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Story Publication logo November 16, 2009

Economics of Security: Setting Off

Media file: south asia economics of security.jpg

"The Economics of Security" explores the threat of extremist violence in South Asia, especially...

Media file: south asia economics of security.jpg

Today, I'm starting on a four-month project to report on the "economics of security," the relationship of economic concerns to political (in)stability in South Asia. In the last week, I've been giving myself a crash course in the latest books and articles on the subject. One argument that I find compelling is the one made by Vali Nasr in his newest book, Forces of Fortune: The New Muslim Middle Class and What It Will Mean for Our World.

In essence, Nasr is making a liberal internationalist version of Milton Friedman's argument for the relationship between capitalism and democracy. Nasr shows how the rise of a capitalist middle class contributes to political stability by creating a group of people who have a lot to lose if the state falls apart. The liberalism twist is in Nasr's notion that the military and defense interests are as responsible as the socialist left for crippling economic modernization in the Muslim world--that's quite different from the conservative notion of "capitalism and freedom" coined by the American Right during the Cold War. It's also quite different from the Randian notion of capitalist freedom as the freedom of the individual FROM the state. If anything, it reminds me of Max Weber's Spirit of Capitalism--like Weber, Nasr is trying to treat capitalism as an social and moral institution, a form of control, rather than a decentralized order based on a loose interplay of individual interests.

My trip this winter starts in Pakistan, where the military is still the de facto authority; where the civilian democratic government is teetering on the edge; and where the economy is in tatters. Here's what Nasr has to say about the mess in his chapter on Pakistan:

  • The growth strategy pursued by ex-President Musharraf expanded the economy, but did so by delivering gains only to a small upper crust, increasing income inequality in a country where class divisions were already profound. Musharraf's government also took regulatory policies on food crops and energy resources that created shortages for most of the population, and compensated by using extensive government subsidies that contributed to inflation.
  • The United States made the mistake of investing in economic growth in Pakistan through gifts to the Musharraf government to spend on its failed policies, rather than through direct investments in Pakistan's private sector.
  • America's relationship to Pakistan is complicated by a failure to understand the nature of Pakistani politics and the true agendas of its leaders.
  • For example, Nasr argues, Zulfikar Ali Bhutto, the leftist leader killed in a military coup in 1979, was not a liberal populist as he professed, but an authoritarian socialist who used populist rhetoric to mask the essentially aristocratic nature of his power.
  • Similarly, Nasr says, the military is not the secular Kemalist body it professes to be: leaders from General Zia ul-Haq to Musharraf in our own time have relied on cultivating certain forms of religious fundamentalism to achieve their own ends, namely the strengthening of Pakistan's position relative to India and of the military's own hold inside Pakistan. For example, Nasr reminds us, it was by sending a band of fundamentalist warriors to Kargil in Kashmir, sparking a humiliating war with India, that Musharraf skyrocketed to international fame and eventually to power. And to Nasr, there's no material difference between an ideological allegiance to such movements and a self-interested cultivation of such movements. But American foreign policy continues to assume such a difference.
  • After the situation in Pakistan deteriorated into a full scale war that threatens to destroy the power regime itself, however, policies and attitudes changed. For example, the State Bank of Pakistan has finally taken the simple step of freezing the assets of the Tahrik-e Taliban, the Pakistan-based group who are affiliates, but not true allies, of their Afghan namesakes. More importantly, Nasr says, ordinary Pakistanis have come out of the woodworks to demonstrate for peace, security and to demand economic relief--he sees the 2008 protests by lawyers and civil servants, for example, as the sign of an engaged and expanding middle class.
  • In Pakistan, ultimately, Nasr advocates policies that will deliver macro-economic growth to the whole society in a way that expands this middle-class group, bridging the divide between the rich and poor that contribute to social unrest, while linking these groups' fortunes to the stability of the state: "Given the chance to pursue business growth without stifling government control, a capitalist flourishing will follow and a thriving middle class will serve as the impetus for moderation and democracy."

I'll have more to say on all these ideas as I report on the specifics of economic and military policy, but for the moment, it's valuable food for thought.







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