Austerity rules

October 05, 2018


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

EARLIER this week on the floor of the National Assembly, Finance Minister Asad Umar once again proclaimed the PTI government’s inalienable commitment to Pakistan’s teeming masses, and particularly the poor. In outlining his ministry’s plans to fix the dysfunctional tax system, he insisted that the guiding principle of economic policy is protecting the most vulnerable.

Governments everywhere make hay about serving the poor, but the evidence overwhelmingly suggests that the world is becoming more rather than less equal. While in Pakistan’s intellectual and political mainstream there is no meaningful analysis about the political and economic structures that (re)produce poverty, the rest of the world is taking stock of just how much these structures have changed — or not — 10 years since the biggest economic crisis since the Great Depression strangulated Western societies, and thereby the rest of the world.

It was in the fall of 2007 that the housing market in the United States started to implode, the world’s biggest financial institutions having indulged in speculative profiteering on a scale that was completely incongruent with the real value of physical assets like houses. As the bubble collapsed, millions of American homeowners were suddenly faced with foreclosure — many losing their homes.

Soon thereafter pensions and any other savings that ordinary people had also disappeared as banks, insurance companies and investment banks went bust. The reality of a globalised economy was laid bare as the crisis engulfed much of Europe and further east. Governments bailed out the financial institutions that had survived, handing out billions. But no one compensated the ordinary people — least of all the poor — who were the real losers of the crash.

The poor continue to be left by the wayside.

As unemployment soared and living standards dipped precipitously, a whole plethora of commentaries emerged about the causes of the crisis; some called it ‘crony capitalism’ while others just blamed greedy bankers. And while deeper structural analyses also saw the light of day — for a while, Marx’s works became bestsellers — there was no real reckoning with the fact that crises are synonymous with capitalism itself and that only a fundamental restructuring of the social order away from the profit motive and towards the meeting of human needs could change the fate of the world and its people.

Within a few years of the crisis, the ‘experts’ were hailing a recovery — even while reluctantly acknowledging that it was a jobless one. Financial asset values skyrocketed once again, profiteers and speculators ultimately free to do as they pleased. According to sociologist Sassia Sassken, by 2013 the total value of financial assets globally had reached $1 quadrillion! In the same year, the world’s GDP — real goods and services produced — was less than $1 trillion, confirming that the financiers had once again trumped reason.

In short, the system became ever more rapacious, with multinationals competing to grab minerals and other natural resources in rural hinterlands, while real estate moguls — we have many in this country — made a killing through elite housing schemes and the like in metropolitan areas.

And all the while the world’s poor continued to be left by the wayside, not only vulnerable to the vagaries of a made-for-the-rich economic system but also to the catastrophic ecological fallouts caused by unending exploitation of resources.

Today in much of the Western world, ‘austerity’ is arguably the most invoked word in politics. Mainstream politicians and intellectuals alike talk up the necessity of reducing public expenditures — those that would otherwise benefit the poor — under the guise of improving the overall health of the economy. An economy that is supposed to be for everyone but ends up servicing the rich at the cost of the poor.

So it is in Pakistan too. No matter who is spewing out the words, policies don’t change. Already provinces like Balochistan are protesting cuts in development expenditure, while on the whole the objective of economic policy is to invite investors — particularly foreign — to find avenues to make money.

Yes there are some meagre social safety nets in place but our health, education and other public service sectors are still in awful shape. Building roads and infrastructure alone is not a solution, while a permanent job is a pipe dream for the millions that stream into our cities in search of a better life. Quite simply, there is no sign of any fundamental restructuring of the system.

In effect, Pakistan’s economic policy is also ruled by the logic of austerity. Yes there are segments of society that are able to take advantages of the opportunities for upward mobility that exist in a capitalist social order, but the majority remains vulnerable. And so one can only take the finance minister’s promises with a grain of salt. Let’s not forget that this is the same PTI that promised to create 10 million jobs.

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

Published in Dawn, October 5th, 2018