Socio-economic evolution of Pakistan - present stage and views on the type of development

Belokrenitsky V.Y.*

Socio-economic evolution of Pakistan - present stage and views on the type of development

Abstract. The article deals with two interraled subjects. The first one purtains to the features of Pakistani socio-economic evolution at the present stage, which began, in my opinion, in the end of 1970s after the Army seized power by committing an abrupt and largely unprovoked coup-d&etat. Recently published scholarly literature contains certain material on the nature of socio-economic transformation in the country and reveals a dispute between mainly left leaning scholars on the specifics of Pakistan&s social, economic and political problems. The second part of the article is devoted to a brief analysis of some of these views.

As it is already clear, the author singles out two long periods in the economic and social history of Pakistan. The first lasted for around 30 years since the creation of the state in 1947, while the second continues for more than 40 years afterwards. What allows me to see the watershed in coming to power of the military in July 1977? It was not for the first time that the military coup happened in Pakistan, and the state authorities used the Islamic ideology not only after but before as well to strengthen control over society. However, that coup had deep and far-reaching repercussions and consequences, some of which are not yet overcome.

Let me state that the military, although they were at the helm of the affairs in the country from 1958 to 1971, could not at that time take full advantage of this. To put it shortly, conditions were then missing for the military to constitute itself as a full-fledged social corporation. Although generals had succeeded in becoming the backbone of the ruling circles in the 1950s and 1960s, they pursued a policy of empowering, with the help of civil bureaucrats, big industrial houses, the class of bourgeoisie which was rich and partially monopolistic by local standards. In sum, traders-turned-industrialists and highier echelone of the civil bureaucracy were the major beneficiaries of the military&s stay in power at that stage [1].

In the beginning of the 1970s, Z.A. Bhutto, a civilian bureacrat-turned-politi-cian who was instilled in power by the military after the Pakistani Army defeat in the war against India, dealt a severe blow on the major groups of big bourgeosie and upper crust of civil bureacracy undermining to a considerable extent their wealth, power, perks and privileges. His populist policy not only weakened the bourgeois-bureaucratic combine, but paved way for the consolidation of military corporation by strengthening its material basis.

Firstly, it was done by making previously created military charitable funds (Fauji [Soldier] Foundation and Army Welfare Trust) active in capital

* Belokrenitsky V.Y. - Candidate of Sciences (Econ.), Doctor of Sciences (Hist.), Professor, Head of the Center for the Study of Near and Middle Eastern Countries, Institute of Oriental Studies, Russian Academy of Sciences.

Socio-economic evolution of Pakistan - present stage and views on the type of development 117

accumulation and in direct industrial investment. Secondly, by rewarding generals with big chunks of newly irrigated state owned land.

After the army came to power again in 1977, active and retired military personnel infiltrated administrative and managerial apparatus. The army under General M. Ziaul Haq relied on the support of conservative clerical circles and embarked on a broad based campaign of Islamization of all spheres of social, political and economic activities. Under the disguise of this policy the military had considerably strenghthened its share in the corporate sector of economy and in other segments of lucrative business. The military continued the populist policy of Z.A. Bhutto (whom they not only deposed but sent to gallows) aimed at discouraging certain groups of alien private capitalists and retained a role for the public sector controlled by them. At the same time they supported and encouraged private investors and industrialists which were linked to them through a network of social ties and individual contacts. Pakistan&s so called formal or organized economy by the late 1970s had become an example of corrupt state-dependent crony capitalism.

The end of the 1970s serves as a watershed because of two other reasons as well, that is, social transformation in rural areas and surge of labor migration abroad. Serious changes in the archaic rural system occurred as a result of the "green revolution" that started in Pakistan in the first half of the 1960s. The agricultural revolution was caused by speedy growth of irrigated land, usage of improved varieties of seeds, fertilizers and pesticides, and by mechanization, increase in the number of tractors. The age-old rural tradition of direct exchange of food, on one hand, and non-eatable products, field labor and services, on the other, was shattered. Eclipsed was the traditional relationship between peasants and farmers, who produced a surplus of food, and craftsmen and other "commi-nity servants", which were in Punjab called kammis (small ones).

In contrast to the Hindu areas, where traditional relations in rural communities were known as Jajmani, and were sanctified by the religion and caste system, the situation in Muslim villages was different. In Punjab, the main agricultural province of the country, the custom of non-monetary exchange was known as Seipi. Unlike Jajmani in India, it seemingly disappeared rather quickly under the transformed conditions. Craftsmen of low traditional status, liberated by the new market conditions, had obtained some privileges in the process of rural-urban migration. Free from pressures of the caste system, they were welcomed in urban and semi-urban localities as workers having certain experience and skills in repairing of agricultural machinery, such as tractors, bulldozers, electric tube-wells and pumps for field irrigation and some other agricultural machines and appliances.

Added to this, a noticeable increase in the price of labor occurred due to the opening channel for going abroad, mainly to the oil rich countries of the Arabian Peninsula and the Persian (Arab) Gulf. The amount of remittances of labor migrants has multiplied in the end of the 1970s and continued its surge afterwards. The remittances in some years were almost equal or even surpassed

export earnings of the country. At home money transfers were partly spent on consumer goods, but partly saved and used to buy real estate (land and buildings). The remittances thus helped to improve living standards and housing conditions in villages of migrants or nearby urban and semi-urban settlements. [2]

It should be stressed that representatives of non-landowning groups of villagers were usually more mobile and persistent in job searching after migrating from native places. Small and medium peasantry was as a rule lagging behind in social mobility which led to reversal in the former hierarchical pyramid. Land owners turned out to be often less prosperous and secure, showed less inclination in giving education to their children. Representatives of previously dependent, socially downgraded population in some cases gained in the position on the social ladder.

At the present stage of socio-economic evolution in Pakistan one can observe a definite increase in the strength of household, small and medium-sized enterprises in industry, trade, transport and services. This phenomenon of enhanced informal entrepreneurship can be characterized as expansion of the "lower tier" of capitalism [3, p. 501-513]. Overall and export potential of the informal sector in manufacturing has definitely increased since the 1970s. This was brought to light in several research papers and discussed in detail by a leading economist S.A. Zaidi. According to some estimates, quoted by him, small-scale and household manufactiring units demonstrated in the 1970-1980s higher growth in capital stock, value added, capital productivity than the large-scale enterprises. Albeit, labor productivity and composition of internally manufactured goods suffered. The trend, presumably, hold further on in time. The small-scale industrial sector contributed no less than 25% to the national export of processed and semi-processed goods in the mid-2000s [4, p. 137-139].

The pace of growth of employment in the informal sector had presumably increased since the 1970s, absorbing about 60-70% of industrially employed working force. While mitigating certain social problems, like open unemployment, the process was accompanied by high social costs, that is, poor quality of products manufactured for both internal and foreign markets, slow capital accumulation and decrease or in some cases only slight increase in labor productivity. Pakistan&s lagging behind in the development of basic industries and industrial infrastructure had had a grossly negative impact on the country&s economic progress which was characterised by some authors as deindustrialization. [5, p. 196].

The peculiarity of the Pakistani path of socio-economic development led to differences in its assessment, which resulted in a scholarly dispute about the nature of capitalism in the country and the key properties of its state system. A neo-Marxist, T. Amin-Khan, Associate Professor at a University in Toronto (Canada) had recently published a book putting forward a hypothesis of fundamental differences between the post-colonial development of India and Pakistan [5]. Starting from the fact of self-serving and significant socio-political role of the class of big bourgeoisie in India, he proceeded to argue that freed from colonial shackles, India from the very beginning followed the path of capitalist evolution.

While in Pakistan not bourgeoisie, but &feudal lords&, owners of vast estates, determined the basic characteristics of state, society and socio-economic evolution. He argues, and with good reason, that at the time of partition of the colonial India in 1947, there was essentially no industrial bourgeoisie in Pakistan, and subsequently it depended entirely on the state, which at certain stages encouraged the transformation of wealthy traders and business contractors into industrial capitalists, and at others suppressed and destroyed entire groups of large entrepreneurs. Relying on this argument, Amin-Khan considers the post-colonial evolution of Pakistan to belong to the category of proto-capitalist. He understands this type of development (shared with Pakistan by many post-colonial states), in two ways, as pre-capitalist and quasi-capitalist.

S.A. Zaidi, an influential author mentioned above, does not agree with the thesis of a non-capitalist evolution of Pakistan. In his book (which is designed to serve as a text-book as well), and in the article published by the leading leftist Indian journal &Economic and Political Weekly&, he emphasizes specific features of Pakistan&s economic and political system, but does not question its capitalist nature. Zaidi underlines rapid changes which had occurred in Pakistani rural and urban areas, resulting in the emergence and growth of &middle classes&. A point he forcefully makes, is the weakening of &feudal lords& both politically and economically. He disagrees with the argument of non-capitalist or precapitalist development of Pakistan stressing convincingly the dynamics of socio-economic evolution. In the social field he sees the spread of urbanization to the formally rural territories, the victory of urbanism over traditionalism and stresses the importance of technological innovations in the cultural sphere and the economy Zaidi refutes the thesis of outstanding influence of so-called feudal (or quasi-feudal) landowners, emphasizing growing mixture of origin in the class of absentee landlords, the emergence of new groups of big landowners from the ranks of retired military and civil bureaucrats.

More or less similar conclusions are made by another left-wing Pakistani author Taimur Rahman. Comparing the Pakistani model of capitalist development with patterns of evolution within the framework of other post-colonial states, he concludes that &the current model of capitalist development adopted by the state of Pakistan has given rise to a small industrial sector, and, by comparison, a gigantic sector of petty commodity production and small-scale capitalism& [7, p. 228]

It seems that the arguments of the latter two authors are more convincing. The Pakistani variant of socio-economic evolution is not fundamentally different from the Indian one, as well as others of the Eastern (Asian) countries, although it has some individual features essential for understanding the unique path of Pakistan&s development.

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