WE live in an Anglo-Saxon world. In a broad sense, this means that a combination of UK-US institutions has come to encompass our lives. For starters, many people around the world speak English, an Anglo-Saxon language. The dispensation of justice and contract enforcement in many countries is also based on Anglo-Saxon legal traditions visible in the precepts of the common law.
Additionally, capitalism, the dominant economic system today, truly came of age in Anglo-Saxon nations with first British and now American economic domination. Specifically, the story that explains exponential economic growth during the Industrial Revolution focuses on the institution of Anglo-Saxon property rights within capitalism as these are said to have created the right incentives. Even cricket is said to have Anglo-Saxon connections given that the name of the sport possibly derives from the Anglo-Saxon word ‘cricce’ meaning a crooked staff.
But, where Anglo-Saxon institutions have come to dominate the world through language, law, commerce and sport they have been able to do so through tremendous agility, flexibility and dynamism, always evolving to address changing social, political and economic ground realities.
Recently, the cricketing world’s attention was focused on the somewhat controversial dismissal of an English batsman during the second Test at Lord’s. The English cricket team and English cricket fans were up in arms against this dismissal as it was deemed to have gone against the norms or the ‘spirit of the game’. It even led to an interesting though good-humoured exchange between the prime ministers of UK and Australia as they met on the sidelines of a recent Nato summit.
We would need to follow in the footsteps of Anglo-Saxon policymakers to modify free trade policies that haven’t worked for us.
The English reaction was so intense because the English-speaking people pride themselves on meticulously adhering to the formal rules and norms — or the institutions — of this sport. ‘It’s not cricket’ is used in the English language to denote unfair behaviour.
This was all well and good. But, 90 years ago, the English cricket team was responsible for introducing new tactics in cricket that had been earlier considered unfair and had resulted in serious acrimony between England and Australia that lasted until World War II.
In 1932-33, the English team’s efforts at regaining the Ashes came up against a fortress called Donald Bradman. Bradman was, and probably his record still stands, the best batsman that ever played the game averaging around 100, twice that of other world-class batsmen.
English bowlers closely studied Bradman to identify chinks in his armour. Even though it was considered unsportsmanlike to target batsmen, Douglas Jardine, the English captain, concluded that Bradman appeared vulnerable against short, bouncing deliveries aimed straight at the body. Jardine directed his pacers to specifically target the Australian batsmen, while placing a ring of fielders on the leg side. As the ‘bodyline’ series got under way, Australian batsmen were often dismissed cheaply in attempts to shield their bodies from dangerous deliveries. Predictably, England won the Ashes series of 1932-33 four Tests to one.
In the same vein, the Anglo-Saxon nations have never shied away from changing their economic policies in their continuous quest for more prosperity. Ever since the implosion of the Soviet Union, the bulk of economic policy advice coming from international financial institutions such as the IMF has focused on the Washington Consensus. Washington Consensus policies drove a wedge between the state and the market, arguing that economic production and redistributive outcomes had to be left to the whims of the free market with a minimum, if any, input from the state.
This thinking was also extended to global trade, with the WTO asking countries around the world to open up their borders to goods and merchandise. At the turn of the century, China’s entry in the WTO was hailed as a significant win for the Washington Consensus as it was proclaimed that free trade would eventually force China to become a Western-style liberal democracy.
According to the IMF’s April 2021 WEO database, China’s GDP amounted to barely 13 per cent of US GDP in 2001. Twenty years later, this number is around 73-75pc. This spectacular economic, and the resulting geopolitical, rise of China has forced Anglo-Saxon policymakers to reject their own free trade ideas in favour of state-sponsored industrial and innovation strategies that in the case of the US, interestingly, have been conceived by Jake Sullivan, the national security adviser. In a sense, the US is gearing up for a serious economic fight with China by providing massive industrial subsidies in order to rejuvenate industrial hubs. The Financial Times labelled these momentous changes as “the new era of big government”.
As a caretaker government in Pakistan is about to unfurl its wings, the new finance minister would be well advised to use the period to bring together the relevant experts to evaluate what has not worked and how Pakistan can develop economic policies that address its social, political and economic ground realities.
Perhaps, the new finance minister would need to follow in the footsteps of Anglo-Saxon policymakers to modify free trade policies that have not worked in Pakistan’s favour. Where India has gained tremendously from free trade after opening up its economy in 1991, Pakistan has not fared well with persistent balance-of-payments crises and consequent exchange rate depreciations despite accepting assistance from the IMF 12 times since 1993.
It should now be clear that given Pakistan’s abysmal state of human capital, Pakistan’s economy cannot prosper in a free trade regime unless a systematic two-pronged strategy is employed. This will involve simultaneously picking winners and providing them with state support in the shape of cheap capital and energy — the IT sector is a good candidate — while channelling massive investment into health and education for Pakistan’s young population so that overall productivity in the economy can go up.
In time, Pakistan’s policymakers need to identify and change the policies and institutions that were implemented by Anglo-Saxon rulers before 1947. This is especially important since Anglo-Saxon institutions themselves have modernised and evolved over the years. It is simply not possible to shoulder the burden of antiquated institutions any longer.
The writer completed his doctorate in economics on a Fulbright scholarship.
Twitter: @AqdasAfzal
Published in Dawn, August 5th, 2023
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