Institutional Rearrangement: Installing the Governance Structure
By the end of the 1990s, people were disenchanted with neoliberal policies. International Financial Institutions bestowed massive responsibilities on the shoulders of the corrupt elite.
The projects of rule of law came in response. The main architect of the ârule of lawâ in the World Bank is considered to be Ibrahim Shihata, who was the senior vice president of the Bank from 1983 to 1998. He emphasized governance, âgood orderâ, and a system of rules and institutions as a prerequisite for the development of developing countries. This was accompanied by Kofi Annanâs famous declaration in 1997, to make good governance âthe single most important factor in eradicating poverty and promoting developmentâ,[1100] and hence, all the development agencies, namely the U.S. Agency for International Development, the Inter-American Development Bank[1101] and the World Bank, became committed to this. The World Bank developed the Global Governance Indicators, reflecting institution building, in transitional economies as explained in the first chapter of this book. The 2000s were thus the decade of putting the state back in the analyses of International Financial Institutions, but this time in the name of good governance. The Good Governance model did not push the developmental state, which had made the âAsian Miracleâ in the early 1990s.[1102] Instead, it was for the legal order that could make the market economy possible.[1103] [1104] The âdevelopment policiesâ now proposed were to fight against corruption through legal reforms in the civil service, as well as criminal law, administrative law and judicial reforms. Terminology and rhetoric used by officials and intellecÂtuals included meritocracy in the bureaucracy, guaranteeing transparency in public administration, ensuring the monitoring of government procurement processes, reducing red tape, curbing arbitrariness and discretion in administrative and judicial decisions.
The judiciary was to hold public officials or politicians responsible for their acts of interfering with market processes and private investment. Hence, the World Bank began giving âtechnical assistance loansâ for judicial reforms. The first loan was granted to Venezuela in 1992. Now, these loans range from $2.5 million (in U.S. dollars) to Yemen to $58 million to Russia. According to one estimate, the World Bank was supporting 330 ârule of lawâ projects dealing with judicial reforms in 100 countries in early 2000s. Per the World Bankâs Annual Report of 2003Â2004, it spent $3.8 billion on loans for judicial reforms since 1993.7 All of the above processes began in the early 1990s, with the transition from the push for a non-interventionist state under deregulation, decentralization and privatization to a state set up to promote the formal market under good governance at the end of the 1990s. These âwavesâ of externally funded law reform in the transition economies of Eastern Europe and Asia were strongly influenced by ânew institutional ecoÂnomicsâ for their theoretical framework.[1105] According to this school of thought, good institutions can make an economy efficient, and benefit the individual as well as society (of course, with the implied assumption of a perfect market, competition and information). Furthermore, the thinking went that existing institutions could be reformed under a much wider and looser theory of social change. âPragmaticâ or purpose-built, economic, political and particularly legal institutions are the focus of institutional economists. The official presentation on this front can be found in the World Bank document, Comprehensive Development Framework? Apart from the legal and development critique of this inclusion of the âsocialâ in preposition of the World Bank[1106] [1107] or this proper place of law in it,[1108] this book is to evaluate the centrality of law for political development. In this perspective, we can see the relationship between the metropolitan bourgeoisie and the Musharraf regime, and why it did not vocally object to this overthrow of the democratic regime of Nawaz. Furthermore, we can see how the rising petit bourgeoisie (or the âcivil societyâ) joined hands with good governance and its emphasis on legalism and constituÂtionalism (or what I refer to as the âliberal legal projectâ). That is how ârule of lawâ became more important than democracy in Pakistan for the metropolitan bourÂgeoisie and âcivil societyâ. Below, I detail this state formation and its class forÂmation under good governance in the 2000s. 5.2
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