Fallacies of partial economic diagnosis.

A column by a former deputy State Bank Governor, scribing about the deadly sins of economic policy managers, recently appeared in the press. The analysis is apt but partial, like his peer's i.e. Mahbubul Haq's, and thus leads to misleading conclusions.

The analysis primarily focuses upon certain weak areas of economic policy making and implementation. Over-concern with growth, consumption trumping savings, elitism, protectionism versus export orientation, lack of social investments and structural reforms to prevent peremptory deficit and current account boom-and-bust cycles, are correctly pinned. But the argument concentrates upon only one dimension of a much wider problem, providing only a partial picture of the malaise and the remedies.

The problem tackled is one of political economy rather than merely economic, as portended. A correct analysis falls short unless the important aspect of the relative roles of power brokers in the overall political and power structure of the country and the way it has impacted economic evolution is considered.

This perspective affords various allied dimensions. As a free state fraught with external dangers that nearly all newly independent post-colonial states face, we opted for the path of external dependence, becoming a security state with a rentier economic orientation rather than the one of growth based upon savings, social investments and productivity.

On the political front we had a task of consolidating a culturally and ethnically diverse polity, balancing centrism with parliamentary autonomy. Weak political traditions coupled with feudalism and an inordinately strong state superstructure facing weak political institutions tended to foster the temptation to regard civilian governments as less than efficient and of warding off possible security threats. This led to an ideology of 'state-paternalism' which considered manipulating parties and politicians as valid from the point of view of preserving the interests of the state. True democracy and development of strong political parties and judiciary were obvious casualties. The evolution of strong parliamentary democracy, civil accountability and a vibrant responsible press kept hemorrhaging.

Political players have been played against each other to retain power: political, economic, social and ideological. This hegemony of a predominantly strong state versus a weak civilian society, to which Hamza Alavi also eluded, and the purposive strategy to keep...