by Dr. M Jehangir Khan
Government and markets failures are well-recognized phenomena where neither of the institutions can deliver growth and development. The policy literature is rife with solutions to address market and government failures though strongly assuming that the general masses, the non-governmental organizations/activists, and the government bodies always work toward a common interest. This may not be the case for obvious reasons!
In fact, such groups can be predisposed to the problems of coordination failure, information asymmetry and inequality concerns; hence limiting their capability to correct market and government failures. Thus, the policy discourse demands the rise of civil society and its active interaction with government and markets to resolve such failures. In the absence of a vibrant civil society, government policies and programs are susceptible to capture and corruption.
Civil society is comprised of organized social activities that occurs in groups formed outside the family, market and the state. Such activities create a public sphere outside the state in which individuals and groups engage in discourse of public concern, expected to generate social cohesion, courtesy, and integrity. It institutionalizes problem-solving debates on questions of general interest, inside the context of organized public spheres. This is done in such a way that enables citizens to bring important matters to the public agenda, to protect civil liberties, and to provide for an effective shared voice in modern-day socio-political life.
A World Bank report[a] reviews nearly 500 studies of participatory development interventions in developing countries, and sheds light on questions such as; how to increase government accountability and reduce capture and corruption in policies and programs? It is reported that the outcomes of an intervention are highly dependent on; the context, the geography, history, the type of political systems, the networks, and social interactions. All communities have different stock of social capital, so the idea to easily harness it is naïve. Most often the actors at the local level have superior information and locational advantage, which can be used for the betterment of the underprivileged only when local formal and informal institutions are robust. In the absence of a supportive state, decision making is captured by elites who control and use the local cooperative infrastructure in their own favor, resulting in a high risk of corruption.
Traditionally, the state is viewed as a benevolent actor, however, the contemporary political economy approaches spoke that the state may pursue its own interests that may not be in line with the interests of the masses, classically referred to as Principal-Agent problem. The incumbent government may pursue clientelist policies beneficial to a certain subgroup, resulting in state capture. Most often, these policies are enacted in isolation without furthering institutionalized policy debates on questions of national interest. Given this, its’ easy for states’ representatives to blame capture in the absence of effective oversight and accountability. As a result, the underprivileged class having poor access to speak their political rights, the wealthy elites are the direct beneficiaries, hampering growth and development.
For example, a report quoting Dr Hafiz Pasha spells out that the elite capture in the country is nearly 2.6 percent of the GDP, approx. PKR 860 billion. The interest groups are facilitated through the Statutory Regulatory Orders (SROs) which are decided outside the budgetary framework. The phenomenon is even discussed in international context where most recently Jeffrey D. Sachs, a professor at Columbia University, wrote about the capture of global mining companies stating “Thanks to the World Bank’s flawed and corrupt investment arbitration process, the rich are making a fortune at the expense of poor countries. The latest shakedown is a $5.9 billion award against Pakistan’s government in favor of two global mining companies for an illegal project that was never approved or carried out”.
These facts trumpet for active participation of the civil society to guard nations’ domestic and international interests. For this to happen, serious efforts are needed to promote policy debates of national interest in organized public spheres with supplemented efforts from the following players including; the effective judicial oversight; the independent planning and audit agencies, promotion of the right to information and most importantly vibrant media and civil society.
[a] Smoke, P., Loffler, G., & Bosi, G. (2013). The role of decentralization/devolution in improving development outcomes at the local level: Review of the literature and selected cases. DFID & Local Development International LLC.