Cover Story 
 

Cover Story

Elite Bargain

In a republic with weak institutional and regulatory control on checks and balances in state governance, the ‘One Percent Republic,’ mainly represents the fraternity of the upper crust.

By Farhat Ali | January 2023


The term ‘One Percent Rule,’ by its very nature, represents a global system where financial predators control the resources of society and override state sovereignty.

The slogan ‘One percent vs. the 99 percent’ is a rallying cry primarily against the billionaire class, which has snuffed the youth out of chances for social mobility as increasing numbers of young people are suffocated by rising debts and costs of living. In USA, Donald Trump and the democratic socialist Bernie Sanders capitalised on the wave of immense anger against the neoliberal status quo in the US which faces a crisis of legitimacy. Recently, US President Joe Biden acknowledged that the neoliberal model has failed, an acknowledgment that came after imposing four decades of relentless market fundamentalism across the world.

Change of few faces at the top is irrelevant to the fact that a vast majority of humanity remains excluded from the planet’s resources. There is no exact blueprint on how to defeat the logic of neoliberalism, which is practically an iniquitous political approach that intrinsically favours unbridled, free-market capitalism at the cost of deregulation coupled with sizeable reduction in government spending.

In contrast, in a republic with weak institutional and regulatory control on checks and balances in state governance, the ‘One Percent Republic’ mainly represents the fraternity of the upper crust of the civil-military bureaucracy, the custodians of law, judicial and constitutional supremacy, the long-standing political dynasties, parliamentarians and legislatures, business and trade mafias. In such an ideal setup devoid of any accountability, transparency or check and balance mechanisms, all of them are glued together under the one point of agenda of plunder, waste and exploitation of state resources at the expense of the public at large. Pakistan regrettably falls under this category.

The old-boy network of the elite provides a candid view of the fragile political economy of the country. Soon after the country’s creation in 1947, the elites struck a bargain for their own benefits and long-term interests. More’s the pity, the deal has endured until today despite conflicts and disagreements among the members of the elite classes.

A recent report by the United Nations Development Programme (UNDP) quantifies these privileges and the inequality spawned by the elite bargain. The report analyses the privileges enjoyed by landed elites, capitalists, traders and top brass of the military, compared with the severe neglect of lower classes via low social expenditures. This includes tax holidays and evasions, subsidies and privilege to buy inputs at lower prices or sell their own outputs at higher than market prices due to compliant state laws and preferential access to land, capital and services.

Conservative estimates show that the privileges add up annually to nearly Rs. 370 billion for landed elites, Rs. 725bn for the corporate sector, Rs. 600bn for traders and Rs. 250bn for military elites. This is a sum of nearly Rs. 2 trillion annually for a tiny sliver of the population. In marked contrast, Pakistan spent only around Rs. 1.3tr annually in recent years on education, health and other social expenditures to cater to the needs of its masses. Even a chunk of this is siphoned off by the rich.


In his seminal work, Dr. Hafiz Pasha details the ways in which successive ‘reforms’ have helped consolidate inequality and class power over the past four decades. In his calculation, state subsidies received by elites annually equal an enormous Rs. 2700 billion, making Pakistan a welfare state but only for the rich. The elite class in Pakistan has chosen to use these subsidies to fuel consumption-driven lifestyles, building luxurious housing societies rather than investing in the productive sector. This unsustainable system is powered by foreign loans, which the ruling classes continue to acquire with assumption that the US will forever rescue Pakistan as long as the military rents out the country’s geostrategic position. The IMF, for instance, has bailed out Pakistan 20 times since 1958.

In the book, Why Nations Fail, the writers, Daron Acemoglu and James A. Robinson, have vividly mentioned that the prosperity of a country doesn’t hinge upon outside help. No amount of donations, aid and other financial assistance, the writers argue, can sustain a country, let alone transform it. When seen in Pakistan’s perspectives, the real crisis can easily be understood. As regards dependency, the most poignantly dangerous issue comes from financial dependency, inter alia. Since the 1970s, thanks to the war in Afghanistan, the economy of Pakistan has been propped up by foreign aid and dollars rolled in.

The impact of the ‘One percent rule’ is felt the most by the voiceless and hunger-stricken people of Pakistan which constitutes over 40 percent of which 37.5% are below the poverty line, surviving at $3.20 /day (2021) and 5% in extreme poverty (2022).

In the 2022 Global Hunger Index, Pakistan ranks 99th out of the 121 countries with sufficient data to calculate 2022 GHI scores. With a score of 26.1, Pakistan has a serious level of hunger. In Human Development Index, Pakistan is among the lowest at 0.544 (161st /2022).

‘One percent rule’ in Pakistan also has its disastrous consequences for its regional and global standing. It is always interesting to compare Pakistan with India as both gained independence at the same time and ever since have remained as rivals.

Not many know that there was a point in the 1960s when Pakistan’s per capita GDP used to be higher than that of India’s. However, over the years, India has not only surpassed Pakistan’s per capita GDP but taken a commanding lead on almost every economic front. The difference between the two is that India faithfully followed its constitution which advocates uncompromising democracy with independent and well-defined role of its state institutions. Democracy and institutions work in harmony like in any other flourishing economy of the world and the outcome is always rewarding for the state and its people. Pakistan, on the other hand, is still struggling to define its mode of state governance.

As of now, India’s GDP is $10.4 trillion with its per capita incomes stands at $7,795 vis-à-vis $1.1 trillion of Pakistan’s GDP with its per capita income standing at merely $1,547. India’s world ranking is 7th, while Pakistan ranks at 33rd position.

As defined by its Constitution, Pakistan was to be a federation of four provinces and known as the Islamic Republic of Pakistan. It emphasised the introduction of check and balance, separation and devolution of powers, and also provided the federal system under which the government should govern the people with social and economic protection and justice.

Be that as it may, the doctrine of social justice in Islam comprises three fundamental elements, i.e. equitable distribution of wealth, provision of social security and protection of the weak against the strong. The first thing that we find in Islam in this connection is the universal fact that it lays down some rights for man as a human being.

Pakistan has now reached the point where the functionaries of the institutions of the country, the parliamentarians and legislatures and the elite class, in whose hands the destiny of the nation and its people lies, do some soul-searching to find out as how well the fraternity of the ‘One percent rule ‘ has honoured the Constitution of Pakistan under which they have taken oath and how faithfully have they complied to the Islamic injunctions of social justice, equitable distribution of wealth and ‘adl and insaf’ (equity and justice) for all.

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