The Case for a Mixed Economy
Alarge number of Asian and African countries got independence from their European rulers in the 50s and the 60s. Since socialism was in the forefront in shrugging off the yoke of imperialism and capitalism, almost all the leaders were ideologically socialist. Socialism was the romance of the times. Invariably the nationalist leaders followed the Soviet model in their economic thinking, inevitably it led to disaster for their respective economies. While they were certainly right in maintaining that the State had a responsibility to safeguard the socio-economic rights of the common citizen and look after their welfare, by shunning free enterprise altogether they created an inefficient system without any incentive or motivation. The monarchical prerogative of appointing managers was replaced by the qualification of individual loyalty to the socialist system irrespective of ability. Over the years, concentrated education ensured that managers of better quality were created in Soviet Russia and Communist China but those also fell away eventually without incentive. Countries such as Zaire, Angola, Uganda, etc had very little experienced managers among locals at their respective independences. The exodus of expatriates devastated their potential. The most potent example of a sea-change in change in thinking is that of Nelson Mandela, who realized that the loss of white managers would send South Africa into the darkness as had happened to many African countries despite being rich in resources. On the surface, Mandela made a historic black-white compromise, in real sense he compromised on ideology for the economic sake of the people, opting for a pragmatic mixed economy instead of the ideally romantic pure socialist concept. Mandela had the advantage of the Zimbabwe experience to back his ideas, not so leaders like Nkrumah, Sekou Toure, etc who took their people into darkness while promising them light. Desperate to be considered one of the great non-aligned leaders of the 20th century and egged on by socialist ideologues like J.A Rahim, Mubashar Hasan, Shaikh Rasheed, Mairaj Mohammad Khan, late Zulfikar Ali Bhutto took us down the nationalism route into economic disaster in the early 70s. In his defence one can only say that he did rein in rampant capitalism that saw inordinate wealth concentrated in the hands of only 23 families, he simply went too far in his nationalisation binge.
Black Money and Power
Pakistan’s economic position is not in the absolute doldrums because the buoyancy of the parallel black economy is keeping it artificially afloat. Operating independently of the country’s banking system, free from the encumbrances of any taxation, it is a tremendous market force and for some Third World countries a cornerstone for economic survival. Without the liquidity of black money fuelling consumer sales there would be a much bleaker economic picture. It is a bitter medicine without which the body economic would shudder to a halt but is a steep price to pay because it degenerates the morality of our society, weakening the fabric that binds it together.