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July 2, 2018
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Who will win Election 2018?

Opinion

July 2, 2018

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“The real issue is not of religion but of economic development. Muslim business leadership lacks confidence in its strength and capabilities…They want a state where they could monopolise the economy without any fear of competition. It will be interesting to see how long they can keep this charade alive.” – Maulana Abul Kalam Azad, in an interview to Chatan magazine in 1946.

More than 70 years ago, Maulana Azad warned Pakistan against the threat of crony capitalism. Crony capitalism, as we know, is a situation where selected economic elites receive preferential treatment and privileges, thus making support from the state rather than the market forces a crucial factor for maintaining and accruing wealth.

Today, crony capitalists have almost destroyed our agriculture, brought Pakistan’s economy to its knees and have come to control our politics and political parties. The corruption narrative can be seen as a smokescreen that hides the fact that our whole economy and politics have been stolen by crony sectors and crony capitalists, making us impoverished and dependent on handouts to survive. Whichever party wins the 2018 elections, it is crony capitalist that will take the victory stand.

It is commonly agreed in political science that politicians build party institutions to advance their goals. Many political scientists have also argued that the goals of politicians are mainly the goals of the groups and activists that provide them with backing and resources. When new groups enter a party, the goals of leadership also change. Nominations for candidates and offices are the fundamental act of parties. The choice of candidates and nominee of offices reflects the balance of forces within a party and the agenda a party is likely to follow. Therefore, single-minded attention to leadership blurs our view of socio-political reality.

There are at least five powerful socio-economic groups backing the three main parties. These groups are: crony capitalists, the traditional elite, traders, small and medium-sized businesses, and the professional middle class. The excluded groups, with the least influence, include genuine industrialists, and the rural and urban working classes (peasants and small farmers, artisans, labourers, etc).

Another group that remains a constant is the salariat or the senior government servants who have ruled the country directly for half of its existence. This is the most powerful group, even when it is not ruling directly.

Until 1970, the salariat ruled Pakistan using the traditional elite, mainly large landholders, as its junior partners. This was also a period when crony capitalists emerged as a force to reckon with. Many families of the ruling salariat also turned to industry and established their own business empires. However, the direct involvement of business in politics was rare.

ZA Bhutto mobilised the educated middle class and the working classes, subjugating the salariat and industrialists for a brief period. His policies benefitted the working class but harmed crony capitalists as well as genuine industry. The industrialists – both genuine and crony capitalists – traders and the salariat joined hands against him to evict the PPP from power and the status quo was restored in the country.

Zia actively promoted the participation of businessmen in politics. The incorporation of the Sharif family into the political arena was one manifestation of his vision of replacing the traditional rural elite with crony capitalists. The Chaudhrys of Gujrat are another family of crony capitalists who were very dear to Zia. This change convinced the traditional elite and the middle-class politicians that they must also make money if they want to survive.

The sugar industry emerged as the main crony sector. With lending from state-owned banks, it was easy to set up and easy to run in a perpetually protected environment. With help from the state, the sugar industry was able to manipulate the prices of both the input –sugarcane – and the produce – sugar. We saw a whole class of sugar barons emerge who remain the most important political elements in Pakistan.

Sugar is a tropical crop that is unsuitable for much of Pakistan. Due to the high cost of production, Pakistani sugar cannot be sold in international markets without costly subsidies. Due to links with state patronage, the sugar industry has an installed capacity that is many times more than the sugar we need in the country. The Sharif family not only set up sugar mills, it also started manufacturing sugar plants at Ittefaq Foundries, the manufacturing industry owned by the family.

Interestingly, the PPP decided to join the game and Asif Zardari allegedly acquired a number of mills through his frontmen. Alongside the sugar industry, the PPP mainly represents the interests of Sindh’s traditional elite who take the easy route of rent-seeking from the government’s development work, jobs and other state resources.

Spinning, or making thread, was another crony sector that benefitted from the artificially suppressed prices of cotton. Since money was easy to make due to low cotton prices in the country, our textile sector never thought of adding value. In 2017, Bangladesh’s exports, mainly comprising textile, stood at $40 billion while Pakistan’s exports were merely $22 billion. The main difference lies in crony capitalism vs entrepreneurship.

Since 2000, real estate has become the most powerful crony sector in Pakistan, though the sugar industry has not lost its lustre. The real estate sector has artificially escalated land prices, diverted investment to a purely speculative activity, and made it impossible for low-income people to build their own houses. However, it has produced many billionaires (in dollar terms). Many politicians have turned to real estate while many real-estate businessmen have joined politics. The influence of real estate over state functionaries, political parties and the media is simply amazing.

The PTI started as the materialisation of a dream of General Hamid Gul, who wanted the educated middle class to claim political space and rule Pakistan as a partner of the salariat, which is an extension of the same class. It was a dream of evicting crony capitalists and the traditional elite from political power. (I have explained in my other columns how the middle class itself is a rent-seeking class in Pakistan that has become as morally and culturally bankrupt as the more powerful classes.)

The PTI remained a representative of this class till 2013. In 2013, Imran Khan was able to mobilise the urban middle class and its enhanced voter bank, made the party attractive to electables that largely comprised crony capitalists and the traditional elite. Many electables from these classes also received a nudge from ‘above’ and realised the party’s potential. The PTI’s socioeconomic base grew as some leading members of the traditional elite and top crony capitalists joined the party and invested heavily on the party and its top leader.

In 2018, the PTI has become completely normalised. As Imran Khan and other party stalwarts claim, the only difference between the PTI and other parties is Imran Khan himself. It is only him who holds the power to transform Pakistan as a messiah.

This situation can only change through enhanced pressure from the voters, during and after elections. It is activism from the people that can convince the ruling classes to act differently. We have reached this situation due to authoritarianism, and renewed authoritarianism will further entrench the interests of crony capitalists and the traditional elite.

Tabdeeli requires a reshuffling of the relative power of different interests group and socioeconomic classes in Pakistan. It also requires the poor to come together and change the nature of politics.

The writer is an anthropologist and development professional.

Email: [email protected]

Twitter: @zaighamkhan

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