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State’s incapacity

Here’s a puzzle: for the past three decades, most sections of the ‘development’ intelligentsia, professional economists and technocrats, analysts, senior members of the bureaucracy, and the top leadership of nearly every political party and the army have held some broad idea of how to fix Pakistan’s stagnating economy. The basic list of reforms hasn’t changed much — tax-base widening, subsidy reduction, civil service reform, accountability reform, belt-tightening through privatisation, more efficient development spending, and so on. In the past five years specifically, solving the country’s long-standing energy crisis has ambled its way on to the top of that list.

And yet movement on any of these fronts has been painfully slow. Each time an effort is initiated, it dies a premature, mostly mangled death. Without fail, and almost always under acrimonious circumstances, the failure to implement any such reform effort, or the inability to carry out basic development tasks in a transparent, efficient manner is usually explained away as a product of incompetence, malignant intent, and/or corruption.

The most recent examples include the long-winding LNG agreement saga with Qatar, privatisation of certain state-owned enterprises (PSM, PIA, DISCOs), and  the Nandipur power generation project. Those bubbling beneath an already volatile surface include a persistent failure to match tax revenues with tax targets, and stuttering efforts to increase documentation of the economy. Explanations premised on the incompetence of decision-makers, or their inherent corruptibility are widely used, and perhaps with good reason.

There needs to be a new way to think about the inability of the Pakistani state to carry out tasks beyond the simpler ones of road-building. The incompetence and corruptibility of our political elite (and their partners in the bureaucracy) is well documented. However, one suspects the constant invocation of such explanations is also an inadvertent way to generate some optimism about the future. When you boil down the failure to develop or undertake reform to poor/deceitful management, the solution becomes alluringly simple: just change the management. This is why PTI’s anti-corruption messaging resonates so widely with a frustrated electorate.

There is, however, a catch. This failure to improve has persisted across several regimes, both military and ostensibly civilian-led, over what is now a very long period of time. Surely successive failures on the fiscal end, or the inability to boost exports, can’t solely be put down to individuals at the helm. In fact, as far as policy advice and the pool of advisers are concerned, that’s pretty much remained uniform throughout.

There needs to be a new way to think about the inability of the Pakistani state to carry out tasks beyond the simpler ones of road-building. Going by the examples of both successful and unsuccessful countries, it appears the basic issue is one of two interlinked characteristics, state coherence and state autonomy. On the issue of coherence, with the increase in the size of the state — due to population pressures, and new departments being made to tackle new aspects of social and economic development — we’ve also witnessed a complementary decline in the ‘quality’ of state performance.

What this essentially means is that any task or order designated from the top is never carried out the way it’s supposed to by those — to borrow Joel Migdal’s phrase — working in the trenches (where most of the real interaction takes place). Good examples of this include the informal transactions carried out by tax officials to enrich themselves and assist private actors in evasion, public school teacher and doctor absenteeism, and the provision of informal and illegal services, such as non-sanctioned electricity and gas connections. It is through the trenches and the tiers directly above it, where the permanent bureaucracy functions across time, regime-types, and governments, that state coherence and discipline for reform is lost on a regular basis.

The second issue, that of autonomy, is directly related to the way politics has evolved over the last 30 years. Due to repeated fluctuations in the type of regimes, the basic functioning of political parties, and regulations of the economy, political agents (both military and party-based) are increasingly reliant on private actors and lobbies for success and stability.

The PML-N, for example, has core constituencies that it cannot afford to alienate given its weakness as a party. The military repeatedly borrows the rural legitimacy of the landed elite every time it comes into power, to ensure political and social acquiescence. The PPP is beholden to a wide variety of political-economic interests, often criminal in nature, for its own survival in Sindh. Even the PTI, despite some admirable efforts in KP, cannot afford to alienate a section within the provincial party or the Qaumi Watan Party if it wants to retain its hold over the government. This means that the starting space for anti-status quo reform is already negligible, and the state’s capacity to ‘discipline’ is non-existent.

The best, and most recent example of this has been the withholding tax saga, which was a circuitous — and some would argue flawed way — of enhancing documentation of the economy. The finance ministry, faced with increasing protests from a close constituency (the bazaar), first gave in to some concessions, and now with Shahbaz Sharif leading the bazaar’s case himself, it appears more will be extracted. The actual purpose of the policy decision — more documentation, and more revenue — may get marginalised in the long run.

The Pakistani state, amongst many other negative things, has had terrible luck with its leadership and the decisions that those leaders have taken in the past. The accumulated impact of these decisions has led to a point where its machinery is increasingly ‘un-tameable’ and does not have the capacity to discipline or regulate either its own parts or those it governs. Good intentions, a clear vision, and incorruptibility may be prerequisites for a reformist government, but without acknowledging and tackling issues of state coherence, capacity, and regime autonomy, no amount of effort will ever bear fruit.

The writer teaches politics at LUMS. umairjaved87@gmail.com, Twitter: @umairjav

Umair Javed, "State’s incapacity," Dawn. 2015-10-12.
Keywords: Political science , Political aspects , Political parties , Decision making , Economic aspects , Civil services , Tax revenue , Economists , Bureaucracy , Politics , Joel Migdal , CM Shahbaz Sharif , Pakistan , PTI , PPP , PIA , PMLN