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The London School of Economics and Political Science HOW A CRISIS IN THE MORAL ECONOMY OF DEVELOPMENT POLICY CHALLENGES STATE LEGITIMACY A thesis submitted to the Department of Government of the London School of Economics for the degree of Doctor of Philosophy, London, September 2011 M. H. Aziz PhD Candidate in Political Science Word Count: 81,518 DECLARATION I certify that the thesis I have presented for examination for the MPhil/PhD degree of the London School of Economics and Political Science is solely my own work other than where I have clearly indicated that it is the work of others (in which case the extent of any work carried out jointly by me and any other person is clearly identified in it). The copyright of this thesis rests with the author. Quotation from it is permitted, provided that full acknowledgement is made. This thesis may not be reproduced without the prior written consent of the author. I warrant that this authorization does not, to the best of my belief, infringe the rights of any third party. 2 ABSTRACT This PhD thesis accounts for the legitimacy challenges faced by the state that are specifically created by organized industrial workers through their anti-state unrest. It also relates such legitimacy challenges to recurring regime breakdown in unconsolidated democracies. I thus answer the question: how can we more fully account for labour-led legitimacy challenges to the state that at key times contribute to regime breakdown in unconsolidated democracies? I build on the dominant elite-driven explanations that are already emphasized in the existing theoretical literature by highlighting bottom-up labour mobilization that has not been given sufficient consideration. Moreover, I have uniquely framed such bottom-up mobilization in terms of “shared norms” in a very particular “moral economy” centred around development policy. These norms were in part created by the state as part of its informal “legitimation project” with labour. Key to the state-labour relationship within this moral economy is workers’ expectation of certain subsistence provision from the ruling regime in return for its role in state-led industrial production and national development. Such expectation of specific subsistence provision was partly built up by the state itself through its own rhetoric and policies; but this also set up the state to frequently lose legitimacy when such provision could not be delivered or maintained. 3 TABLE OF CONTENTS 1. Introduction 1A. Existing Literature 1a. Pakistan 1b. Regime Transitions 1c. Moral Economy 1B. A Fresh Approach to Understanding Pakistani Politics 1C. Methodology 1D. Chapter Structure 2. Existing Explanations for Legitimacy Strain and Crisis of the Pakistani State in 1947-1971 2A. Civilian-Led Regime: 1947-1958 2a. Legitimacy Strain in 1947-56 2b. Legitimacy Crisis and Regime Breakdown in 1957-58 2B. Military-Led Regime: 1958-1971 2a. Legitimacy Strain in 1958-69 2b. Legitimacy Crisis and Regime Breakdown in 1970-71 3. Moral Economy of Development Policy During Civilian Rule in 1947-1958 3A. Setting Up the Expectation Relationship in the Moral Economy of Development Policy: 1947-1951 3a. Labour’s Nationalistic Role of Sacrifice in Pakistan’s “Economic War” with India 3b. State-Trade Union Relations 3c. Wages 3d. Prices 3B. Moral Economy Violations and Legitimacy Strain of the State 1952-1956 3a. Industrial Unrest Over First Wage Issue: 1952-1954 3b. Industrial Unrest Over Second Wage Issue: 1952-1954 3c. Industrial Unrest Post-1955 Labour Policy: 1955-1956 3C. Moral Economy Violations and Legitimacy Crisis of the State 1957-1958 3a. Economic Decline 3b. Industrial Unrest Over First Price Issue: 1957-1958 3c. Industrial Unrest Over Second Price Issue: 1957-1958 4. Moral Economy of Development Policy During Military Rule in 1958-1971 4 4A. Setting Up the Expectation Relationship in the Moral Economy of Development Policy: 1958-1961 4a. Labour’s Nationalistic Role of Sacrifice in Making Pakistan A Viable State 4b. State-Trade Union Relations 4c. Wages 4d. Prices 4B. Moral Economy Violations and Legitimacy Strain of the State 1962-1969 4a. Industrial Unrest Over First Wage Issue: 1962-1964 4b. Industrial Unrest Over Second Wage Issue: 1962-1964 4c. Industrial Unrest Post-1965 War and Labour Policies: 1965-1969 4C. Moral Economy Violations and Legitimacy Crisis of the State 1970-1971 4a. Economic Decline 4b. Industrial Unrest Over First Price Issue: 1970-1971 4c. Industrial Unrest Over Second Price Issue: 1970-1971 5. Conclusion 5A. Recap of PhD Thesis 5B. Summary of State-Labour Relations in 1971-2007 5C. Further Research 6. Bibliography 6A. Foreign Aid 6B. State Documents 6C. Legitimacy 6D. Methodology 6E. Moral Economy 6F. Pakistani Development 6G. Pakistani Labour 6H. Pakistani Politics 6I. Patronage 6J. Regime Breakdown, Democracy and Dictatorship 6K. The Press 5 CHAPTER 1 INTRODUCTION During periods of both military and civilian rule in Pakistan in 1947-1971, ruling elites ploughed ahead with a development policy that focused heavily on boosting industrial production to achieve growth.1 Part of the rationale behind this particular development policy was to give legitimacy to a struggling Pakistani state both abroad and locally2 – the higher the level of state-guided industrial production (increasing overall growth), the greater the perceived legitimacy of the state.3 At certain points in its history, outside observers openly praised the results of this ambitious industrial development policy, consequently recognising Pakistan as a legitimate state. In 1955, for instance, the US government commended Pakistan for the “speed and efficiency with which it carried out measures necessary” to give the people “benefits” from its economic program.4 In 1964, US President Lyndon B. Johnson admired the state’s “efforts to improve [people’s] well-being and pave the way for a better future.”5 The New York Times reported: “Pakistan may be on its way toward an [industrial] economic milestone that so far has been reached by only one other populous country, the US.”6 Even the Times of India noted its supposed enemy’s achievements in a 1965 editorial: “Pakistan has made impressive gains in the 1 This policy, however, failed to consider the distribution of growth to all groups in society. This policy observation in many developing countries was first made by theorist John Stuart Mill in 1848 who wrote: “It is only in backward countries of the world that increased production is still an important object [when] what is economically needed is better distribution” (Book IV, 6.6. Principles of Political Economy, Seventh Edition, Longmans, Green and Co, London, United Kingdom, 1909). 2 Pg 8. The State’s Legitimacy in Fragile Situations Unpacking Complexity, OECD Publication, 2010. Accessed at: http://www.oecd.org/dataoecd/45/6/44794487.pdf. The OECD identifies four types of legitimacy in weak states like Pakistan: process, performance, shared beliefs and international. 3 Different theorists have defined legitimacy in terms of different criteria. Muthiah Alagappa (1996) for instance considers the legitimacy of the state to be linked to the identity of the nation-state, type of regime and government. Seymour Lipset (1959) considers the legitimacy of the state in terms of economic development. This thesis focuses in on the regime and economic aspect of state legitimacy. This is not to say that legitimacy did not decline with respect to the other criteria. 4 Dawn, February 18, 1955 5 Pg 2. The Pakistan Example, Documentation of Comments on Pakistan Economic Development, Ferozsons Ltd, Rawalpindi, Pakistan, 1966 6 New York Times, January 18, 1965 6 [industrial] economic field during the last five years. … These are achievements of which Pakistan can be justly proud.”7 Yet viewed through a socio-political lens of a very particular moral economy in Pakistan, it is clear that this policy did not always give the state its desired legitimacy locally. While certain elite industrialists approved of this development policy, significant numbers of industrial workers repeatedly challenged it and in effect the legitimacy of the state-labour relationship during periods of low or high growth and military or civilian-led leadership in 1947-1971. Organized industrial labour only made up a small minority (300,000-500,000 workers) in a country with a growing population of roughly 70-100 million8 in 1947-1971, yet more than ten to twenty percent of this group (30,000-100,000)9 managed to pose a notable threat10 to the ruling regime through their anti-state unrest. In fact, recurring strikes and protests led by industrial workers during this period reveal a “special sort of lens for examining society”11 – they “unmasked many of the values of a common people [surrounding development policy] which in other times went unvoiced.”12 These values showed labour’s “underlying assumptions about social and economic relations”13 in terms of its relationship with the state.14 This significant perspective is largely absent from the existing elite-centred literature on Pakistan yet quite apparent in certain local archival data. For a more holistic understanding of the challenges to state legitimacy in Pakistan, the role of labour must be considered. This PhD thesis thus accounts for key aspects of the legitimacy challenges faced by the Pakistani state that were specifically created by industrial workers through their anti-state 7 Times of India, Bombay, June 14, 1965 8 Pakistan Population Census, Statistics Division, Government of Pakistan, Islamabad, Pakistan, 1972 9 Pg 10-28. Rashid Amjad and Khalid Mahmood, Industrial Relations and the Political Process in Pakistan 1947- 77, International Labour Organisation, Geneva, Switzerland, 1982 10 Yes, these organized industrial workers were indeed a small group relative to Pakistan’s population, but this does not mean their impact on state legitimacy was negligible. After all, other groups who impacted state legitimacy at certain points were also small in number – e.g.