On the question of deep rooted change whereby nations get onto a path of transforming their material conditions of life, the state of science in the New Institutional Economics has established two propositions: (1) the fundamental factor in the prosperity of nations is their ability to change from exclusive to inclusive institutions; (2) the ability to make economic institutions inclusive is derived from a prior change in the realm of politics from exclusive to inclusive political institutions. Exclusive institutions in the political sphere restrict power to a small coalition of elites who then establish an institutional structure in the economy whereby they can generate rents for themselves. This is done by excluding the majority of the people from getting a substantial share in the fruits of economic growth. Acemoglu and Robinson (2012) in their seminal work have analyzed the history of a number of countries to substantiate the earlier insight of Douglass North that exclusive political and economic institutions reinforce each other and create a powerful constraint to achieving the prosperity of a nation. This vicious circle between the political and economic spheres leads to economic policies that generate affluence for the elites at the expense of economic deprivation of the majority of the people. Therefore it can be argued that breaking this vicious circle involves shifting political and hence state power from the elite coalition to broad sections of the population.
The key to understanding transformative change is the concept of a critical juncture in the history of a country, which opens the possibility of transformation in the system of political and economic power. Acemoglu and Robinson show how in the case of the English Civil War between 1642 and 1651 and similar conflicts against absolutism in France and Spain during the 17th century, “a confluence of factors disrupts the existing balance of political and economic power in a nation”. These critical junctures are important moments that provide an opportunity to the excluded sections of society to break the hold of the ruling elites over political and economic power.
In the case of Pakistan it can be shown that a combination of political, economic and social factors has created such a critical juncture. The citizens’ movement helped establish an independent judiciary, while the People’s Party government fueled by the passion of its martyrs achieved constitutional amendments that aimed to institutionalize a new balance between the Parliament, the Executive and the President. At the same time the prospect of a future coup d’état has been considerably reduced even if indirect military influence in governance may persist. This has set the stage for institutional reform towards a more inclusive polity through the democratic process. However, the current coalition of power elites, inspite of these changes faces critical stresses that threaten its continued existence in its present configuration. This is due to: (a) the emergence of armed militant groups as rival powers to that of the state within its territorial domain, (b) the abject failure of the power elites to fulfill the fundamental function of establishing order in terms of which the existing configuration of state power is legitimized, (c) the acute economic deprivation of the people in contrast to the affluence of the elites and the manifest inability of the government to address the challenges of mass poverty, provision of basic services, and critical shortages of electricity and gas.
As John Dunn has argued, “revolutions are either ventures in creativity… an enhancement of freedom or nothing….”. Pakistan today, faces a revolutionary situation but there is neither a revolutionary party nor a revolutionary culture which as Gramsci has argued is vital for revolutionary change. What we have instead is a constellation of militant extremist groups seeking to mobilize people for a political upheaval through coercion, fear and bigotry. At the same time the depredations that the people are suffering at the hands of an incompetent and corrupt elite coalition, makes the democratic structure vulnerable to mass political pressure mounted by a demagogue with the facility of what Boris Pasternak called the “tyranny of the glamorous phrase”. Reform for inclusive political and economic institutions is necessary otherwise there could be a counter revolution.