Invest in institutions of the poor

In my previous article, (‘How does poverty alleviation work?’), published May 25, 2019, I promised my readers to provide some deeper analysis of poverty reduction programmes and their management at an apex poverty alleviation institution in Pakistan.

The aim was to explore the policy proposition of the relationship between the low impact of poverty alleviation programmes and the management, governance and development acumen of the practitioners as a case study. Since this apex institution of poverty alleviation was established by the government of Pakistan, the inference therefore was in the larger public interest rather than being selective about an institution. This was not an all-out criticism against a certain institution but a critical overview of the uni-dimensional social policy propositions which govern poverty alleviation programmes in Pakistan.

With due apologies to my readers, I will focus instead on larger issues associated to poverty alleviation programmes in this article. This is only an afterthought based on the feedback and reactions from a wide array of readership and it makes perfect sense that good writing must maintain its universality rather than falling into the abyss of particularities. However, it is also important to substantiate assertions with concrete examples and references which I will be doing after a few more articles on this particular subject in the coming days. For most of us who are associated with the development sector, it has been a tendency to defend our positions from an organizational perspective, while leaving out the larger issues that affect the goal of socioeconomic transformation.

What does this catchy phrase ‘socioeconomic transformation’ entail in real life? Why should one expect to attain this goal from a simple development programme and who should be doing this? These are some of the critical questions we must ask from those who use the term ‘socioeconomic transformation’ rather loosely. The term has been in frequent use in the development sector without much debate about its essence – as if transformation is a prescriptive formula of social change.

The socioeconomic transformation of a society is neither a simple mechanical process nor is it about bringing change in the lives of people through a development programme. Development programmes may be treated as one of the inputs to attain this larger goal which is political in nature. The notion of ‘transformation’ is a process of qualitative change of a society into a new state of affairs which at times leads to creation of an entirely different social and political system.

Human societies are social, political and economic arrangements to govern the rule of individual life so as to maximize the collective good of humanity at large. Individuals are important for a society but they are part of a larger whole which is always greater than its constituent parts. Individuals have to surrender a part of their freedom and self-interest for the upkeep of social and political order of a given society. This is called social altruism which provides the basis of human civilization. Social altruism is the bedrock of transformative change, which is always much greater than individual actions of altruism.

In my previous article, I tried to provide a summary of factors contributing to the failure of poverty alleviation programmes in Pakistan. In that I highlighted some key policy perspectives and recommendations for the government to rethink its poverty alleviation agenda in the context of its relevance to three dimensions of poverty. These three dimensions include household poverty, structural or systemic poverty and poverty caused by the neoliberal globalization and free trade. The poor in Pakistan have always borne the brunt of the combined adverse impact of three-dimensional poverty. This calls for a long-term commitment of socioeconomic transformation of the poor. This transformation is possible only if the poor have the venues to exercise their collective power – and this is exactly why the significance of rural support programmes becomes pronounced. Community institutions created through rural development programmes are the local embodiment of social altruism with transformational potential.

Contrary to our development view and policy framework of social exclusion, the poor in reality are not excluded but are adversely incorporated in the system of inequity and oppression. It is not social exclusion but the adverse incorporation of the poor which merits policy deliberations vis-à-vis poverty alleviation. The more we move towards the neoliberal development framework offered by international financial institutions like the IMF, the more economic disparity and social inequity is the result. This is what Joseph Stiglitz and George Soros have suggested in their confessional writings in the aftermath of the 1997 economic crisis in Far East Asia. My interactions with Joseph Stiglitz during my university days in London helped me understand the phenomenon of increasing global disparities within and across national borders.

We use the term ‘neoliberalism’ to describe a set of economic actions and policies which promote privatization and a free market economy as the motors of transformation and prosperity. Neoliberalism advocates non-interference of the state in the economy, and allows free trade across national borders. National asserts are privatized and the only objective of this unbridled privatization is to extract maximum profits for owners with no public accountability about resource allocation and distribution of proceeds. This tends to enhance unemployment because reducing labour wages and increasing massive layoffs is the only way to ensure higher profits for private owners. The role of the state is reduced to a tax collection function with no control over the management, governance and decision-making of national economic priorities.

In developing countries like Pakistan, international corporations get a free hand to usurp the national wealth; international financial institutions make this exploitation kosher in the name of structural adjustment and rightsizing. Political democracy without control over resources and the economy makes parliament subservient to big corporate interests and international financial institutions. This leads to de-industrialization, plummeting economic growth, rampant unemployment and widespread disparity. The job market becomes skewed in favour of those who have sophisticated skills, cutting edge professional qualifications and innovative ideas to boost profitability in a highly competitive free market environment. The poor and those with conventional education become losers of the neoliberal economy and are pushed to the peripheries of the new economy.

This is exactly what is going to happen in Pakistan with stringent conditions of the IMF loan – the privatization of state-run entities, free trade and Foreign Direct Investment (FDI). This means that the coming days will likely plunge 50 percent of our population (if not more as the middle class will also suffer since the economy will face contraction) into poverty. It is, therefore, important for the government to come up with an innovative poverty alleviation strategy rather than relying on its current approach of creating a layer of inefficient institutions – inefficient because they are not aligned to cope with the challenges of an emerging mayhem of neoliberalism.

The easiest way to start with is to invest directly in the community institutions of the poor created through Rural Support Programmes (RSPs) with robust monitoring of outcomes in collaboration with RSPs. However, it is important for the government to engage experts for designing a robust graduation programme which must reflect the long-term objective of socioeconomic transformation of the rural poor. I am a great admirer of RSPs only for one reason: they have created institutions of the poor in the far and wide of rural Pakistan. These institutions can work as shock-absorbers in the future to offset the negative impacts of adverse incorporation of the poor in an era of increasing economic liberalization.

The writer is a social development and policy adviser, and a freelance columnist based in Islamabad.

Email: ahnihal@yahoo.com

Twitter: @AmirHussain76