In the national discourse on issues of economic recovery and inclusive and sustainable growth, we are constantly reminded of the need for new social contracts or charters of economy, democracy, governance, and rights.

To enjoy national ownership, these new social contracts must evolve with the stakeholders’ consensus through the reconciliation of their diverging interests.

Concerted efforts are underway to get political parties, particularly elected representatives, to work on a common minimum agenda for quick economic recovery. For that to happen, all political parties must opt for a policy of independence and cooperation. While seeking a common agenda, they should remain free to pursue policies for their maximum programme.

Implicit in the above approaches is that they touch upon issues of common interests in one way or another. The need for participatory representation based on free and fair elections and respect for the electorate mandate is seen as the best mode to define and work for the common good. This is crucial for policymakers and all stakeholders in reorganising production, distribution and the new socio-economic model.

Without a common minimum agenda to work towards, the state and stakeholders make poor policy decisions, mismanage conflicting interests, and harm local emerging market players

The question arises: what should we do so that goods and services benefit the public as a whole? That is the main theme of Jean Tirole’s book Economics for the Common Good.

“The task begins,” the author says, “with defining common good to align the private interest of individuals, social groups and nations.” Discussions in economics should focus on the objectives embodied in the common good by distinguishing ends from means. He observes that once a definition of ‘common good’ has been agreed upon, economics can develop tools that contribute to achieving it.

Minister for Commerce Jamal Khan told a news conference during the two-day Pakistan-Saudi Arabia investment conference that Pakistan’s new strategy, focusing solely on facilitation, has significantly enhanced the confidence of investors.

While the urgent need to revive investors’ confidence cannot be denied, the issue of public goods cannot be set aside. One can just refer to a few cases where unreconciled interest clashes lead to negative outcomes.

For example, the interest of stakeholders, including consumers, cannot be overlooked in the case of the recently proposed acquisition of Telenor Pakistan (Private) Limited by Pakistan Telecommunication Company Limited.

After preliminary investigations, the Competition Commission of Pakistan notes that if the acquisition proceeds, competition will diminish, leading to fewer choices and options, particularly in local markets with few competitors, potentially resulting in adverse outcomes for consumers.

Despite the state’s strong footprint on the economy, the regulatory framework for promoting public goods is weak. Production of goods and services should at least be competitive at the domestic level before producers strive to become globally competitive. The market should not be allowed to be manipulated to discourage newcomers.

‘The quest for common good also involves constructing institutions to reconcile, as far as possible, the interests of individuals with general interests’

Liberal imports alone cannot help make the economy competitive. In fact, according to local vehicle manufacturers, the increased import of used cars is currently impeding local output and sales. This has been a recurring event from time to time.

In another case, farmers are protesting against unneeded wheat imports that have depressed local demand and pricing of increased local wheat output. In the conduct of trade policy for foodstuff and essential items, the first priority should be to meet the peoples’ needs, and only trade surplus should be exported.

Last week, apparently to pacify the farmers, the Cabinet Economic Coordination Committee approved an increase in the federal wheat procurement target from 1.4 million tonnes to 1.8m tonnes, along with the required cash credit limit of about Rs41.5 billion to purchase additional quantity — an odd way to manage conflicting interests.

To quote Mr Tirole, “The quest for common good also involves constructing institutions to reconcile, as far as possible, the interests of individuals with general interests.” Some economists have advocated setting up a common interest state. Economics is about public welfare, according to those who consider economics to be a beneficial social science.

“Rights to health, equality of opportunity to education, human rights and freedoms are no longer abstract concepts that society can grant or deny people at will,” says Mr Tirole. “In practice, rights need to be granted at different levels,” he adds.

His research is based on the theory and practice of economics. It includes concerns about the increase in inequality and the loss of social cohesion in the current phase of development of market economies. The book also dwells on the role of independent authorities in addressing market failures and, more importantly, the primacy of politics. And that human rights and freedoms are needed to protect people against arbitrary government.

The author observes, that the current form of corporate management grants decision-making power to shareholders or, if debts are not repaid, to creditors. Yet, the firm has many other stakeholders, employees, sub-contractors, customers, local authorities, the country and the countries in which they operate or those who live nearby. He suggests many potential organisations where the shareholders may hold power in diverse configurations and arrangements.

Published in Dawn, The Business and Finance Weekly, May 13th, 2024