Reviewed by Mamoon Chaudhry

Development of industrial capitalism has remained an elusive goal for the rulers of Pakistan. After independence, successive governments facilitated the transformation of merchant capital into industrial capital. But in spite of all this support, Pakistan’s economy is still dominated by petty commodity production and small-scale capitalism.

In The Class Structure of Pakistan, Taimur Rahman has attempted to explain the transformation of Pakistan from an agrarian economy to a small-scale capitalist economy. The book is a welcome addition to the debate on this transformation and his research sheds light on aspects of class transformation that have not earlier been explored at great length. Rahman emphasises that the slow growth in industrial capitalism in Pakistan is a result of how our social relations have developed historically. He argues that the capitalist modes of production in South Asia are not a result of indigenous societal transformation; rather they were brought here by the colonial powers: “One historical fact that nearly all scholars are agreed upon is that the capitalist transition of South Asia did not occur through a popular revolution but as a consequence of British Colonial rule,” he writes.

Rahman also notes that “the British belonged to a capitalist society. Hence, one of the features of the British colonial rule was the capitalist imperative for the extraction of maximum surplus. These imperatives led the British to introduce the mechanisms to increase surplus extraction that, in turn, brought about the fundamental changes in the modes of production of South Asia.”

In order to explore the pre-colonial class relations, The Class Structure of Pakistan looks at the Mughal era. The Mughals ruled South Asia through appointed mansabdars. The office of mansabdar was completely different from a feudal as the jagir (the land granted to mansabdar) was not hereditary: “the jagir cannot be considered a fief. Not only were these jagirs not hereditary but, unlike Europe, judicial powers over the jagir were not vested in the jagirdar.” Due to lack of data from the regions that constitute Pakistan, the author has largely focused on Bengal.

The British brought institutional changes by allocating land to individuals. The process of allocating land started in Punjab in 1846 and subsequently a land market emerged as a result of private property. To enhance the commercialisation of the product, British India invested up to 40 per cent of the annual capital outlay in canal irrigation that brought more land into cultivation and resulted in a massive increase in the export of wheat and cotton. The commercialisation of agriculture continued after 1947. The Pakistan government promoted high-yield varieties of crops as well as fertilisers, pesticides, tractors and tube-wells. To further the process of capitalism, no concrete step was taken to reduce inequality in land distribution. The index of inequality has virtually remained the same from 1960 to 2000. Pakistan’s governments have remained convinced that by avoiding land reforms, the process of capitalist transformation could be accelerated, but Rahman’s conclusion is that “significant features of pre-capitalist and non-capitalist relations remained part of the social formation of agrarian Pakistan.”

Pakistan has seen exponential growth in population while the rate of growth in urban areas is much higher than the overall population growth. The upsurge in urban population has helped in the transformation of the merchant capital into industrial capital; however, the majority of the labour force is still employed in small enterprises and “the class structure of industrial relations is dominated by petty commodity and petty bourgeois production.”

Moving on, it is argued that Pakistan’s governments have always promoted capital concentration to increase savings and investment. This has happened at the cost of peasants and petty commodity producers. During the nascent stages of the country, the government facilitated investment in the manufacturing sector by creating institutions such as the Pakistan Industrial Development Corporation. Then during the 1950s, the investment rate doubled and large-scale manufacturing grew significantly. The process of industrial growth continued in the 1960s too but it was accompanied by capital concentration while export earnings from the jute produced in East Pakistan were also used to finance West Pakistan’s industrialisation. The concentration of wealth led to the growth of monopolies and 44 “monopoly houses” controlled 77 per cent of the gross fixed assets of all the companies listed on the Karachi Stock Exchange. The book also highlights the significant role of US economic aid and the IMF in the industrialisation of Pakistan but also considers it a contribution to the national debt burden.

Rahman is of the view that this concentration of wealth resulted in the revolt of industrial workers and led to the subsequent periods of nationalisation and increase in public sector spending in large scale industry. The five-year-rule of Zulfiqar Ali Bhutto was just a brief interruption in the policies promoting capital concentration, he believes. After the promulgation of martial law by General Ziaul Haq, state investment in large-scale manufacturing was curtailed from 70 per cent in 1978 to 18 per cent by 1988. During this period, Pakistan also received massive inflows of foreign exchange in the name of Afghan jihad and through remittances from overseas Pakistanis. The share of remittances reached 10 per cent of the GDP by the mid 1980s. Following the death of General Zia, liberalisation was unleashed and 168 public sector enterprises were denationalised while import duties were reduced dramatically. The workers’ right to strike was also curtailed severely as the Supreme Court issued a judgment declaring that the workers’ right to strike is not a fundamental right under the Constitution. The Industrial Relations Ordinance of 2002 took away most of the rights won by the workers following the struggle during the 1960s. Despite all the efforts of successive governments to promote industrial capitalism, large-scale industry still employs only three per cent of the overall labour force in the country.

The Class Structure of Pakistan

(Economics)

By Taimur Rahman

OxfordUniversity Press, Karachi

ISBN 9780199065073

326pp.

Published Jul 07, 2013 04:07am

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