PAKISTAN’S economic situation is unquestionably dire. The yawning trade and current account deficits, galloping inflation and default prospects have generated significant comment. It is noteworthy, though, that the working masses, who bear the biggest brunt of the downward economic spiral, barely feature in most analyses.

Most commentary has focused on the efficacy of short-term fixes like the ‘Dar peg’. But there have also been prominent contributors on these pages who have presented prescriptions to stabilise and restructure the economy in the medium to long-run.

I disagree both with the foundational assumptions of most analytical treatises in vogue, as well as the long-term vision accompanying them. What follows is a reasoned attempt to engage with the dominant — what I’d characterise as liberal — notion of ‘econo­mic reform’, alongside a case for a class politics and redistributive policies which better represent the interests of Pakistan’s working class.

Proponents of liberal economic reform start from the premise that Pakistan’s economic woes are rooted in the state’s excessive role and the unwillingness of politically motivated decision-makers to adopt market-based solutions. They say that it is by eschewing political pressure and making commitments to market-based solutions that the principle of merit can be resuscitated, the absence of which has led to the consolidation of a highly unequal economy where there is little or no prospect of social mobility for the majority.

The working class should be the object of economic policy.

There is undoubtedly concentration of wealth, inequality of opportunity and a self-serving ‘elite’ here. Yet the arguments that generally accompany these facts are tautological and selective; eg, how does one square the fact that a self-serving elite engages in rent seeking yet makes a pitch for a new ‘elite bargain’ to undertake policy shifts? Is it accurate to claim that privatisation of SOEs and further corporatisation of education are novel reforms?

A more meaningful historical analysis reveals that, over almost eight decades, Pakistan’s ruling class has presided over a political economy that cannot be captured by a simple binary of state and market. The state has always enabled private enterprise to a significant extent, while both private interests and state institutions/functionaries comprise the ‘elite’, which means that rent-seeking is a set of practices that has historically been founded upon different configurations of state-market relations.

While it is true that social mobility has been limited for working people, the ruling class has evolved over time; eg, individuals like Malik Riaz who do not hail from privileged backgrounds. The religious right and commercial segments have pushed themselves into the structure of power ‘from below’, particularly during and after the 1980s.

It was in the same decade that the privatisation of SOEs was initiated. Many were sold to friends of people in power for a pittance. The once profitable PTCL was sold at gunpoint to Etisalat, a company in which the UAE government enjoys a 60 per cent share! There is little evidence to suggest that PTCL’s privatisation has contributed to better service for the undifferentiated category of consumers that liberal economic reformers believe should be the primary beneficiary of economic policy.

In contrast, I believe that the working class majority — across both formal and informal occupations in agriculture, manufacturing and services — should be the object of economic policy, and, relatedly, the subject of a politics to overturn Pakistan’s long-standing ‘elite bargain’.

This majority is largely propertyless and relies on wage slavery and various types of precarious self-employment to make ends meet. It spends most of its measly income on rent or under-the-table payments for informal housing because the formal housing market — sanctified by the state — is dominated by speculators and rich investors. It is increasingly forced to turn to private providers for health and education, even where the quality of service is poor. It is the class most affected by hikes in prices of basic amenities, food and petrol.

None of this can be explained through a binary whereby an otherwise ‘efficient’ market is not being allowed to operate by an ‘inefficient’ government. Instead, we should name the nexus of state and capital that privileges profit-making in agro-industry, real estate and similar sectors. Acute concentration of property in a few hands is exacerbated by the pillaging of what remains of the commons.

The domestic political economy is reinforced by powerful interest groups outside Pakistan. Multilateral donors like the IMF and World Bank also lament the unwillingness of Pakistan’s economic decision-makers to undertake ‘painful structural reform’ like privatisation. But none of these elite interests, home and abroad, will ever put (rural and urban) land reform along with other redistributive measures at the top of their wish list.

The writer teaches at Quaid-i-Azam University, Islamabad.

Published in Dawn, January 6th, 2023