Class Formations Under Neo-liberalism
4.1.1 The Start of Neo-Iiberal Globalization and the Rise of New Institutionalism
With the 1970s came global economic stagnation, the toll of the Vietnam war, the 1972 oil shock and the abandonment of the gold standard by the U.S., which resulted in significant material and ideological shifts, debates and conflicts.
The promotion of non-Western (non-capitalist) development with top-down development thinking began to lose priority.[784] The eventual response was neo-liberalism, on the one hand, and post-development in development thinking, on the other.[785] The former attacked the state in the name of market-led development and the latter did so in the name of anti-development.Samuel Huntington translated the collapse of modernization as a problem with human behaviour,[786] and the New Institutionalism school of thought began to adopt the same assumptions.[787] Huntington found the dichotomy of modern and traditional as asymmetrical where modernity is abstractly defined to create a category of tradition.[788] He rejected the idea of a liberal universalistic cultural model; modernization and development do not necessarily produce cultural westernization.[789] He suggested replacing modernization with a ‘neutral’ shift, and advised the U.S. not to promote modernization as a counter to communist revolution, but rather, to follow the rules of stability. Why did he do this?
American political life was in chaos in the 1960s. Huntington and others found the norms of this period excessively liberal and wanted the re-imposition of authority, both at home and abroad. The chaos arose from ‘an excess of democracy’, according to Huntington, and so a higher degree of government was needed, that is, more imposition of the will of the government on the people.[790] The World Bank moved to a ‘Basic Needs’ approach instead of large infrastructure projects, such as those under President Robert McNamara.[791] It is not irrelevant to mention here that one of the main proponents of this approach was Finance Minister of Pakistan, Dr.
Mahboob-ul-Haq. In a nutshell, modernization was dead by the 1980s. Yet, for a while, it lived in truncated form and had an explicit revival around the 1990s. The salient structure of the old building was not ready to collapse.[792]Modernization returned with American hegemony as “the unstated, undefended, but nevertheless omnipresent liberal vision of historical change”. This hegemony was spearheaded and firmly defended by the Japanese-American Hegelian philosopher Francis Fukuyama.[793] Lucian Pye, while addressing the American Political Science Association in 1989, gave the verdict that the collapse of communism was proof that the modernization theory was right.[794] The point I want to make is that globalization and neo-liberalism were the continuity of the modernization project.[795]
4.1.2 1990s: The Statefor the Market and not for the People
The metropolitan bourgeoisie were the first to push the idea of a non-interventionist state. The reigning theory was that ‘trade openness’, or free trade, was conducive to industrialization and development.[796] The policy reforms of this time are commonly termed as the Washington Consensus.[797] The thinking was that only a ‘market’ with individuals responding to price signals, and thereby “allocating resources to their most productive use”, could eliminate the difference between developed and underdeveloped countries. The market could hence bring an end to the traditional development path of underdeveloped countries with its stages of growth, ‘take off’ and industrialization.[798] As a result, local state formations faced pressure for restructuring from International Financial Institutions that promoted the withering away of the state.[799] Marxist theorists rejected this diminishing of the state approach,[800] for the theories of the weakening state paid little attention to the difference between the states of the North or the South.
Further, North-South integration was presented as a win-win situation, whereas for critical and Marxist theorists, this was patently false. Marxist theorists posited the Washington Consensus as a new restructuring phase of the world economy, and accumulation of capital along with a new international division of labour, which resulted in the re-colonization of the developing countries and exploitation of workers (in export processing zones). The changes were perceived as quantitative and transitory, not qualitative, for the extractive and imposed exploitation of capitalism was the same. States continued to play their role in the capitalist economy, with tight borders kept intact for the protection of national capital. Marxists posited that the nation-state in the third world, while weak as compared to the imperial powers, was strong against its people.[801]4.1.3 Changing State Formation and Class Formation
in Pakistan
In Pakistan, scholars diverged widely in their understanding of the character of the changing state in the 1990s and 2000s. Mushahid and Akmal argued that qualitative changes were apparent in politics at the end of the 1980s, with a decline of LeftRight polarization, greater affluence and national self-assurance.[802] As such, they reiterated the ‘End of Ideology’ thesis (their views on the judiciary to follow). For Ayesha Siddiqua, the relationship among different state institutions affects the capacity of the state to deliver, and hence can determine relatively how strong or weak the state is.[803] In established and institutionalized democracy, multiple interests are accommodated and the state is considered strong, internally and externally. For Cheema, bureaucracy was rule-based until Ayub in terms of patronage to large industrialist groups. It became ‘non-rule-based’ from the Bhutto’s period onward, with the state distributing patronage at the local level and hence, proving to be a weak state.[804] Furthermore, Cheema found considerable change in the state’s ability to affect social formations.
From this, A.S. Akhtar deduces that the importance of bureaucracy has increased to distribute patronage,[805] distribution through the lower bureaucracy used to control the politicians on patronage. This development for A.S. Akhtar does not weaken the state per se [emphasis added by the writer]. Oligarchy’s dominance was restored within a decade. A.S. Akhtar also believes that the state is losing a source of its power to affect or direct change. For Hasan, the state structure remains unchanged in spite of changes in social formation.[806] He looked at how the operation, management and implementation of the fiscal system, structure and governance of the Pakistani state did not reflect any demographic, social, cultural and economic changes.[807] Addleton describes how, during the 1970s and 1980s, gulf migration undermined the Pakistani state’s ability to centralize economic decision-making.[808] This resulted in the insulation of oligarchy and the dominant classes from counter-hegemonic challenges. In this view, the state is not weakened, but has in fact negotiated change in such a manner so as to consolidate its power.These theories have not looked at Pakistan sufficiently within the wider geopolitics in which it is located. In this wider context, the metropolitan bourgeoisie increased its grip on the economy through International Financial Institutions. The ruling class, though in control of democratic institutions, was not hegemonic, and many of the deals were brokered according to the priorities of International Financial Institutions, sometimes with interim Prime Ministers to make quick fixes in the economy and polity.[809] After the failure of each democratic regime in the 1990s, a caretaker prime minister, from the World Bank or IFIs, was appointed. After the dissolution of Nawaz Sharif’s assembly, the Vice President of the World Bank, Moeenuddin Ahmad Qureshi, was appointed as caretaker Prime Minister from 13 July 1993 to 19 October 1993.
Similarly, after the dissolution of Benazir Bhutto’s government in 1996, Regional Vice President of the World Bank for Caribbean and Latin America, Shahid Javed Burki became caretaker Finance Minister (1996-97 for 67 days). That was not enough; hence, during Musharraf’s regime, Executive Vice President of Citibank Shaukat Aziz was elected (actually ‘selected’) as Prime Minister (from August 20, 2004 to November, 2007). The state was indeed weakened with the entry of International Financial Institutions, Structural Adjustment Programs, and their related conditionalities, as well as by being denied control of resources. Furthermore, unequal and uneven development raised the additional crisis of how to gain control of people who were increasingly discontented. The growing poverty put pressure on the fragile democratic polity. The state’s administrative authority, which is linked to its cohesiveness, was weakened or compromised due to the deepening of capitalism, with the new middle class emerging as a contender of power. The encroachment of capitalism was also marked with an unorganized economy outside the formal economy and polity. New local spheres of power, like the regional political party Muttahida Qaumi Movement (MQM), as well as NGOs, also became contenders of power.A.S. Akhtar saw this middle class as co-opted by the already defined historic bloc. As already discussed in the last chapter that it is not quite so simple, and moreover, he never defines the dominant class within the hegemonic bloc, or how state formation and the liberal project was affected. In proposed explanation here, the Pakistani state was structurally dependent on the metropolitan bourgeoisie (through their International Financial Institutions), and it became more dependent on it under rising neo-liberalism. The civil society of the late 1990s allied with legalism and constitutionalism, thus acting as a check on the corrupt ‘political elite’ until the end of the 1990s—but all of this was within the priorities of the hegemonic bloc. Forthcoming analysis will now demonstrate this by analyzing the judiciary, its decisions and particular legal discourses around the separation of power, the appointment of judges, the independence of the judiciary, and the loud rights discourse under Public Interest Litigation (PIL) that emerged through the 1990s.
4.2