Not an economic miracle

THE NEWS -Saturday, December 15, 2007
Aasim Sajjad Akhtar

In his speech following the imposition of martial law, General Pervez Musharraf mentioned the need to consolidate the gains made by the Shaukat Aziz-led team of economic managers during his eight-year stint in power. In fact he more or less admitted that the ‘economic revival’, which was trumpeted as a major achievement by the current regime, was in genuine danger of being reversed if things did not go according to plan.

In the days and weeks that have followed the November 3 announcement, commentators have focused on the general’s claims that the executive machinery was paralysed and that ‘extremists’ have been running riot, but too little has been said about the extent to which the fears of economic downturn are in fact valid.

The ‘economic revival’ has been almost universally lauded as one of the (few) successes of the current regime. But for a handful of dissident economists, experts in Pakistan and abroad have corroborated the government’s claims that its team of technocrats rescued Pakistan from a position of virtual collapse upon taking over from the Nawaz Sharif regime.

To recapitulate: the foreign debt burden was overwhelming with only a few weeks of foreign exchange reserves separating Pakistan from total default; growth rates were negligible in all major sectors of the economy; the fiscal deficit was rising and bordered on the uncontrollable; the country’s credit rating was falling; investment was low and declining; and the people of Pakistan were subject to a government that had become involved in several scandals and controversies (for example, the Pakistan Steel privatization, the sugar price-fixing scandal and of late the wheat shortage scandal).

In contrast, the Musharraf government claims to have engineered an economic turnaround by undertaking ‘structural reforms’ which have pushed foreign exchange reserves up to record levels, dramatically improved the country’s credit rating, induced a wave of foreign direct investment, all of which have supported consistently high growth rates.

There are of course, problems with this version of events. First and most importantly it completely neglects the continuing economic strangulation of the vast majority of working people. If there has been growth in Pakistan, it has not generated employment in any meaningful way; most of the growth has been by way of non-productive, high-return investments in the stock and real estate markets. Then there is the unprecedented rise in prices of basic commodities that constitute the bulk of poor households’ expenditures. The government’s inability to raise revenue from progressive income and corporate gains taxation has necessitated duties on petrol and even though government economists claim that they have actually kept prices of basic amenities such as electricity and natural gas low, the real problem derives from the inordinately narrow revenue base.

It does not take a rocket scientist to recognize that, despite what the regime has said, there has been virtually no attempt to restructure the economy, or more specifically control over productive assets. In fact ownership of productive assets has arguably become more skewed while the government’s ability (and will) to redistribute income has declined sharply. More importantly the army has emerged as the biggest landholder and corporate conglomerate in the country and this is no longer a hidden fact. The fact of the matter also is that its economic ventures are beyond public accountability and scholarly research has proved — regardless of the various attempts to defame such research — that an enormous burden is placed on the national exchequer by the invisible subsidies and other concessions given to army-run companies.

But as important is the fact that the army also keeps its friends happy, whether they be involved in hoarding wheat and sugar, engaging in blatant coercion to illegally keep possession of or encroach upon land, or engage in malpractice in the dealing of financial commodities that would be heavily punishable in virtually any other country in the world. Indeed as is always conveniently ignored by economists on the official payroll, economics is never autonomous of politics. In Pakistan it is arguably accurate to claim that political power actually underlies economic power. Since colonial times the state has been responsible for creating and propping up dominant social classes, often in spite of objective pressures for organic change from below.

Such practices continue unabated in the post-colonial period. And given that many of our mainstream parties remain dominated by such dominant groups, it is perhaps not surprising that there remains a distinct unwillingness on the part of many of these mainstream parties to break with the military-dominated status quo.

In thinking about Pakistan’s political economy, it would be foolish to undermine the role of the international financial institutions (IFIs) and the western country governments that provide both political and economic support to the state and its allies. Indeed, the ‘reform’ programme championed by Shaukat Aziz & co. has been designed in Washington and Tokyo and reflects the dominant neo-liberal paradigm that continues to be propagated across the globe despite clear evidence of its destructive impact.

For all of the talk of ‘good governance’ and the like, the IFIs and indeed western country governments care little for democracy, more concerned with perpetuating relations of dependency and ensuring that our markets and resources remain available for their larger projects of capital accumulation. In doing so, they erode what little sovereignty we may still enjoy while setting our struggle for democratization back with each intervention they make.

It is a sordid story, which many claim sounds more like a conspiracy rather than an objective evaluation of the facts. But when push comes to shove, there will be few who can argue that the people of Pakistan have benefited from the present regime’s ‘economic revival’ or even that there is any medium-run prospect of the benefits of growth ‘trickling down’. Indeed, the immediate indicators look very bad, while the Ramazan and post-Ramazan hoarding of basic necessities exposes all claims that this government is any less ‘corrupt’ or ‘self-serving’ than any that came before it.

As the regime continues its practice of spreading misinformation, the need to deconstruct the ‘economic miracle’ is acute as it remains the one saving grace of a regime among the intelligentsia that has degenerated on all other fronts. Of course, one would not expect the urban elite to necessarily dispute the benefits that it has itself gained over the past eight years, but if there is any chance that the current agitation evolves into a mass movement, there will be no other option.

The writer is a political activist associated with the People’s Rights Movement. He also teaches colonial history and political economy at LUMS. Email amajid


1 Comment

Filed under Economy, Pakistan, Poverty

One response to “Not an economic miracle

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