This article was originally published by Hein Htet Kyaw at The Mises Institute.
Despite its breathtaking golden pagodas, vibrant culture, and welcoming people, Myanmar stands as a tragic example of how military dictatorship and oppressive governance can stifle a nation. This strategically important and resource-rich nation, located between India and China with a diverse ethnic makeup, once thrived due to its position on major trade routes. However, the socialist economy and the military dictatorship that suppresses individual liberty and economic freedom offer a sobering lesson for those who believe in liberty and limited government.
Independence Era
Following the three Anglo-Burmese Wars, which spanned six decades, the Burmese territories were incorporated into British India. Subsequently, Burma received separate administrative status in 1937 and ultimately achieved independence in 1948. Following its independence, Myanmar was initially governed by the Anti-Fascist People’s Freedom League (AFPFL), a broad coalition primarily composed of the Communist Party of Burma, the Socialist Party of Burma, and the Burma National Army (later the Myanmar military). Despite internal tensions, the AFPFL government adopted social democracy, initiating national industrialization. The economic advancement of Myanmar and its potential as an emerging economy were significantly impeded by the Communist Party of Burma’s insurgency, which was rooted in Marxist-Leninist ideology and aimed at the forceful overthrow of the elected AFPFL government. This initial insurgency of the CPB marked the beginning of a protracted civil war that continues in Myanmar and also fostered a political climate susceptible to coups d’état.
Burma Socialist Programme Party (BSPP)
Beset by a nationwide civil war—involving both Burman insurgent groups driven by ideological politics and various ethnic minorities—Myanmar descended into chaos. Consequently, Ne Win, of the military, established the Union Revolutionary Council (which later transformed into the Burma Socialist Programme Party) and, in the 1962 Burmese coup d’état, overthrew the democratically elected Union Parliament of U Nu’s government. This action established Burma as a one-party socialist state operating under the “Burmese Way to Socialism” ideology.
This event marked Myanmar’s shift from social democracy to a one-party totalitarian socialist system. The “Burmese Way to Socialism,” as articulated by Ne Win, integrated elements of nationalism, Buddhist cultural identity, and Marxism. This ideology rejected the “bourgeois” principles and practices of social democratic parties, which advocated for achieving socialism through parliamentary means. Besides, it emphasized learning from the doctrines of Marx, Engels, and Lenin, while cautioning against treating their words as absolute dogma.
The “Burmese Way to Socialism” implemented the nationalization of education and healthcare, which had detrimental consequences for Myanmar’s economy and the living standards of its populace. The international aid organizations were expelled from the country. Foreign-controlled oil companies were compelled to cease operations, with the state-owned Burma Oil Company establishing a monopoly in their place. The government also imposed stringent visa restrictions on Burmese citizens, particularly for travel to Western nations, while sponsoring trips for students, scientists, and technicians to the Soviet Union and Eastern European socialist states for training, aiming to counteract “years of Western influence.” Furthermore, the regime severely curtailed freedom of expression and the press, declaring the Burma Socialist Programme Party as the sole legal political entity and prohibiting foreign language publications. The BSPP government’s extensive nationalization program—initiated on June 1, 1963—encompassed all major industries, including import-export trade, rice, banking, mining, teak, and rubber, leading to the nationalization of approximately 15,000 private firms, predominantly owned by foreigners or individuals of foreign descent (such as Indians and Chinese). Even small and medium-sized enterprises, including department stores, warehouses, and wholesale shops, were nationalized. Prominent newspapers were nationalized, and the publication of privately-owned newspapers was banned. The nationalization of banks contributed to a sharp decline in Burma’s foreign exchange reserves, from $214 million in 1964 to $50 million in 1971, accompanied by soaring inflation.
State Law and Order Restoration Council (SLORC) to State Peace Development Council (SPDC)
In 1988, widespread strikes and protests erupted, advocating for a market economy and democratic governance in opposition to the ruling Burma Socialist Programme Party (BSPP) and its “Burmese Way to Socialism” ideology. However, due to the military’s entrenched position within the state, a new military junta—the State Law and Order Restoration Council (SLORC), led by military Generals including Than Shwe—seized power and dismantled the BSPP regime.
Ne Win—the architect of the “Burmese Way to Socialism”—was subsequently placed under house arrest. The SLORC later reconstituted itself as the State Peace and Development Council (SPDC). While both the SLORC and SPDC abandoned socialism, they maintained the existing authoritarian structures of the state, effectively perpetuating a military dictatorship. Despite maintaining authoritarian control, the State Peace and Development Council (SPDC) formulated an economic reform agenda that embraced neoliberal principles, effectively signaling a transition towards what could be termed “Burmese Way to Capitalism.” Evident in state-sponsored media of the 1990s up to 2010, slogans promoting the reform of the economy towards market neoliberalism were common. Under the SPDC government, the possession of foreign currencies, particularly the USD, is prohibited. The government has introduced “foreign exchange certificates” as a mandatory substitute for foreign currencies, notably the USD.
USDP’s Quasi-Military Crony Government
The State Peace and Development Council (SPDC) was formally dissolved on March 30, 2011, coinciding with the inauguration of a new government formed by the Union Solidarity and Development Party. This transition followed a widely-criticized election, boycotted by democratic opposition parties, as the USDP was perceived as a proxy for the former military junta and was led by Thein Sein—a retired general who had previously been a member of the SPDC and served as Prime Minister. Under the quasi-military government of the Union Solidarity and Development Party (USDP), a series of economic reforms were implemented. These included the encouragement of foreign investment and the development of internet and telecommunication infrastructure. The “foreign exchange certificates” were abolished and the government started to tolerate the limited circulation of foreign currencies within the country even though the exchange rates were highly controlled by the state. Additionally, there was a proliferation of private schools and healthcare centers, although many of these were owned by individuals with prior ties to the former socialist leadership or the military.
NLD Government
In the 2015 general election, the National League for Democracy (NLD) achieved a decisive electoral victory by surpassing the 67 percent supermajority required, although the military retained significant power, holding 25 percent of parliamentary seats (without being elected) and controlling key ministries. Between 2015 and 2020, Myanmar experienced a period of democratic governance under the National League for Democracy (NLD). The NLD government followed its economic plan “Myanmar Sustainable Development Plan” which held one goal as transformational economic growth in Myanmar to be led by the private sector, suggesting the government to simply get out of the way when it comes to economics. Furthermore, as detailed in “Best Laid Plans”—Sean Turnell’s analysis of Myanmar’s economic transition—suggests that the proposed economic policies, informed by his expertise as an Australian economist and former advisor to State Counsellor Aung San Suu Kyi, exhibit significant parallels with core principles of both neoliberalism and free-market economics. These recommendations can be characterized as a pragmatic and contextually-adapted application of developmental neoliberalism.
2021 Coup
The 2021 military coup saw the emergence of the State Administration Council (SAC), which has since declared its intention to reinstate the state cooperative system. Following the coup, the SAC regime implemented stringent controls, including nationwide internet blackouts and restricted social media access. Assets of individuals supporting resistance or the Civil Disobedience Movement (CDM) were seized. The general trend indicates that businesses owned by those perceived as opposing the SAC have been nationalized or seized. New regulations severely limited bank withdrawals and lowered interest rates. Furthermore, the arrest of foreign currency exchangers effectively made holding foreign currency nearly illegal, echoing the SPDC’s past introduction of the Foreign Exchange Certificate (FEC). In 2024, the SAC’s announcement of a return to the state cooperative system (reminiscent of the BSPP era) has triggered widespread concern among the working and middle classes. This apprehension stems from historical experiences of economic hardship and the perceived enrichment of the ruling elite under socialist policies, followed by their transition into a crony capitalist class.
Conclusion
In summary, Myanmar’s economic and political trajectory has been significantly defined by prolonged totalitarian governance and substantial military influence. In 1962, the “Burmese Way to Socialism” under the Burma Socialist Programme Party (BSPP) established a state-controlled cooperative economic system. The subsequent military junta—known as the State Peace and Development Council (SPDC) from 1998—initiated a superficial shift towards a neoliberal market economy while preserving its authoritarian and totalitarian characteristics. This transition included the drafting of a constitution that granted immunity to the military, culminating in a partial transfer of power in 2010 with the establishment of the Union Solidarity and Development Party (USDP), an affiliate of the military cronies. From 2015 to 2020, Myanmar experienced five years of a neoliberal market economy with a long-term aspiration for a free market economy. However, this progress was abruptly halted by the 2021 coup, which resulted in the reestablishment of a state-cooperative economic model under the ruling military junta.
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