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In the elections of February 1972, the People’s National Party (PNP) had won handsomely by a landslide victory of 36 seats to the Jamaica Labour Party’s (JLP) 17 seats. Furthermore, on December 16, 1976, the PNP enlarged their margin of electoral support by once again defeating the JLP by 47 seats to 13 seats. However, by October 1980, the PNP were humiliatingly defeated by the JLP who won 51 of the 60 parliamentary seats.

During the two decades prior to 1972, the Jamaican economy showed unprecedented growth as measured by the nominal and real growth of the country’s GDP. Between 1950 and 1971, nominal GDP increased from a lowly total of J$152.4 million to J$1.12 billion, an increase of over 635%. From 1950 to 1968, the average annual rate of growth of the real GDP was a respectable 6.7%, and between 1959 and 1972, the real GDP had more than doubled from J$407 million to J$825.2 million. Furthermore, real per capita income also increased by more than 100% between 1950 and 1968, and from 1950 to 1960, the figure increased at an annual rate of 5.4%, slowing down to increase at an annual rate of 2.9% between 1960 and 1968. The production of the Jamaican economy at this time was largely reliant on the success of the bauxite-aluminum industry which had expanded quite dramatically during the 50s and 60s.

However in 1974, Manley instituted the Bauxite Production Levy Act, which increased the rate of taxation per ton of bauxite produced by 480%, from J$2.50 to J$14.51. Unsurprisingly, the state revenue from the bauxite-aluminum sector increased 650% between 1972 and 1974 from J$22.71 million to J$170.34 million. This appeared beneficial, however, the increased taxes on the aluminum and bauxite companies resulted in a sharp price increase to maintain similar profits after tax.

The Joint Senate Committee on Commerce and Government Operations of the US heard that the Jamaican levy would amount to an 8% increase in the price of aluminum, while the price of bauxite itself would be increased by three cents per pound. As a result, foreign countries like The United States went elsewhere to purchase aluminum and bauxite because countries like Australia and Guinea were selling at a much cheaper price.

Consequently, Jamaica’s bauxite and alumina production were significantly reduced. Bauxite production in 1976 was 32.1% less than it was in 1974, the year the levy was first introduced. Aluminum production fell even more sharply by no less than 48.8% between 1974 and 1976 (Jamaican Dept of Statistics, 1976). In 1970 Guinea accounted for only 3.9% of US bauxite imports, while Jamaica accounted for 56.2%. By 1976, however, those figures had changed significantly. Guinea comprised 23.9% of the US market, while Jamaica's share declined to 49.0%.

Manley’s declaration of `democratic socialism' and his extreme rhetoric led to a decline in the levels of investment (foreign as well as domestic) and flight of capital. Manley, while promoting ‘democratic socialism’ at the same time gave many concessions to private enterprises. Incentives, such as tax holidays for certain industries, were made more generous. The tax concession period for some industries was extended from 7 to 10 years. Additionally, the tax-free period for companies operating under the incentive legislation in the rural areas of the island, was extended to 15 years. Many measures were also taken to assist and encourage small businesses, including the granting and guaranteeing of loans with extremely favorable terms to those enterprises. All these measures are capitalist, but Manley himself was a proclaimed socialist. Foreign investors were weary of Manley’s unpredictability, and as a result, a lot of the money that had been coming into the country, prior to 1972, halted.

In the most immediate sense, the demise of the PNP is to be explained by the fact that the regime served neither the interests of capital nor that of labor effectively, and the central reason of the demise of the PNP is to be found in its simultaneous quest for a greater degree of equality while maintaining the existing structures of private property.

Unsurprisingly, economic fallout ensued, and the regime was ousted from office. The PNP could not attract domestic or foreign capitalists but at the same time it did not embrace the alternative of socialism. For the PNP, despite its rhetoric, capitalism was its system, albeit one that wreaked total havoc on Jamaica. Although the PNP and Manley declared that they wanted equality they argued with equivalent vehemence for the prevention of any infringement of the rights of private property.

Between the years of 1974 and 1980, real Gross Domestic Product (GDP) experienced a cumulative decline of 19.8%. One sector of the economy, construction and installation, which is crucial to economic growth due to its high level of employment, experienced, between 1972 and 1980, an absolute disaster. It underwent a cumulative decline in production of no less than 83.3%. Gross Capital formation, as a percentage of the GDP, dropped from a level of 35.1% in 1969 to 15.7% in 1980. The budget deficit increased more than eleven times, from J$66.8 million, in 1972 to a phenomenal J$750 million in 1980. Net national debt skyrocketed, increasing by over 800% from J $431.4 million in 1973 to J$3.88 billion in 1980. Furthermore, the external position of the national debt increased even more sharply, from J$150.4 million in 1973 to an astonishing J$1.54 billion by the end of 1980, an increase of 927.2%. Net foreign reserves, in accordance with the economic collapse, fell from a positive figure of J$130.2 million in December 1974, to negative J$961.1 million by the time the PNP vacated office in 1980. In the meantime, unemployment increased from 24% of the labor force in 1972 to 31% in 1979. Even more significantly real disposable income per capita fell to the levels they were around thirteen years previously, in 1967. And, in keeping with the other macro- economic indicators, the standard of living of the working class fell dramatically. Between April 1975 and November 1980 while wages increased by 98.5%, prices, over the same period had increased more than twice as much, by 204.7%. Real wages had thus declined by more than one-half in less than six years.