A country at war

In the wake of the assassination of Benazir Bhutto we revisit our October special on Pakistan in whi

Pakistan is about to descend even deeper into violence and chaos, as the front-line state in the war on terror prepares for an all-out offensive on the jihadi militants entrenched in Waziristan, the country's lawless northern province. In what amounts to total war on the Taliban and al-Qaeda, President Musharraf is planning to bring the whole region under military control. This is a high-risk strategy, as the consequences of failure could be devastating for Pakistan. They could even lead to the break-up of the country.

Behind the headlines, the state's contradictions and tensions are being tested to the limit. The arrival of Benazir Bhutto, supposed to help marshal the forces of moderation and reform, has increased political instability. Supporters of the other former prime minister, Nawaz Sharif, who plans a second attempt to return from exile to Pakistan in the first week of November, are preparing a mass campaign against Musharraf that could lead to political gridlock. And the president himself has given a general amnesty to corrupt politicians - an act seen as handing a tabula rasa to plunderers and murderers.

Bhutto returned to Pakistan on the basis of a "power-sharing deal" brokered by Washington and vaunted in the international media as a po sitive move towards democracy. But it is little more than a conjunction of self-interests. Mush arraf describes the proposed arrangement as a "troika", involving the president, the prime min ister and the army chief of staff. The powers of the president, including being able to sack the prime minister at will, are to remain untouched for the next five-year term. Any premier would thus have little real power and would be forced to do the bidding of the other two members of the troika. A pliant prime minister with selected political parties on board means Musharraf remains in charge. The status quo is preserved.

In return for joining the arrangement, Bhutto's two main demands are met: her Swiss bank accounts have been unfrozen and she gets to keep her skyscraper in Dubai and properties in England and the US; and the rule against her serving a third term as prime minister is waived.

Musharraf's plans for the immediate future have two components. First, now that Bhutto has returned, he is determined to hold elections before mid-January. They will be "managed", just as he managed the 2002 elections, by "seat adjustment" - this time to the advantage of her party. He expects Bhutto to deliver her "blind" followers from Sind and Punjab, largely poor peasants at the mercy of feudal landlords. The intelligence agencies and the army will do the rest and ensure the desired results.

However, after the bloodbath in Karachi at Bhutto's return on 19 October, it is difficult to see how in the current atmosphere elections can be held. "Political rallies will be open to both militant attacks and sabotage by rogue intelligence elements," says Rashed Rahman, managing editor of the Post, the Lahore daily. "With intel ligence apparatus as prime candidate for the attack, all previous assumptions of Bhutto riding back to power are scuppered."

Fear of suicide bombings will be a potent inhibition to voters from venturing into the polling booths. And given that large parts of the northern provinces are virtually no-go areas, it will be next to impossible to hold elections in that region. "A limited voter turnout at around 20 per cent will hardly constitute a credible election," says Rahman - no matter how the elections are "managed".

Second, a fully fledged assault on Waziristan is due within days. "This has now become inevi table," a high-ranking military officer told the NS. "We are taking daily casualties. If we don't take the militants on with our full might, the morale of the army will sink even further." Unlike previous operations, which target ed specific militant bases or tried to block guer rilla movement between Pakistan and Afghan is tan, "the aim now is to pacify the entire province".

Forces would be deployed in all major cities, such as Mir Ali, Angor Ada and Magaroti, with the aim of establishing permanent army bases manned by thousands of military and paramilitary troops. The entire region will come under Pakistani military control, administered under the direct command of the newly appointed vice-chief of the army staff, General Ashfaq Pervez Kiani. (When and if Musharraf removes his uniform, General Kiani will take over as chief of the army staff.) "We estimate the all-out assault will destroy the centralised command structure of al-Qaeda and the Taliban, making their operations sporadic and largely ineffective," says the military officer.

Language of liberation

However, given the Pakistani army's poor record in Waziristan, this seems rather optimistic. The militants will almost certainly stand and fight to the bloody end. Pakistan has already lost more than a thousand soldiers; 300 more are being held hostage. The Pashtun fighters, including the Pakistani Taliban, know the region well. They are used to guerrilla warfare and see death in battle as a great honour and a direct route to paradise. Most of the local population supports them. The chances of the Pakistani army "pacifying" the region are therefore slim.

At issue is more than terrorism. The fiercely proud and independent Pashtun people see the American and British forces in neighbouring Afghanistan as invaders. Pakistani troops marching into Waziristan will also be seen as a foreign invasion. A civil war will turn into a war of "national liberation". Many tribal leaders are already speaking the language of liberating themselves from the "Pakistani administration". The end result could be a new wave of suicide attacks and acts of sabotage throughout Pakistan.

Musharraf began putting his strategy in place two weeks ago. He secured the passage of the national reconciliation ordinance (NRO), as it is called, on 5 October. This dropped all corruption charges against politicians from "all parties". "We decided to wind up those cases that were pending for the past 15 years," Musharraf said, claiming that it would bring to an end the politics of vendetta and victimisation in the country. The NRO cleared the way for Bhutto's return and wiped out the last remaining charges against her husband, Asif Ali Zardari, who was released on bail in 2004 after spending eight years in prison. The next day, Musharraf had himself re-elected as president for another term by the current hand-selected parliament.

But the amnesty granted in the NRO does not include Nawaz Sharif, leader of the Muslim League, Pakistan's second-largest party. A conservative, staunchly anti-American politician, Sharif believes democracy and military dictators do not go together. He commands huge support among both the middle classes and religious groups and is more likely to win a fair election than Bhutto. Sharif, deposed in a bloodless coup in 1999, is determined to engineer Musharraf's downfall. On his first attempt to return to Pakistan on 10 September, he was arrested at Kar achi Airport and given two choices: prison, or return to exile in Saudi Arabia. The cases against Sharif are still pending before the Supreme Court. Yet, despite Musharraf's efforts, the courts have refused to issue new arrest warrants against him. If Sharif succeeds in returning, the Bhutto/Mush arraf deal will be in serious trouble.

"The chances of that alliance holding are also slim," says Rahman. To begin with, the two despise each other. The Pakistan People's Party is not so much a party as a feudal institution that Bhutto runs as her fiefdom. But even she may find it difficult to suppress dissent in the senior ranks. Many PPP stalwarts believe that the power-sharing pact with Musharraf is damaging the party's reputation and electoral chances. A number of Bhutto family members have openly stated their criticisms. The poet and newspaper columnist Fatima Bhutto, Benazir's niece, holds her aunt responsible for the deaths in Karachi because of her insistence on "political theatre".

Her ratings in opinion polls conducted after the NRO have fallen sharply. Some senior PPP members hoped she would give a new lease of life to the party by behaving like a senior states woman and allowing younger politicians to lead. But not many are willing to defend an indefensible deal. There is thus a real chance that the PPP may split, as it did at the previous elections. And if Bhutto fails to deliver at these elections, even after seat manipulations, Musharraf will drop her as easily as he has abandoned other parties.

So far, Musharraf has had it all his way. His only remaining obstacle is a case currently at the Supreme Court over whether he can continue as president in uniform. It is not much of an obstacle, however, as everything is now in place for him to retain his power even if he has to dispense with his military position.

The power-sharing arrangement was conceived as a ploy to paper over the gaping cracks in the country. After Karachi, it looks more like another contributory factor in a more turbulent and dangerous era for Pakistan. The intelligence services, elements of which may be responsible for the attack on Bhutto's motorcade, are out of control. Suicide bombings have become an integral part of the militants' strategy in Waziristan, both to undermine the political process and to demoralise the army. Whether one player, or even power-sharing players, ultimately subservient to Washington can retain control of this explosive situation is a moot point.

Ziauddin Sardar, writer and broadcaster, describes himself as a ‘critical polymath’. He is the author of over 40 books, including the highly acclaimed ‘Desperately Seeking Paradise’. He is Visiting Professor, School of Arts, the City University, London and editor of ‘Futures’, the monthly journal of planning, policy and futures studies.

This article first appeared in the 29 October 2007 issue of the New Statesman, Pakistan

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What Marx got right

...and what he got wrong.

1. You’re probably a capitalist – among other things

Are you a capitalist? The first question to ask is: do you own shares? Even if you don’t own any directly (about half of Americans do but the proportion is far lower in most other countries) you may have a pension that is at least partly invested in the stock market; or you’ll have savings in a bank.

So you have some financial wealth: that is, you own capital. Equally, you are probably also a worker, or are dependent directly or indirectly on a worker’s salary; and you’re a consumer. Unless you live in an autonomous, self-sufficient commune – very unusual – you are likely to be a full participant in the capitalist system.

We interact with capitalism in multiple ways, by no means all economic. And this accounts for the conflicted relationship that most of us (including me) have with capitalism. Typically, we neither love it nor hate it, but we definitely live it.

2. Property rights are fundamental to capitalism . . . but they are not absolute

If owning something means having the right to do what you want with it, property rights are rarely unconstrained. I am free to buy any car I want – so long as it meets European pollution standards and is legally insured; and I can drive it anywhere I want, at least on public roads, as long as I have a driver’s licence and keep to the speed limit. If I no longer want the car, I can’t just dump it: I have to dispose of it in an approved manner. It’s mine, not yours or the state’s, and the state will protect my rights over it. But – generally for good reason – how I can use it is quite tightly constrained.

This web of rules and constraints, which both defines and restricts property rights, is characteristic of a complex economy and society. Most capitalist societies attempt to resolve these tensions in part by imposing restrictions, constitutional or political, on arbitrary or confiscatory actions by governments that “interfere” with property rights. But the idea that property rights are absolute is not philosophically or practically coherent in a modern society.

3. What Marx got right about capitalism

Marx had two fundamental insights. The first was the importance of economic forces in shaping human society. For Marx, it was the “mode of production” – how labour and capital were combined, and under what rules – that explained more or less everything about society, from politics to culture. So, as modes of production change, so too does society. And he correctly concluded that industrialisation and capitalism would lead to profound changes in the nature of society, affecting everything from the political system to morality.

The second insight was the dynamic nature of capitalism in its own right. Marx understood that capitalism could not be static: given the pursuit of profit in a competitive economy, there would be constant pressure to increase the capital stock and improve productivity. This in turn would lead to labour-saving, or capital-intensive, technological change.

Putting these two insights together gives a picture of capitalism as a radical force. Such are its own internal dynamics that the economy is constantly evolving, and this in turn results in changes in the wider society.

4. And what he got wrong . . .

Though Marx was correct that competition would lead the owners of capital to invest in productivity-enhancing and labour-saving machinery, he was wrong that this would lead to wages being driven down to subsistence level, as had largely been the case under feudalism. Classical economics, which argued that new, higher-productivity jobs would emerge, and that workers would see their wages rise more or less in line with productivity, got this one right. And so, in turn, Marx’s most important prediction – that an inevitable conflict between workers and capitalists would lead ultimately to the victory of the former and the end of capitalism – was wrong.

Marx was right that as the number of industrial workers rose, they would demand their share of the wealth; and that, in contrast to the situation under feudalism, their number and geographical concentration in factories and cities would make it impossible to deny these demands indefinitely. But thanks to increased productivity, workers’ demands in most advanced capitalist economies could be satisfied without the system collapsing. So far, it seems that increased productivity, increased wages and increased consumption go hand in hand, not only in individual countries but worldwide.

5. All societies are unequal. But some are more unequal than others

In the late 19th and early 20th centuries, an increasing proportion of an economy’s output was captured by a small class of capitalists who owned and controlled the means of production. Not only did this trend stop in the 20th century, it was sharply reversed. Inherited fortunes, often dating back to the pre-industrial era, were eroded by taxes and inflation, and some were destroyed by the Great Depression. Most of all, after the Second World War the welfare state redistributed income and wealth within the framework of a capitalist economy.

Inequality rose again after the mid-1970s. Under Margaret Thatcher and Ronald Reagan, the welfare state was cut back. Tax and social security systems became less progressive. Deregulation, the decline of heavy industry and reduction of trade union power increased the wage differential between workers. Globally the chief story of the past quarter-century has been the rise of the “middle class”: people in emerging economies who have incomes of up to $5,000 a year. But at the same time lower-income groups in richer countries have done badly.

Should we now worry about inequality within countries, or within the world as a whole? And how much does an increasing concentration of income and wealth among a small number of people – and the consequent distortions of the political system – matter when set against the rapid ­income growth for large numbers of people in the emerging economies?

Growing inequality is not an inevitable consequence of capitalism. But, unchecked, it could do severe economic damage. The question is whether our political systems, national and global, are up to the challenge.

6. China’s road to capitalism is unique

The day after Margaret Thatcher died, I said on Radio 4’s Today programme: “In 1979, a quarter of a century ago, a politician came to power with a radical agenda of market-oriented reform; a plan to reduce state control and release the country’s pent-up economic dynamism. That changed the world, and we’re still feeling the impact. His name, of course, was Deng Xiaoping.”

The transition from state to market in China kick-started the move towards truly globalised capitalism. But the Chinese road to capitalism has been unique. First agriculture was liberalised, then entrepreneurs were allowed to set up small businesses, while at the same time state-owned enterprises reduced their workforces; yet there has been no free-for-all, either for labour or for capital. The movement of workers from rural to urban areas, and from large, unproductive, state-owned enterprises to more productive private businesses, though vast, has been controlled. Access to capital still remains largely under state control. Moreover, though its programme is not exactly “Keynesian”, China has used all the tools of macroeconomic management to keep growth high and relatively stable.

That means China is still far from a “normal” capitalist economy. The two main engines of growth have been investment and the movement of labour from the countryside to the cities. This in itself was enough, because China had so much catching-up to do. However, if the Chinese are to close the huge gap between themselves and the advanced economies, more growth will need to come from innovation and technological progress. No one doubts that China has the human resources to deliver this, but its system will have to change.

7. How much is enough?

The human instinct to improve our material position is deeply rooted: control over resources, especially food and shelter, made early human beings more able to reproduce. That is intrinsic to capitalism; the desire to acquire income and wealth motivates individuals to work, save, invent and invest. As Adam Smith showed, this benefits us all. But if we can produce more than enough for everybody, what will motivate people? Growth would stop. Not that this would necessarily be a bad thing: yet our economy and society would be very different.

Although we are at least twice as rich as we were half a century ago, the urge to consume more seems no less strong. Relative incomes matter. We compare ourselves not to our impoverished ancestors but to other people in similar situations: we strive to “keep up with the Joneses”. The Daily Telegraph once described a London couple earning £190,000 per year (in the top 0.1 per cent of world income) as follows: “The pair are worried about becoming financially broken as the sheer cost of middle-class life in London means they are stretched to the brink.” Talk about First World problems.

Is there any limit? Those who don’t like the excesses of consumerism might hope that as our material needs are satisfied, we will worry less about keeping up with the Joneses and more about our satisfaction and enjoyment of non-material things. It is equally possible, of course, that we’ll just spend more time keeping up with the Kardashians instead . . .

8. No more boom and bust

Are financial crises and their economic consequences part of the natural (capitalist) order of things? Politicians and economists prefer to think otherwise. No longer does anyone believe that “light-touch” regulation of the banking sector is enough. New rules have been introduced, designed to restrict leverage and ensure that failure in one or two financial institutions does not lead to systemic failure. Many would prefer a more wholesale approach to reining in the financial system; this would have gained the approval of Keynes, who thought that while finance was necessary, its role in capitalism should be strictly limited.

But maybe there is a more fundamental problem: that recurrent crises are baked into the system. The “financial instability” hypothesis says that the more governments and regulators stabilise the system, the more this will breed overconfidence, leading to more debt and higher leverage. And sooner or later the music stops. If that is the case, then financial capitalism plus human nature equals inevitable financial crises; and we should make sure that we have better contingency plans next time round.

9. Will robots take our jobs?

With increasing mechanisation (from factories to supermarket checkouts) and computerisation (from call centres to tax returns), is it becoming difficult for human beings to make or produce anything at less cost than a machine can?

Not yet – more Britons have jobs than at any other point in history. That we can produce more food and manufactured products with fewer people means that we are richer overall, leaving us to do other things, from economic research to performance art to professional football.

However, the big worry is that automation could shift the balance of power between capital and labour in favour of the former. Workers would still work; but many or most would be in relatively low-value, peripheral jobs, not central to the functioning of the economy and not particularly well paid. Either the distribution of income and wealth would widen further, or society would rely more on welfare payments and charity to reduce unacceptable disparities between the top and the bottom.

That is a dismal prospect. Yet these broader economic forces pushing against the interests of workers will not, on their own, determine the course of history. The Luddites were doomed to fail; but their successors – trade unionists who sought to improve working conditions and Chartists who demanded the vote so that they could restructure the economy and the state – mostly succeeded. The test will be whether our political and social institutions are up to the challenge.

10. What’s the alternative?

There is no viable economic alternative to capitalism at the moment but that does not mean one won’t emerge. It is economics that determines the nature of our society, and we are at the beginning of a profound set of economic changes, based on three critical developments.

Physical human input into production will become increasingly rare as robots take over. Thanks to advances in computing power and artificial intelligence, much of the analytic work that we now do in the workplace will be carried out by machines. And an increasing ability to manipulate our own genes will extend our lifespan and allow us to determine our offspring’s characteristics.

Control over “software” – information, data, and how it is stored, processed and manipulated – will be more important than control over physical capital, buildings and machines. The defining characteristic of the economy and society will be how that software is produced, owned and commanded: by the state, by individuals, by corporations, or in some way as yet undefined.

These developments will allow us, if we choose, to end poverty and expand our horizons, both materially and intellectually. But they could also lead to growing inequality, with the levers of the new economy controlled by a corporate and moneyed elite. As an optimist, I hope for the former. Yet just as it wasn’t the “free market” or individual capitalists who freed the slaves, gave votes to women and created the welfare state, it will be the collective efforts of us all that will enable humanity to turn economic advances into social progress. 

Jonathan Portes's most recent book is “50 Ideas You Really Need to Know: Capitalism” (Quercus)

Jonathan Portes is senior fellow The UK in a Changing Europe and Professor of Economics and Public Policy, King’s College London.

This article first appeared in the 22 June 2017 issue of the New Statesman, The zombie PM

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