The elitist paradigm and Pakistan’s economy

A few days back I came across a tweet by a leading business personality of Pakistan, who is CEO of a large electronics brand and also owns a PSL franchise since its commencement. The tweet stated, ”Starbucks or Costa to Pakistan!?” hinting at bringing in one of the largest coffeemakers in the world to Pakistan. Apparently the tweet must have induced excitement for the general population of Pakistan, which could be seen on Twitter following this tweet. Even though a coffee lover by heart my opinion has been ambivalent on this. The said business personality has a history of introducing foreign brands in Pakistan from different sectors including automobiles and son, and has used Twitter to create hype among consumers. But if we see it in a broader picture, he speaks in casual parlance of privileged while addressing to the consumer market. If we look at the social class structure in Pakistan, Costa or Starbucks coffee can only be afforded by a particular upper class of Pakistan as their daily go to coffee place.

Pakistani businessmen have a long history of reinforcing social hierarchy in Pakistan owing to their style of doing business. And this is evident by the fact that despite improved economic growth indicators, the social class structure in Pakistan has retained its arbitrariness and over the past two decades. The elite cater elite and thus the status quo remains intact. The Elite and upper class in Pakistan makes only a very little portion of the population while the middle and lower classes makes the rest of it. The gap between the social classes, more importantly between upper and middle classes, has widened. The social, cultural and income inequality between the two is more than evident.

The elitist paradigm of doing business in Pakistan is that they introduce trends in Pakistan, make it a subject of social attainment and persuade the middleclass to follow in their footsteps as consumers. The middleclass in return exhausts its resources to follow these trends and only helps the elite in accomplishing its business strategies. The result is Pakistan has become a permanent importer. Its imports have grown twice as fast as exports in 2020.

We import every other luxury item in the world at the behest of the elite class. Pakistanis have become a nation of consumers with limited productivity and innovativeness. The moneyed elite of this country tips the scales of markets in its favour by means of corrupt business practices, tax evasions and advantageous access to the corridors of power. They use their privilege to import commodities at the expense of the national exchequer rather than to create something of value through their own enterprise. The result is we have an unproductive rent seeking elite class, contributing little to the economy of Pakistan which has become deplorable. Pakistan has one of the lowest investment rates in the world. The productivity has diminished and the elite class which includes social, political and financial bigwigs, lack the innovation and vision necessary to uplift the economy and society of Pakistan. The weak regulatory structure of country and fragile institutions have supported the elitist status quo over the years.

Instead of investing in technology and innovation to support the economy and create opportunities for young entrepreneurs from the middle class, the egocentric elitist businessmen invest their capital in buying urban land and turn them into housing societies. This adds nothing to the economy of the country. A famous wealthy family from Gujranwala which was recently in news for allegedly spending over a billion rupees on a wedding, has announced to build a complete replica of Paris in a housing society in Gujranwala. Their privilege has even blinded the creativity and originality that can be found from within Pakistan. While Elon Musk is building space rockets and electric cars, Pakistani business elites are competing with one another in building housing societies.

Sooner or later, the elites shall have to let down the guards to their capital and open it up for the middle class to enter. The former’s privilege may not last longer than latter’s patience.

Another sector which has a sheer lack of innovation is the auto industry. It is heavily protected by the government, but has failed to provide consumers with automobiles at par with the rest of the world. The business personality I mentioned in the start of this article used an opportunity in this sector and introduced a compact SUV which costs almost Rs six million in the market, again catering to the needs of the elite. Currently, a consumer belonging to the middle class cannot even afford to buy a hatchback without spending his or her whole fortune.

One of the reason is that these bigwigs only navigate through their elite social structure which sociologist Pierre Bourdien terms “Social and cultural capital”. And they are not ready to share it with classes lower to them. The elite create, control and guard their domain, serving as gatekeepers to those outside who might seek to gain entry to this capital. It is now extremely rare, if not impossible, for an individual of lower or middle class origin to access the theatres and forums where elite business takes place, regardless of their aptitude, entrepreneurship and level of education.

The elite enjoys export subsidies in all sectors without an iota of contribution to the export growth. And the result is the dilemma of economy we are witnessing.

The solutions may need a completely separate article but I would mention an excerpt from Dr. Ishrat Hussain’s book Pakistan: The Economy of an Elitist State, which gives the three imperatives that should influence the governance of this country. They are following:

1) Restore confidence in country’s institutions i.e government, legislature, judiciary, universities etc. 2) Initiate and sustain technological change and manage transition to a modern economy and society. 3) Foster stability and trust in social and cultural relationship between various classes and segments of the population.

The implementation of above goals is intertwined and should be looked at collectively rather than individually and sequentially.

Sooner or later, the elites shall have to let down the guards to their capital and open it up for the middle class to enter. The former’s privilege may not last longer than latter’s patience.