Pri­vati­sa­tion: the road to ruin

The Pak Banker - - 4editorial - Lal Khan

The rulers and their ex­perts in Pak­istan do not have a clue about what they are faced with and how to avert the im­pend­ing eco­nomic dis­as­ter. Since the late1970s, all regimes have con­tin­ued to slav­ishly fol­low the dic­tates of the im­pe­ri­al­ist fi­nan­cial in­sti­tu­tions

As the coun­try plunges into even greater eco­nomic de­cline, the cus­to­di­ans of this sys­tem in its ter­mi­nal de­cay call for mea­sures that, in­stead of re­triev­ing, will fur­ther ex­ac­er­bate the al­ready ad­verse con­di­tions so­ci­ety is af­flicted with. Al­most all the po­lit­i­cal par­ties and the dom­i­neer­ing in­tel­li­gentsia and ex­perts are cry­ing hoarse for the im­ple­men­ta­tion of an aus­ter­ity regime and the recipes of trickle-down or sup­ply side eco­nom­ics.

The mantra of pri­vati­sa­tion, dereg­u­la­tion, lib­er­al­i­sa­tion, re­struc­tur­ing and down­siz­ing is be­ing par­roted by the lead­ing lights among opin­ion mak­ers of the rul­ing classes. Their ideas and so­lu­tions are a poor im­i­ta­tion of those ex­perts and eco­nomic strate­gists of the west that have proved to be a mis­er­able fail­ure with the eco­nomic col­lapse of the last pe­riod.

Al­though eco­nom­ics is not an ex­act sci­ence, the refu­ta­tion of the pre­dic­tions of these ex­perts by con­crete re­al­ity speaks vol­umes about their so-called ex­per­tise and ex­ag­ger­ated claims of the glo­ri­ous fu­ture of cap­i­tal­ism. A for­mer chief of the US Fed­eral Re­serve dur­ing the years of the 'un­end­ing' and 'ev­er­last­ing' boom of the 1990s and the first years of this mil­len­nium, Alan Greenspan, had to say the fol­low­ing when the re­cent crash rat­tled the world econ­omy: " Un­less some­body can find a way to change hu­man na­ture, we will have more crises" ( Time, Septem­ber 21, 2009).

What this cel­e­brated bour­geois econ­o­mist, a one­time dar­ling of the im­pe­ri­al­ists, fails to un­der­stand is that it is con­di­tions that de­ter­mine con­scious­ness and not oth­er­wise. The his­tor­i­cally ob­so­lete and re­dun­dant sys­tem that has failed to de­velop the means of pro­duc­tion and hence so­ci­ety, needs to be over­thrown. It is only through a so­cial­ist trans­for­ma­tion of the so­cio-eco­nomic sys­tem that hu­man na­ture will have a chance to surge ahead and change.

In a re­cent ar­ti­cle, po­lit­i­cal the­o­rist Alan Woods wrote, "The boom years were largely based on a vast ex­pan­sion of credit, which was re­flected in a huge in­crease in pri­vate debt lev­els be­fore the cri­sis, and un­prece­dented lev­els of pub­lic debt af­ter it. Af­ter a drunken binge comes a se­vere han­gover."

This is one of the rea­sons why any re­cov­ery will be de­layed and there will be one cri­sis af­ter an­other. The re­cent boom was based on ex­ten­sive bor­row­ing, ex­tended debts and credit fi­nanc­ing. Eco­nomic growth was ap­par­ently de­fy­ing the laws of grav­ity. Even­tu­ally the hyper-in­flated bub­bles burst and the 'boom' that had 'over­come' the boom-bust cy­cle crashed into the biggest slump since 1929. Now the present re­cov­ery is a job­less one and a new so­cial norm, based on un­prece­dented cuts and aus­ter­ity mea­sures, is be­ing es­tab­lished by regimes of all shades in the ad­vanced coun­tries. At the same time, we are at a turn­ing point in Europe and else­where, as a fresh and re­silient wave of class strug­gle be­gins to erupt against these dra­co­nian mea­sures. Stormy events im­pend, as the pro­le­tariat in the ad­vanced world wakes up to a new re­al­ity and be­gins to chal­lenge the whole sys­tem.

In this back­ground of the world econ­omy, the rulers and their ex­perts in Pak­istan do not have a clue about what they are faced with and how to avert the im­pend­ing eco­nomic dis­as­ter. Since the late1970s, all regimes have con­tin­ued to slav­ishly fol­low the dic­tates of the im­pe­ri­al­ist fi­nan­cial in­sti­tu­tions. The in­cum­bent regime has gone the far­thest down this path. The PML-N and other right-wing par­ties are de­mand­ing the pri­vati­sa­tion of Pak­istan Rail­ways, PIA, Wapda and other state owned 'loss mak­ing' in­dus­tries to foot the bill of the mam­moth macroe­co­nomic deficits. But the re­al­ity is that the sell­ing of the fam­ily sil­ver will not suf­fice to over­come the rapidly ac­cu­mu­lat­ing debt. And even if ev­ery­thing is pri­va­tised and still the debt con­tin­ues to soar, what would be the so­lu­tion then?

The only way that this cri­sis­rid­den Pak­istani cap­i­tal­ism can sur­vive is to bor­row more to ser­vice the debt. This will be ac­com­pa­nied by even more strin­gent con­di­tions of new taxes on the poor and an even greater ex­ploita­tion of the work­ing class and peas­antry. This is a nev­erend­ing vi­cious cy­cle that will fur­ther crush the al­ready im­pov­er­ished masses. The com­prador rul­ing classes and the state (army) will get their com­mis­sions and crumbs from their im­pe­rial masters and con­tinue to serve them and per­pet­u­ate im­pe­ri­al­ist plun­der.

This vi­cious cy­cle can only be bro­ken by noth­ing less than a revo­lu­tion. The irony is that there is no real dif­fer­ence of opin­ion in the rul­ing coali­tion on the is­sue. The PPP lead­ers be­trayed the found­ing prin­ci­ples of the party long ago. They had fore­gone Zul­fikar Ali Bhutto's na­tion­al­i­sa­tions when they em­barked upon the pol­icy of pri­vati­sa­tion in the 1990s. The present regime has an­nounced the pri­vati­sa­tion of al­most all the ma­jor state en­ter­prises. How­ever, the real prob­lem for them is that there are no buy­ers be­cause of the world re­ces­sion and the fi­nan­cial crunch that is throt­tling eco­nomic ac­tiv­ity and in­dus­trial pro­duc­tion. It is also a fact that in the last decade and a half, most in­vest­ment has been cap­i­tal­in­ten­sive rather than be­ing labour-in­ten­sive, even in poor coun­tries.

This means that in­stead of gen­er­at­ing new jobs, these pri­vati­sa­tions and in­vest­ments will mas­sively cut jobs and in­dulge in technology as prof­its rise with the de­crease in the vari­able cap­i­tal em­ployed in pro­duc­tion.

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