Day of the Middleman

The no confidence motion moved by the COP in the national assembly, and the political manoeuvring that accompanied it, has dominated the national media for the past few weeks. Both parliamentary groups emphasised that only their victory could ensure the continuation of democracy and a measure of stability in the country. These claims are belied by the unscrupulous manner in which the COP and its supporters conducted themselves in this whole affair, and the undignified response of the PPP leadership to the challenge thrown at it. As a result, one found half the representatives of the people of Pakistan sitting in Murree, and the other half in Saidu Sharif, waiting to be transported like cattle for the national assembly session that was supposed to decide the future of democracy in Pakistan. In addition, claims and counter-claims that votes were up to sale and that MNAs had been kidnapped by their opponents, so as to prevent them from attending the assembly session, point to the moral bankruptcy of the political leadership in Pakistan and the contempt in which it holds the people who elected it.

But even if the leaders of the people of Pakistan believed in the power of ideas and ideals, rather than the power of money and muscle, the result of the no confidence motion by itself cannot bring about a change in the increasingly anarchic manner in which this country is administered, or guarantee any measure of stability for the foreseeable future.

Democracy, development and stability are inseparable, and can only be achieved if the social and economic changes that have taken place in Pakistan over the past three decades are institutionalised, and those institutions and procedures that prevent this from happening, are dismantled. To make this possible, the support of the class that controls production processes and economic activity in the country is essential, and that can only happen if power can be shared with it. Contrary to the popular view, this class does not consist of big industrialists and traders, feudal or tribal chiefs, or the rural and urban proletariat. It consists of small entrepreneurs and middlemen who, in practical terms, are the only link of the people of Pakistan with twentieth century concepts of production, management and marketing. Therefore, it is essential to understand the processes that have led to the emergence of this class, its role in the economy of the country, and its political concerns – both in the rural and urban context.

Between the late fifties and the mid-seventies, the social economy of the rural areas of Pakistan was transformed. Cash replaced barter, and new relationships broke the isolation of hitherto isolated areas – transforming their subsistence economies into exchange ones. These changes were made possible by the introduction of new varieties of seeds, fertilisers and pesticides on the one hand, and by the development of a communication system and the emergence of large urban markets on the other. Electrification, mechanisation of agriculture and irrigation, and the development of small agro-based industries followed. Although the state was responsible for the introduction of the ideas, concepts and tools that set the process of change into motion, it did not develop the institutions, infrastructure, credit facilities, workshops, and marketing mechanisms that were required to sustain it. These developments were undertaken by enterprising individuals in the rural areas or the small mandi towns on the main highways. Over the years, the number of such individuals has multiplied, and even in the remote villages of Balochistan and the Northern Areas today such entrepreneurs are active.

Because of the complex inputs now required for agricultural production, the small farmer cannot operate without credit. Over 72 percent of Pakistan’s farmers receive this from artis, or middlemen, at exhorbitant rates, as state credit is not easily available. Fertiliser and pesticide distribution and extension services are extensively controlled by small businessmen and so as machines and tractors that are let out for agricultural production. Mechanical irrigation systems, such as tube wells, are often privately operated in the more arid areas, and water is sold to the farmers. In addition, dairy farming, except for the few large modern farms, is entirely dependent on the middleman’s credit and his managerial and marketing skills. On the coastal regions, the colossal fishing activity is again financed and managed by middlemen. In a short period of time since 1978, they have been able to mechanise boats, introduce new types of nets, establish ice factories in remote areas to preserve fish and set up a complex transportation and marketing network.

Although tractors and mechanised transport vehicles used for support activity to the agricultural sector are imported, other machinery, such as small diesel engines for tube-wells mechanical pumps, electric generators and transport trolleys, are all locally produced. All over the Punjab and Sindh there are scores of small factories that undertake this production. In addition, all over the country there are thousands of workshops and lathe machines that manufacture their spare parts and those of imported vehicles as well. And then, there are tens of thousands of mechanics that maintain and repair them. This entire activity has developed, not only without government support, but in spite of active government persecution. The state, over the years, has liberalised imports of items manufactured by these entrepreneurs, and increased duties on the imported raw materials required by them. Yet, due to their low cost of production, they have not only survived, but made mechanisation and its maintenance increasingly affordable to the small farmers.

In addition to the services mentioned above, the entrepreneurs also control the mandis in the market towns. This control is not only financial, but also administrative, and in more recent years they have determined not only the nature of physical expansion of the mandis, but also the price structure of the produce. The government, it seems, has abdicated its functions in their favour.

The dynamics of change in the urban centres are no different from those in the rural areas. Between 1961 and 1988, the urban population of Pakistan has increased by 21.5 million, or by over 200 percent. Yet, potable water, sewerage, solid waste management, transport, education and health facilities on the one hand, and land credit and technical assistance for house building on the other, were not made available by the state, except to a small affluent minority. The poorer sections in the urban centres, which constitute over 80 percent of the urban population, have been served again by entrepreneurs and middlemen who have operated in defiance of state laws and in violation of established procedures. Today, the ‘informal sector’ that they control not only takes care of the health, education, housing and transport needs of the vast majority but also provides credit facilities for small businesses and a much larger number of jobs than those provided by the state or formal sector activities. Vegetable vendors, carpet weaver loom operators, fire-wood salesmen, cobblers and potters, to name a few, cannot function without the financial and managerial assistance of these ‘informal sector’ entrepreneurs. Because of the dependence of lower income groups on the services they provide, those activities of these entrepreneurs that are a violation of state laws and procedures, are now accepted by the government.

The most important service that these entrepreneurs provide, both in the rural and the urban context, is mechanised transportation. Except the wheat, which is transported by the NLC, all agricultural produce is transported from farms to mandi towns and larger urban centres, in their vehicles. Movement of consumer goods and cooking oil from the cities to the rural areas is also controlled by them. In addition, they provide for over 75 percent transport needs of the cities in Pakistan, and virtually control all inter-city road transport systems in the country. Again, these achievements owe very little to government assistance and support.

Given the control that middlemen and small entrepreneurs have over almost every form of economic act of the country, they can, if they act together, bring Pakistan to a complete standstill. In 1977, it was their support to the PNA that made the ‘wheel jam’ strikes, which were responsible for toppling the Bhutto government successful. Again, it was the lack of interest and involvement in the anti-Zia political movements that kept the army in power for 11 long years. Therefore, it is essential for political parties in Pakistan, if they are interested in the development of democratic institutions, either to understand the social background and political leanings of this class and cater to its needs, or to build up a viable alternative to the role it plays in the country’s economy.

By and large, the middleman and the small entrepreneur class has developed out of the artisanal and trading communities of the old feudal system that, until recently, had controlled the social economy of Pakistan. Its level of awareness, education and skills is thus naturally higher than that of the rural and urban proletariat. The fact that its members have been able to understand and economically exploit changes in the modes and organisation of production, links them to the twentieth century and makes social mobility possible for them. All these aspects bring them into conflict with the feudal system out of which they have evolved. Although they may not be against the working class as yet, since it poses no threat to them, they certainly do not want to see the proletariat organised. Any such organisation would seriously affect the unequal relationship between the two groups and make the economic exploitation of the working class and lower middle income groups, whom they serve, more difficult. So far they have not participated in politics, except as an appendage to larger national movements, and have neither produced national leaders, nor options on major national issues. They have, however, been active in local civic life and are responsible for the creation of thousands of social welfare and trade organisations that are playing an increasingly active role in the district and municipal level politics of the country. In addition, they have participated in a big way in the three local body elections held in the Zia era, and have, in the process, frequently defeated the nominees of the feudal and tribal lords of their areas. Today, most district and municipal councillors belong to this class, and almost all town committees are controlled by it.

Representatives of the local bodies, who are overwhelmingly ‘karobari’ people, are not happy with the ‘democracy’ that has come to Pakistan. It has pushed them into the background and placed the MNAs and MPAs, most of whom are feudal and westernised liberals, at the help of affairs. They have not contested the national and provincial elections, as they do not as a class have the confidence, the vision or the money to do so. As such, they remain potentially the most powerful enemies of parliamentary democracy in Pakistan.

The only way to integrate this class into the structure of democracy in Pakistan is to empower it. This can be done if the functions of the district administration are handed over to the elected councils, and the councils are empowered to decide how to utilise their revenues. Similarly, in the urban areas, the executive wing of the local government, the development authorities, the revenue department, and the police should be made subservient to the elected municipal committees and corporations. In addition, at the national level, legislature and policies to facilitate and expand the activities of this class should be developed. Such expansion is bound to lead to major economic developments and to the creation of viable working class movements, without which democracy is not possible.

There are, however, major obstacles in empowering local bodies and decentralising revenue collection. A state that spends over 80 percent of its revenues on defence, paying interest on its foreign debt, and on its civil establishment, will not be permitted by its foreign bankers and local interest groups to take this step. Yet, if this is not done, the political situation in Pakistan has in it the seeds of a major conflict in which democracy will be the first casualty.