Economy of fools

Updated April 05, 2019

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

THE more things change, the more they stay the same. This adage captures much about state policy in Pakistan, but perhaps social and economic ‘reform’ most of all. The current hue and cry about the precarious state of the economy and the reforms necessary to get things back on track is remarkable precisely because it has all be said and done before. Many, many times.

The indefatigable Khurram Husain wrote yesterday about the three attempts at ‘adjusting’ the economy over the past decade — in fact ‘structural adjustment’ of the economy has been ongoing for more than 30 years! It was in 1988 that the first set of loan arrangements were agreed under the Structural Adjustment Programme between the PPP government and the IMF. Surely by now adjustment would have been successfully completed?

Every political regime here for more than three decades has spewed the same rhetoric about inheriting a mess from its predecessors, the need for urgent reform, and the unavoidability of swallowing the bitter pill of ‘adjustment’.

The regime then claims to have turned a corner — thanks in large part to aid handouts — but the turnaround is inevitably short-lived and things reach their lowest ebb by the end of the government’s tenure.

The next election cycle rolls around and the farce plays out again.

The role of the IMF and other multilateral and country donors in this story must certainly not be understated.

Aid packages are always accompanied by conditionalities; the money comes only if ‘structural adjustment’ of the economy is ensured.

It is always the same — privatise loss-making public enterprises, reduce government expenditures (and subsidies in particular), liberalise trade and financial markets, and make sure that the foreign investors are given incentives to bring in the big bucks.

In recent years, with ‘institutions’ in vogue in Western academic and policymaking circles, emphasis has also been placed on improving the performance of government institutions (via a never-ending supply of ‘expert’ consultancies).

Every political regime here has spewed the same rhetoric.

So if we’ve been doing this for the best part of 30 years, why is adjustment still necessary?

In short, because the world remains at the behest of financial oligarchs whose desire to pillage the resources of ‘underdeveloped’ regions whilst also monopolising emerging consumer markets is never satiated.

‘Adjustment’ is a barely disguised policy that removes all the regulations designed to provide at least some safeguards to the toiling classes that, until the 1980s, were a bona fide ‘stakeholder’ in the policy matrix in all countries.

It was in the late 1970s that the Keynesian policy frameworks that dominated the post Second World War period — featuring high levels of government intervention in the economy and the allocation of a substantial share of resources to labour — were displaced by what is now known as economic neoliberalism, or Washington Consensus.

At the time this ‘Consensus’ was forged by arch-conservatives like Ronald Reagan and Margaret Thatcher in the West, with handymen like Gens Zia and Pinochet doing the job in the East.

Organised labour and the political left were depicted as enemies of freedom — of the individual and the market — and almost 40 years later, the intellectual and political discourse in countries like ours is almost devoid of mention of the class wars that undergirded the shift towards neoliberalism.

The same is not true in Western countries.

The collapse of financial institutions between 2007-09 meant the ideological monopoly of neoliberalism was decisively challenged. Today, young educated people trying to secure a decent standard of living in an age of unbridled consumerism have become aware of the grave danger that ‘free market’ capitalism poses to their own well-being, and future generations.

It is high time that the young population of this country learns about the history of ‘adjustment’ so that at least the possibility arises of arresting the policy merry-go-round we have witnessed over the past three decades.

It was inevitable that the ‘tabdeeli’ brigade would falter as all others have before it — the crisis of political representation is directly related to the hegemony of neoliberal development models that no government dare challenge.

What is not inevitable is that we remain an economy of fools forever. Embryonic popular awakenings in different parts of the world about the need to once again consider an alternative to capitalism offer us hope.

The so-called experts will continue trying to convince us that the same old ‘reforms’ are necessary and bank on handouts from the IMF, the UAE, China or whoever is willing.

The real reforms we need are not rocket science: recover the commons (health, education, housing, employment, nature) from the profiteers, audit and reduce defence spending, and stop taking ‘painful’ steps that hurt the poor, and, instead, inflict some pain on the rich.

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

Published in Dawn, April 5th, 2019