Af / Pak Economy — 05 March 2013
Pakistan: An Ideological Approach towards the Economy

By Moez Mobeen

There seems to be a widespread consensus within Pakistan’s intelligentsia that Pakistan’s economy is in a mess. That this is indeed the case is something which is felt by the Pakistani street for some time now. But given the disconnect which exists between a conservative populace and a liberal ruling elite such convergence of perceptions is hard to find. It is however the lack of intellectual discourse on economic ideas and solutions which is an extremely worrying trend within the Pakistani polity. Pakistan’s liberal intelligentsia is obsessed with perfecting the structure of the state and balancing or ensuring the separation of power between institutions of the state. A historical analysis of political and intellectual trends within Pakistan suggests that, civil military relations, provincial autonomy and recently the executive judiciary balance of powers have dominated the Pakistani political and intellectual landscape. Such has been the frequency of these discussions and their recurrence that over the years a broader narrative has emerged which narrowly defines this select vision for Pakistan which has been adopted by the political parties and the liberal intelligentsia at large. That civilian supremacy, provincial autonomy and institutional restraint, if ensured, would lead Pakistan and its people out of the misery they find themselves today. This narrow vision and intellectual obsession has all but stifled intellectual discourse on key ideas related to organization of people’s affairs. Although foreign policy and ideological identity of the Pakistani people are other topics which are very strongly debated within Pakistan but such discussions are also held hostage to strict ideological biases of a liberal elite which has locked itself in to an intellectual paradigm of Western dependence and Secular identity and would not allow any debate or questions on such a paradigm.

It is however the discussions on economic ideas which is almost nonexistent in this intellectual discourse. Consider the near unanimity of proposed economic reforms as an example. There is a consensus on increasing the tax to GDP ratio, the need to cut social security programs like giving out subsidies on fuel and electricity, to cut to size the non performing state owned enterprises by privatizing them, to continue foreign lending and foreign investment as a means to stimulate the economy and to pursue a policy of austerity in state expenditure, including defense. For some this unanimity suggests a commonality of vision towards how the economy should move forward. It is infact quite the opposite. It is rather the complete absence of any vision at all for the economy which has resulted in this consensus. These solutions as they appear in the media are presented by retired economists working for international financial institutions or retired government officials who have worked closely with these institutions. These solutions are proposed by Western Governments and international multilateral institutions like the IMF and the Work bank and are taken directly from them without any considerations as to whether such solutions will help solve Pakistan’s economic problems. The collapse of the international financial system designed by Western governments followed by the sovereign debt crisis which has rocked Europe and threatens the very existence of the European Monetary Union and the prolonged recession which has hit Western nations and which has entered its sixth consecutive year has not led to any debate or discussions in Pakistan. Surely, if the proposed economic solutions for Pakistan are indeed that good, wouldn’t such solutions be helping make the economies of the Western world any better? And if they aren’t doesn’t this require a critical scrutiny of such economic prescriptions? But we have seen none so whatever. The consensus prevails.

The economic prescriptions for Pakistan’s economy which enjoy near unanimous consensus within the intelligentsia are based on capitalist principles and ideals. The intelligentsia within the Muslim World was mesmerized with West’s economic and scientific growth and holds Western economic solutions in almost divine reverence so much so that these solutions are followed blindly despite the obvious flaws within them. Consider the current approach towards the energy crisis. Capitalism values private property in high regard. It believes that the motivation for profit is the drive which leads human beings towards innovation and creativity. It believes that human intellectual and physical efforts are mobilized best in pursuit of personal gains. By creating competition between different human beings this energy can be used as a force for driving the economy. The personal stake, the quest to increase private wealth, ensures good quality and passion as well as better managerial skills in running businesses. Thus governments which are representative entities should not run businesses and the economy should be driven through private enterprise. This is one of the fundamental views of capitalism towards economy and business. It is this idea of what drives the economy in capitalist thought which was attacked by Karl Marx who then went on to give an alternative economic and political model to that of capitalism. It should be noted that the Western World was following the capitalist economic principles as they were presented by Adam Smith and David Ricardo when Karl Marx was born. Karl Marx attacked the idea that profit and personal gain should be the driving force behind the economy. He saw in Europe that an economy based on such principles results in concentration of wealth in a small capitalist class at the expense of the whole society. The personal stake while good for competition and creativity was also a force of individual greed where the economic needs of individual businesses and wealthy investors took priority over that of the economic needs of the society resulting in widespread suffering especially amongst the poor or what he called the working class. For Marx this suffering, as he witnessed it in Europe was on such a wider scale that he called for abandoning the personal stake and the motivation for profit as being the driving force behind the economy. For this he advocated the abolishment of private property and called for collective ownership of everything the society produces. As for the drive or the energy which should run the economy Marx suggested that this should be the needs of the society. So the motivation for economic activity should not be profit rather fulfilling the needs of the society. Although Marx did not suggest as to how this would be done practically, Lenin later on used Marx’s ideas and advocated that the State should own everything and should guide economic activity to fulfill the needs of the society.

So what is the way forward? Private Ownership and motivation for profit as a drive for running the economy or State ownership and the motivation of fulfilling the needs of the society as the driving force for the economy?

Islam has addressed this issue by presenting a different viewpoint towards economy and ownership. It has sought to bring in the human angle in economic principles. It has opposed the complete abolition of private ownership as being against the nature of human beings and his instinctive energy for security resulting in want of owning properties and the like. It has however proposed partial abolition of private ownership. It has looked at partial abolishment of ownership from the angle of giving the needs of the society priority over the needs of the individual. So if individual ownership of a property which by its nature would result in the community being deprived of the benefit of such a property then the ownership of that property is prohibited like public roads, town squares, rivers, seas and the like. A road or a river by their nature serve the need of the community. Such a property cannot be privately owned because it would be giving the needs of individual more priority over the needs of the society. If the nature of the property however does not require abolishment of individual ownership then it is allowed to own it individually given that it does not deprive the community from accessing that property. If however, private ownership of such a commodity would result in the individual benefiting from it at the cost of the community then such private ownership is prohibited. For example mineral resources, electricity, gas and petrol (energy resources in general).  So while coal, gas, petrol, salt and the like are used by individuals for their personal needs the private ownership of a coal or salt mines or gas or petrol fields would result in an individual benefiting from it at the expense of the community. So while salt, gas, petrol and electricity can be privately owned salt and coal mines, gas and petrol fields and electricity generating plants and dams cannot. It was narrated in the book At-Tirmidhi which is a collection of sayings of the Prophet Muhammad (SAW) that Abyadh ibn Hammal came to the Prophet(SAW) and asked him to grant him a salt laden land, and he (SAW) granted it to him. And when he left, one person in attendance with the Prophet (SAW) said, “Do you know what you granted him? You granted him the uncountable water (Al ‘udd)”. He(SAW) then took it away from him.” The Prophet (SAW) took back from Abyadh the salt mine because he was informed that it is one of those resources which do not deplete. So Islam has divided ownership in to State, Public and Private Property. The State managing the State and Public property while individuals owning the private property.

 

As for the energy and motivation which drives the economy in Islam, the concept of three distinct properties has produced a net positive energy for driving the economy. The individual ownership and quest for profit would result in creativity and passion which results from production for the sake of motivation for profit. However by refusing private ownership of certain types of properties Islam has ensured that the motivation for profit does not result in the needs of the individuals taking priority over the needs of the society. So the state directly looks after the needs of the society while the individuals continue to produce for profit. In this way the energy which drives the economy is private entrepreneurship and a guardian state which caters to the society’s needs.

 

The acute energy crisis which has hit Pakistan cannot be solved with administrative measures like eliminating the circular debt, removing subsidies and diversifying energy resources. For this crisis to be solved in a manner in which cheap and affordable energy is available to the people the private ownership of electricity generating plants and oil and gas fields must be abolished and the state needs to supervise their management directly. This means that these resources would not be allowed to be business commodities for private multinationals and investors. They belong to the people and State manages them on their behalf.

 

The author is a freelance columnist who resides in Islamabad and writes regularly on Muslim Affairs

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(1) Reader Comment

  1. Many Countries in the world like the Pakistan have a lot of problems: living costs are on the up and up, pensions are under threat from all quarters, and it seems no job is safe anymore, but it would appear that our politicians lack the competence to deal with the many problems arising from the economic crisis. Perhaps they should take advice from professional economic crisis specialists. For example, the Orlando Bisegna Index, specialists in the economic crisis, have developed a program that has helped various counties with debt problems, business failures and unemployment, improving the economic situation of many families. The program has arisen from their development of the Orlando Bisegna Index, a unique index based on 206 diverse indicators that measures the intensity of the economic crisis in the G20 countries and other Euro countries.

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