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Limits of capitalism

27 1 0
22.01.2020

The PTI-led coalition government that came to power about 17 months ago promising change (Tabdeli) has so far followed almost the same failed economic model that the successive governments, both civil and military, have been pursuing over the last 40 years.

Earlier during the 1970s Pakistan had seen the creation of an industrial base of sorts in the public sector. This sector was expanded with the setting up of Heavy Mechanical Complex, Heavy Electrical Complex, Pakistan Machine Tool Factory, Special Steel Factory, the Pakistan Steel Mills and a couple of fertilizer factories, etc. During the decade regular support prices also used to be announced for cash crops.

However, since the days of President General Ziaul Haq the bias against public sector investment in new and emerging areas has prevented investment in the areas the private sector has been unwilling or unable to invest in because of lack of technical capcity. The total break with the strategy of the 1970s of establishing modern heavy industry has undermined Pakistan's ability to change the structure of production, from low value products towards high value technology intensive production.

Today the economy seems to be hobbled by constraints of technological backwardness, poor human resources and declining competitiveness even in traditional industries like cotton and leather. Any break will require long term intervention and well developed industrial policy. However, given the enormous influence of the IMF and the World Bank, to whom such interventions are an anathema, it is unlikely that Pakistan will soon embark on such a course.

By the mid-1980s Pakistan had started following the economic model which had been propounded by the Milton Friedman's Chicago School of thought that promoted what is called free market economy. In this model greed was good; small was beautiful; and it was not the business of the government to be in business.

Prime Minister Benazir Bhutto who came to power following the 1988 general elections had spent much of her exile years in the UK when Mrs. Thatcher was holding the economic fort there and which had even forced........

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