Failed neo-liberal policies? Dr Meekal A Ahmed - Tuesday, April 19, 2011

I write in regards to the excellent appraisal by Ambassador Tanvir Ahmed Khan (April 14, 2011) on the collected works in the new book titled “Pakistan: Beyond the Crisis State” edited by Ambassador Dr Maleeha Lodhi. I am sure all the other contributors to the volume will appreciate and reflect on his comments as well.

Ambassador Khan criticises my chapter on the economics of the crisis state on the grounds that it adheres to standard neo-liberal analysis and prescriptions. In other words I have not come up with something new, some novel, sexy concept or refreshingly new view that has a money-back guarantee to set the Pakistan economy on a glorious, never-ending upward trajectory. I had anticipated such criticism. The debate about the efficacy of neo-liberal economics to development economics has a long history and is not new.

However, it would take more than a short column in this esteemed paper to discuss it. Suffice to say that since I have never been an intellectually obstinate person, I remain open to being convinced of an ‘alternative’ path to development that can produce the kind of macroeconomic outcomes that we should be striving for: robust, labour-augmenting growth with low inflation, with economic growth being driven by savings, investment and exports (and not consumption and imports) so that the ‘twin deficits’ can fall over time and growth becomes more self-sustaining and less aid and debt-dependent (Dr. Maleeha Lodhi’s concept of ‘borrowed growth’). Thus, I most certainly do not insist and never have insisted that “remedial initiatives have to remain within the parameters of the dominant neo-liberal theories of the time”.

May I also submit to Ambassador Khan that the thrust of my chapter was not on whether we as a nation (and/or I) are lackeys of the IMF who slavishly follow the strictures of the “Washington Consensus”, or not. Pakistan’s problem is not that we have followed this or that paradigm. As a witness to economic history, Pakistan’s problem is that it has never implemented an adjustment programme with unswerving commitment and full ‘ownership’ as in other countries.

Implementation is undertaken grudgingly, haltingly, in bad faith and more egregiously with the occasional, or is it now an ingrained tendency, to use the sleight of hand to meet targets. This is not a harsh judgment. Pakistan’s interactions with the IMF (or the west more generally) is a depressing litany of broken promises and failed programmes which we have always abandoned at mid-point once the crisis is past, the economy starts to recover and most importantly, our foreign exchange reserves reach more comfortable levels. Then we become smug, complacent and arrogant and want to regain our ‘economic sovereignty’ – until, of course, the next crisis. Worse still, not only do we abandon the programme, we proceed to roll-back whatever little reform we may have undertaken – a good example being the charade that is played out with regards to removing and then restoring tax exemptions and concessions for the rich and powerful.

The main point of my chapter was that a grudging, half-cocked, start-stop, cook-the-books, roll-back approach to reforms is not the way the people of Pakistan are ever going to see any benefit from adjustment programmes whether financed by the IMF or not, and whether the programme carries the label ‘Washington Consensus’, ‘Chinese Consensus’, ‘Voodoo Economics’ or ‘Islamic Ummah Consensus’. The blunt fact is that the perfidy of successive governments in Pakistan has time and again let the people down. This betrayal must stop.

Suggesting that our present economic malaise is because Pakistan has been following neo-liberal policies misses the point, ignores the facts of economic history and sounds to me like a bit of a cop-out. Successful countries like those in the BRIC group, as well as Turkey, Thailand, Malaysia, Indonesia, Vietnam, Cambodia and even countries in sub-Sahara Africa (which according to the IMF’s latest global forecast are set to record the highest GDP growth rate in a decade) have made rapid strides in developing their economies while lifting millions of people out of poverty. They don’t waste time on polemics. We need to find the way to emulate them (as Pakistan was emulated in the 60s by them) and not get bogged down in tiresome, tangential debates on ideology and metaphysics.

The writer has worked at the Planning Commission and the IMF. Email: meekalahmed2

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