The problem with ongoing discussions in the spheres of economic and political policies respectively is that policy options for change in one sphere are being considered in isolation of the other sphere. Thus issues of corruption, strengthening democracy, the rule of law are being divorced from the issues of reviving the economy on a sustainable basis, overcoming poverty and providing basic services to the people. When the required changes, involve not just tinkering with policy but rather fundamental changes, then we must consider an important proposition: Political and economic systems are organically linked within the Social Order and are subject to what has been called the theory of “double balance”: Sustaining fundamental changes in the political system require fundamental changes in the economic sphere, and vice versa.
The New Institutional Economics suggests that a Social Order encompasses the political, economic, cultural, religious, military and educational systems. Therefore changing the Social Order involves changes in each of these elements and the relationship between them. There are two kinds of Social Orders in the contemporary world. The Limited Access Social Order of the undeveloped countries and the Open Access Order of the developed countries.
The institutional structure of a Limited Access Social Order is characterized by a coalition of elites that excludes the majority of the population from the process of governance and growth. On the basis of this exclusion it generates unearned income (rents) for itself, uses its power to structure markets in its favour and creates wide interpersonal and inter regional inequalities. Poverty is endemic in such a Social Order because it precludes thriving markets and sustained long term growth.
By contrast the Open Access Social Order exhibits systematic competition in both economic and political spheres, free entry and mobility and hence long term development.
The policy issue in Pakistan today is not merely which sector to select as a “driver of growth”, or ending corruption by making an example of a few selected individuals, or broadening the tax base, but must address the question of why attempts at such policies in the past have failed. These policy concerns, relevant as they are, must be considered in the context of the imperative of a fundamental change in the Social Order itself. Changing the Social Order is the central challenge for both democracy and development in Pakistan.
The essential feature of this change process, as shown by North, Wallis and Weingast is that it initiates “a series of reinforcing changes in institutions, organizations, and individual behaviour such that incremental increases in access are sustained by the existing political and economic systems at each step along the way”.
Let us indicate the doorstep conditions for initiating the process of changing Pakistan’s Social Order: (1) Rule of law. This involves subordinating individual or party interests to the obligation of maintaining the balance between various organizations of the State such as the executive, judiciary and parliament that is specified in the Constitution. The rule of law also requires the development of new norms that can underpin and are consistent with the formal rules specified in the Constitution. (2) The military in its own long term organizational interest must maintain the integrity of the State by subordinating itself in actual practice, to elected civil authority as stipulated in the formal rules of the Constitution. This change could be facilitated, if elected governments enlarged their space within the power structure by delivering economic and social justice to the people who are the source of legitimacy. (3) The foreign policy must be driven not simply by a ‘national security paradigm’ but by Pakistan’s economic interests and by the logic of human security. (4) Social and political organizations in civil society that align themselves behind the Change Agenda need to develop democratic rules and norms in their internal organizational structures and should network amongst themselves to create a broad based and mutually reinforcing momentum for a change in the Social Order.
In the present critical crisis, creating the institutional, organizational and cultural basis of a fundamental change in the Social Order is necessary if state and society are to survive and prosper.