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Countering market fundamentalism

Amidst a deep economic and financial crisis, the pundits of the neoliberal world are again prescribing a recipe for disaster, piling pressure on the government to privatize state-run entities and impose an austerity plan that is likely to further impoverish the people, creating immense hardships for over 200 million souls who have already been reeling under the catastrophic impacts of the Structural Adjustment Program launched in 1980s.

These followers of laissez faire are active on every platform. You can see them on X (formerly Twitter) asserting that the privatization of PIA is the way forward. You can read their posts on Facebook describing state run-concerns as a white elephant, bleeding the economy. You can watch them on private and state-run television channels, advocating the cause of privatization, liberalization and deregulation.

But none of them wants to answer crucial questions about the loss-making state-run entities. They can’t answer as to why these state-run institutions were not incurring huge losses before Gen Zia’s dictatorship. They can’t explain how PIA, which is considered as the founder of some Middle Eastern airlines, is in a terrible shape today. They just want to lure people into believing that the panacea of neoliberalism will resolve all our economic problems in a miraculous way.

It is important to counter this free market fundamentalism posing tough questions to those pundits who have pushed the economy towards destruction. Their recipe to cure economic ills has turned out to be very catastrophic for the people of this country, who are selling their assets, pulling out their children from school, and cutting down on their household expenses just to ensure that they will survive for another one or two years.

Let us begin with external debts. When this neoliberal agenda was imposed on the country during the decade of the 1980s under Zia’s brutal regime, we were told that state-run enterprises would be sold out to repay foreign debts. The country’s foreign debt was not even $20 billion at that time. Today it has already crossed a whopping $121 billion. Despite privatizing over 100 public-sector concerns, our vicious pile of debt has not witnessed any reduction at all.

We were also told that privatization, liberalization and deregulation will help the country industrialize but more than 30 years down the road we have a plethora of shopping malls and an uncontrollable consumer culture based on importing foreign goods instead of setting up industries and manufacturing value-added products. What we were given was not any industrial complex but a jungle of apartments and housing colonies that have served to whiten black money. Despite the mushroom growth of these housing colonies, owning a house has become a dream not only for more than 60 million people living below poverty line but even sections of all stratas of the middle class.

We were also told that if the neoliberal formula was imposed, the country would be flooded with foreign investment and would see a number of Marshall plans that would greatly transform the economic infrastructure of the country, helping it become the South Korea of the region. Instead, today our currency is poorer than that of Afghanistan. Pakistan has witnessed deindustrialization during the last three decades. While foreign investors are pumping money into Vietnam, Malaysia, India and other countries, they don’t even want to visit us, let alone invest here.

The foreign investments that we received in the energy sector proved to be very disastrous. The elite of the country entered into destructive energy agreements with independent power producers (IPPs) offering them extremely lucrative terms and conditions. This is now making it difficult for Pakistanis to pay their electricity bills. The IPPs made it impossible for local manufacturers to continue production given the skyrocketing cost of power that could largely be blamed on the costly power generation gifted by the Babus of the Planning Commission and finance ministry and vested interests.

It is time to counter this market fundamentalism, and let people know that if PIA is running in losses today, it is because of divestment on the part of the state. Overstaffing may be a factor in the losses but the important question is: who sold out profitable routes of the national carrier, destroyed its aircraft repair mechanism and recruited executives on hefty salaries and insane privileges?

Similarly, while talking about the losses of Pakistan Railways, no mention is made of the fact that its freight was snatched away and doled out. Nowhere in the world can railways be operated without freight. Even the railways systems in advanced capitalist countries would incur huge losses if they were deprived of a significant share of their freight. Again, the appointment of executives on hefty salaries, encroachment on railways lands, conspiracies of transport lobbies and car importers are also some of the factors plunging Pakistan Railways into financial disaster.

It is important that we point out the real factors contributing to the destruction of our state-run entities. Conflict of interest is the biggest impediment in the way of their development and profitability. If a private airline owner is tasked to improve the national carrier, they would never make efforts to revitalize it. If a steel magnet is assigned to revitalize Pakistan Steel, they would end up recommending its closure. If lords of private medical colleges and universities are asked to suggest corrective measures for state-run education institutions, they are more likely to come up with plans to make a phenomenal surge in the fee structures.

Therefore, if we really want to revive the economy, then sincere efforts need to be made to drastically slash the prices of power which would not only benefit public manufacturing units but the private sector as well besides helping people survive financially. We need to let people know that these independent power producers are the third biggest burden on our economy draining our resources. People deserve to know that these independent power producers are receiving far greater amounts of money than the allocations made to compensate for the losses of state-run companies.

People should also be informed that while the government is withdrawing subsidies extended to poor people in the past, it has been pumping more than $17 billion into the pockets of the elite and the super rich. Despite the devolution of powers, the federal government is pumping huge money into federal ministries. According to some estimates, it has already spent over Rs700 billion on ministries that have already been devolved to provinces. During the last 30 years, more than Rs30000 billion have been spent on the federal and provincial governments’ public-sector development schemes but despite all that the basic necessities of life are still a dream for the vast majority of Pakistanis. It means that these projects just served vested interests instead of helping poor people, 67 per cent of whom have no decent housing, 80 per cent are without pure drinking water and millions without proper health, education and sanitation facilities. It is important that we counter market fundamentalism and make people aware of the real factors bleeding the economy simultaneously.

Abdul Sattar, "Countering market fundamentalism," The News. 2023-09-20.
Keywords: Economics , Economic problems , Economic infrastructure , Privatization , Importers , Pakistan , PIA , IPPs