Economy and democracy
(Dedicated to my late father who would have been 69 today, had he lived beyond 1983).
The economic shambles of the German Weimar Republic saw the emergence of Hitler’s Third Reich. In short order, by the help of various draconian economic measures, the country became an economic giant. Given the anarchy besetting Germany in the late 1920s, the industrialists who willingly cooperated with Hitler, could not see the seeds of destruction at the end of the rainbow, only a pot of gold, but that is in keeping with the normal penchant of most human beings, businessmen cannot be isolated in the blame for this.
In utter contrast to the experience of the early 30s came the resurgence of the Federal Republic of Germany from 1950 onwards, this time under democratic elected governments. The Federal Republic of Germany (FRG) has now become the pre-eminent economic power in the world, so much so that one of the occupying powers, the Soviet Union, a major Superpower, is looking anxiously at them for sustained economic sustenance less than half a century after laying Germany in ruins, bereft of material and human resources. On July 1, 1990, the two Germanys became united in a monetary union (leading to full unification). Only the economic strength of West Germany could absorb the almost worthless East German currency on a one on one ratio, an amazing display of awesome monetary depth.
One country, but with two contrasting routes to economic prosperity in the same century but in both methods there are obvious merits and de-merits, in third world countries the choice of going the authoritarian way or the democratic one is not based on economic premises, it is ruled by events beyond one’s control, sometimes created by circumstances, sometimes out of sheer dereliction of the mandate given by the masses and/or the ambitions of certain individuals and/or groups.
We have recently gone over (till 1988) a period of authoritarian rule of eight years followed by a democracy of sorts for a period of three years. The economy inherited by the Martial Law Regime from Zulfikar Ali Bhutto’s PPP was in terrible shape. When PPP came to power, they appointed their most ardent (and intellectually honest) socialist Mr. J.A. Rahim, to implement their nationalisation programme as Minister for Production. Almost as if following Ayn Rand’s script for “Atlas Shrugged” and “Fountainhead”, the People’s Party nationalised all heavy industries, bringing it under the Ministry of Production (Board of Industrial Management) followed a couple of years later by Dr. Mubashar Hasan’s mad scheme of nationalising the commercial banks under the Pakistan Banking Council (PBC) run by the Ministry of Finance, cotton and rice already controlled by the aegis of the Ministry of Commerce as the Cotton Export Corporation of Pakistan and Rice Export Corporation of Pakistan. Mr. J.A. Rahim was a bureaucrat of the old tie, unwittingly he created a monster.
Cynics say that nationalisation effort was not out of sincere intent for the uplift of masses but more out of spite of the rich, whether this is true or not is open to question, what is probably more correct is that the politically sensitive Bhutto rightly assessed that the masses deeply resented the wealth acquired indiscriminately by the robber barons under Field Marshal Ayub’s benevolent decade of rule. The middle class was hardest hit, about the poor the less said the better. Nationalisation seemingly took back the “peoples” wealth on behalf “of the people”. In theory this was laudable, third world countries in the same stage of development that Pakistan was in the early 70s needed a fair mix of public and private sector in the management of the economy. If the public sector had remained under strict political control there would have been some aberrations but generally things would run smoothly, as it is we saw lackadaisical political control after the ex-ceremonious exit of Mr. J.A. Rahim with resultant bureaucratic loot of the till, leaving both the politicians and the electorate with an empty bag. Except for very honourable exceptions, either in efficiency or in honesty or both, the bureaucracy did not have the foggiest notion of running commercial and/or industrial enterprises, this coupled with boundless greed, saw each and every sector of the public sector come to grief and in most cases grind to a halt.
With the advent of Martial Law in July 1977 private business and industry raised its head again. While de-nationalisation was promised, bureaucracy which had tolerated a modicum of accountability under the political government now became untouchable. Since the last Martial Law had no economic objectives and no commitment to ameliorate the lot of the downtrodden masses, an unholy cabal of bureaucrats and businessmen ruled over the economy while the men in uniform, supposedly the rulers, never even darkened the portals of any of the crucial Ministries of Finance, Planning or Commerce. As long as financial control remained firmly in the hands of selected bureaucrats, they were quite happy to let the uniformed men play paper “Kings and Monarchs”. No doubt, the easing of the disturbed political situation brought the economy temporarily under some control, an artificially buoyant economy was purchased by acquiring of short and long term debt without thought of repayment, the parallel black economy thriving on smuggling of drugs, etc helped. In effect the stability of the economy was brought at the cost of the economic future of the nation. There is no doubt that the World Bank and IMF felt comfortable with the authoritarian regime (as they are normally wont to be with non-representative governments), they knew that any prescription suggested would be followed in a slavish manner. The bureaucracy however ignored privatisation or denationalisation, though a Cell was created in the Ministry of Production that negotiated some such deals out of sheer vested interest, somewhere in the woodworks those rich bureaucrats are still alive and well in Islamabad. It was not till the Junejo Government came to power that a measure of accountability was restored. Mr. Junejo is a lack-lustre politician having very little mass appeal, probably that is why he was chosen as PM by the late Gen Ziaul Haq, however Mr. Junejo grew confidently in stature in his job and to his credit some Federal and Provincial Ministers were fired for corruption or incompetence, the bureaucracy that was cock-a-hoop of the business-as-usual attitude grew increasingly critical of his performance.
Some known leeches and hangers-on active during the Martial Law Regime wound their way into Junejo’s inner circle and proceeded to use that leverage to their own pecuniary advantage but that is the way of the world, such people being basically pimps who ingratiate themselves with any regime by corrupting the nouveau power-elite. Almost all the known “lobbyists” during the Junejo regime are back in contention today, whether arranging cotton deals, rice deals, aircraft deals, you name it! These deal makers can conjure up the right contacts at the drop of a hat in any regime, bad loans from various banks notwithstanding.
Any measure of democracy is better than a martial law, even economically as we have seen, provided the rulers elected by the masses are sincere to their mandate and themselves. The PPP regime has come to power on the strength of a dream, the vision of the masses that Ms. Benazir has a panacea for all ills. While it has been a satisfactory exercise for the nation to go back to the democratic process, increasingly it is becoming clear that politicians and their cronies are out to line their own pockets at the expense of the elected. It is also clear that Ms Benazir has been badly hamstrung by the rumours swirling around her own family in taking any forceful step. In normal circumstances Ms Bhutto would have dumped the political handicap that Ehsanul Haq Piracha a long time ago, as it is the suspicion persists that even this political lightweight would be in a position to blackmail the PPP hierarchy by blowing the whistle on various shenanigans if he exits Government. No doubt there were blatant cases of corruption during the Zia and Junejo regimes, the present hailstorm of rumours are unfortunately associated with Ms. Benazir’s regime in widespread and persistent fashion. The question arises, is she really an idealist, burning with the fervour of ameliorating the sorry lot of the masses and the glory of the country or has she fallen prey to the gold fever? Some of her closest confidantes during the lonely London days of half-exile do not think so, more out of loyalty than conviction, blaming the changes on post-marriage perceptions. There is no doubt that some elements in the PPP have cornered the cronyism market, the economy is being effected by their machinations.
It is easy to jump to the conclusion that democracy has failed and so we should return willy-nilly to authoritarian rule but that is not so, democracy has not failed, the people who have brought unadulterated democracy back to this country are in the process of failing by adulterating the very democracy they are pledged to secure. While martial laws may be good for the economy in the short term, if it comes in with no other commitment than one objective only, to perpetuate the rule of one man, in civilized society it becomes a non-starter (until such time that civilization starts to deteriorate). If people are getting away with unbridled loot and plunder in a democracy, what security would martial law provide when there is no accountability because of total clampdown on the media? Accountability exists through the media in a democracy for the general good of the public, while one such candle is kept a-lit, this exercise is fulfilling.
The PPP would do well to put its house in order, we have reached a stage where any straw will break the back of democracy. The responsibility of that catastrophe will lie squarely with those in power today.
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