstatedwithrespectto theprocess

of economic development,it is true that many governmentdevelopment
programs in less developed countries commit simple errors in the pursuit
of the dubious rather than the obvious under the fervor of economic na-
tionalism and socialism.
The high hopes of the Pyidawtha Plan were shatteredby the mid-1950s
when the world price of rice began to drop and foreignexchange reserves
dwindled. A Four-Year Development Plan was launched in 1956 with new
outlooks and strategy.A more sober attitudetoward private enterprisebe-
gan to appear in the officialpolicies of the government.Foreign sources of
capital and technologywere given serious attentionfor the firsttime, and
by 1957 the governmentindicated its willingness to transfercertain non-
key industries back to the private sector. The Four-Year Plan professed
to follow the model of a true welfare state in its objectives of desocializa-
tion, establishing an investmentlaw for stimulatingprivate foreign and
indigenous investmentsand attractingforeign capital.12 In 1959 an In-
vestmentAct was passed to indicate the change in economic policy but be-
cause of the rapid political deteriorationfollowingU. Nu's returnto power
afterthe 1960 election,the liberal policies were never really implemented.
In spite of the magnificentsuperstructuring of governmentalenterprisesand
controls,Burma in the 1950s had a mixed economy that employedplanning
throughthe marketmechanismto a certain extent.In banking, agriculture,
trade, and industry,private propertyand enterpriseswere toleratedbehind
the vanguard of the state. Burma's economic performanceduring the 1950s
was poor relative to the prewar period, of course, yet the limited achieve-
ments of the Pyidawtha Plan are impressive when compared to economic
progress since 1962 under the presentRevolutionaryCouncil Government.
The growthof the Burmese economy in the 1950s was recorded as 6.3%o
for "the average annual rate of real gross domestic product at factor cost"
and 2.7% for per capita output.'3 The real gross domestic product by the
send of 1960 was 11% higher than in 1938-39.14 The growthrate for the
Pyidawtha period (1952-60) was less than these rates-about 4% for the
real gross domesticproduct.With all the failures and defectsof the Pyidaw-
tha Plan, roughly80% of its physical targetswere achieved, i.e., the gross

"Ibid.
"See: Premier U. NIu on the Four-Year Plan (Rangoon: Director of Information,
1957), pp. 24-29.
"3UnitedNations,Statistical Yearbook 1966 (New York: United Nations, 1967), pp.
575-76.
"The EconomicSurveyof Burma 1962 (Rangoon: GovernmentPrinting& Stationery,
1962),p.5.

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MYA MAUNG 538

domesticproductof 1960 in termsof 1950-51priceswas aboutK. 5.6 bil-

lion,insteadof the ex-antetargetof K billion.'5Withrespectto the rela-
tivegrowthof ex-postversusex-anteoutput,however,less than40% of the
targetswere achieved.Evidenceof a relativelysustainedgrowthrate for
theeconomyin the1950scan be discernedin theannualvalue and volume
of exports,particularlyrice. In spiteof thebalance-of-payments deficitin
1953-54and the latterpart of the PyidawthaPlan period,the value of
Burma'sexportsaveragedaroundK. 1 billionthroughout the fifties.
The
annualvolumeof riceexportaveragedabout 1.5 milliontons.Considering
therateofpopulationgrowth, whichaccountedfora greaterdomesticcon-
sumption ofrice,thesesustainedratesofexportindicatea relatively healthy
economy.Rice exportsin the1950s,however,remained50% belowprewar
levels.
Between1960 and 1962,theBurmeseeconomycontinuedto function on
thebasis of theFour-YearDevelopment Plan, withno significant changes
in theorganizationof thegovernment agenciesof development.The growth
of military
economicestablishments, theDefenseServicesInstitute and the
BurmaEconomicDevelopment Corporation,as profit-makingorganizations
duringthemilitaryinterregnum of 1958-60further indicatedthetendency
towardliberalizationof trade and industry.Political splits and power
strugglesamongthecivilianpoliticians,alongwithminority unrest,led to
theseizureof politicalpowerby thearmyin March1962, whichdrastically
transformed theBurmeseeconomyfroma welfarestateto a commandecon-
omy.The major indictment of theeconomicpolicyof the civiliangovern-
mentwas summedup by the Revolutionary Council as follows:

The Unionwas dominatedbythefeudalists forovera thousandyears,

by theforeign overa hundredyears,and was dominated
imperialists
afterit had attainedindependence.'6
bythelandlordsand capitalists

The PyidawthaGovernment thesameabuses

was chargedwithessentially
thatit had chargedagainstthecolonialheritageand capitalism.The new
regimefoundthe U Nu government guiltyof havingbetrayedsocialism
by perpetuating capitalismand infectingthemasseswitha bourgeoisemen-
tality.The officialphilosophy,labeled "the BurmeseWay to Socialism,"
adoptedextremeMarxistideologiesand policiesof socioeconomicchange
as thebeststrategy foreconomicdevelopment. The coexistenceof private
and public enterprises or privateand public ownershipof the means of
productionwas construedas an economicand social evil and as a fraud
perpetuated by theciviliangovernment in thenameof a socialisteconomy.

:"Adjusted to conformto the base year of 1950-51used by the KTA planners.The

gross domesticproductin 1960, in termsof 1947-48prices, was K 5.513 billion. The
1950-51prices are about 6% higherthan the 1947-48prices.
"6The Burma Socialist ProgrammeParty, Central Organization Committee,Party
Seminar 1965: Speeches of General Ne Win and Political Report of the General Secre-
tary (Rangoon: Sapay Beikman Press, 1966), p. 101.

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539 THE BURMESE WAY TO SOCIALISM

THE ECONOMY SINCE 1962

With respectto its ideal form,the Revolutionary Council's"Burmese

Way to Socialism"maybe deemeda formaladoptionof a commandecon-
omyoftheSino-Soviettype;it aspiresto build "a socialisteconomyof the
plannedproportionaldevelopment of all nationalforces"via the vehicle
of stateownershipand controlof all meansofproduction.17Such an econ-
omyis consideredto be theprerequisite of an ideal socialistsocietyaimed
at "theparticipationof all for the generalwell-beingof all, sharingthe
benefitsderivedtherefrom.""'

Socialisteconomy plans,on thebasisofthepopulation

proportionally
andproductive andabundance
forsufficiency
forces, ofconsumer
goods.
Whileimproving thestandard thepurchasing
oflivingand increasing
powerof thenation,it also expandsproduction.19

The socialisteconomywhichthemilitary government has so farmanaged

to establishis farfromthisideal form,exceptthattotalnationalization of
theeconomyhas been achieved.For one thing,thereis no planningma-
chinerywithrespectto productionotherthantheSocialistPlanningCom-
mitteeof theBurmaSocialistProgramme Party(BSPP), whichnominally
cameintobeingonlyafter1965.20 Furthermore, therehas beenno drawing
up or launchingof a development plan since 1962. What existsin reality
is an unplannedeconomyownedand runby thestate-i.e., "an unplanned
socializedeconomy"withcentralized decision-making underthedirectcom-
mandof themilitarywungis(ministers).
Thus, althoughthesocialisteconomyhas remainedunplanned,the first
steptowarda commandeconomyin linewithclassicalMarxistprescriptions
was takenduringthe firstthreeyears (1962-65) of the militaryregime.
Withstateownershipas thetop priority, "such vitalmeansof production
as agricultural production,
and industrial distribution,transportation, com-
munications, externaltrade,etc."21 werenationalized.The year 1963 saw
nationwidepropagationof theBurmeseWay to Socialismthroughvarious
Peasants'Seminarsand thepromulgation of laws empowering the govern-
mentto eliminateprivateenterprises obstructingits socialistgoals. At the
Duya Peasants' Seminaron January31, 1963, GeneralNe Win declared
that:

to setup newestablish-
We do notintendto permitprivateindustry
mentsbeyondthosealreadyin existence.
Previouslywe had thought

"The Philosophyof the Burma Socialist ProgrammeParty: The Systemof Correla-

tionofMan and His Environment(Rangoon: The Ministryof Information,
1963), p. 45.
"'Ibid.
"Party Seminar1965,op. cit.,p. 64.
"Ibid., p. 127.
21Ibid.,p. 65.

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MYA MAUNG 540

of permitting
them.The Government
would not be able to do every-
thing.22

In thesame speech,however,he furtherindictedthe existingprivateenter-

prises as greedy ("insatiable ghosts") and sounded their death knell. Pri-
vate ownershipwas also deemed incompatible with the economic goals of
the Burmese Way to Socialism. In the Party Seminar of 1965, the Revolu-
tionary Council's change of attitudetoward private enterprises,from leni-
ency to the harshness of nationalization,was attributedto "the inability of
the indigenous capitalists to restraintheir greed."23
After the promulgation on March 13, 1963, of the Law to Protect the
Constructionof the Socialist Economy, the firsttarget of nationalization
was the banking system,primarily the twenty-twoforeign banks. These
banks simplyclosed shop and were incorporatedinto a systemof "People's
Banks" under the managementof militaryofficers.This nationalization was
rather simple since there was only a handful of indigenous private banks
in operation. The banking systemof the Union of Burma was largely gov-
ernmentalto begin with in that it had no organized private capital market
or financial institutionsexcept for foreign banks and local moneylenders.
The major source of capital was always governmental,under the directcon-
trols of the Union Bank of Burma, the State Commercial Banks and the
State AgriculturalBanks. The nationalizationinvolved a simple transforma-
tion of the flow of capital from a systemof public capital for public and
limited private enterprisesto a system of public capital for public enter-
prises only. The modus operandi of the formergovernmentalbanks has
changed very little,except that the banks have been put under the direct
command of the militaryofficersin the distributionof direct loans to culti-
vators and the allocation of funds to various governmentalenterprises.In
conjunction with this, the RevolutionaryCouncil proudly proclaimed that
compared to the previous government'sdirect loans to farmersof K 161.8
million in 1960-61, it was able to advance an average annual loan of about
K 450 million in the 1963-65 period.24
The BurmnaEconomic Development Corporation (BEDC) and the De-
fense Services Institute(DSi) were also nationalized in 1964. It should be
noted that both of these enterprisesunder the previous governmentwere
militaryeconomic establishmentsoriginally designed to promote the wel-
fare of servicemen. During the 1958-1962 period, the BEDC, under the
managementof an ousted member of the RevolutionaryCouncil, Brigadier
Aung Gyi, had grown rapidly as a profit-makinggovernmentalenterprise.
The economic operations of both institutionsunder the civilian government
and the militaryCaretakerGovernment(1958-60) were quite extensiveand

22Ibid.,p. 66
23Ibid.,p. 67
24Ibid.,p. 68.

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541 THE BURMESE WAY TO SOCIALISM

successfulenough to impress many observers.25Their success was due pri-

marilyto such special privileges as tax exemptionand the procurementof
valuable importlicenses. The delusive efficiencywith which the Caretaker
Governmentmanaged these economic establishmentsenhanced the Revolu-
tionary Council Government'sconfidence that it could build and manage
a command economy. The nationalization of the DSI and the BEDC, of
course,was in line withthe philosophyof "the Burmese Way to Socialism,"
which professedto destroythe pernicious economic systemof self-seeking
and profit-motivation.
During 1964, in a sweeping move, the governmentnationalized the so-
called big business establishments,wholesale and retail stores,warehouses,
and consumers' co-operatives, institutinga complete state monopoly of
the nation's marketingand distributionsystem.Governmentshops, known
as People's Stores, were opened up under the directcommand and manage-
mentof the People's Stores Corporation of the Ministryof Trade-formerly
the Ministryof Commerce and Development. The same ministrymonopo-
lized all externaltrade by establishingthe Myama Export-ImportCorpora-
tion (MEIC), whereby all trade and industry was operated directly by
militaryofficersand membersof the BSPP. A systemof rationingby quotas
and price control was introduced in the sale and distributionof all goods
and services.The People's Stores,withtheircentralheadquarter at Rangoon,
congestedthe entire economy. The RevolutionaryCouncil Governmentwas
put to thetestof efficiencyin managing such a systemand had to admit later
its lack of knowledge and manpower. The economic waste in the allocation
of resources was due to a number of factors,of which bureaucratic delay
in decision-making,lack of coordination, and mismanagementwere most
conspicuous. These were furthercomplicated by a lack of facilities for the
preservationof highly perishable goods (fish paste and vegetables,for in-
stance) and by the pecuniary motives of storekeepersand consumers alike
in developing black markets throughoutBurma. The People's Stores Cor-
poration (PSC) became the most notorious economic operation of the
state,and was widely criticized.The Chairman of the RevolutionaryCoun-
cil Governmentadmitted that:

The men fromour Defense Servicesknowonlyhow to wage war. For-

merlytheyate whatthe wifecooked forthem.They did not knowthe
prices of the various commodities.The politicianstoo know hardly
more. Thus, we had to undertakea task we know so little about.26

"Cf. L. J. Walinsky,Economic Developmentin Burma (1951-60) (New York: The

TwentiethCenturyFund, 1962), Chap. 15. Also, Moshe Lissak, "Social Change,Mobili-
zation and Exchange of Services betweenthe MilitaryEstablishmentand the Civil So-
ciety: The BurmeseCase," Economic Developmentand Cultural Change,Vol. XIIL No.
1, Part 1 (1964), pp. 12-16.
"6PartySeminar1965,op. cit.,p. 191.

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MYA MAUNG 642

He furtherattributedthefailureofthePSC to a lack of skilledmanagers

whosupported theformationof a socialisteconomy.In a rhetorical
answer
to thelogical questionof whythe militaryelite introducedand resumed
management of sucha deficient
systemwithso littleknowledge, theanswer
was "we had to do so because we wished to establish a socialist economy."27
Indeed,theessenceof theproblemof development confronting Burma,un-
der the civilian and militarygovernments alike, has been preciselythe
matterof wishesout-running actual capacities.The problemis magnified
in thecase of themilitarygovernment, whoseintroduction of a completely
newand unfamiliar commandeconomysystemhas augmented requirements
and creatednewpro-blems inherentin a systemofdirectcontrols.
The Revolutionary Councillauncheda directattackon the purchasing
powerin thehandsof capitalistsvia the1964 demonetization measure,but
withoutmuchsuccess.In thename of theLaw to ProtecttheConstruction
of theSocialistEconomyfromOpposition,thegovernment announcedthe
demonetization of currencynotesK 100 and K 50 on thenightofMay 17,
1964. The noteswereproclaimed"illegal tender"and orderedto be sur-
renderedto thegovernment withina week.Exchangeof surrendered notes
intosmallerdenominations was made by applyingtheprogressive income
tax rates,whichled to a phenomenalsurrenderof notesvaluingunderthe
tax-exempt incomebracketof K 1,500.The primaryreasongivenfortak-
ing thisactionwas "the factthatthemoneystockwhichcould be used as
an instrument to attackthe construction of the socialisteconomy"28had
to be takenaway fromthe oppositionforces.The value of the notessur-
renderedto thegovernment was givenas K. 930.8 million,out of thetotal
value of notesin circulationofK. 1.2022billion,leavingaboutK. 270 mil-
lionin thehandsofthepeople.Mostofthenotessurrendered weresupposed
to have come fromforeigncapitalistswho were held responsiblefor in-
flation,speculationand capitalistexploitation.The ineffectiveness of the
demonetization measure,as recognizedexplicitly by the government, came
fromthe evasion of directpersonalsurrenderby the relativelywealthy
people,who workedthroughagentsto take advantageof the government's
promiseto redeemthe notesof thosewho had saved themoneyhonestly.
The government's restraint
in takingactionagainstthesepeople was said
to be based on humanitarianism, but the real reason,of course,was the
impossibility ofdetermining thesourceand typeofearningsin an economy
in whichaccountingrecordsand statistical information werepoor.
The year1965 witnessedthefinalstageof totalnationalization. The last
remnants of imperialistcapitalismwereremovedas thestatetookoverthe
twomajorjointventuresof theBurmaOil Companyand theBurmaTrade
Corporation, along withA. ScottCo., UnileverCo., and all otherprivate
concerns.The SocialistEconomyConstruction Committee (SECC) had been

2"lbid.,also, pp. 192-94.

28Ibid.,p. 94.

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543 THE BURMESE WAY TO SOCIALISM

formedon April19, 1964,soon afterthenationalization of businessesand

stores,to managethenationalizedbig businesses(e.g., the People's Pearl
and FisheryBoard,BEDC, DSI, CigaretteEnterprises and thePyilon-awba
Rice Mill). The SECC was also giventhepowerto decideamountsof com-
pensation30 and mattersof nationalizationthrougha sub-committee, the
Nationalization Committee. The townshipSECCs were formedunderthe
auspicesof theBSPP and thelocal administrative bodies,theSecurityAd-
ministration Committees(SACS), to manage the nationalizedshops and
procureand distribute goodsin areas wherethePSCs did notthenfunction.
Unfortunately, and mismanagement
the inefficiency thathad proveddis-
astrousforthePSC also plaguedtheSECCs, and theyhad to be dissolved
afterthereorganization ofthePSC in 1965.The PSC was reorganized under
thenewnameoftheTrade Council,withattendant local councils,butexcept
forthechangein namethesystemremainedessentially the same.
This congestion of committees,councilsand corporations in themanage-
mentof theeconomyis not reallya new phenomenon in the development
planningof independent Burma.The same problemof functionalconflict
and lack of coordinationamong governmental agencies and enterprises
besettheformerciviliangovernment's economicoperations.But themili-
tarygovernment of Burmahas confronted greaterproblemsof inefficiency
due to fear,delay and disincentive effectin dispensingwiththe market
mechanism. WhilethecentralSECC was nominally preserved withitsmajor
organsof the ProductionCommittee, the Transportation Committee, the
InternalTrade Committee and theForeignTrade Committee, theMinistry
of Trade really managed the entiretradingand distributive systemof
Burma.FromtheTrade Councilsto theMyamaExport-Import Corporation,
theexecutiveadministrators weremainlyarmyofficers and ex-servicemen.
Ex-businessmen, employeesof theformergovernmental agencies,and sym-
pathizersoftheBSPP wererecruited to runthenationalizedbusinessesand
PSCs, withthenetresultthata nationwideblackmarketsystem-Corpora-
tion"24"-emerged.31
The hoardingof moneyby relatively wealthypeopleand theshortageof
goods undera mismanagedrationingsystemnaturallyled to privatedeal-
ings withgovernment storekeepersand consumersalike. The systemof
musicalchairsand personalprivilegesin thesale of goods on thebasis of
quotaslipscreatedmanyloopholesthrough whichgoodsof all kindsflowed
intoblackmarkets.The artificialscarcityvalue createdforthequota slips
undera systemofrationingwithno checkingor policingof purchasesfrom
thegovernment storesgave riseto a concealedpriceinflation thatwas un-

29Ibid.
"0Upto the present,no compensationhas generallybeen paid to ownersof businesses.
"Corporation"24" is a popularizedname forthe black markets,since thereare 23 gov-
ernmentalcorporations,numberedaccordingly,to manage the trade and industryof
Burma. See: Robert Keatley, "Burma's Sticky Way to Socialism," The Wall Street
Journal,September16, 1968,p. 16.

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MYA MAUNG 54

precedentedin independentBurma. Prices in the black marketssoared

fourto fivetimeshigherthantheofficial pricessetat thegovernmentstores.
The distortionofpricepatterns and misallocation
ofresourcesreachedsuch
troublesome dimensionsthatthegovernment 34 items,
had to denationalize
mostlyperishableconsumersgoods suchas fishand theirrelatedproducts,
onions,chillies,etc.,on September27, 1966.82The majorconsumergoods,
rice and cooking oil, . . . 356 other items,remained nationalized. Up to the
present,reportson priceincreasesofnationalizedand denationalized goods,
black marketeering, and arrestsof privatedealersare regularfeaturesin
theBurmesenewspapers.Nevertheless, theRevolutionary CouncilGovern-
menthas remainedsteadfastin its relentlesspursuitof the ideal socialist
economy.On October18, 1965,it promulgated theredundant Law Investing
Powers to Constructthe Socialist Economy,wherebythe state was en-
poweredto determine and fixsale prices,costsof productionand a hostof
othercosts. The 1964 Law to Protectthe Construction of the Socialist
EconomyfromOppositionand the 1963 People's StoresCorporationLaw
wererepealed.
As in the case of the civiliangovernment, the Revolutionary Council's
firsttargetforestablishing politicallegitimacyand supporthas been the
ruralpopulation.In theabsenceoflandedbourgeoisieand industrialwork-
ers,thepeasantshave beenthefocusof attention of thesuccessivesocialist
governments in the dissemination of politicalideologiesvia massiveaid
and welfareprograms.Undertheciviliangovernment, storeagenciessuch
as theStateAgricultural Marketing Board,theAgricultural and Rural De-
velopmentCorporation,the Departmentof Agriculture, the Co-operative
SocietiesDepartmentand the State Agricultural Banks all gave various
kinds of aid to cultivators. The militarygovernment pursuedthe same
policyof massiveaid throughtheseagencies,someof whichhave been re-
namedCorporationNo. 1, No. 2, etc. The Co-operativeSocietiesDepart-
ment,however, was totallytakenoverbythegovernment, and former volun-
taryco-operative societieswerereorganizedunderthe new name of Agri-
culturalMultipurposeCo-operatives(AMPCs). Direct agriculturalloans
werealso advancedat a rapidrate.In 1962,cultivation loans amountedto
K 358 million;in 1963 theyroseto K 700 million,or one-third of thetotal
value of agriculturalproduce,38and for the restof the 1960s theyhave
averagedaroundK 500 million,a phenomenalincreaseof nearly100% in
comparison to theannualloansadvancedby theciviliangovernments in the
1950s. The annual repayment of theseloans eitherin kind or cash has
been less than80%o a year,so thatthecumulativearrearsof loans annu-
allynowaverageoutto aboutthesame amountas thatof thenewloans.34

82KyayMhoan, The MirrorNewspaper (Rangoon: Kyay Mhoan Press), Sept. 28, 1966,
p.1.
"3Newsletter on Party's Aflairs,No. 1, 1966 (In Burmese) (Rangoon: The Central
Party OrganizationCommittee,BSPP, January1966), p. 9.
34Ibid., p. 10.

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545 THE BURMESE WAY TO SOCIALISM

The viciouscircleof indebtedness thathas historicallyplagued Burmese

cultivatorshas not disappearedunder the BurmeseWay to Socialism.
In fact,it is likelyto get worseundera commandeconomyin whichthe
disincentive effectof dispensingwith the marketmechanismand profit
motivation has been repressiveof agriculturalproductivity. Massive gov-
ernmental aid has failedto generatean economicutopia of collectivepar-
and endeavor.
ticaipation
In 1963 the government promulgatedthe Law to Protectthe Rights
of Peasantsand the TenancyAct. The peasantswere spared fromland
nationalization and government seizureof the means of production,and
werealso allowedto own and operatethe land and sell theirproductsor
meansof production.35While this was actuallynot a new measure,the
land havingbeen formally nationalizedwiththe same provisionsin 1948,
it was lenientrelativeto the expropriation measuresundertakenin the
fieldsof trade'andindustry.However,theprivateagricultural marketwas
supersededby the massive formationof government purchase boards
and depotsthroughAgriculturalMultipurposeCo-operatives(AMPCs),
villageshops,Land Conunittees and Peasant Councilsall overBurma. A
few state farms,livestockstationsand cooperativevillages were also
formedas experimental models. In 1965,therewere9 cooperativevillages
constructed forthelandlesspeasantsas an experiment in collectivefarming
and communalliving. Except for the massive economicand technical
helpprovidedfor thesepeasants,the experiment has not been successful
in attractingcultivators.The government has not yet introducedany
significantmovementof collectivefarmingon the societal level. In
1965-66,it was reportedthatthe government owned and operatedover
4,500 tractorsthrough100 or so tractorstationsto help mechanizefarm-
ing,but these stationshave been operatingat a substantialloss due to
under-utilization and depreciationcosts.36The deficitjumpedfromK 2.2
millionin 1962-63to K 17.677 millionin 1964-65,37and currently over
5,000 tractorsare availableforsale to farmerswithno buyersin sight.
The mostconspicuousfeatureof socialistconstruction in rural Burma
since independencehas been the quantitativedrivefor cooperatives.In
an actionreminiscent oftheciviliangovernment, themilitaryregimesoon
afterthe coup hurriedlyorganizedpoliticalcadres to starta nationwide
cooperativemovement.In threeyears (1962-65), over 11,000 AMPCs
and over10,000villageshopswereformed.38But it mustbe pointedout
thattheseare not reallynew or revolutionary institutionssince theyare

3"PartySeminar,1965,op. cit.,pp. 74-75.

86Newsletteron Party's Affairs,No. 11, 1966 (In Burmese) (Rangoon: The Central
PartyOrganizationCommittee,BSPP, November1966), p. 22.
87Reportof the RevolutionaryCouncil to the People on the Budget Estimates of the
RevolutionaryCouncil Governmentof the Union of Burma for 1965-66 (Rangoon: Cen-
tralPress,1965), p. 8.
"Party Seminar,1965,op. cit.,p. 80.

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MYA MAUNG 546

the formerMultipurposeProducers'Cooperativesrenamedand reorgan-

ized directlyby the government throughthe BSPP. The 21,000 AMPCs
and village shops formedby the Revolutionary Council representmore
thana 300% increaseoverthe6,731 agricultural cooperativesof 1960-61,
and if only the workingcooperativesof 1960-61 are considered,they
representa growthof morethan500%.39 Like thecooperativemovement
of the civilian government, the formationof the AMPCs was made in
orderto help farmersovercomethe vicious circle of indebtednessand
eliminatecapitalisticexploitationby merchantsand moneylenders.And
as in the case'of 'theciviliangovernment,the emphasison quantityand
creditfunctionratherthan on qualityand productivity has led so far to
a disastrousfailurein solvingthe problemsof indebtedness and the low
incometrapin the rural economy.Privatemoneylenders and merchants
may be less able to advanceloans openlybut the substitution of govern-
mentforprivatecreditshas achievedverylittlein eitherinstillinga co-
operativespiritor stimulating cooperativeeffort.
Despitethestrongpenalitiesimposedon themisuseof cultivation loans
and thefailureto deliveragriculturalproduceto the government's depots
underthe "advancepurchaseof paddy"system, privatedealingsand sales
have continuedin rural and urban areas alike. Farmershave shown a
generallynegativeresponseto the advance purchaseof paddy system,
whichwas introducedin the name of social justice and anti-capitalism
butwhichis actuallyan advancedpurchaseat a fixedpriceset arbitrarily
by thegovernment. Accordingto theRevolutionary Council:
The advancepaddypurchasesystem oftheRevolutionary Councilhad
noresemblance whatsoever
tothepituangsystem ofcapitalists....The
capitalists
boughtthe standingcropsat halfof whattheywouldbe
worthat thetimeofharvest.The systemofpurchaseemployed bythe
Revolutionary Councilwas procurement at the price whichwould
prevailat thetimeofharvesting.40

Buttherewas no explanationof howthefuturepricewas determined, for,

understatemonopsonyand price control,withoutthe freeinterplayof
marketforces,the fair and equitable price becomes meaninglessand
arbitrary.Indeed,the advancepurchasesystemprovedabortiveas culti-
vatorshoardedpaddy and otheragriculturalproduce. Throughoutthe
independentperiod the State AgriculturalMarketingBoard has been
confrontedwitha shortageof supplydue to theunwillingness of theculti-
vatorsto sell theirproduceat the low purchaseprice set by the govern-
ment. Under the BurmeseWay to Socialism, the problemhas been

39Fordetails,see, Mya Maung, "AgriculturalCo-operationin Burma: A Study on the

Value-Orientationand Effectsof Socio-EconomicAction,"Social and Economic Studies,
(Jamaica: Universityof the West Indies) Vol. 14, No. 4 (1965), pp. 330-31. Also,
PartySeminar,1965,op. cit.,p. 80.
"Party Seminar,1965,op. cit.,p. 80.

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547 THE BURMESE WAY TO SOCIALISM

magnifiedbecause of total nationalization, which has not only had a

disincentive effecton theproductionand sale of productsto themonopso-
nisticgovernment but has also createda tremendous disparitybetween
theofficialand theblackmarketprice. The blackmarketboomforpaddy
and otherbasic necessitieshas stimulatedacquisitivenessratherthan a
socialistspiritamongthe cultivators.It has been observed,forinstance,
thata pricedifferential forpaddyof about 500% betweenthegovernment
and theblackmarketsshattered thecultivators traditionalhabitof saving
part of theirproduceto feed theirown families (wun-sah),since they
could sell rice at a high price on the black marketand thenbuy it at
a lowerpricefromthestatestores.41The netresult,of course,was a run
on thealreadyshortsupplyat government shops,and an artificialscarcity
createdby inappropriate economicpolicies.
Burma'seconomicperformance since 1962 reflectstheseproblemsand
inefficienciesof management.For thefirsttimein its history,thisnation
witha relatively affluent
factor-endowment has beenplungedintothevicious
circleoflow income-low output-low incomewitha demand-pulled inflation.
Fromfoodshortage,rice lootingand massivesmugglingto the economic
wasteofperishablegoodsruinedin thegovernment warehousesbecauseof
mismanagement, thesehave been economicallythe mostdisastrousyears
forBurma. Outputsince 1962-63has shownmore years of declinethan
increase,so thatforthefirsttimesinceindependence therehas been a nega-
tiverateof growth.Fromall availabledata,the grossnationaland gross
domesticproductdeclinedalmostcontinuously duringthe 1963-68period,
withthe exceptionof 1964-65. During 1963-64,the real gross domestic
productfellfromK 8.111 to K 7.962 billion,42and during1965-66from
K 8.68 to K 8.05 billion.43Thoughreliablestatisticsfor 1967 and 1968
are notavailable,the government reported'a declineof outputwhichmay
be estimatedas fromabout K 8.20 to K 8.0 billion.44This may be con-
firmedby the factthat1967-68did indeedwitnessa bad harvestand a
drasticdeclinein productionbecause of bad weather,stormdamage on
theArakanesecoast,increasedblack marketeering, and the Sino-Burmese
dispute.The estimates on riceexportfurther indicatedthatin 1968 Burma
wouldbe unable to exportmorethan 300,000 tonsof rice (comparedto
about500,000tonsthepreviousyear).4- The growthin per capita output,
indeed,has been even worse,since a recentU.N. estimateindicatesthat

"1UPI Release: U Ba Than, "Rice Crisis Strikes Burma" (Rangoon: UPI, October
1967).
42Revolutionary Council Governmentof the Union of Burma, Central Statistical and
EconomicDepartment,QuarterlyBulletin of Statistics,Four Quarters1966 (Rangoon:
CentralPress,1968), p. 132.
4"FromI.M.F., InternationalFinancial Statistics, October 1968 and Newsletteron
Party'sAffairs,no. 11, 1966, op. cit.
44Reportof the RevolutionaryCouncil to the People on the Budget Estimates of the
RevolutionaryGovernmentof the Union of Burma for 1966-67.Also, see The Working
People's Daily (Rangoon) Vol. IV, No. 252 (September20, 1967), p. 1.
'5Keatley,loc. cit.

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MYA MAUNG 548

Burma'spopulationgrowthis over2% comparedwith1.5%oin the 1950s.

Withpopulationpressureplus dwindlingproductionand export,Burma
is sufferingan economicdisasterwhichmay be attributed largelyto the
pursuitof inappropriate policies.
The externalsectorof theBurmeseeconomyhas deteriorated the most
underthe militarygovernment due to a combinationof factorsof which
theannualshortageofsupplyofprimaryproductsto thegovernment ware-
housesseemsmostconspicuous.The statemonopolyof theexternalsector
is nottotallynew,sincetheciviliangovernment had moreor less done the
same thingregardingthe exportof such major primaryproductsas rice,
teak;and cotton.What is new,however,is the total displacementof all
privateenterprise by governmental tradecorporations in bothinternaland
externaltrade,withthe Myama Export-Import Corporationof the Trade
Ministryservingas the onlyagencyforexternaltrade. Furthermore, this
systemof statecapitalismhas inducedchangesin the directionand types
of externaltradebut no significant changesin its composition.Though
theexactstatisticson thetypesand distribution of Burma'sexternaltrade
amongvariouscountriesare not available,it may be inferredthatthere
has been a relativeshiftof tradepatternsdue to a greaterinflowof non-
Westerngoods and services,e. g., Czechoslovakiantractorsand Chinese
capitalgoods. The severerestriction on importsfromtheWest,alongwith
thenationalization of all foreignfirms,banksand privateenterprises, has
led to an expansionof tradewith"socialistcamp" economieson the one
hand and to the development of bilateraltrade agreements on the other.
Burma'sunfortunate experienceswithbilateraltradeagreements afterthe
end oftheKoreanWar boomin riceexport,46 however,do notseemto have
taughtthepresentmilitarygovernment anything.
For theexternalfinancing ofgovernment expenditures,themajorsources
of capital have been Japanesereparations(includingtechnicaland eco-
nomiccooperation)and foreignloans and aid (includingcreditpurchases,
and aid fromthe U.S. and international organizations).More than two-
thirdsof themajorforeignloans came fromCommunist China,Czechoslo-
vakia,East Germanyand Russia,theChinesesharebeingthelargestsince
1962. Accordingto thegovernment's 1967-68BudgetEstimates,47 foreign
loans and aid, includingcreditpurchases,wereK 51.4 millionand K 128.7
millionfor 1966-67and 1967-68. Of these,the Chineseshare accounted
forroughly20% and 10% respectively. The declinewas due to the rapid
deterioration in economicrelationsbetweenBurma and China following
the Sino-Burmese riot in Rangoonduringthe summerof 1967. China's
loans declinedfromK 15 millionto K 13 millionbetween1967 and 1968,
whileU.S. loans increasedfromK 4.2 millionto K 10 millionduringthe
sameperiod. In 1967.68,Burmaalso obtaineda loan of overK 13 million
"6Fordetails see, R. L. Allen, "The Burmese Clearing Account Agreements,"Pacific
Affairs,
Vol. XXXI, No. 2 (1958).
7 WorkingPeople's Daily, loc. cit.

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549 THE BURMESE WAY TO SOCIALISM

duringthesame period. In 1967-68,Burmaalso obtaineda loan of over

K 13 millionfromWestGermany.48 The Sino-Burmese riftin recentyears
posesan interesting dilemmato thebuildersofBurma'scommandeconomy,
particularly
in lightof the continuingdeclineof exportsand foreignex-
changereservesand thelimitedinflowof technicaland economicaid from
theWestsince 1962.
Since 1964 theBurmeseeconomyhas been suffering froma balance-of-
payments theworstpartbeinga chronictradedeficitarisingsolely
deficit,
fromdrasticdeclinesin thevalueand volumeofexports,mainlyrice. Since
1962,theaverageannualvalue of exportshas been aroundK 600 million,
or less than60% of the 1962 value and less than50% of the levelin the
1950s. Similarly,thevolumeof exportshas declineddrastically, rice ex-
portsbeingthelowestsinceindependence.Rice exportshavebeen declining
since1964, reachingits worstyearsin 1967 and 1968. The combination
of bad harvestand black marketeering has depressedthe volumeof rice
exportsto 500,000metrictonsin 1967 and about 300,000tons in 196849
or less than one-third of the average annual volumein the 1950s. The
deficitin the balance-of-payments averagedaroundK 80 millionfor the
1964-68period,and foreignexchangereserveshave thereforedwindled
seriously.Therehad been a sharpincreasein foreignexchangereserves
between1962 and 1964; thiswas proudlyproclaimed'bytheRevolutionary
CouncilGovernment to be theresultof its efficient
management of theex-
ternalsector,butwas actuallydue to thepervasivecarryover effectoffavor-
able balance-of-payments underthe previousgovernment, the seizure of
all foreignexchangesand foreignbanks,and directcontrolsof all inter-
nationalflowof goods and capital. In recentyears,however,the large-
scale protectionof theeconomyhas resultedin reducingforeignexchange
reservesto belowthe averagelevel of thelate 1950s, and to a level of K
71.2 millionin 1967.50 These unfavorabledevelopments in the external
sectorhave led the government to pursuetighterforeigntrade policies.
In fact,in 1967-68higherdutieswereimposedon morethan30 itemsof
importwithithecuriousexceptionof golfequipment.
"The BurmeseWayto SocialismbeyondtheWelfareState"has produced
a numberof interesting results,the mostpronouncedof whichis the gap
betweenthe policy'spursuitof socialismand the individual'spursuitof
concretepersonalends.6' Althoughthisgap has confoundedthe develop-
mentendeavorsinceindependence, it has widenedundertherevolutionary
socialisteconomyas themilitarypoliticaleliteprovedmore willingthan

"Ibid., p. 8.
'91.M.F.,InternationalFinancial Statistics,op. cit.,pp. 64-65.Also, Keatley,loc. cit.
501.M.F.,InternationalFinancial Statistics,loc. cit.
"1MaxWebertermed
thesetwoprocesses
wertrational
andzweckrational.
See his,The
Theoryof Social and Economic Organization(Talcott Parsons,ed.) (Glencoe: The Free
Press,1947),p. 115.

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MYA MAUNG 550

the civiliangovernment to sacrificeeconomicperformance to doctrine.52

Paradoxically,such an ideationalcommitment to Marxian socialismhas
nottransformed itselfintoreal patternsof socioeconomicorganization and
development planning.A lack of pragmaticschemes,development plans
and planningmachinerycharacterizesthe commandeconomyin Burma
today,makingituniquelydifferent fromthesocialisteconomyofthecivilian
government and mosteconomiesof the Sino-SovietWorld. In thissense
the socialismof Burma today is truly"the BurmeseWay to Socialism"
producing"an unplannedsocializedeconomyof disproportional develop-
ment."
Mostparadoxicalof all is thepresentgovernment's endorsement of the
Marxianthesisof development fora countrylike Burmawheretherehas
beenneithera largenumberofoppressedproletariat nora sizablebourgeois
or landedclass. The sweepingnationalization of theeconomyhas had the
unfortunate effect ofpreserving whattheMarxistsconsiderto theretarding
institutions of 'socialand economicdevelopment-aspiritof dependency,
a consciousnessof privilege,and a misuseof capital for acquisitivepur-
poses. Managerialinefficiency underla systemof congestedad hoc com-
mitteesand short-run schemeshas been magnifiedby economicwaste in
theprivatesector.The stresson equityalso remainsan unconvincing ideal
in viewofthepovertycreatedforthemass of peopleon theone hand 'and
the maldistribution of social and economicprivilegesbetweenthe ruling
military eliteand othersocialgroupson theother.The unsuccessful, indeed
mythical, exchangeof efficiency forequityhas createdan economiccrisis.
It is worthwhile to 'bear in mind the observationof many objective
economiststhatthe processof development in less developedcountriesis
different fromthatwhichtook place earlierin the advancedeconomies.
It is also doubtlessvaluableto heed thesuggestionthatthereshouldbe a
new and objective"beam in our eyes"53in the analysisof the povertyof
nationsor the inapplicability to underdeveloped economiesof therapies
based uponthemodelof an advancedeconomy.54I wouldargue,however,
thatbecause of a beam in theireyes as well,thatis, theirobsessionwith
theevilsof capitalismand theirpursuit'ofa mythicalclasslesssociety,the
socialistleadershipof manyex-colonialcountrieshave been equallyblind
to the experiencesof the developedones.
Burma'srecentexperiencedemonstrates thatin substancethe so-called
old issuesin economics-stillpersistand thatthe grandold alternatives of
"isms" stillprevailin different forms.55It may be thatthe old issue of

52See J. K. Galbraith,Economic Development(Cambridge: Harvard UniversityPress,

1964), pp. 68-69.
"3GunnarMyrdal,Asian Drama: An Inquiiryinto the Povertyof Nations (New York:
The TwentiethCenturyFund, 1968), Chap. I.
54Cf.A. 0. Hirschman,The Strategyof Economic Development (New Haven: Yale
UniversityPress,1958), pp. 11.14.
"5Cf.R. A. Dahl and C. E. Lindblom,Politics, Economics and Welfare (New York:
Harper& Row,1963), pp. 1-3.

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551 THE BURMESE WAY TO SOCIALISM

the stateversusprivateownershiphas been modifiedthroughtime and

space. The counterarguments to the infantindustry argumentfor protec-
tion,the economicevils of tradebarriersand directcontrols,the relative
inefficiencyof a highlycomplexsystemof state capitalism,the relative
efficiency
ofthemarket mechanism in a mixedeconomy, and theopportunity
costsof thepsychicas comparedto the materialincomein the assertion
of economicnationalism, all seemto applydirectlyto theBurmeseexperi-
mentwithsocialism. One mightarguethattheBurmeseWay to Socialism
has failedeconomically notbecause the systemis bad but because it has
notbeenfullyor effectively implemented. Althoughthereis sometruthto
this argument,I would maintainthat some systemsare relativelymore
difficult
to implement thanothersand thatsuccessin development attempts
based on the economicexperienceof the advancedcountriesdependson
thepropensity ofthesocial systemto adaptand renovatethrough pragmatic
schemesof optimumallocationof resources.
The social costs of a simpletransferof resourcesfromthe privateto
thepublicsectorcan be summedup as themisallocationof resources,-the
distortion of priceand incomepatterns, thedeclinein operatingefficiency
due to mismanagement and disincentiveeffect,the exodus of Western-
trainedand Western-oriented socialgroups,artificialscarcity,thelimitation
of externalsourcesof capital,'andeconomicdepressionwithina relatively
shortperiod of time. Of course economicdepressioncomesquickerand
lastslongerthanprosperity.The social benefitsare the psychicincome
derivedfromthe assertionof politicaland economicnationalism, the dis-
crimination againstaliensand certainWestern-oriented social groups,and,
fortherulingmilitaryeliteand sympathizers of thegovernment, increased
privileges.The social costs have heavilyoutweighedthe social benefits.
Inflation,generalinefficiency, and loss of incentive,reflectedin thenation-
wide black market,have drasticallyreducedthe standardof living. The
arbitrary settingof pricesand wagesthroughout theentireeconomy,plus
the continualincreaseof taxes and controls,has been matched'by the
recurrence of incremental -loopholes that deterthe institutionalizationof
a commandeconomy.In brief,the ideal economyof the BurmeseWay
to Socialismso faris out of reachand is likelyto remainso in the fore-
seeable future.

MYA MAUNGis AssociateProfessor

in theDepartment
of Financeat BostonCollege.

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