Daily Times

There is a hue and cry in the media and the present PML-N leadership are shouting in an orgy of wild triumphalism at the miracle brought about by the finance minister Ishaq Dar. It is true that the rupee has come down from about Rs 107 to a dollar to less than a hundred, but that was the exchange rate when this regime came to power. The government is using this is proof that the economy is improving. However, the stock market and exchange rates are chaotic and based on speculation, and hardly reflect the real state of the economy; their fluctuations are mainly due to factors that are temporary and without a solid base. The growing weakness of the dollar versus the rupee has more to do with the precarious nature of the US economy, the US retreat on Syria, the impotence of imperialism in Ukraine, and the slowdown in China, than with any strength in Pakistan’s crippled and dysfunctional economy. The US dollar is also down against the euro, the yen, and the New Zealand, Australian and Canadian dollars.

The money markets have been volatile and the rupee has been in a continuum of decline since the end of the Musharraf regime. If that is the criterion then Musharraf and his Prime Minister Shaukat Aziz deserve praise for keeping the rupee at 60 to a dollar for eight years. They managed an average growth rate of above six percent and there was substantial growth in manufacturing, agriculture and the services sector. When Shaukat Aziz took over as finance minister after Musharraf took power, his predecessor was Ishaq Dar: there were hardly any forex reserves left and the economy was in a shambles by the end of the previous Sharif government of 1996-99. But that does not mean that the masses under Musharraf had any respite and even with the relatively higher growth rates during his regime, it is estimated that ten thousand people fell below the poverty line every day.

The present small rebound of the rupee is mainly due to high remittances of around $ 10 billion annually by Pakistani migrant workers abroad, and emergency financial loans by the IMF and other institutions. There were also some desperate administrative measures, which always have a temporary effect before they lose momentum and things return to normal. Several bourgeois economists and columnists have proved how growth figures, etc, have been fudged and manipulated by the finance and commerce ministries to portray a false picture of an improving economy. There are still record budget, trade and fiscal deficits to deal with, and spending on social development has been dismal. What the finance minister conceals deliberately is that 73 percent of the economy is in the informal sector — the black economy — which is not audited or under any real control by the state, being effectively outside the taxation network.

The black economy is growing at an approximate rate of nine percent according to the limited figures available, while the real growth rate of the formal sector of the economy is between two and three percent. The black economy creates more than two-thirds of jobs, though without any benefits. This form of daily labour forces workers into drudgery and extreme exploitation with woeful wages. The official minimum wage is mainly applicable to the state sector and the private sector doesn’t even bother to apply it. Industrial growth and investment are in regression and even the services sector is not expanding, except for a few areas like telecoms and real estate. The agricultural sector is in deep crisis and small farmers and poor peasants are still being forced to work in extreme poverty and deprivation.

On top of all this, the regime is trying to aggressively privatise state industries and institutions to cover deficits created by the previous privatisations. Telecommunications, power and other sectors that were privatised before have actually became the major sources of deficits for the state. The various incumbent rulers during these privatisations took billions in bribes from vulture capitalists and sold national assets at throwaway prices. The power companies were paid, not for the amount of electricity they actually produced, but for total capacity, half of which was not even utilised. The Middle East-based company that bought the country’s telecommunications concern hasn’t even paid the agreed upon amount yet, eight years after its sale.

This time privatisation will not be any different. Huge industries like the steel mills, PIA and others will be cut into various parts like a butcher cuts pieces from a goat to sell it piece by piece. Most buyers will be the frontmen of the sellers. This will exacerbate the already massive rate of unemployment while those in employment will be under severe stress and fear of losing their jobs. They are being forced to accept drastic decreases in their wages, while pensions and other benefits are steadily being abolished. Apart from the miseries privatisation will inflict on workers, it will not be able to cover the debts of the state and the state will be even poorer as a result.

The Karachi Stock Exchange has been soaring to unprecedented heights, breaking all records, while the actual economic decline shows a slide towards catastrophe. Hence this minuscule rise in the rate of the rupee against the dollar is not only fragile but does not signify any real improvement in our diseased economic situation. Even if there is a slight increase in the growth rate, that does not signify any substantial strengthening of the economy. Investment, if it increases at all, will be of capital rather than labour-intensive character, and hence there will be no increase in job creation. Rather it will bring more downsizing. Infrastructural investment is also of a parasitic character. The Chinese and other investments will be in projects seeking to increase plunder. Health, education and other sectors of our social infrastructure are being given up by the state. Private control of these sectors will only lead to even more deprivation of access to these basic necessities for the vast majority of the population.

What is important to understand is that we are suffering through the organic crisis of capitalism, which by its nature must relentlessly drive social conditions into the abyss of even more poverty, misery and deprivation. In its terminal decay, the capitalist system is fragmenting society. The question is how long and to what extent the masses can endure these excruciating hardships? All political paths have been blocked and it seems that there is no party that can offer a way out of this agony. Meantime, things continue to heat up beneath the surface. The longer this process is prolonged, the more drastic will be the volcanic eruption of class struggle. The writing is on the wall.

The writer is the editor of Asian Marxist Review and international secretary of Pakistan Trade Union Defence Campaign. He can be reached at ptudc@hotmail.com