13
Civil Society Undermined
INTRODUCTION
The ruling elite at the dawn of independence consisted
of an alliance between the landlords and the nascent industrial
bourgeoisie backed by the military bureaucratic oligarchy. The
nature of the ruling elite conditioned t eh form of the economic
growth process. However, the latter in turn influenced the form
in which state power was exercised. Economic growth was of a
kind that brought affluence to the few at the expense of the
many. The gradual erosion of social infrastructure, endemic
poverty and the growing inequality between regions
undermined civil society and accelerated the trend towards
militarization. In this section we will examine the relationship
between an increasingly coercive state structure, external
dependence and the nature of economic growth during the
Bhutto and Zia periods respectively.
I Contradictions and the Nature of Economic
Growth: 1960-1970
The basic objective of the planning strategy during the
decade of the 1960s was to achieve a high growth rate of gross national product (GNP) within the framework of private
enterprise. Investment targets were to be achieved on the basis
of the doctrine of ‘functional inequality’. This meant
deliberately transferring income from the poorer sections of
society, who were thought to have a low marginal rate of
savings, to high income groups, who were expected to have a
high marginal rate of savings.1
it was thought that by thus
concentrating income in the hands of the rich, the total
domestic savings, and hence the level of investment, could be
raised.2
It was argued that in the initial period, when domestic
savings would be low, the gap between the target level of
investment and actual domestic savings would rise, until by the
end of the Perspective Plan in 1985, the country would become
independent of foreign aid.3
During the decade of the sixties, the above strategy was
put into practice and at a superficial level at least, in terms of
its growth targets, it was successful. For example the growth
rate of GNP was 5.5% per annum; manufacturing output
increased by an average annual rate of about 8 percent, and
large scale manufacturing increased at over 10 percent per
annum. The elite farmer strategy of concentrating new
agricultural inputs in the hands of rich farmers also bore fruit
by generating a growth rate in agricultural output of 3.2 percent
per annum (compared to less than 1.5 percent in the4 previous
decade). However, underlying t his impressive performance in
terms of aggregate growth rates was an economy which
became structurally and financially so dependent on the
advanced capitalist countries that the very sovereignty of the
state began to be undermined. Apart form this, the nature of the
growth process generated such acute inequalities between
regions that the internal cohesion of society began to be
seriously eroded. The particular growth process in Pakistan generated
four fundamental contradictions:
(i) A dependent economic structure and the associated
high degree of reliance on foreign aid.
(ii) An acute concentration of economic power in the
hands of forty-three families and the resultant gulf
between the rich and the poor in urban areas.
(iii) Growing economic disparity between regions.
(iv) Polarization of classes in the rural sector and a
rapid increase in landlessness.
(i) Underlying the apparently impressive figures of the
growth of manufactured output (10 percent per annum
in the large-scale manufacturing sector) was an
inefficient and lopsided industrial structure. Growth
was concentrated not in heavy industries which could
impart self-reliance to the economy but rather in
consumer goods produced with imported machines.
Thus, by 1970-71, cotton textiles alone accounted for as
much as 48 percent of value added in industry, while
basic industries such as basic metals and electric and
transport equipment accounted for only 11 percent of
the value added in manufacturing in Pakistan. Not only
was growth concentrated in consumer goods industries,
but also the efficiency of these industries was very low.
This was due to the high degree of protection and
support given by the government in the form of high
import tariffs, and overvalued exchange rate tax
holidays and provision of cheap credit.4 Industrialist
could thus earn annual profits of 50 per cent to 100
percent or more and were under no pressure to increase
efficiency. Apart from this, export subsides enabled
manufacturers to export goods at an extremely high rupee cost per dollar earned. In some cases, good
were profitably exported at dollar prices which were less
than the dollar value of the raw materials embodied in
the goods.5
Given the failure to develop a heavy industrial base and
the emphasis on import-dependent consumer goods
industries, the structure of Pakistan’s industry induced
increasing dependence on imported inputs. At the same
time, the failure to increase domestic savings pushed to
economy further into reliance on foreign aid. The policy
of distributing income in favour of the industrialists
succeeded, but the assumption that this would raise
domestic savings over time failed to materialize. Griffin
points out, for example, that 15 percent of the resources
annually generated in the rural sector were transferred to
the urban industrialists, and 63 percent to 85 percent of
these transferred resources when into increased urban
consumption.6
Far from raising the domestic savings rate
to the target level of 25 percent of GNP, the actual
savings rate never rose above 12 percent of GNP and in
some years was as low as 3 percent to 4 percent.7
The low domestic savings caused by the failure of
capitalists to save out of their increased income resulted
during the decade of the sixties in growing dependence on
foreign aid. According to government of Pakistan figures,
foreign aid inflow increased form U.S. Dollars 373 in
1950-55 to U.S. Dollars 2701 million in 1965-788
. This
seven-fold increase in the volume of aid was accompanied
by a continuing change in the composition of aid form
grants to loans so that whereas ‘grant and grant-type’
assistance constituted 73 percent of total aid received
during 1950-55, this type of assistance declined to 9
percent by 1965-70. Thus, not only had the volume of
aid increased dramatically but also the terms on which it was received became increasingly harder,
the result was that debt servicing alone by the end of the
sixties constituted a crippling burden. While debt servicing
as a proportion of commodity export earnings was 4.2
percent in 1960-61, by 1971-72 it had become 34.5 percent.
Clearly, such a magnitude of export earnings could not be
spent on debt servicing in vital food and industrial inputs
were to be maintained. Thus, buy the end of the sixties,
economic survival began to depend on getting more aid to
pay back past debts. This pattern of aid dependence
continues to this day. In 1986, for example, 73 percent of
gross aid received was returned as payment for debt
servicing charges on past debt. What is perhaps 3even more
significant is that the conditionality clauses of ‘foreign aid’
specify in great detail the economic policy that the
government of Pakistan is required to follow.9
Aid giving
agencies, for example, specify policies form the price of gas
and fertilizer to import policy, form the method of
administering railways to the allocations to be made by the
government in each sector of the economy. These
increasingly comprehensive macroeconomic policy
packages accompanying foreign aid seriously erode the
sovereignty of Pakistan’s economic decision making.
(ii) The process of economic growth upon which Pakistan
embarked during eth 1960s was designed to concentrate
incomes in the hands of the industrial elite on the one hand
and the big landowners on the other. It is not surprising
therefore that by the end of the 1960s a small group of
families with interlocking directorates dominated industry,
banking and insurance in Pakistan. Thus forty-three
families represented 76.8 percent of all manufacturing
assets (including foreign and government assets). In terms
of value added, 46 percent of the value added in all largescale
manufacturing originated in firms controlled by forty-three families.
In banking the degree of concentration was even greater
than in industry. For example, seven family banks
constituted 91.6 percent of private domestic deposits and
84.4 percent of earning assets. Furthermore, there is
evidence to show that the family banks tended to favour
industrial companies controlled by the same families in the
provision of loans, State Bank compilation of balance
sheets of list ed companies indicate s which bank these
companies dealt with. In virtually all cases, banks
controlled by industrial families were one of the two to four
banks that were dealt with by the industries controlled by
industrial families were one of the two to four banks that
were dealt with by the industries controlled by the same
industrial families.11
The insurance industry, although smaller in size than
banking, also had a high degree of concentration of
ownership. The forty-three industrial families controlling
75.6 percent of assets of Pakistani insurance companies
tended to favour industrial companies owned by the same
group. The insurance company investments were used for
providing a ready market for the shares of the families’
industrial companies whenever they wished to sell shares
without depressing the share price.12
The major industrial families and entrepreneurs were a
fairly closely-knit group. Not only did many of them have
caste and kinship relations, but members of the families
tended to sit on each other’s boards of directors. About onethird
of the seats on the boards of directors of companies
controlled by the forty-three families were occupied by
members of other families within the forty-three.13
Not only were the forty-three families dominating industry, insurance and banking, but they also had
considerable power over government agencies
sanctioning industrial projects. For example, PICIC
(Pakistan Industrial Credit and Investment Corporation)
was the agency responsible for sanctioning large-scale
industrial projects. Out of the twenty-one directors of
PICIC, seven were form the forty-three leading
industrial families and were actively involved in the
administrative institutions that directly affected their
economic interests.
During the process of rapid economic growth of the
1960s while and exclusive and highly monopolistic class
was amassing wealth, the majority of Pakistan’s
population was suffering an absolute decline in its living
standards. For example, the per capita consumption of
foodgrain of the poorest 60 percent of Pakistan’s urban
population declined from an index of 100 in 1963-64 to
96.1 in 1969-70. The decline was even greater over
the same period in the case of the poorest 60 percent of
rural population. In their case, per capita consumption of
foodgrain declined form an index of 100 in 1963-64 to
only 91 in 1969-70.14 There was an even larger decline
in real wages in industry. For example, griffin suggests
that in the decade and a half ending in 1967, real wages
in industry declined by 25percent.15 S.M. Naseem, in a
more recent study for the ILO, has estimated that in
1971-72 poverty in the rural sector was so acute that 82
percent of rural households could not afford to provide
even 2100 calories per day per family member. (2300
calories a day per head are regarded as the minimum for
a healthy active life.)
(iii) In an economy where investment takes place on the
basis of private profitability alone, there would be a
cumulative tendency for investment to be concentrated in the relatively developed regions. Consequently, regional
economic disparities would tend to widen over time. This
is in fact what happened in the case of Pakistan. Punjab and
Sind Provinces, which had relatively more developed
infrastructures, attracted a larger proportion of industrial
investment than the other provinces. In Sindh, however, the
growth in income was mainly in Karachi and Huderabad.
Thus, economic disparities widened not only between East
and West Pakistan, but also between the provinces within
West Pakistan. During the 1960s the factor which
accelerated the growth of regional income disparities
within what is today Pakistan was the differential impact of
agricultural growth associated with the so-called ‘Green
Revolution’. Since the yield increase associated with the
adoption of high-yield varieties of foodgrain required
irrigation, and since the Punjab, and Sind had a relatively
larger proportion of their area under irrigation, they
experienced much faster growth in their incomes,
compared to Baluchistan and NWFO.16
In a situation where each of the provinces of Pakistan had a
distinct culture and language, the systematic growth of
regional disparities within the framework of the market
mechanism created acute political tensions required a
genuinely federal democratic structure with
decentralization of political power at the provincial level.
Only such a polity and large federal expenditures for the
development of under-developed regions could ensure the
unity of the country. In the absence of such a polity, the
growing economic disparities between provinces created
explosive political tensions.
(iv) The failure to conduct and effective land reform in Pakistan
has resulted in a continued concentration of landownership
in the hands of a few bib landlords.17 Thus, in 1972, 30
percent of total farm area was owned by large landowners (owing 150 acres and above.)18 The overall picture of
Pakistan’s agrarian structure has been that these large
landowners have rented out most of their land to small and
medium-sized tenants (i.e., tenants operating below twentyfive
acres.)19 In such a situation, when the ‘Green
Revolution’ technology became available in the late 1960s
the larger landowners found it profitable to resume some of
their rented out land for self-cultivation on large farms
using hired labour and capital investment. It is this process
of the development of capitalist farming which has
generated new and potentially explosive contradictions in
Pakistan’s rural society. These contradictions have resulted
form the highly unequal distribution of landownership.
During the period when high-yield varieties of foodgrain
were being adopted, there was a rapid introduction of
tractors. The number of tractors increased from 2000 in
1959 to 18,909 in 1968.20 By 1975 there were 35,714
tractors with an additional 76,000 tractors being imported
between 1976 to 1981.21 What is significant is that most of
these tractors were large-sized in a country where 91
percent of the farms are below twenty-five acres, and
about 51 percent of total farm area is operated in farms
below 25 acres.
An important reason why large tractors were introduced
was that large landowners, responding to the new profit
opportunities, began to resume rented-out land for selfcultivation
on large farms. Given the difficulty of
mobilizing a large number of labourers during the peak
season in an imperfect labour market and supervising
labourers to ensure satisfactory performance, the large
farmers found it convenient to mechanize even though
there is no labour shortage in an absolute sense.
As result of the development of capitalism in agriculture, polarization has occurred in the size distribution of farms,
especially in the Punjab; i.e., the percentage share of large
and small farms is investing, while the percentage share of
medium-sized farms (eight to twenty-five acres) is
declining.22 This polarization is essentially the result of
large landowners resuming their rented-out land for selfcultivation
on large farms. The land resumption has had
the greatest impact on medium-sized tenants.
Along with polarization in the rural class structure,
landlessness has increased as many tenants are evicted
following land resumption by big landowners. It has been
estimated that during the decade of the 1960s. 794,042
peasants became landless labourers; i.e., 43 percent of the
total agricultural labourers had entered this category
following proletarianization of the poor peasantry.23
Unlike Europe, where the growth of capitalism in
agriculture was associated with the emancipation of the
peasantry, in Pakistan the development of capitalist
farming has intensified the dependence of the poor
peasantry. The reason is that in Pakistan capitalist farming
has occurred in a situation where the political and
economic power of the landlords is still intact.
Consequently, the big landlord is able to control local
institutions for the distribution of credit and other inputs.
The result is that the poor peasant in order to buy tube
well water, seeds, fertilizer and pesticides and to market
his output, has to depend on the good offices of the
landlord. Thus, as the inputs for agricultural production
become monetized and insofar as access to the market is via
the landlord, the poor peasant’s dependence has intensified.
As money costs of inputs increased without a proportionate increase in yield per acre of the poor
peasant (due to poor timing and inadequate inputs) his
real income is being reduced. Evidence shows that both
the quantity and quality of diet of poor peasants have
deteriorated.24
The particular from that capitalist farming in Pakistan
has taken is increasing landlessness, unemployment,
class polarization and poverty. Each of these features
has arisen because capitalist farming is occurring in a
situation where landownership is highly unequal, and
where the feudal power of the landlords is intact.
II Class Composition of the Pakistan People’s Party
and the State Apparatus
The PPP was originally composed of radical elements
of the petite bourgeoisie of the Punjab and Sind on the one
hand and substantial elements of capitalist farmers on the other.
The radical elements of the petite bourgeoisie were dominant
in the PPP until 1972. this was evident form the manifesto,
which was anti-imperialist. Anti-fedual, and against monopoly
capitalism. The same stratum also played a key role in devising
a propaganda machine suited to the manifesto and presenting it
as a ‘revolutionary’ program, thereby getting the support of the
urban workers and the poor peasantry.
The radical stratum was drawn from diverse social
origins and had differing political objectives, and its members
therefore connected themselves to Bhutto in separate groups or
factions. The inability of different factions of the radical petite
bourgeoisie to constitute themselves into a singly block within
the PPP facilitated the purges that came after 1972.
By 1972 Bhutto had consolidated his power and began
to shift the balance of class forces within the PPP in favour of the landlord group. This shift was not accidental, nor was it a
personal betrayal of the radicals on Bhtto’s part as it was
subjectively experienced by the party cadres. Changes in the
internal class composition of the PPP were objectively
determined by the changed position of the PPP in relation to
the state. In the pre-election period the dominance of the
radical petite bourgeoisie and its political rhetoric were
necessary in the PPP was to get a mass base for an election
victory.
After the election, Bhutto realized that if the socialist
rhetoric of the left wing of the PPP was to be implemented, it
could not be done through the existing status apparatus. It
would involve institutionalizing party links with eh working
class and the peasantry by building grass-roots organizations.
This would soon generate a working class leadership which
would not only threaten his own position within the party but
would also unleash a momentum of class conflict that would
place the PPP on a collision course with the military and the
bureaucracy. Given Bhutto’s own commitment to seek social
democratic reforms within the framework of the state as
constituted at the time, he was unwilling to take a path that
would lead confrontation with the state apparatus.
Consequently, the socialist rhetoric of the PPP had to be toned
down, its radical petite bourgeois elements quietened or purged
from the party, the rudimentary organizational links with the
working class and poor peasants broken and the landlord
elements of the PPP firmly established as the dominant element
within the party.
The decision to purge the radical elements within the PPP
and to separate it structurally from its worker-peasant base meant
that Bhutto had to rely on the bourgeois state apparatus to respond to
the political challenges emanating from three directions: First, the
intensification of the nationalist struggle in Baluchistan; second, the growing militancy of the working class in the Punjab and Sind: and
finally, parties rep-resenting the industrial bourgeoisie.
The strategy of selective repression of the political
opposition necessitated changes in the state apparatus so as to
make it more effective as a coercive instrument. Bhutto
brought about three types of changes:
1. He Streamlined and strengthened the internal
security service and formed new para-military
organization called the Federal Security Force,
consisting initially of 10,000 men. This was
essentially a political police force responsible
directly to the prime minister.
2. An attempt was made to reduce the power and
autonomy of the elite CSP (Central Services of
Pakistan) cadre of eh bureaucracy. This was
done first by purging 1300 officers on grounds
of misuse of power and filling their vacancies
by pro-PPP men. Second, a new system of
lateral entry was instituted. Through this, direct
appointments at all levels of the administrative
services wee made on recommendation form the
PPP leadership. By thus short-circuiting the
hierarchy of the CSP and penetrating it with
officers who were loyal to the PPP, large
sections of the bureaucracy were politicized and
made more amenable for use by the PPP.
3. In the armed forces, Bhutto conducted two purges in
quick succession. He first discarded the five top
generals who had dominated the government before
and during the Bangladesh crisis, and second, he
ousted those commanders like Lieutenant-General
Gul Hassan Khan and Air Marshal Rahim Khan
who had been instrumental in the transfer of power to Bhutto himself. Thus, enemies and benefactors
alike were removed on grounds t hat they had
Bonapartist tendencies. The new chief of the army
staff was Tikka Khan, who was succeeded by Zia ul
Haq, whom Bhutto promoted by superseding four
other generals in the hope that he would he obliged
to be loyal. However, as was realized later, a coup
d’etat cannot be prevented by simply placing loyal
generals in command. What is necessary is to
change the very structure of the armed forces and its
relationship to the political system. What he had to
do to prevent a coup was to subordinate the armed
forces as an institution to the political system. This
change in the structural position of the armed forces
within the state, from a position of dominance to a
position of subordination to the political system,
from a position of dominance to a position of
subordination to the political system, could only
have been achieved by organizationally linking the
PPP to its mass base. This was something that
Bhutto was not prepared to do.
While Bhutto in his attempt to use the state apparatus to quell
political opposition was internalizing some sections of the state apparatus
into his political apparatus, a parallel process of infiltration was being
covertly conducted by another political party: The Jama’at -i-Islami.
The Jama’at-i-Islami is an extreme right-wing religious party
composed of the most retrograde section of the urban petite
bourgeoisie. It had suffered a humiliating electoral defeat in 1970,
having obtained only 5 percent of the vote and three National
Assembly seats. After this defeat it started concentrating on preparing
for a coup by increasing its infiltration of the army and bureaucracy.25
The Jama’at from its very inception was a semi-secret, extreme rightwing
organization of disciplined cadres, some of whom are given
combat training. After 1970 it was able to expand its influence over
strategic sections of the state apparatus for a number of reasons:
1. The earlier generations of generals in the high
command were British-trained, liberal officers, drawn
largely form the affluent land-owning class.
However, in the 1960s a new generation of officers
began to occupy command positions. These were less
literate and more religious, drawn largely form the
economically depressed migrants from East Punjab
(like General Zia ul Haq) and the unirrigated Potwar
region of West Punjab. This new generation of
officers was socially more conservative than the
earlier generation, was brought up in a religious
culture and was highly susceptible to the puritanical
ideology of the Jama’at.26
2. Similarly, patterns of general recruitment in the
army had changed, whereby many of the rank and
file as well as the junior officers tended to come
not from the prosperous central Punjab, but from
the relatively impoverished northern districts of the
province, where a fundamentalist religious ethos
still prevails.27
3. The demoralization of the armed forces following
the defeat in Bangladesh had opened the way of ran
obscurantist ideology. In the absence of ideological
work among the ranks by the left, the average
soldier turned to the Islamism of the Jama’at for an
explanation both of his failure as well as his future
purpose.28
4. The Jama’at propaganda among troops was tolerated
and in some cases sanctioned by commanding
officers at the battalion level and above.29
It appears that the relative autonomy and internal coherence of the state apparatus has been considerable
undermined due to its infiltration by PPP sympathizers on the
one hand and by Jama’at cadres on the other. The consequent
factionalizing process within the armed forces and the
bureaucracy is an important factor in the nature of the July
1977 coup as well as an element in the present crisis of the
state.
III Socio-economic Causes of the Anti-Bhtto Movement,
and the Bhutto Legacy
The essential political aspect of the nationalization of
nine basic industries, banks and insurance companies was that
it enable the PPP to buy the political support of a section of the
urban petite bourgeoisie through provision of credit and
contracts for consultancy, construction projects and production
of components. The nationalization of banks particularly
enabled the PPP to strengthen its support among the kulaks by
providing them with low-interest loans. For example, in 1975
alone, Rs. 1,650 million were provided to kulaks. In the period
1971-72 to 1975-76, loans from nationalized commercial banks
for tractors and tubewells increased by 400 percent and loans
for other farm needs (so-called taccavi loans) increased by 600
percent. Similarly, government subsidies for chemical fertilizer
rose from US Dollars 2.5 million to US Dollars 60 million
during the period 1972 to 1976. The same rapid expansion of
rural credit is indicated by loans given by the Agricultural
Development Bank:
1971-1972 1975-1976
Tractors Rs. 370.41 million
Tubewells Rs. 180.41 million
Rs. 2,200 million
Rs. 860.67 million
The nationalization of banks and the subsequent credit expansion for financing loans to industries and capitalist
farming led to heavy deficit financing and an Increase in the
money supply. Thus, notes in circulation increased from Rs.
23,000 million in 1971-72 to Rs. 57,000 million in 1976-77.
There was a sharp slowing in the growth rate of both
agriculture and industry. Thus, industrial growth fell from an
average of 13 percent per year during the 1960s to only 3
percent per year during the Bhutto period from 1972 to 1977.
Similarly, the agricultural growth rate declined from an
average of 8.65 percent in the 1960s to a mere 0.45 per cent In
the period 1970-75.
The sharp increase in the money supply during a period
of virtual stagnation in agriculture and industry was reflected in
a very sharp rise in the rate of inflation. The wholesale price
index at 1959-60 prices rose from 150.3 in 1971-72 to 288.8 by
1974-75, with the sharpest increase being recorded in Foodgrain
prices, which rose by 200 percent over the three-year period. It
appears then that, although nationalization of Industry and credit
expansion enable the PPP to buy the support of a section of the
urban petite bourgeoisie through the provision of jobs, contacts,
licences and loans; the available funds and contracts were not
large enough to enrich the entire petite bourgeoisie. In fact a
section of the lower middle class that did not gain from the PPP,
suffered an absolute decline in their real incomes due to the high
inflation rate. It was this frustrated section of the urban petite
bourgeoisie and the large lumpen proletariat which had been
stricken by inflation that responded to the call for a street agitation
in March 1977. Although the apparent form of the street agitation
was spontaneous, it was orchestrated and given political focus at
key junctures of the movement. This organizational and
coordinating function was performed by the highly trained cadres
of the Jama’at-i-Islami. The agitation was of course fuelled by the
fact that the PPP was alleged to have rigged elections in a number
of constituencies, although it was subsequently recognized that
the PPP would have won a majority even without the rigging. While internal
factors were important determinants of the anti. Bhutto
movement, nevertheless they must be seen in the context of the
international forces at play during the last days of the Bhutto
regime. Former Prime Minister Bhutto by means of his nuclear
program and his diplomacy with the Arab regimes was
attempting to acquire a leverage against the power of the
United States in the region. His defiance in the face of U.S.
disapproval of his policies occurred in a situation where his
domestic political support had not been secured and
institutionalized through a political party. This was a factor as
important in his overthrow as the organized opposition by
elements of the petite bourgeoisie. The overthrow of the Bhutto
regime and the subsequent hanging of the only popularlyelected
prime minister of Pakistan dramatically represented the
limits of populism within a state structure dominated by the
military bureaucratic oligarchy. Through his charismatic
personality and populist rhetoric Mr. Bhutto had in his early
years galvanized mass consciousness and unleashed powerful
popular forces. His failure to institutionalize these essentially
spontaneous forces within a grass roots party and the resultant
failure .to subordinate the military bureaucratic elite to the
political system led to his tragic downfall. . Yet, the style and
content of Mr. Bhutto’s political message has left a lasting
legacy in popular consciousness:
That the poor have the right and the ability to be freed
of the shackles of oppression; that they too can dream of
threatening the citadels of power. His lonely defiance of
military authority during his, months in the death cell has given
this dream an immediacy and the Bhutto name an intense
emotional change..
IV Militarization and Dependence under the Zia Regime
(i) The Fragmentation of Civil Society
Each, regime that came into power sought to legitimize itself through an explicit ideology: The Ayub, regime
propounded the ideology of modernization and economic
development. The Bhutto regime sought legitimacy in the
ideology of redeeming the poor (Food, Clothing and
Shelter for all) through socialism. It is an index of Zia’s
fear of popular forces, that he initially sought justification
of his government precisely in its temporary character. If
anything it was the ideology of transience. (That he was
there for only 90 days for the sole purpose of holding fair
elections). It was this fear that impelled the Zia regime to
seek (albeit through a legal process) the physical
elimination of the one individual who could mobilize
popular forces. It was the same fear that subsequently
induced Zia to rule on the basis of military terror while
propounding a version of Islamic ideology. Draconian
measures of military courts, arbitrary arrests and public
lashings were introduced. Thus the gradual erosion since
independence of the institutions of civil society, brought
the power of the State into stark confrontation with the
people. Earlier in 1971, this confrontation had been a,
major factor in the break-up of Pakistan and the creation
of an independent Bangladesh. Now a protracted period of
Martial Law under the Zia regime served to brutalize and
undermine civil society in what remained of Pakistan.
As the Zia regime militarized the state structure it
isolation from the people was matched by its acute external
dependence. In the absence of domestic political popularity it
sought political economic and military support from the United
States. This pushed Pakistan into becoming a “front line state”
in America’s Afghan war which was an important factor in
further undermining civil society.
Since 1977, with the steady inflow into Pakistan of
Afghan refugees and use of Pakistan as a conduit for arms for
the Afghan war, two trends have emerged to fuel the crisis of
Civil society.: a) A Large proportion of weapons meant for the
Afghan guerrillas have filtered the into arms
market.
b) There has been a rapid growth of the heroin
trade. Powerful Maffia type Syndicates have
emerged which operate the production, domestic
transportation and export of heroin. Many
Afghan refugees who now have a significant
share of inter-city overland cargo services have
also been integrated into the Drug Syndicates.
The large illegal arms market and the burgeoning
heroin trade have injected both weapons and syndicate
organizations into the social life of major urban centers. At the
same time the frequent bombings in the NWFP resulting from
the Afghan war, and the weakening of state authority in parts
of rural Sind has under mined for many people confidence of
life to its citizens. Under these circumstances it is not
surprising than an increasing number of people are seeking
alternative support mechanisms in their communities to seek
redress against injustice and to achieve security against a
redress against injustice and to achieve security against a
physical threat to their persons and families. The proximate
identity or group membership through which the individual
seeks such security can be an ethnic, sub-religious, subnationalist
or Biraderi (kinship) group. Thus, civil society has
begun to get polarized along vertical lines. Each group,
whether ethnic, sub-religious, sub-nationalist or Biraderi, has
an intense emotional charge and a high degree of firepower
derived from the contemporary arms market.
(i) The Mechanism of Economic Dependence
Under the Zia Regime
The development strategy under the Martial Law regime
was formulated within the framework of the IMF/ World
Bank Structural Adjustment Program. This is a comprehensive macro economic policy package which
constitutes IMF/WORLD Bank conditionality and
contains three principal policy guidelines:
1. Import liberalization
2. Withdrawal of subsidies
3. Exchange rate devaluation.
These guidelines are essentially interrelated and effectively
propose that the economy be “opened tip” to the flows of
foreign goods and capital and that resource allocation in the
domestic economy take place on, he basis of world market,
prices. Import liberalization and withdrawal of subsidies
from local goods means that foreign goods would be freely
available locally and compete more effectively against
domestically produced goods whose prices would rise as
the result of subsidy withdrawal. Apart from this, formerly
overvalued exchange rates constituted an implicit subsidy
to domestic industrialists using imported inputs.. This too
would be withdrawn following exchange rate devaluation.
As import expenditures following import liberalization
increase and export earnings from manufactured goods
using imported inputs fall, there would consequently arise
an acute pressure on the balance of payments. Hence,
exchange rate devaluation, which is the third element in the
IMF/WB policy pack age, would induce a downward
adjustment in the exchange rate as a device to sustain
import liberalization and subsidy withdrawal.
The overall effect of this policy would be that resource
allocation in the domestic economy would take place in
response to world market prices. This means that the domes tic
resources would tend to be concentrated in the agriculture
sector where the country has a comparative advantage (in a
static sense) and a shift- away from the strategy of
industrialization, which was an emblem of national
independence in the post colonial period. In such a development strategy growth of GNP is predicated primarily
on the agriculture sector and foreign exchange earnings
critically dependent on agricultural exports. Accordingly while
readily available agricultural goods would enable an increase in
foreign ex change earnings in the short run, the decline in the
terms of trade against agricultural exporters and the low ceiling
to agricultural growth, would combine to restrict the growth of
export earnings In the long-run. Thus, the IMF/WB policy
package while it would create the capacity to service debts in,
the short term, would be constraining the growth of foreign
exchange in the long-run, and hence maintain a continued
dependence of the national economy on foreign loans.
Let us now consider how in the case of Pakistan the
IMP/WE conditionality was implemented, and then examine its
implications for industrialization and planning in this Country.
In Pakistan, the Sixth Five Year Plan which was
formulated by the Martial Law Regime reflects the Structural
Adjustment Program imposed on Pakistan’s planners as a
condition for the loans given by the IMF/WB. The Sixth Plan
places emphasis on resource allocation based on present
comparative advantage, agriculture as the basis of achieving
aggregate GNP growth targets and concentration on
agricultural exports. For example, the World Bank Review of
Pakistan’s Sixth Five Year Plan states:
“The plan’s principal objectives are to achieve a major
breakthrough in agricultural production, an expanding
foothold in export markets for agricultural products,
rapid development of selected industries in which the
country has a comparative advantage. ……“30
The Sixth Five Year Plan document itself makes clear
the strategy of making agriculture (rather than industry)
as the spearhead of growth in GNP: “…. . . the growth strategy of the Plan is based
on a major breakthrough in agriculture
production……”31
The Plan document goes on to emphasize the objective
of agricultural exports:
“The growth strategy of the Plan relies on a
combination of policies including:
1. A major increase in agricultural yields
through more efficient use of fertilizer
water and farm technology.
2. An expanding foothold in export markets
for wheat and rice as well as for fruits,
vegetables, flowers, poultry and meat.
3. Increased self- sufficiency in oil seeds.
4. Rapid development of steel based
engineering goods; modernization of textile
industry and extablishment of agroindustries
for processing agricultural
surpluses……..32
The policy of import liberalization, subsidy withdrawal
and resource allocation based on the market mechanism
is indicate clearly in the World Bank Review of the
Sixth Plan:
Another significant feature of the Plan is the
expanding role assigned to the private sector.
With private investment project to increase
more than twice as rapidly as public investment,
and the involvement of the public sector in
manufacturing to decline sharply, the attainment of the overall targets of the plan will depend to a
greater extent than in the past on the
performance of the private sector. . . As is
recognized in the Plan, major actions in pricing,
deregulation, tariffs and import liberalization
and other incentives will be needed to induce
the private sector to play the increased role
expected of it. . . (emphasis mine)33
The implementation of the third element ‘in the
conditionality package of the IMF/WB (indicated above)
namely devaluation of the rupee, was done by means of
delinking the rupee from the fixed exchange rate with the
dollar and putting the rupee on a “managed float” with a
weighted average of the currencies of Pakistan’s major
trading partners. This resulted in effectively devaluing the
rupee against the dollar by 37.9 percent between January
1982 and May 1985. As suggested in the foregoing
analysis the imperative to devalue the exchange rate arises
as the result of pressure on the balance of payments
associated with import liberalization, subsidy withdrawal
and reliance on agricultural e which are subject to declining
terms of trade. Thus in Pakistan, after an initial increase in
foreign exchange earnings and a strong balance of
payments position between 1978 to 1982, export earnings
declined sharply by 17.3 percent in 1983. The balance of
payments continued to deteriorate in subsequent years until
in March 1985 the gross foreign exchange reserves fell
drastically to dollar 883 million which is equivalent to only
1.6 months of import expenditures. One of the most
important factors in the deterioration in the balance of
payments, and the resultant increase in the reliance on
foreign loans was a deterioration in Pakistan’s terms of
trade in a situation where our exportable are mainly
agricultural goods. Thus, terms of trade have been
declining steadily from 87.5 in 197 8-79 to 60 in 1983-
.84.37We have argued in the foregoing analysis that Pakistan
has moved towards the implementation of the WB/JMF policy
package which is prescribed for loan receiving countries,
namely: Import liberalization, withdrawal of subsidies and
exchange rate devaluation. The Sixth Five Year Plan has
explicitly adopted the framework of resource allocation in
response to world market prices on the basis of private
profitability criteria, i.e., agriculture as the spearhead of growth
of GNP and agricultural exports as the major instrument of
foreign exchange earnings. In so far as this has occurred, the
Sixth Five Year Plan represents a marginalization of planning
in the process of economic growth. For the basic premise of
economic p1ar in an underdeveloped economy is that the
present comparative advantage imposes a structure of
production (i.e. specialization in raw material production) that
works against the long term interests of the economy and the
free market mechanism merely reinforces the existing structure
of production. Hence planning is thought to be necessary to
pull the economy out of the existing structure of production
based on specialization in agriculture towards one based on
industrialization. The logic of planning is that the existing set
of world prices is not an appropriate indicator for resource
allocation. In so far as the Sixth Five Year Plan has explicitly
adopted World Prices and Comparative advantage as the basis
of resource allocation, it constitutes an abandonment of
National Economic Planning in the strict sense of the term.
Conclusion
The current crisis of the state in Pakistan has arisen out of a
state structure in which the dominance of the military bureaucratic
oligarchy systematically constrained the development of the
political process. The oligarchy devised a political framework which, while allowing rivalry between the landlords and the
industrial bourgeoisie for the division of the economic surplus,
maintained the mode of appropriation of the surplus through which
the existence of these elites could be perpetuated.
The predominance of the army and bureaucracy in the
structure of state power in Pakistan was due to the form of the
freedom struggle in the pre - Partition period on the one hand, and
the nature of the Muslim League on the other. At the time of
independence, he state apparatus of the colonial regime was largely
intact, and it articulated the framework within which politics were to
occur. The second factor in the failure to subordinate the army and
bureaucracy to the political system lay in the two basic
characteristics of both the Muslim League before Partition and the
Pakistan People’s Party during the 1970s:
(1) Both the Muslim League in the pre-partition
period as well as the Pakistan People’s Party
during the 1970s were movements rather than
parties. They were therefore unable to establish
an organizational structure on the basis of which
the power of the people could be
institutionalized and’ used to subordinate the
army and the bureaucracy to the political
system.
(2) The Muslim League in the decade before Partition,
and the PPP during the early 1970s, were taken over
by landlords whose political interest lay in
constraining the process of political development
within the confines specified by the militarybureaucratic
oligarchy.
The nature of economic growth occurred in an economy
dominated by the landlords and the industrial bourgeoisie
generated acute economic inequality between rich and poor on the one hand and between regions on the other. These
economic contradictions manifested themselves in growing
political tensions between social groups and regions —
tensions which could have been mitigated (although not
necessarily resolved) only within a democratic political system
that was responsive to the aspirations of the dispossessed
classes and poorer regions. As it was, in a state structure within
which the political system was severely constrained by the
military-bureaucratic oligarchy, these tensions merely built up
pressure on the state structure.
The growing political tensions between social groups
and regions developed at a time when the relative autonomy of
the military- bureaucratic oligarchy was being eroded as the
result of its politicization. Thus, while the task of mediating the
conflicting political forces became increasingly difficult, the
ability of the military-bureaucratic oligarchy to do so became
weaker. Consequently, as civil society became polarized the
state increasingly used coercive forms of control, Unlike the
earlier Martial Law governments, the Zia regime was unable to
effectively hand over power to its civilian facade. Thus, in spite
of formally declaring the end of Martial Law, the posts of
Chief of Army Staff and the President continue to be held by
General Zia ul Haq. This has made possible the presence of the
military in the daily affairs of the State. It has also created the
institutional basis of short circuiting the civil administration by
the military chain of command, whenever this is felt necessary
by the Chief of Army Staff. It is in this perspective that the
following major elements of the crisis of state and civil society
can be understood:
1. The state dominated by the repressive apparatus
is highly centralized and is unable to recognize
let alone grant the rights of the various
nationalities. This has enhanced sub .national
tendencies given the fact that the army is drawn
predominantly from the Punjab province. 2. The State’s interpretation of religion is seen by
the people as sanctifying particular class
interests and justifying repression against those
who dare to question it. The state is, therefore,
bereft of a legitimizing ideology. For this reason
the army unlike in the past cannot withdraw
behind a civilian facade.
3. The prolonged military rule and the demise of
the 1973 constitution have eroded the balance
between the various institutions of the State, i.e.,
the armed forces, the bureaucracy, the judiciary,
etc. There is, therefore, an institutional crisis of
state authority.
4. The fragmentation of civil Society along various
sub-religious, ethnic, biraderi and sub-regional
lines, and the rapid arming of conflicting groups
has weakened the basic function of the state:
The protection of life of the ordinary citizen.
This has accentuated the tendency of the
individual to seek security in the most
proximate identity, and to militantly assert this
parochial identity as an emblem of his
membership in it.
References and Notes 1. “It is clear that the distribution of national production should be such as
to favour the savings sectors of Pakistan Planning Commission, The
Third Five Year Plan, 1965-70 (Kara chi; Government of Pakistan,
May 1965), p. 33.
2. 2. ‘Savings are a function not only of the level of, income but also of its
distribution. Mahbub-ul-Haq, Strategy of Economic Planning (Karachi
:Oxford University Press, 1963), P. 30.
3. Government of Pakistan, Third Five Year Plan., p. 17.
4. For a discussion of Inefficiency of Pakistan’s industry, see R. Soligo
and J,J. stern, ‘Tariff Protection, Import-Substitution and Investment
Inefficiency”, Pakistan Development Review (summer 1967). See, also
CC. Winston,”Over-invoicing and Industrial Efficiency”, Pakistan
Development Review (Winter 1970).
5. R. D. Mallon, “Export Policy in Pakistan”, Pakistan Development
Review (Spring 1966).
6. K. Griffin, “Financing Development Plans in Pakistan’ in Growth and
Inequality in Pakistan, ed. K. Griffin and A.R. Khan (Lon don:
Macmillan & Co., 1974), p. 133.
7. Ibid., pp. 41-2.
8. Government of Pakistan, Finance Division, Pakistan Economic Survey,
1973-74 (Islamabad Government of Pakistan, 1974), p. 133.
9. See “The Memorandum of Agreement between the Government of
Pakistan and the World Bank, 1980,” (Typescript.) Also see “Economic
Policy Memorandum of the Government of Pakistan for 1981-82”,
May, 1981. (Mimeograph).
10. L. J. White, Industrial Concentration and Economic Power in Pakistan
(Princeton: Princeton University Press, 1972), p. 63.
11. Ibid., pp. 74-5.
12. Ibid., pp. 79-80.
13. Ibid., pp. 81-5.
14. N. Hamid, “The Burden of Capitalist Growth A Study of Real Wages
in Pakistan,” Pakistan Economic and Social Review (Spring 1974). 15. Griffin and Khan, Growth and Inequality, pp. 204-205.
16. 16. For a detailed study of regional disparities within West Pakistan,
see : N. Hamid and A. Hussain, “Regional Inequalities and Capi talist
Development,” Pakistan Economic and Social Review (Autumn 1974).
17. For discussion and evidence on the failure of the attempts at land
reforns in 1959 and 1972, see Akmal Hussain, The Land Reforms in
Pakistan: A Reconsideration. Bulletin of Concerned Asian, Scholars
January - March, 1984, Colorado.
18. Ibid.
19. Landowners with 150 acres and above rent out 75 percent of their
owned area to tenants operating 25 acres or less. See A. Hussain
“Impact 1960-78” (D. Phil. thesis, Sussex University, 1980).
20. Akmal Hussain, Land Reforms. op. cit.
21. Ibid.
22. Akmal Hussain, “Impact of Agricultural Growth”.
23. Akmal Hussain, Land Reforms. op. cit.
24. Ibid.
25. For a more detailed description of the Jama’at-i-Islami, see Aijaz
Ahmad, “Democracy and Dictatorship in Pakistan”, Journal of
Contemporary Asia (Winter, 1978).
26. Ibid., p. 503.
27. Ibid.
28. Ibid.
29. Ibid.
30. Pakistan: A Review of the Sixth, Five Year Plan. A World Bank
Country Study, The World Bank, Washington, D.C., U.S.A., Page 17. 31. The Sixth Five Year Plan 1983.88 Planning Commission, Govern ment
of Pakistan, Page 11.
32. Ibid.
33. “Pakistan: A Review of the Sixth Five Year Plan” op. cit. Page 17.
34. Government of Pakistan, Pakistan Economic Survey 1984-85
Islamabad.
35. Ibid.
36. Ibid.
37. Ibid.
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