By Zubair Faisal Abbasi
In Pakistan, neither the so-called highly skilled bankers and economists nor well-disciplined institutional arrangements such as the military and civil bureaucracy could implement such a vision of economic growth. In many ways, some analysts argue that the institutional arrangements which were designed to promote equitable growth have found zones of comfort in the private prisons of hard-nosed special interests. One manifestation of the capture is that almost every third or fourth person in Pakistan is illiterate and trapped in the cluster around poverty line. The situation appears to reflect chronic and persistent inequality and poverty being entrenched as a structural condition of Pakistan's economy.
Political rhetoric of various governments aside, the country has manifestly been caged in the hands of those powerful few who could divert economic resources and opportunities towards themselves. While the predominant flow of power and economic resources is bottom-up, the country fails to rapidly expand the number of people who could meaningfully mainstream themselves in systems of economic growth and social well-being. The reason is simple. The affluent minority does not reallocate an optimal level of capital accumulation towards productive investment which can create public and ethical goods for the poor. Most of the time, they waste the capital on unnecessary luxury and comfort in carefully guarded enclaves both in Pakistan and abroad. The income and consumption remains concentrated in few hands and the economy keeps feeding the elites.
Under the circumstances, the state appears to be a toothless entity unable to divert economic resources from being wasted to be utilised for social efficiency gains. It fails to generate a well-coordinated dynamism in investment, education, health, trade, and industrial policies to lift the economic planning from serving the already rich. It fails to become an entrepreneurial entity to innovate institutional designs which could successfully articulate public and private interests. In other words, the state of Pakistan needs to generate a systemic response to bring in equity in economic resource allocations using both autonomous administrative guidance and systems of incentives and disincentives. The key is to redesign the rights and obligations of the economic players which can generate a viable social compact affecting long term growth prospects. However, without critically assessing the current economic vision of economic policy and planning in Pakistan, the vision of equity which the founding fathers also enunciated will remain a hope against hope.
The economic managers in Islamabad should move on from the belief in neo-liberal orthodoxy that the so-called (read imaginary) free-market and free-trade with scaling down the role of state, is the only viable form of capitalist system. The unfettered and near-religious belief in the primacy of markets as efficient resource allocator must be questioned. It must be noted that there is a wide range of working capitalist systems, apart from the Anglo-Saxon ones in which the state plays an activist and equality generating role and their human development indicators are better than other the so-called neo-liberal economies.
In fact, in the not so distant past, a unique feature of Newly Industrialized Countries (NICs) of East Asia was that speedy growth reached the bottom of the economic resource pyramid and substantially increased the income share of the poor. This way they expanded their domestic markets and involved almost every citizen in economically productive processes. Japan even today implements an active labour policy for development and reallocation of human resources to manage and execute social adjustments in the processes of economic change.
In short, the strategy of acquisition, assimilation and deployment of resources for economic development, such as finance, opportunities of accumulation and investment, human resource development, and technological capability, all had a system-wide vision of equity. With improvements in both equity and efficiency, through policy and institutional innovations, East Asia could jump from periphery of economic and industrial development towards the semi-periphery if not the centre.
Pakistan also needs to understand the inadequacies of its growth strategy for reasons of both efficiency and equity. It needs to draw from institutional and policy understandings available both in the West in the shape of welfare state as well as of developmental state in East Asia. These economies are neither anti-private-sector nor anti-market. They, however, take markets as institutions working as a system of rights and obligations.
They embed the social development and equity perspectives in the systems of economic production and exchange. The process of embedding is moderated by the state which shows substantial commitment to tackle the social equilibrium questions upfront.
To conclude, it can be mentioned that Pakistan needs to go beyond both the social safety nets minimalist state to tackle issues of poverty and inequality. The safety net approach, in essence, is a combination of residual instruments to address adverse effects of change in resource endowments and allocations in an economy. The state of Pakistan urgently needs to develop cross-cutting social policy designs which melt down the artificial boundaries between economic growth and social development priorities. All it needs is an identifiable political commitment with the people of Pakistan and rather than the powerful few. It requires to make Pakistan a socially responsible state and a trust worthy central actor for the long term sustainable human development and economic growth.
The writer is pursuing graduate studies in the UK. Email: abbasi.zubair@ gmail.com