A State that took over society

You can bring the rich to the level of the poor overnight but it takes a lifetime to lift the poor to the level of the rich.  [Irish proverb]

During the 1970s, Pakistan went in for wholesale nationalization of its private enterprises, taking even educational institutions into the state’s hands. This was a move laden with far-reaching and unforeseeable consequences. Some are still being unveiled today. It changed not only the economic and political, but also the social, intellectual and moral landscape of the country for generations to come.

The story began in 1968, with a political movement basing itself purely on totalitarian economic agenda. Its slogans were reminiscent of an ancient collective tribal life where everything belonged to everyone. Two of these were: ‘socialism is our economy’ and ‘all power to the people’. The movement was built on the myth of 22 wealthy families: it was argued that the sole cause of poverty of the people of Pakistan was the concentration of wealth in the hands of a few big industrialists. This myth was exploited fully to gain the political benefit.

Thus, under the Nationalization Order of 1972, a number of industries such as iron and steel, basic metals, heavy engineering, heavy electrical, assembling and manufacturing of motor vehicles and tractors, heavy and basic chemicals, petrochemicals, cement, public utilities, power generation, transmission and distribution, and gas and oil refineries were nationalized. The Order ostracized the private sector from economic areas of ‘crucial importance’. In 1972 all private educational institutions, including schools, were shifted to the public sector. The second Order in 1974 led to the nationalization of banks, life insurance, shipping and marketing of petroleum products. In 1976, 2,815 cotton ginning, rice husking and flour milling units were taken over. It ‘created an administrative nightmare and widespread resentment,’ as an analyst said.

More important were the revolutionary changes in the wake of nationalization. The damage was more than economic: mutual trust and regard for personal freedom and property disappeared. It was just like a powerful windstorm uprooting everything coming in its way. There was simultaneous nationalization of social and moral values of Pakistani society. Thus, out of the dust of this storm emerged a new ethic that ultimately proved inimical to basic principles of human civilization. In time, these values pervaded the thinking and practices of people at all levels of society.

The foremost value was: ‘all wealth is evil’. Some of the other values let us sense the gravity of the crisis: that wealth can only be earned by evil means; or, it is created only through evil means; that one who has wealth has got it through evil means; that the wealth one has, was stolen from someone else; that wealth is not a private property; that it is to be owned only collectively; and last but not least, that earning it in any manner is perfectly justified.

These values reflect only the tip of the iceberg. The crisis was so deep and pervasive that it engulfed and destroyed all profit-incentive, work-incentive, work ethics and business ethics. The very concept of property rights and justice was dismantled, resulting in an unprecedented jungle-like anarchy where everything belonged to everyone, and ultimately came to belong to none but the mightiest.

Naturally, the nationalized entities were mercilessly plundered, over-employed and finally collapsed. This gave rise to a kleptocratic institution of government and a kleptocratic society as well. One of Pakistan’s greatest entrepreneurs, G.M. Adamjee, pondered, "In a society neck-deep in corruption, I more often than not find myself a misfit. There is no place for a veteran businessman."

Under the circumstance, the state acquired the role of an instrument of making and redistributing money, and it was the influential elite that used it most, made money and redistributed money the most. This elitist system benefited only a few--and those who were networked. All politics of the elitist state found an exclusive focus ready to be exploited for amassing wealth, and cultivated a general consensus that the state must provide for all of the citizens according to their wishes, no matter what their social and economic status is. This induced an unrelenting scramble for power and money.

Poverty was now to be considered a disadvantage for individuals, caused by the larger earnings of the rich. It meant that the poor were poor because the rich were rich. This was a situation of mistaken targeting: it was not the rich industrialists or capitalists who were responsible for the poverty or low standard of living for people at large as was understood generally. The people who were at the helm of the affairs--regardless of whether they were industrialists or landlords, bureaucrats or politicians or others--grabbed political power and resources, and exploited the rest.

All this prevented Pakistan from moving towards and forward on the path to development and prosperity for all.

When the economy had reached a state where it was in a shambles, the winds changed direction. It was during the 1990s that Pakistan started treading on the path to de-nationalization, privatization, and then moved ahead with de-regulation and liberalization with a hope to redress the damage done till date. But of course, it will take time for confidence and mutual trust to be restored among the people, and between the people and the state. Moreover, the damage done to the social and moral fabric of society will take a much longer time to heal. The society of Pakistan is still in a state of valuelessness and lawlessness!

[This article appeared in Mint on March 7, 2008]