RECENTLY, Pakistan’s first-ever national security policy was unfurled to much fanfare. The new policy, we are told, seeks to go beyond the guns-versus-butter trade-off model by connecting the attainment of security objectives to first enlarging the economic pie. In a sense, the national security policy endorses continued reliance on the Washington Consensus, or neoliberal policies on economic growth, so that the resulting increase in available resources can assist in strengthening security.
Not only is this idea not new, Pakistan’s reliance on neoliberal economic policies has largely failed in bringing about economic growth. Moreover, in addition to the failure to grow economically, almost all gains from stop-and-go growth have accrued to a small coterie in this country. While a sound economy is certainly important, the foundations of a secure and prosperous Pakistan can only be laid by strengthening political institutions like democracy.
The new security policy tells us that an inclusive economic growth model is the need of the hour. A cursory examination of previous vision statements released by different governments shows that this purported new focus on inclusive economic growth is not new. For instance, Pakistan 2025, a vision released in 2014, talked specifically about sustained, indigenous and inclusive growth. As a matter of fact, Pakistan 2025 specifically traced the connection between per capita economic growth and defence against non-traditional threats like poverty and disease.
And, like the previous national visions in Pakistan, the new security policy borrows economic growth prescriptions out of the now defunct neoliberal playbook. The new security policy recommends standard neoliberal prescriptions of free markets, fiscal austerity, mobilising savings to increase investment, as well as finding ways to spur exports. The problem is that these neoliberal prescriptions have not worked in the past as Pakistan has not been able to see any meaningful increase in employment or exports. In a sense, Pakistan’s experience with growth has not been sustainable and instead of improving the standard of living, following neoliberal policies has only led to pernicious declines in the exchange rate thereby making everything expensive.
Following neoliberal policies has only led to pernicious declines in the exchange rate thereby making everything expensive.
The ideology of neoliberalism is the foundation of the Washington Consensus, which, in turn, encouraged IMF to impose rigorous conditions on borrower nations. One of the core precepts of neoliberalism focuses on keeping the state out of economic management. However, Covid-19 has brought the efficacy of using the state as an optimal tool for economic and social turnarounds into stark relief. Developed nations, in particular, have channelled massive support through state institutions in the wake of Covid-19. As of July 2021, total global fiscal support stood at $16 trillion.
At the same time, a very strong political challenge to the already crumbling neoliberal order is underway in South America. Chile, the veritable birth place of neoliberal policies, recently elected a leftist former student leader, thereby driving another nail in neoliberalism’s coffin. Some have argued that the sun is now finally setting on neoliberalism and the world is now moving into an era of neo-statism, where the state will play a significant and permanent role in economic and social policy for some time to come.
Given the failure of neoliberal policies in bringing about real inclusive economic growth and the advent of neo-statism necessitates a rethink with respect to the new security policy. It is clear that the state would need to play an important role in a re-examined security policy in order to provide direction and guidance towards inclusive economic growth. Moreover, a thorough, concerted and long-term programme of strengthening key state institutions needs to be undertaken. Some key state institutions besides the State Bank like the Higher Education Commission and Planning Commission will have to be given required technical resources and complete autonomy so that they can chart out an education and industrial policy for an inclusive economic transformation.
A blind reliance on the state to address all issues is also problematic since states can be captured by vested interests. For this reason, where the state needs to take a driving seat in the economic and social transformation, the state must exhibit democratic hues working under and being accountable to Pakistani democracy.
In a sense, a democratic state must be placed at the centre of any new security policy in order to bring about the required social and economic transformation in Pakistan. Dani Rodrik, a leading development expert, has highlighted the institution of democracy as a ‘meta-institution’ that assists with the building of other good institutions. Rodrik cites a range of evidence to show that democracies enable high-quality growth — sustainable growth that improves living standards.
What this points out is that democracy must be the foundation or the starting point for a secure and prosperous Pakistan. For this reason, in order to improve various dimensions of the Pakistani democratic process, a new reform agenda needs to be launched so that democracy can become more representative, responsive, transparent and accountable. These reforms could entail moving from a plurality basis to a proptional representation basis. Perhaps, in order to safeguard minorities, the efficacy of quadratic voting needs to be assessed given that it allows for how strongly voters feel about particular issues. And, the feasibility of wholescale campaign finance legislation needs to be evaluated so that better leaders can be encouraged and incentivised to participate in the democratic process. Finally, it goes without saying that improving the quality of democracy will also prove salubrious for countering various ethnic and linguistic conflicts that exhibit centrifugal tendencies.
The new security policy seeks to address traditional and non-traditional threats facing Pakistan through neoliberal economic growth policies. It is old wine in a new bottle. Not only have these policies failed to deliver in the past, the world is now moving towards neo-statism where democratic states will become the engines of social and economic transformation. The journey to a secure and prosperous Pakistan must start with giving democracy the pride of place.
The writer completed his doctorate in economics on a Fulbright scholarship.
Published in Dawn, February 10th, 2022