The education crisis is rapidly moving towards a situation from where turning around will become hard for the policy makers as well as for society. Pakistan’s chances of meeting the Millennium Development Goals (MDGs) are zero. More than seven million children are out of school and those who are in school are getting substandard education. An assessment survey revealed that less than a third of the enrolled children can perform up to the grade level in which they study. Only 44 percent can do two-digit addition. About 68 percent mothers are illiterate. The survey found fundamental weaknesses in both public and private education systems (ASER, 2010). The failure of the education sector in Pakistan is colossal and across the board. Not only have the government schools failed to provide education, the private sector is also constrained in terms of outreach and quality, except for a few hundred elite and expensive private schools overwhelmingly concentrated in the cities and towns. Policy makers and concerned citizens are looking towards the public and private sectors for succour. Though understood but poorly articulated, the dilemma is that probably the solution to our problem does not lie in these sectors. There are convincing reasons why both these sectors in their present form will not be able to meet the challenge even in the long run. Let us take the public sector first. If the strength and power of the state is to be gauged by its ability to provide services to its citizen, then our state is a weak state. In fact, the state is just less than 1/10th of society as it can generate revenue that is only nine percent of the total GDP. No matter how hard we shout, a state that collects only one tenth of society’s wealth cannot give six or seven percent of GDP to one sector only. Currently, almost all revenues are sucked off by defence, security, debt servicing and for running the civil administration. With such a low base, nothing much can be expected. In fact, not having the minimum funding jeopardises the little funding the education sector has, just like a low upkeep amount for a car would not only keep the car immobile but would rust and damage the car in no time and this is exactly what is happening in the public sector. The private sector too cannot meet the challenge. Education is a labour-intensive sector. High costs are involved in establishing, maintaining, and delivering education. This basic business condition results in a bi-dimensional manifestation: a) the private sector will work in an area where people can afford education; b) private schools will not be able to provide quality education on a large scale, except where charging high tuition fees is possible. So what to do? Keeping in view the grossly weakened state in comparison to the society it governs and the fundamental weakness of the private sector, the only way forward seems to be constituting and establishing a third force in education. The third force must meet the following criteria to be relevant to our society: a) it must have vast outreach to be able to make use of the full strength and resources of society, and b) it should be grounded in the local context and conditions. Education is a sector where a hundred unique decisions are to be taken on a daily basis. Nowhere else is the subsidiary principle more relevant than in education. Let us unpack the above two concepts and see how they can be implemented. In its current form, the education sector is lacking both in terms of human and financial resources. Teachers and education managers are either untrained or ill trained. Productivity is low and resource waste due to inefficiency is high. In financial terms, the current allocation to the education sector, as stated above, is abysmally low. It has also been shown that in the near future, allocating substantially higher resources is not possible. Though generating new revenues for the education sector may be hard for the government, common citizens are already contributing heavily by purchasing education. Out of pocket expenses for education are substantial, according to the Pakistan Social Living Measurement Survey (2007). In addition to government expenditure, it is estimated that households are spending more than Rs 81 billion on the basic and secondary education sectors. This is larger than the actual development and non-salary budget of the government. The point that I want to make here is that the government is lacking in resources. Society as a whole has these resources and is contributing but in a rather unorganised way. Secondly, in its current form, the sector is heavily centralised due to the structures and dispositions of the power wielding elite. The salary expense is almost 85 percent of the total education budget and decisions on salary scale, promotion and increase are decided at the central level. This is a structural problem and deprives local communities of a fair salary for teaching and non-teaching staff, based on need and availability of prospective teachers. In addition, due to the feudal mindset of our elite, even the basic decisions like teacher hiring, choice of textbooks, and need for infrastructure maintenance and development are taken at the provincial levels. A third force in education could be a hybrid of the public and private sectors. In this scheme, the state and local communities will provide the funding and school managers and communities will be responsible for delivering education. It can only be achieved if the power and responsibility to generate and allocate resources is devolved to the local level. A local education authority, elected at the union council level and comprising agriculturists, businessman and traders, professional people like doctors, lawyers, engineers and retired educationists will manage the entire spectrum of education activities in their jurisdiction. The third force will use the power of collectivism, just like the state does, and respond to the needs and demands of the community with the same force and vigour as market forces do for the private sector. The local education authority will take the decision near the actual service delivery and hence appropriate, prompt and better decision-making can be expected. This will also ensure that the full force of society is harnessed in managing and promoting education. This is a transformational change and will not be possible through the style of ‘business as usual’ reforms; this will require having a new social contract between the state and society. A contract based on greater trust on society’s strength to organise itself with the state providing the means to society to reach its potential. The writer is a Fulbright Scholar and graduate in Education Policy and Management from Vanderbilt University. He can be reached at nav.gos@gmail.com