Limited Access Orders and Violence: Pakistan’s Development Dilemma

“How can low- and middle-income societies improve the conditions of their people?” This question keeps continuously resonating around the world. There has been a growing strand of literature for answering problems of development in a new light. It emphasizes that in order to address the problem of development, we need to understand better the structure of economies and polities and the sources of change. ‘Structure’ means that countries fall into different social orders – distinct patterns of organizing society – that allow to simultaneously understand the operation of political, economic and other systems. In particular, this concept allows to understand how society controls violence, the form of its institutions, the nature of its organizations – especially who can form them – and the dynamics of its economy. It outlines that countries solve the problem of violence in two distinguishable ways. In the words of North, Wallis, Webb and Weingast (2011),“Limited Access Orders (LAOs), covering most developing countries today, solve the problem of violence by granting political elites privileged control over parts of the economy, each getting some share of the rents. Since outbreaks of violence reduce the rents, elite factions have incentives to refrain from violence most of the time. Stability of the rents, and thus of the social order, requires limiting access and competition. The alternative to LAO is Open Access Order (OAO), a social order based upon impersonal institutions, compatible with sustained prosperity and growth. OAOs, which dominate the modern developed world, function as self-enforcing, impersonal rules that treat all members of the society equally and control the problem of violence through open access and competition.”

Put differently, the LAOs are marked by absence and/or failure of impersonal institutions i.e. societal structure built around personalities and power circles rather than rules, laws and systems. There is consensus among economists over the last twenty years that success in economic as well as political development depends primarily on improving institutions, as the world has witnessed many development failures despite abundant capital, natural resources and educated populations, who emigrate or stagnate if institutions do not put them to good use. Empirical studies, such as Acemoglu and Johnson (2008), have also showed that property rights institutions have a major influence on long-term economic growth, investment and financial development. Seen against the backdrop of institutional presence and efficiency, Pakistan’s case is that of a failure to put institutions to good use. Constant neglect of institutional development – widely considered by country’s intelligentsia as an intentional act by the ‘political elites’ as a means to maintaining their hold on power – has not only resulted in gradual degradation of institutions that existed in the early days of independence in late 1940s and through 50s, but has also taken the country farther from transition to a more institutions-based social order.

LAOs are not static, and gradual progress can lead to a relatively better LAO first and then ultimately to an OAO as well. LAOs often progress across the LAO spectrum – defined in order: fragile, basic and mature – because the progression increases rents and elites can make themselves better off, if they manage to retain power while moving from a fragile to a basic LAO or from a basic to a mature LAO. But these transitions are uncommon, if not rare. A good example of a successful transition from LAO to OAO in recent history is that of South Korea, which transformed itself from a poor nation to a rich and democratic country during the second half of the 20th century.

Short episodes of growth followed by longer periods of dismal economic performance signify Pakistan’s problems with LAO. Hereditary politics has led to a strong monopolistic political-networking whereby political power has concentrated into a few families. Family patronage and the capacity for violence have assumed greater role in determining political outcomes that are now plain manifestation of feudalistic relationships. As such, political parties serve as mere platforms that grant selected elite access to state resources under the patronage of a couple of ‘mega political families’. Religious and sectarian violence in the last two decades has introduced another group of claimants to state resources and rents.

While some impersonal institutions do exist in the country, overbearance of political clout and capacity for violence mean that these institutions work very differently for different people. Although the country has oscillated between military and civilian rule throughout its history, these oscillations have hardly changed the nature of government. Under both types of regimes, politics has been dominated by small elite that is organized into weak coalitions along lines of patronage rather than ideology. To claim power, elites have coupled general promises of higher living standards with specific promises to particular politicians, families and districts but because the state lacks the financial resources and capacity to keep these promises, power has proved fleeting, making any government unstable. Dependent on placating a number of actors through patronage, both military and civilian elites have preferred to protect their own interests or those of their supporters at the expense of their fellow citizens. As Inskeep (2011) puts it, “Pakistan is not a poor country; it’s a poorly managed country.”

Table 1 on the previous page divides Pakistan’s social order into seven distinct phases and summarizes the level, trajectory and defining factors of LAOs prevalent in each of these phases.

It can be concluded that Pakistan inherited a basic LAO on independence, in 1947, from the British rule but it faced a growing risk of descent into fragility due to monumental human, economic and constitutional crises. Absence of a power-sharing formula between East and West Pakistan was a natural outcome of absence of joint history of state-building aspirations between the elites in the two wings. The threat of fragility assisted ambitious military and bureaucratic personnel to find an authoritarian solution to the constitutional problem. A military coup in 1958 apparently stabilized the LAO and brought economic growth, but offered few opportunities for broader access and for development of impersonal rule. Elites of East Pakistan, were almost entirely excluded from the dominant coalition which resulted in conflicts on rents and power-sharing and ultimately led to separation of East Pakistan in December 1971, now known as Bangladesh. Elected regime of Zulfikar Ali Bhutto (1972-77), which attempted to bring socialist state-owned-and-run economic model in the country under a strictly controlled LAO built around Bhutto himself, not only harmed the economy but also evoked dissent from excluded opposition and powerful industrialists who had enjoyed the rents during 1960s.The replacement of Bhutto’s populist authoritarianism with another military ruler in 1977 made entry to the LAO possible on individual bargains. A combination of technocrats, bureaucrats, private entrepreneurs and religious leaders formed the new dominant coalition under overall control of the military. Global rents from Afghan war boosted the economy as well as regime’s attempts on Islamization.

Elected governments took turns to power from 1988 to 1999 but could neither stabilize the LAO nor maintain economic growth. Political in-fighting further deteriorated national institutions and invited yet another military coup in 1999. Oriented as liberal and moderate, the basic LAO under military made it possible for the elite to interact in a less centralized fashion, with a potential for impersonal rules to develop. Stability and availability of global rents from second Afghan war enabled it to do economically quite well for some time. Once the liberalization created opportunities for some elite members in judiciary and media to gain power, they in turn exerted their influence for higher rents and power-sharing. Starved of rents and facing exclusion, militant religious groups and Baloch separatists used their capacity of violence to challenge the dominant coalition. The basic LAO ended in fragility in 2007 as it succumbed to the conventional political forces that could mobilize the public much more effectively. Since 2008, poor policy design, revival of family-oriented politics, excessive rent-seeking and connivance among two most powerful political groups has resulted in wastage of opportunities for progress. Judicial activism and media adventurism tend to undermine other institutions such as civil service and police. Poor economic performance, energy crisis and pervasive violence from militant and separatist groups also vie heavily in keeping the LAO vulnerable to fragility.

Developments since 2008 have affirmed elections as a mechanism for settling intra-elite conflicts in the country. Keefer and Vlaicu (2008) show that implementing elections in societies where political organizations are dominated by patron–client networks, i.e. societies with highly personal forms of political organization, are likely to produce an outcome in which the patrons use votes as a mere medium of exchange. Elections in this setting may help stabilize an LAO by providing a visible means of assessing the relative strength of disparate groups and increasing the likelihood that adjustments in power among those with access to violence occur peacefully, making the LAO more stable and preventing downward spirals into violence. Nonetheless, elections of this type fail to produce OAO-style democracy; rather, they perpetuate LAOs, a result seen as failure. In Pakistan too, while elections have served as a non-violent mechanism for settling contests among the elite, the access restrictions and most essential features of the limited order remain intact. Entry barriers are likely to remain high and become source of new disputes between the elite and non-elite and among the elite groups. Also, long-lived private organizations independent of the state are yet to develop. Thus, Pakistan’s social order appears to have remained a basic LAO that is vulnerable to fragility and slow to mature.

Open Access Orders do not emerge from LAOs in a short time period because impersonal rules that allow access to be open to the population at large have to emerge and become widely accepted and deeply ingrained in the collective understanding of the society (Esfahani et al., 2013). The major implication for Pakistan from the social orders framework applied in this article is that while prevalent entrenched power dynamics make wholesale reforms extremely unlikely, incremental steps – that enhance stability by obviating the need for threatening violence, strengthen the capacity of the state to ensure that the law applies more equitably, and embrace committed economic reforms that give business people a greater interest in promoting change and free the national economy from the hold of a few power brokers – would gradually enable Pakistan to move toward a more stable, equitable and open access order, which in turn, promises better economic development.