Nationalizing “Bundoo Khan”
World War 2 sustained communism far beyond the 50 years it should have gone on its own momentum, the impetus of that war acting as a “manufacturing force-multiplier” for the socialist economy. As it is Communist China chose economic emancipation in the mid 70s under Deng Tsao Peng, President Jiang Zenin nailing the coffin of its socialist ideology last October by allowing free enterprise entrepreneurs officially into the Communist Party. By the late 60s it had been clear that the romantic notions of socialism that the leaders of independent third world States newly created in the 50s was seriously flawed. Saddled by an inefficient and indolent public sector which was into railways, telecommunications, water projects, electricity, sewerage, etc but flanked by socialist ideologues like JA Rahim and Dr Mubashar Hussain, Zulfikar Ali Bhutto plunged Pakistan into three decades (and still counting) of economic wilderness by his nationalization-binge of the early 70s.
Privatise, but Carefully!
Pakistan’s golden economic years were the 60s. While there were aberrations, e.g the disproportionate distribution of wealth among only a handful, they were nowhere as serious as those confronting the nation today. A mixed economy with benevolent central direction was a model for the other emerging economies of Asia. Today we will be lucky if we can regain any semblance of the momentum lost to us over the past three decades. By the early 70s, despite the fact that it had become quite apparent that the concept of socialist economy was a dismal failure and many of those countries that had followed the romantic notion of socialism under the leadership of charismatic leaders were already re-thinking their economic strategy, we started to head pell-mell in that direction. The first major breakaway from the pure socialist model was the Peoples’ Republic of China, which under Deng Tsao Peng started to gradually brake and reverse the socialist Soviet model and by the early 1980s was well on the road to a mixed economy. In retrospect it seems they followed Chinese cousin Lee Kwan Yew’s Singapore model of the late 60s/early 70s on a far bigger scale. The far smaller Island-State provided the blueprint for opening the economy to free enterprise with public utilities under State control, at places in partnership with the private sector. The leaders of both Singapore and China were careful to keep the opening up of the economy ahead of the loosening of controls over freedom lest the public’s aspirations overcome achievement. In the early 80s Thatcherism was born when Margaret Thatcher established her policies on the dual Chinese experience (Singapore and China), to quote “when you copy from one person it is called plagiarism, when you copy from many it is called “research”.
The father’s penchant for sweeping nationalism has only been transcended by the daughter’s for complete privatisation, an orgy of extremes and excess, both at the wrong time. Late Zulfikar Ali Bhutto at least had his own vision, neither Ms Benazir’s vision or her objectives seem to be her own. Bhutto went about dismantling Ayub’s economic legacy with wholesale vengeance but this paled in comparison to the bureaucratic excess during Zia’s Martial Law that followed. Given a veritable treasure package to handle, bereft of political control and with the military men-in-charge having no sense of economics, bureaucracy went berserk in personifying the worst of Soviet-model control in industry, ushering in inefficiency, pilferage, corruption, etc in so rabid a manner that despite free-wheeling movement towards free enterprise over the past 5-6 years we cannot stop our economic slide downwards. One saving grace of the Soviet model was that those corrupt or profligate with the public money or property faced firing squads, has any of our corrupt managers in the 1977-1985 period faced any punishment?
Pre-budget Economic Review – Economic Fortress Pakistan – III
(This is the FINAL instalment in a series of THREE articles)
Unlike Deng Tsao Peng who put economic liberalisation in China far ahead of the gradual awakening of political freedom, Gorbachev was so eulogised (and pampered) by the western media that he went overboard and attempted Glasnost (openness) ahead of Perestroika (economic revolution) in the Soviet Union. An inefficient centralized economy under the strain of the extended Afghan War was pummelled by Gorbachev’s ill-planned denationalisation and disinvestment, raising the expectations of the masses beyond the capacity of the State to fulfil and resulting in economic disaster. By focussing on Gorbachev’s ego, the west succeeded in its aim of disintegration of the Soviet Union, winning a war “without bloodying swords” (Sun Tse Tsu) against one of the two communist Superpowers. The same was precipitated to short-circuit China’s process but failed because of China’s refusal to cow down before student pressure in Tianenamen Square on prime time TV. Germany and Japan had surrendered unconditionally to the western powers, fifty years later they have put the victors to the economic sword without fighting a single battle. Arguably Soviet Union’s economic fate was best depicted by former Warsaw Pact’s Russian Commanders selling arms and equipment in Eastern Europe in order to pay salaries to their soldiers. For those keenly interested in the direction national security is taking in Pakistan, this should serve as a horrible example.