- Undercuts democracy
Markets in Pakistan (like many developing and developed countries) are becoming increasingly a place where the private producers can get a price for their product that is a lot more than the cost incurred to produce — and on the other hand, in the labour market, where the price of labour or wages/income is kept depressed compared to the value addition the labour makes towards the production process.
Moreover, under the neoliberal thought process carried forward by successive governments over time, these private producers are protected in doing this by the government itself, that is, by safeguarding the private sector from market principles of prices determined through a natural interaction of demand and supply forces, and from creating tax and subsidy structures for a favoured set of producers, usually large producers and conglomerates — that in return assist political parties in election campaign finance, and also because the stalwarts of many a political party themselves have one arm as a private producer — that make a large number of small firms uncompetitive, which get crowded out from a particular sector or market over time. This has resulted in the monopolising of many markets in terms of a few private producers running them, and in turn supported by conniving governments to their advantage. But who safeguards the advantage of the majority, the electorate, the general citizenry.
So how does the government and the private sector get away with this: primarily at the back of ‘manufacturing consent’ (the concept made popular by Professor Noam Chomsky of the MIT University) of the public — since using coercion is becoming increasingly a matter of the past in a world of global human rights organisations and the very advancement of technological oversight in keeping track of such physical pressures — through primarily using the cover of Regan-Thatcher era set of policies, called the neoliberal policies. Though the propaganda techniques have now overtaken to accomplish the neoliberal agenda (and without having this particular name of ‘neoliberalism’), the phenomenon itself is quite old, in fact very much prevalent in the colonial times.
In either case, the phenomena itself is something like: lack of government control over markets, liberalisation of the economy, which is to say massive privatisation drive and substantially lowering of trade related tariffs — the otherwise declared ‘free market principles’ in economic orthodox literature. Yet, while these market principles of the neoliberal kind were forced upon the colonies (and later on through either manufacturing consent or as loan conditionalities in the aid-dependent third world), exactly the opposite happened in these developed countries when they were trying to develop initially centuries ago — high protectionism, enforcing the concept of these market principles on their colonies, including extensively practicing the theory of ‘comparative advantage’ whereby, for instance, India and China were kept at the stage of raw materials production, so that those could be used to start industrial revolution by producing highly mechanized value-adding products.
So once again how did the private sector made those gains: successive governments kept the markets under which these utilities worked, like the real sector markets
Taking a step back to see the roots of this phenomenon, reveals its inherent weaknesses, and the level of apparent desperation of the political and economic elites to use it to their advantage. Hence, these set of policies were wrongly fashioned with the name of neoliberalism, because they were neither ‘new’ nor ‘liberal’ in the classical sense, whereby philosophers like John Stuart Mill had evolved this philosophy for a different kind of world, on the basis of a separate of kind of reasoning for these policies to become applicable; notwithstanding the fact that the pre-requisite environment for these policies as propounded by Mill and others, was based on a part imaginary world.
In that part imaginary world, the public in general did not have much economic class difference, but the only struggle was to carry the flag of liberal values — freedom of expression, along with other basic human freedoms — against the authoritarian state. The fact it is part imaginary is because there has always been class differences of significant magnitude in every society, so the struggle was also been different economic classes. Moreover, this clearly had little relevance in times of the 1970s or so (when Regan and Thatcher first propounded the neoliberal values) and more so today where corporations have continued to take up public space of production and services, and have contributed to (among other factors) in a world of increasing class inequality- and these corporations and private sector overall continued to increase penetration even in areas where the government initially made all the investments, like in the public utilities or corporations.
So once again how did the private sector made those gains: successive governments kept the markets under which these utilities worked, like the real sector markets- including the labour market and the financial market- weakly regulated, which resulted in the diminishing performance of the public sector arena, may that be education or health sectors, or companies providing public utilities. At times, it strongly appears that the stalwarts of certain governments even made policies to make inefficient certain public corporations or areas of intervention, to the extent that it could be ascertained (using the philosophy of neoliberalism) that the public sector was inherently not suitable but rather private sector (in which these government stalwarts have direct or indirect stakes) to conduct the affairs in these corporations and areas.
So very carefully public consent was influenced by propaganda techniques and using the make-beliefs positives of the neoliberal philosophy that (a) private sector is inherently always better than public sector- although as many a cases abound indicate otherwise, for example in the creation of micro-chip or GPS systems in the developed world, or the well laid out physical infrastructure and service providers in public utilities and corporations in the developing and developed world- and that (b) the private sector works better under weakly regulated markets, which by themselves as if through an ‘invisible hand’ (to borrow the phrase of Adam Smith) reached at true price signals; while in fact it was the tax money of the public and the hard work of the public sector that produced the basis for private sector to make use of it later on, in which case the private sector were (and are) not even satisfied to make normal profits (at the back of correct pricing of products and labour) but still wanted abnormal profits through including in the Neoliberal policy milieu elements of weakly regulated markets (that allowed incorrect price signalling); at the back of bringing on their side the government, which was ready anyways given the same inherent financial temptations shared by the powerful and the wealthy.
While the financial-interest based government-private sector relationship perpetuated the neoliberal mindset in policy formulation, what it means is that role of the public got diminished in policy. Overall, neoliberalism undercuts democracy. This is because private corporations or their affairs in the sectors they were involved by definition of being private, took out the check of public from decisions of production, distribution and pricing of products, which could otherwise keep oversight of public sector through the power of voting in elections; while the role of opposition although remained docile because after all the party in government and that is opposition remained quite similar in their behaviours and interests, and that is to act as one ‘business party’- only colluding with economic elites and presenting a weak check on these elites and the markets they were involved in, to overall safeguard their financial personal- and their political party interests.
(To be continued…)