Economics is a social science that focuses on the production, distribution, and consumption of goods and services. What is produced in an economy, who produces it and how, and how consumption of these goods and services is encouraged (or discouraged) falls under the domain of economics.
To produce these goods and services, resources are required, which means that economics also deals with the collection and distribution of key resources in an economy.
Understanding the above is critical for recognising that contrary to the wish of many in Pakistan, economics and economic policymaking cannot be separated from politics. This is especially true in a country like Pakistan, where resources are both scarce and have been captured by a narrow kleptocratic elite.
It is for this reason that calls to separate the economy from politics and even well-meaning demands for developing a so-called “charter for the economy” are unlikely to resolve the crisis confronting Pakistan’s economy — the inability to create opportunity and wealth for the many, not just the few.
According to the UNDP, over $17 billion a year is provided in subsidies and other handouts to elite segments of society. To put this figure in context, the total losses and reconstruction costs of the 2022 floods is about $30 billion, meaning that resources provided to elites over a period of two years are sufficient to recuperate the losses and rebuild communities devastated by the historical floods.
In the absence of a political conversation about the resources Pakistanis have collective access to, suboptimal choices about who benefits from the distribution of resources will always be made.
A reading of the country’s own short history of 75 years provides us evidence of the implications of these poor choices — extraction of resources from East Pakistan, for example, led to a sense of disenchantment and anger among the people that now inhabit the country of Bangladesh. Similarly, extraction of natural gas from places like Sui led to resentment among the population in Balochistan, who for decades did not benefit from a natural resource extracted from their own lands.
These economic choices were made because economic policymaking was disconnected from politics. A narrow segment of elites, including technocrats brought in to make economic policies for dictators, railroaded the political process. As a result, economic choices that were made did not consider the cumulative welfare of the tens of millions of ordinary citizens.
The development of these exclusionary economic policies and their implication, in fact, would have been next to impossible had the economy not been disconnected from politics.
Which is why one can safely say that the policy of depoliticising the economy, and not its overpoliticisation, is what has brought the country’s economy to the brink.
All choices are political
To get out of this morass, Pakistan needs more effective and representative politics. This includes devolution of power, which calls for giving local governing bodies the right and ability to raise and spend tax revenues, as well as a sustained process that reduces the influence of unelected stakeholders in economic decision-making.
Take for example the issue of property rights. A capitalist society, even one with Chinese characteristics, cannot function without robust enforcement of property rights. The enforcement of these rights is a political issue — for example, who can own what type of land, what they can do with it, and how they profit from (and pay taxes on) said property are all political choices.
If the said country is facing food insecurity, it may devise an economic policy that makes it difficult to convert agricultural land to a multi-acre housing society. Another may realise that while a parcel of land was productive for growing cash crops, the negative consequences causing reduction in water table demands rezoning of that land for perhaps a better use.
In the same vein, a country with weak regulations may take a cautious approach to wholesale privatisation, while one with low literacy rates may prioritise expending scarce resources towards basic education, not bleeding-edge research and development.
All these choices are fundamentally political in nature, starting from their local community impact at the very lowest levels of political involvement and going all the way to the top in terms of their impact on macroeconomic stability and human security. To argue that these choices should be made by separating them from politics would be a travesty, as it disenfranchises millions of ordinary citizens from having a say in their own economic future.
As Pakistan’s economic and political crisis deepens, the answer lies in more, not less politics. This is because only through a sustained political process — that increases inclusivity and representation of the many at the expense of the few — can Pakistan meet its full economic potential.
How the country makes those choices should be determined by the millions of patriotic Pakistanis that call this land home. By taking away the right of ordinary Pakistanis to engage in politics and thereby determine their own economic future, Pakistan’s elites will only inflict more misery on the country and its future generations.