IN the recent days, three (related) pieces of news on the state of the country’s finances and strategies have been made public, albeit to much less fanfare than they deserve.

First, in the report released at a meeting of the National Economic Council chaired by the prime minister, it was asserted that poverty and unemployment have fallen.

Notwithstanding the credibility of such figures, it is high time that such pronouncements are exposed for the relatively meaningless public relations exercises that they are.

Intuitively, these figures totally contradict the feeling that prevails amongst most Pakistanis about the suffocating increase in the cost of living and the potent lack of comparable income-earning opportunities.

From a methodological point of view, these figures do not speak to the fact that the vast majority of economic activity in Pakistan takes place in the so-called informal sector anyway.

While there has been much hullabaloo about the informal sector in global policymaking circles over the past couple of decades, analyses of it have been woefully inadequate, largely because they gloss over the political and cultural dimensions of its myriad dynamics. The reasons to better understand the complexities of Pakistan’s (and most other third world countries’) economy are profound.

The majority of people are involved in work that is not captured by the formal mechanisms of codification, therefore they are not legally recognised and cannot be provided the requisite protection to which they are legally entitled. On top of this, propertied classes of all kinds carry out a large part of their activities informally and therefore huge amounts of potential revenue are lost to the state.

If this was where the phenomenon ended, there would already be enough on our plate. All of the above-mentioned processes are further complicated by the fact that the state is part and parcel of the informal economy and therefore central to the ‘problem.’ Most mainstream policies designed to meet the challenge of informalization revolve around the idea of an objective and monolithic policy making entity that has the clear goals of maximising social utility.

When it is pointed out that the state is far from this objective entity, policymakers – particularly since the heady days of Reaganomics – have posited that the state is part of the ‘problem’ and therefore the solution involves rolling it back, or in other words liberalizing the economy so that the cumbersome regulatory apparatuses that underlie ‘corruption’ are done away with.

But this is equivalent to putting the proverbial cart before the horse. In the first instance, state functionaries thrive on the informal processes that they theoretically want to do away with.

Second, reducing the state’s formal capacity to regulate economic activity does not actually reduce ‘corruption’ but instead ensures that the cultural and political practices that underlie the informal economy are reworked in new and often more ruthless ways.

In any case, use of the term ‘corruption’ to conveniently set up a case for rolling back the state totally neglects the complex political and cultural dynamics that condition capital accumulation, which, after all, is what economic policy in all corners of the globe is ostensibly about.

In a patently unequal society such as Pakistan’s, the workings of the informal economy provide an uncensored insight into the reproduction of inequality. In this process, propertied classes – including not only those that run the commanding heights such as big landlords and industrial and mercantile magnates, but also intermediate classes such as traders and medium sized landowners – are involved in numerous highly personal relationships with state functionaries, typically based on kinship and other such ‘primordial’ identities, in which all parties benefit from cycles of accumulation.

Meanwhile, the subordinate classes – including landless agricultural labourers, ex-tenant farmers, and wage labour of all kinds in the service and manufacturing sectors – continue to fall through the cracks.

So, when our government releases glossy figures about the glowing state of the economy, rest assured that they provide almost no insight into the dynamics of the real economy.

What is more revealing however is the second piece of news that confirmed – as usual – that defence spending in the current fiscal year will exceed budgeted allocations. Apparently the half-year figure shows an increase of 18 per cent over the previous fiscal year and the upward trend is set to continue.

Of course, to some extent even these figures do not tell the whole story. At least a part of allocations for pensions and salaries of military men are reflected in the civilian budget.

In any case, as has been asserted far and wide, defence remains a sacred cow in Pakistan and there are numerous expenditures related to the non-combat needs of the military that are simply not accounted for in any budget.

Finally, there is the news of the government’s belief that approximately US$60-70 billion is needed to replace its ailing water storage infrastructure. Such announcements/appeals have been made repeatedly since the launching of the Water Vision 2025 which foresees the building of numerous mega water projects in different parts of the country over the next two decades.

It is another matter altogether that the issue of water is arguably the most controversial political matter in the country, that there is nothing approaching a consensus about the need or efficacy of mega water projects, or that it is now internationally recognised that there are a multitude of alternatives to such projects that cost less, and affect much less ecological and social damage.

Taken together, these three pieces of news provide a glimpse into the warped world of our economic managers. On the one hand they insist on depicting Pakistan as soon to be joining the mythical world of Asian tigers, replete with the same international glamour. Meanwhile they also cling onto the charade of Pakistan as a military power, even as the US and India deals that further relegate Pakistan to a position of relative obscurity, doomed to be important only when geo-politics demand it.

Not to mention that the inordinate expenditures on defence continue to condemn large numbers of Pakistanis to unacceptable deprivation. And finally our economic managers persist with an overall vision of development that is not only politically destructive in terms of the massive fissures that it promotes within an already fractured polity, but also in terms of its innumerable social and ecological impacts that have been acknowledged by all and sundry.

In reality, Pakistani society is ravaged by inequality and injustice and no amount of posturing and public relationing can obscure this. While the motives and machinations of the ruling class are not likely to change, what can change is the intellectual dishonesty that pervades the polity.

Even while our state oligarchs are secure in the knowledge that there is no serious challenge to the neo-liberal paradigm that they champion, there is every reason to believe that Pakistani society could implode at the seams if the deep complexities that underlie it are not understood and redressed.