Government failure and market failure are well-recognised phenomena where neither of the institution can deliver growth and development. The policy literature is rampant with solutions to market and government failures though strongly assuming that the general masses, non-governmental organisations/activists and government bodies always work toward a common interest. And that 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 mend market and government failures. The policy discourse demands for 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 programmes are susceptible to capture and corruption.
A civil society is comprised of organised social activities that occur 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 institutionalises problem-solving debates on questions of general interest inside the context of organised public spheres 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 sociopolitical life.
The incumbent government may pursue clientelist policies beneficial to a certain subgroup, resulting in state capture
A World Bank report reviews nearly 500 studies of participatory development interventions in developing countries to shed light on questions such as how to increase government accountability and reduce capture and corruption in policies and programmes.It is reported that the outcomes of an intervention are highly dependent on the context, geography, history, political systems, networks, and social interactions. All communities have a different stock of social capital so the idea to easily harness it is naïve. Very often, 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 favour, resulting in a high risk of corruption.
Traditionally, the state is viewed as a benevolent actor;however, the contemporary political economy approaches show that the state may pursue its own interests that may not be in line with the interests of the masses, classically referred to as the ‘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 institutionalised policy debates on questions of national interest.Given that, it is easy for state’s representatives to blame capture in the absence of effective oversight and accountability. As a result,with the underprivileged class having poor access to speak their political rights the wealthy elites are the direct beneficiaries, hampering growth and development.
A report quoting Dr Hafiz Pasha states that the elite capture in the country is nearly 2.6 percent of the GDP, approximately Rs 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 the international context where most recently Jeffrey DSachs, a professor at the Columbia University, wrote about the capture of global mining companies stated:”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 favour 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 the nation’s domestic and international interests. For this to happen, serious efforts are needed to promote policy debates of national interest in organised public spheres with supplemented efforts from the following players including effective judicial oversight, independent planning and audit agencies, promotion of the right to information,and, most importantly, a vibrant media.
The writer is an assistant professor at PIDE, Islamabad