Benazir Bhutto and Zia: a Real Discontinuity?

In doing some research for a project, two important insights emerged concerning contemporary economic policies in Pakistan, and the transformation of feudalism. When it comes to Benazir Bhutto's economic policies, this much is clear: she was closer to being the daughter of the military dictator Zia than to her own father, who was hung by Zia. Zulfikar Bhutto undertook a plan to dramatically increase the role and size of the state in the economy in 1972: nationalizing firms in the steel sector, basic metals, heavy engineering, heavy electrical, assembly and manufacture of motor vehicles and tractors, heavy and basic chemicals, petrochemicals, cements, public utilities, power generation, transmission and distribution, gas and oil refineries (Ur-Rehman 1998). In 1974 he nationalized the banking and insurance industries, and by 1976, all flour mills, rice mills, vegetable ghee mills, and cotton ginning factories were nationalized (Husain 1999). The idea was to create a powerful public sector capable of governing the 'commanding heights' of the economy, and push the country's industrialization effort forward (Husain 1999). However, although the rhetoric is widely categorized as populist and remembered for its inflection of socialism, it was state capitalism that arose in a majority of instances.

It is also interesting to note that the land reforms passed under Z. Bhutto were very minor, and left intact agrarian structures and landholding patterns. Critics noted that Bhutto's plans mostly targeted financial and industrial capitalists, leaving intact the zamindars (feudal landlords) that formed his constituency and contributed to rural inequality and exploitation (see more below).
While privatization was touted and initiated by the military dictator Zia, it would actually pick up speed under Benazir Bhutto in 1988. It was her administration that consolidated the different privatization committees, and embarked on the trio of 'liberalization, privatization, and deregulation' with the aid of British consultants, (she also had the dubious distinction of signing the first Pakistani structural adjustment packages of the 80's with the IMF and the World Bank).

Her rival and successor, Nawaz Sharif, simply continued on the path laid by Bhutto, as did the most recent military head of state, Musharraf. During the last 29 years, Pakistan has followed a continuous path of privatization and liberalization of controls on exchange rates, trade tariffs, credit, and the banking sector. In terms of economic policy, it has not mattered if there was a military dictator or democratically elected prime minister, if there was a Bhutto or a Sharif in charge. The results are as to be expected: unemployment has risen (officially from 5% to 11%, but unofficial figures place it much higher), and poverty and inequality have worsened (Talat Anwar notes that that expenditures fell for the already-poor bottom 40% of the population, and rose for the top 20% from 1984 onwards). The World Bank itself noted about Pakistan in a SAP evaluation that “indeed, assistance packages appeared to do little but increase the country's debt burden” (World Bank, 2006). Increasing unemployment resulting from privatization efforts is also what alienated the labor voting constituency from Benazir Bhutto's administration, further isolating her from domestic allies. Another continuous trend is the share of government expenditures devoted to social services; while we would have expected Benazir Bhutto to stand out given her populist rhetoric, she neither raised spending on education, nor on development. All of the B. Bhutto, Sharif, and Musharraf administrations roughly split over sixty percent of government expenditures on debt servicing and military expenses.
One thing should be clear: that Benazir Bhutto's, Sharif's, and Zia's economic policies aligned quite nicely with the 'Washington Consensus,' whereas Zulfikar Bhutto's did not. There has been no substantive disagreement between all of the former on the whole-hog benefits of private capitalism, and the Adam Smith version of little government economic intervention. Z. Bhutto belonged more firmly to a Keynesian framework: a big state push that took control of finance and industrial development, riding on the back of a public sentiment in boil over the vast extent of poverty and inequality. The genius of Z. Bhutto lay in channeling this sentiment against some of the 22 most wealthy families of Pakistan, who collectively controlled two-thirds of industry, and over 90% of the banking and insurance industries. Bhutto called them “robber barons” on January 1st, 1974 as he explained why the banking and insurance industries had been nationalized (Ur-Rehman, 1998). But Bhutto's socialist politics stopped short; he was not anti-capitalist, and he most definitely was not opposed to exploitation, as evidenced by his continuing support of agrarian feudalism. Not a single one of Pakistan's recent heads of state, going as far back so as to include Zulfikar Bhutto, have moved to break the power of Zamindari (feudalism). Zamindari was barely nicked in the agrarian reforms of the 70's. In the 1972 land reform, in-family land transfers meant hardly any land actually changed hands. And in the second, land was purchased at over-inflated prices, resulting sometimes in an increase in asset value for the landlords. All in all, less than 10% of land was re-distributed in the combined land reforms of 1959, 1972, and 1977 (Husain 1999).
One may wonder what it would take to change Pakistan, and to transform feudalism. This can be approached from two angles. The first is to recognize that such changes have always been bloody and difficult, requiring and marshaling collective forces acting domestically and internationally. Feudalism is pernicious in various ways: it seeps into culture, ideology, music, poetry, the arts (zamindars have always been life-sustaining patrons of classical music and the arts in Pakistan). It regulates daily life in mundane and dramatic ways, and is naturalized with the adjective 'ancestral.'

Hence any transformation of feudalism will involve struggling not only in economic and political terms, but also cultural and religious terms as well. Such an approach is different in that it requires putting together an assemblage of strategies, rather than the magic key approach of micro-credit or education as panaceas. But there is hope for resistance and transformation given a widespread critique of zamindars that circulates in both urban and rural Pakistan. My second reaction is to immediately note that an anti-feudal stance should also carry with it an understanding of what class exploitation is, and that once that occurs- one must also recognize that capitalist 'entrepreneurship' would not be the solution, but merely the same problem dressed differently.