The people are witness to what happens when the government tries to use unrestrained power to achieve its narrow political ends at the cost of independent institutions so badly needed for improved governance. Or when it ignores official rules for the benefit of the privileged with its negative outcomes.

Whatever the outcome of the current political imbroglio, the very fact that, this time round, there is a public debate over the nitty-gritty of every major move by the active players can be viewed as a silver lining. Dividends in terms of real gains to the social order will depend on the inter-action of different approaches and the changing ground realities.

It is mindset of the government to exercise pervasive control which is also at work in the sphere of economic activity with undesirable consequences. The low level of public awareness over the economic policy issues gives what someone called, ‘power freaks’ in the government, the opportunity to act on their whims, throwing rules to the winds.

The SRO culture, persistent interference in autonomous bodies such as the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan hold testimony to the observation.

Sadly, public trust and resources were squandered through financial scams by those at the top and their cronies. The indecent haste in privatisation of strategic public assets, capital market scams, spiral in prices of sugar, fertiliser, cement, pesticides and wheat flour are still fresh in public memory.

It has little to do with understanding and more to do with interests. “I found technocrats at high political offices no better than the incompetent bureaucrats and the inefficient politicians as far as relaxing rules to accommodate special interest groups are concerned”, an officer sidelined for sticking to the official rules told Dawn. He added that those responsible for crash in bourses got away because they have strong links in the corridors of power.

Ideally, a government should do first what it is supposed to be doing: to act as a referee between conflicting interests; to act a facilitator for economic agents so that broader goals of development are better served.

There is a consensus that a government can better perform its key functions if its powers are constrained particularly in areas of economy where there are greater temptations and chances of overstepping the mandate.

Today, in fact, institutionalisation has been identified as a key that introduces an inbuilt mechanism of check and balance on disorderly use of power by a government. In recent economic literature, the level of institutional setting has assumed such importance that a renowned economist Olson (1996) says: “the only remaining plausible explanation is that the great differences in wealth of nations are due mainly to difference in the quality of their institutions and economic policies”.

Autonomous institutions operated by professional managers and technical experts are thus widely advocated as obvious solution to the problem. It is assumed to be the cornerstone of the good governance.

In Pakistan, like in many other developing countries, the economic governance reforms are driven primarily by institutional development partners. The IMF, the World Bank and the Asian Development Bank made their support conditional to what they call ‘second generation’ reforms to facilitate a systemic transition “from a discretionary or patrimonial capitalism to arms-length rules-based, market economy.”

Sceptics may ask the reason for the interest of Bretton Wood sisters and the ADB in progress in a client states. The obvious rationale is the same as that of interest of any commercial bank in success of a project for which it gives a loan. International lenders want their clients to be predictable and financially stable enough to service their debts.

The historical record demonstrates that reforms, no matter how appropriate, superimposed by external powers, seldom succeed. The reason being, that in most cases, they are carried out half-heartedly, primarily to qualify for fiscal stimulus promised in return and not because of any real commitment.

The fact is that the governance reforms are perceived by the governments of developing countries to be intrusively directed to employ controls on their powers. Hence their successive resistance.

It is the beneficiaries of reforms and the strength of public opinion that can provide support to formal changes in rules and regulations to make them effective. The masses, however, would only rally for governance reforms if they perceive them to be gainful for themselves.

What do they care for free market, privatisation or institutional reforms, if it does not help them improve their lot? No matter how prudent, if free market means offering free hand to powerful market players to squeeze vulnerable customers and increase their profit margins, people’s opposition is but logical.

If privatisation put them out of job in a shrinking labour market no amount of theoretical argument will convince them to back it. If an autonomous central bank fails to make commercial banks share the gains of financial reforms with their depositors, the SBP will have to contend with the support extended by commercial banks in its favour.

Nothing convinces better than personal experience. The gains of institutional reforms in the economy will have to reach people for them to understand their relevance to progress.

Reforms should not lead to consolidation of the traditional elite and the renter class at the cost of equality of opportunity, competition and economic efficiency.