Pakistan, Institutional Instability & Underdevelopment: State, People and Consciousness
By Dr Akmal Hussain
Folio Books
ISBN: 978-969-7834-52-5
471pp.

Dr Akmal Hussain is not just a renowned economist and academic. He is also a prolific writer. From the United Nations Development Programme’s Human Development Report two decades ago, and the more recent Sustainable Development Report (2017), to books, chapters and articles on development economics, governance and public policy in Pakistan and the region, Dr Hussain has written a lot.

In this latest book, he covers a lot of ground, some of which is familiar territory, but much is an exploration of entirely new areas, namely institutional instability and how this affects the psyche of a people.

If that sounds ambitious, it is. This is not bedtime reading. Though not very long, this book best needs to be approached with a clear mind, and a pencil — to make notes in the margin.

Beginning by defining key terms such as ‘institutions’, ‘norms’ and consciousness, Dr Hussain defines his premise itself in the very first chapter. He explains that institutional instability in Pakistan is driven by the tussle between different groups of elites within the same underlying power structure. And that this rent-based power structure not only constrains human potential, it also hampers “equitable, sustained and environmentally protective economic growth.”

Dr Akmal Husain’s new book is an exploration of entirely new areas for the renowned economist, primarily institutional instability and how this affects the psyche of Pakistan’s people

He argues that much of the instability in Pakistan stems from the imposition of “formal” rules on “informal” norms. He also says that the sources of these norms are radically opposed to each other. Thus, formal rules are essentially laws enforced by the state, while informal rules, as posited by new institutional economics, stem from culture and norms.

The epitome of formal rules or law in any state is the Constitution — all statutory law ultimately stems from the exercise of powers granted by this document. The Constitution derives from a truly representative legislature that reflects the will of the people to the extent that it nurtures the diversity of culture, religion, language and ethnicity in the country. It will not significantly clash with informal rules.

But, as Dr Hussain posits, in Pakistan there is a perpetual crisis of legitimacy of the ruling elite, who formulated the Constitution, and indeed enforce rule and law in society. Almost 200 years of colonial rule only exacerbated the schism between the elites (who were essentially co-opted by the colonial administration) and the common man.

In order to build a strong sovereign state, Dr Hussain says that the post-colonial ruling elite should have led a process of “decolonisation of the consciousness.”

He defines this through four elements: the need for people to reconnect with their pre-colonial past (decolonisation of the psyche); the need to restructure the economy so that it does not just produce rents for the colonialists (read: the elite), within a framework of dependence on the developed world; the need to provide the highest standard of education to all to fully develop human capabilities and ensure equal opportunity; and the need to build institutions, which would allow free and fair elections to be held periodically, and empower elected governments at each tier, including at the local level.

It is obvious that Pakistan is failing on all these counts. Clearly, the decolonisation of the consciousness has not progressed here. Like many other books on Pakistan’s political and economic history, this one also traces key events that occurred from 1947. But it analyses their impacts through the lens of institutional development.

With regard to Gen Ziaul Haq’s martial law, for example, Dr Hussain describes it as a period when the “official ideological onslaught of intolerance and bigotry tended to suspend the sensibility of love and reason embodied in the intellectual tradition of the people and their living folklore.”

In other words, there was a complete disconnect between formal rules and informal norms, which created instability over the long term — an instability from which Pakistan has perhaps yet to recover.

Later on in the book, Dr Hussain’s assessment of the International Monetary Fund (IMF) programmes in Pakistan seems pertinent in the current scenario. He quotes from a slew of research studies, from across the globe, that show inverse relationships between IMF policy prescriptions (particularly curtailment of government expenditure and tariff rationalisation) and growth.

For Pakistan, Dr Hussain says that public expenditure reduction and increased interest rates have suppressed growth and disincentivised private investment, while trade liberalisation has led to de-industrialisation. Other Pakistani economists (notably Shahrukh Rafi Khan and Akbar Zaidi) have put forward similar theses.

But while Dr Hussain offers a longer term prescription, ie to focus on human development and people-centred development, that is not a solution to the short-term balance of payments crises that governments periodically face, which prompt a run to Washington.

Perhaps, the solution is to do what India did in the early 1990s — to complete one programme, but to use the period of stabilisation to institute structural reforms in the economy. It is something that Pakistani governments have repeatedly failed to do.

But taking Dr Hussain’s thesis forward probably has something to do with institutional instability. With political governments typically facing a three-year timeframe, much of which is spent fighting for survival, who is going to worry about long-term structural reforms?

As one reads on, one is struck by how Dr Hussain weaves in more philosophical themes, such as humankind’s relationship with nature — and how upending that relationship has led to environmental and economic destruction — quantum mechanisms and its links to brain functioning and, most importantly, universal consciousness and human values.

There is a lot to think about here, and Dr Hussain has made a brave attempt to link these philosophical concepts with political economy and human development. One can disagree with some of his ideas, but this book is thought-provoking and represents a new approach in Pakistani scholarship. For that, Dr Hussain is to be commended.

The reviewer is a researcher and policy analyst

Published in Dawn, Books & Authors, August 13th, 2023