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Concerns about national common markets

April 15, 2013

How best can the ‘national common markets’ be shaped and served by the transition to democratic federalism to provide ‘national public goods’?

In the Social Policy and Development Centre (SPDC) study on ‘Devolution and sustainable development’, fears have been expressed that “there can be a breakdown of the common market for national goods and services if some regions impose restrictions on movement.” And it suggests ‘allocation of expenditures’ and fiscal powers should not disrupt the functioning of the national common markets.

Perhaps the concerns about the common market can best be examined in the light of some of the ‘key principles’ embodied in the ‘conceptual framework’ for devolution stated in the report. Significant among them in this context are ‘equity among federating units’, subsidiarity, ‘recognition and promotion of diversity and differences’ and ‘co-operation between federating units.’

In applying these principles together, one must inevitably encounter diverse approaches towards an evolving ‘common market’ with ‘provincial’ economies gradually adjusting to the emerging autonomous status of the federating units on whose foundation a sovereign Pakistan can be achieved.

Currently, the needs of the common market, as it exists with many single market features, tends to compromise the autonomy of the federating units that leads to a self-reliant growth of the ‘provincial’ economy.

The sub-national government’s, to quote the study, ‘fundamental responsibility’ and ‘empowerment’ of the people ‘to raise their voice, be heard and make choices’ will have to be reconciled, step by step, with the needs of the common markets. The underlying principle for this adjustment or give-and-take should be what cannot be managed beyond competence by ‘sub-nationalities’, should be handled at the federal level, as the SPDC report points out through ‘cooperation between the federating units’. (Forums such as Council of Common Interests provide the mechanism through which common concerns can be resolved through joint decision-making.)

Such an arrangement will help overcome the ‘disadvantages’ of federalism and ‘duplication of government’ mentioned in the report. No doubt, federalism is ‘more complicated and difficult to operate’ because of the absence of the cardinal principle of ‘subsidiarity’ in today’s quasi-federalism. This principle ‘allows for decisions to be taken at a level closest to where the impacts of decisions take place.’ As for efficiency, the failed concept of ‘too big to fail ‘proves beyond any iota of doubt that ‘efficiency’ is not an attribute every thing big. While some features of democratic federalism may have stabilised, representative district governments are still nowhere in sight.

Then in the course of organic evolution of democratic federalism, the centre-provinces relationship will guided by the country’s ground realities, international experiences and no less important, the transformational phase of federalism specific to the current era.

In this scenario, it is but inevitable that national common markets will have to shed some space to allow the federating units to exercise autonomy and practice economic self-reliance. Market democracy can no longer block the path to representative democracy leading to federalism. The emerging contours of national common market will be shaped initially by the course representative democracy takes, and the gradual evolution of the participatory process. The common market will gain or lose space according to the changing needs of the federating units for common endeavor at the federal level.

Federalism may be ‘more complicated and difficult to operate’ but it is currently the best possible course to resolve the complex and complicated process of economic, political and social development.

The authors of the study have rightly called for a ‘different development paradigm to deal with the country’s social and political problems’. They rightly point out that the ‘paradigm followed in recent years’, despite several years of high growth, has plunged the country into a deep crisis.

While acknowledging ‘equity among federating units’, how can one escape the consequences flowing from it? One such example is the recognition of the right of the ‘sub-nationalities’ over their natural resources and the first right to use them. For example, oil and gas. This is consistent with the principle of ‘recognition of diversity and differences’ in federalism that authors of the report advocate.

Seeking unity in diversity through universally applicable principle is one thing and enforcing uniformity through a fiat is another. Fiscal powers should be determined by the imperatives of ‘provincial’ autonomy rather than the demands of the national common markets in the current phase of quasi-federalism.