How political culture matches "Poor Economics"

Illustration: Fahim Anzoom

It is often said that “every nation gets the government it deserves”, a quote popularly misattributed to diverse commentators such as Alexis de Tocqueville and Abraham Lincoln but that is in fact derived from Joseph de Maistre's publication in the Lettres et Opuscules. There is a grain of truth in this. Governance conditions improve more in the context of active citizenry empowered with actionable rights, than in the context of passive citizenship. Political leadership of a given nation-state is a reflection of its constituency i.e. "endogenous" to the characteristics of its citizens. A more nuanced epigram stems from Leninist dialectics where Ulyanov said that “politics is the concentrated expression of economics”. One should not interpret this as yet another iteration of economic determinism where economics dictates what happens to politics. Articulated in the height of the New Economic Policy amidst civil war, when the survival of the new born Socialist state was at stake, the Leninist epigram defined protecting economic peace at any costs as the cornerstone of political governance. There is only a very limited zone of subjectivity within which politics can be truly free and independent of the compulsions dictated by economic interests. The present intervention further narrows down on one aspect of such economic moments by focusing on poverty dynamics and the consequences that such dynamics hold for the nature of political culture.
This article makes two main points. First, the central narrative of the last two decades of economic development can be summarized by a silent but dramatic ascent of the poor. Second, this ascent of the poor, although deservedly celebrated in its own right, has implications for the nature of Bangladeshi politics as seen in the persistence of the overall low-level of democracy.
It may be noted that the poor's rapid ascent has also made its footprints in the sphere of cultural productions, notably in the rising significance of religion in the context of a weak but moderate Muslim democracy. But, this question will be dealt with in a separate essay.
1. Structure and Agency
Bangladesh has been subjected to oscillating pessimism and optimism in the last 42 years. At one time Bangladesh was dubbed the test case for development. In another time it was seen as the role model of least developed countries (LDCs) in making progress on economic and social fronts. Such oscillations between positive and negative appraisals is not exceptional - it is arguably a common characteristic of many low income countries passing through the phases of stagnation, renewal and retrogression. Sometimes economic institutions grow but political institutions lag behind, displaying the complex interrelations between economic, social and political indicators. Underdevelopment is conceptually expressed not just at the level of low income but also in the unpredicted mismatches between economic and political dimensions of development. Since early last year, the country has been viewed mainly through a pessimistic lens.
This essay glosses over the acuteness of the currently burning issue of post-election political settlements. There has been endless commentary on the subject, especially on the critical importance of an inclusive, free and fair election that would ensure the participation of the historically two major nationalist political parties. The relevance of party-inclusiveness can be seen from the fact that each of these major parties  had roughly about 33 to 40 percent share of the votes cast, even when they failed to win majority seats in the parliament (as per 2001 and 2008 elections). The interest in the present intervention however lies in examining the forces of inertia—why things remain as they are—that tend to reproduce the disconnects between economic progress and political regress.
Early entrants into the global capitalist system had the initial advantage in maintaining the complex dynamics between economic and political developments. Historically, in developed countries of the West, economic development could be given exclusive primacy for a long time while paying little attention to political development. Early capitalist transformations of these economies did not require the commensurate – by now established as a universal standard – practice of liberal politics. This was not only true in the case of policies adopted in the New World (colonies) but also in the case of political practices adopted in the Old World (metropolis)—the terms old and new being used originally from the European perspective. Comparative economic history shows that there has been a significant time lag between economic and political moments in the development of Western modernity. Market capitalist institutions developed much earlier than the political institutions of democracy based on universal suffrage. In contrast, developing countries saw the nationalist acceptance of the "idea of democracy" based on universal suffrage much earlier than the corresponding capitalist institutions found their roots in such societies. Although the idea of free and fair electoral democracy based on multi-party system remained popular in these societies it lacked other “institutional ingredients” that make democracy work. Part of the problems stems from ignoring participation and public reason as a precondition to democratic order. The ruling coalition typically lacked imagination and authenticity, and as a result, it lapsed mainly into a “mimicry of democracy” compared to the Western standard achieved today (the problem of mimicry has a pervasive existence in early stages of development, including in articulating nationalism and the idea of Nation).
Bangladesh's experience of the last two decades, however, suggests that decent long-term economic development can take place even under political regimes engaged in such a mimicry of democracy. That raises a legitimate question: what explains the continued democratic mimicry in the face of such economic development? In other contexts, arguably, such a mismatch between economic and political moments (unstable political equilibrium) would not have lasted long: it would lead either to authoritarian rule or to a more acceptable order of inclusive democracy. What is it in our past development that makes democratic mimicry persistent? It is easy to invoke the continued personal rivalry between the two main leaders of the country—recent telephonic conversation expressed it more clearly--as explanation for the persistence of democratic mimicry. This answer is too easy to be taken seriously. There must be some “structural factors” that underline such democratic mimicry. The interest, therefore, is in understanding the persistence of democratic mimicry in such dynamic economic contexts as Bangladesh where economic conditions for full-blown democracy are not ripe as yet. The problem is analogous to explaining the trend towards mean reversion in finance literature. It is useful to know why things do not improve although (unlike some countries of Sub-Saharan Africa) they do not fall apart either here.
The article takes a long term view on current disillusionment, arguing that the very factors that gave rise to our economic success also contained elements that contributed to democratic underdevelopment or even backtracking, marked by dysfunctionality of political institutions with negative spill-overs on the society at large through sporadic uncontrolled outbreak of extremist violence. In taking this long term view, it specifically focuses on the "structure-agency" framework whereby the main actors of economic development also shape the nature of political subjectivity.
For the purposes of this essay, the term “upper class” denotes the governing class and consists of the political elite, the higher echelon of the business class, the top government functionaries and NGO leaders, and the upper crust of military bureaucracy. The term “middle class” refers to routine business and factory owners, self-employed family entrepreneurs, English-educated salaried workers, managers, teachers, doctors, engineers and other professionals, medium level NGO functionaries, as well as civil society think-tanks and opinion makers. This is in contrast to the “lower class” which consists of peasants, industrial workers, day laborers, transport workers, petty commodity producers, and in general diverse mix of subaltern and marginal social groups.
2. “Poor” Economics
Abhijit Banerjee and Esther Duflo in their influential book "Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty" explored the micro institutional arrangements that benefit the poor most and drew our attention to the choice that policy makers have in designing pro-poor programs and plans. Their phrase “poor economics” is borrowed here to exemplify a path of economic development which rests primarily on the productive use of relatively unskilled labor, resulting in their rapid economic mobility and quality of life improvements. This is “poor” economics because it works well for the poor both as beneficiaries and actors as opposed to a path of development--which can be termed "non-poor" economics--where the main actors and beneficiaries are the middle class and the rich. The uniqueness of Bangladesh's development that drew global attention is the way poor economics worked particularly well for the poor, resulting in a rapid movement out of poverty within a short span of time with commensurate improvements in social indicators and/ or human development.
The basic narrative of Bangladeshi economic successes is well known, but like most stories of success it can be told differently. "Seeing like the poor" would mean tracing how these economic successes impacted the economic lives of the poor. The four main economic drivers of growth and development in the past two decades have been improvements in agriculture, rural non-farm sector, export led industrialization and remittances. Bangladesh's efforts in giving impetus to its poor through these four  economic drivers was supported by simultaneous social investments in basic health and human development, such as providing decent coverage of preventive health care and primary through secondary education, especially for the female population and the poor. Without the latter, the poor's participation in those sectorial drivers would not have been successful - for example, exposure to basic literacy and primary education is required for an average female laborer to participate in the ready-made garments (RMG) sector.
While agriculture and rural non-farm sector were the mainstays of development in the 80s and 90s, beginning with the 2000s, export led industrialization and foreign remittances began to play a more prominent role. Rise in agricultural productivity freed up surplus farm labor for non-farm jobs and resulted in rapid internal migration to cities, a development that was supported by export growth and a mode of urbanization where construction sector growth was backed up by remittance. This process of transformation is mentioned elsewhere by the author in a collaborative paper with Mahabub Hossain and Yasuyuki Sawada for the WDR 2013 for Jobs. The truly striking facet in this story of transformation is the crucial role of relatively unskilled labor, noticeably including female labor from the 2000s onwards, in the agriculture, rural non- farm, export led industries, and construction sectors.
This has resulted in the economic ascent of relatively unskilled labor — the poor and the poorest — along the poverty and human development ladder. The mystery of the success in meeting the MDGs at a relatively low level of income, for which Bangladesh is so applauded at home and abroad, lies herein. Bangladesh's development irrespective of political regimes and ideological orientations cannot be understood merely by looking at macro growth figures - it requires close examination of micro statistics of the ascendancy of the poor across the four main drivers previously mentioned.
While this story is well known to close economic observers of Bangladesh, less discussed is the impact of “poor” economics on other aspects of economic, social and political lives. The virtual lack of rapid and mass public transport in urban areas is one of the most striking

economic expressions of inadequacies of democratic culture in Bangladesh. The poor simply lacked the citizen voice to demand decent public transport both in terms of intra-city travel and inter-city connectivity. The absence of citizen voice has been a general problem afflicting the entire range of public services. Had the middle class been the driving force of economic development, the likelihood is that it would have been more successful in extracting better quality public services from the state. In most countries of the world there is a broad correlation between the level of middle class activism and the development of urban transportation. A cursory comparison of the capitals of the two Bengals, Kolkata and Dhaka, illustrates this point well with the former enjoying far greater choices of public transport services. In all advanced democracies where the middle class remains an influential voting constituency, the creation and/or maintenance of a decent and inclusive public transport is regarded as a political good.
The corollary question is why the voices of the non-poor have also not been strong enough to extract better quality public services in Bangladesh? Given the faster poverty reduction in the last two decades, with the poverty headcount declining from approximately 62% in 1991/92 to 32% in 2010, one might have expected a significant qualitative change in the supply of public services. This has not happened because of two factors, one economic and the other sociological. Rapid moving out of poverty was not matched by an equally rapid increase in the population share of the middle class since there is an analytical gap between crossing the poverty line and becoming part of the middle class. Recall that the non-poor is a mixed category comprising of vulnerable non-poor (those in the vicinity of $1.25-2 line), lower middle class ($2-3 line), upper middle class ($3-4 line) and upper class (above $4 line). This article deliberately deviates from the internationally suggested definition of measuring middle class as being in the range $2-10 line because of the low average income of Bangladeshis. In the last two decades, of those who escaped poverty very few entered into the stratum of upper middle class, but instead most of them found themselves in the vulnerable non-poor and lower middle class categories. Swelling in the ranks of specifically these two categories is one reason why poverty reduction was not translated into improved quality of public services measured in terms of broad-based access, beneficiary satisfaction, significant impact, and low corruption. However, the issue is not only the relatively small size of the upper middle class. The middle class is not just an economic category but also a sociological category. The core of the middle class was classically defined by the English-educated workers and those employed in salaried jobs. The proportion of workers with English education (loosely defined as educated above class 10) and salaried jobs has increased much less dramatically than the rate of poverty reduction, thus effectively explaining the smaller traction of the sociological middle class with regard to improvement of public services and the democratic politics of public goods provisioning.
From the view-point of public economics, the issue of distributive justice is an important consideration in explaining the quality of growth and development. Successful democracies cannot afford to ignore the issue of distribution even from the electoral angle of winning over the "median voter". Bangladesh has been experiencing sharp rises in inequality of income and assets over the last two decades. But, equally striking has been the simultaneous increase in the "tolerance for inequality". Here too poor economics played a role of crucial difference. In a sense, the success of poor economics came as part of a Faustian bargain. While poverty was reduced, inequality in the distribution of income, assets and power rose sharply. It can be argued that the latter was an outcome of an attitude of political permissiveness towards corruption. Inequality of unearned incomes is likely to be higher than the inequality of earned incomes. It is likely that inequality of unearned income sustained by corruption and violation of legal norms--rather than human capital and skill based differences in income and asset acquisition—has fueled this sharp rise of inequality in income and assets. Widespread media coverage of the wealth statements of the ruling coalition candidates that were submitted to the Election Commission in the recent January 2014 election indicates that possibility. This has possibly been a reflection of the wider pattern of the accumulation process that underpins the formation of upper class and upper middle class. Such a process of wealth accumulation and the causal role of illegal incomes are likely to be captured inadequately in the HIES data, thus misleading the true extent of worsening ground realities in this respect.
The ultimate consequence of sharp rise in inequality was the diversion of focus of the politically influential upper and upper middle classes from improving the public services by holding the state actors accountable. Inequality enabled these privileged classes to rely more on private exclusive services (such as private transport, private security services, private clinics, and private schools) to form an enclave of their own with little traction with the system of distribution of public services.
Nevertheless, such elitism in the Bangladesh context was different from similar situations in Africa in that it also permitted a considerable degree of economic mobility for the poor. This helped to mitigate the bite of inequality on social peace and stability to some extent. Essentially, the poor did not object to the unprecedented concentration of economic power so long as they could also improve their fortunes. Politically, such an appeasing “class compromise” translated into subservient acceptance of the low quality of political culture. Such a class compromise on the part of the poor was, in turn, additionally rewarded by the governing coalition through implementing anti-poverty programs. The latter include social protection transfers and basic human development programs that benefited the poor families. Admittedly, such programs were not successful in equal measures between the poor and the poorest, rural and urban areas, and between ethnic majority and minority identities.
To summarize, in this implicit social contract, the poor benefit but the middle class and upper class benefit much more on the backs of the poor. Tolerance of such inequality will depend on the durability of success of this covenant. As long as this basic compact holds on, the poor economics shows a path of development that is much better than economic stagnation with worsening poverty along with exclusive reliance on a wasteful rent-seeking path of development. The sustenance of Bangladeshi democracy, up till now, rested on the political marketing of this covenant. The next section will argue that the success of this compact also contains elements that undermined itself, as reflected in political culture.
3. “Poor” Politics
Poor economics had significant footprints on the entire ensemble of relations that contribute to the low quality of political culture: the choice of political candidates, the relationship between the major political parties, the degree of inner-party democracy, the pattern of personal loyalty to the leaders and leader-worship, the rhetoric of political leaders, and, in general, the level of political discourse. Democratic mimicry is apparent in all of these.
The process that contributed to the low quality of public services in Bangladesh, as described in the previous section, is equally applicable to the production of low quality political governance. As long as the political class regarded the poor to be the median voter, the leaders did not feel enough electoral pressure to change the existing political and administrative practices both within the party and within various branches of the state. This is paradoxical since rapid poverty reduction in the last two decades also meant that a typical median voter now would actually be a potentially demanding non-poor (the new class of “movers” out of poverty). Nevertheless, the basic power equation underlying the political economy of public policy has not varied. This is because the new median non-poor voter still does not represent the electoral power of the middle class and is likely to be a representative of the vulnerable non-poor variety, lacking economic and political allies. Furthermore, his demands and psychology do not vary significantly from those of the poor voter. As a result, even though the country's political scene has witnessed the practice of democratic mimicry for the last two decades, the procedural practice by itself did not lead incrementally to desired democratic transformation. The latter seems to be a tall order to attain for poor economics.
Not only has the social dynamics, seen through the angle of changing profile of the median voter, failed to create sufficient political pressure for political reform, it may have become an excuse for the political leaders to evade and postpone institutional changes that are being demanded of them. For example, the need for modernization in politics—campaign finance reform and inner-party democracy for instance--has been indefinitely postponed by invoking the argument that such reforms while desirable are not practical given the stage of economic development. This political underdevelopment was not addressed by the prevalent strategies, articulated in the global discourse, which focused instead on basic needs in the 1970s, structural adjustment in the 1980s, and MDGs in the 1990s. These strategies, while vastly different, nevertheless operated within a narrow definition of development and did not give equal priority to easily monitorable political indicators along with economic and social indicators. This further reduced the compulsions to improve political culture. Instead, the focus of politics and politicians turned towards appealing to the lowest common denominator of the population, thus preventing a higher level of political discourse corresponding to the standards of the sociological middle class.
The failures of the poor and vulnerable non-poor in this regard are perhaps understandable, but why was the middle class not able to change political culture? The small size of the middle class segment cannot be invoked as an adequate explanation here. In the 1960s, the Bengali middle classes could provide political leadership during the national liberation movement, even though it was proportionately smaller then than it is now. Why then is the comparatively larger middle class now incapable of effecting political reforms? After all, the share of the economic middle class has increased from about 8% to 19% between 1991/92 and 2010 (according to author's estimates using the Chen-Ravallion line for middle class). Back in the 1960s, the newly formed middle class or the vernacular elite were the children of peasants and the consequent national liberation movement drew on the resources of a deeply peasant Bengali nationalism, which had broad based national appeal. This is no longer the case. The urban middle class is now distant from the peasant mode of economic and cultural lives. They may walk on the streets of Dhaka but actually feel more at home in living in the global village of the advanced countries. A vast Bangladeshi diaspora continues to feed the dreams and aspirations of this class. In short, formation of economic middle class per se does not mean the growth of political middle class willing to fight for the modernist ideals of political democracy.  In addition, the middle class has also been a beneficiary of the system of poor economics, especially through urban property development, exports and remittances, and enjoyed their share of the spoils of corruption and rent-seeking. Ultimately, this has subdued and defused their reformist potential to take on both parties of the political equation--the government and the opposition alliance--even on basic libertarian issues such as political repression by the state and opposition violence against ordinary citizens, including ethnic and religious minorities. A recent telling example is the inability of the business class to enforce discipline on the political process even at the cost of their own financial interests. Arguably, the democratic activism by the middle class would have been more likely in the context of economic decay. This has been a central thesis of Benjamin Friedman in his book “The Moral Consequences of Economic Growth”. On the other side, the political class could easily disregard the demands of the middle class because political leaders are aware of and rely significantly on the support of the lower class when it comes to electoral democracy.
Perry Anderson once noted that the economic causes underlying the dynamics of Tahrir Square movement were linked with vast educated unemployment along with rural distress. The Bangladesh scenario has been different (so far) from that context because of the success of poor economics, as discussed in the preceding section. This description should not mean that the members of the lower class have no agency of their own against the profit, power and privileges of the upper class. In fact, in the past two decades the members of lower class have repeatedly demonstrated their agency by replacing one party by another in successive elections but stopped short of demanding a higher quality of political representation. Their surprisingly enthusiastic turnout in past elections under the guise of festive participation can then be interpreted also as a subversive activity of the lower class corrosive to one-party rule. In the West, such subversion has been tamed by the ruling classes, resulting in low voter turnout and political apathy. In our case, participation in elections has been an art of popular resistance. This is the key reason why the people feel so disenfranchised by the prevalence of uncontested seats in the recently held one-sided election.
The sustainability of maintaining this democratic mimicry based on poor economics would be eventually challenged in the process of development.  The essay takes a long-term of view on political reforms based on class formation, class dynamics and class action. The dialectics of poverty reduction contains the seeds for such change – as education and literacy increases, the first generation movers out of poverty who have relied on the four economic drivers of poor economics will graduate into the category of English-educated salaried middle class in a more industrialized and urbanized settings. Alternatively, the current middle class could become more active in demanding political change. This evolutionary path of transition from poor economics to middle class economics is not devoid of tensions, slippages, conflicts and revolutions. Studying other countries experiencing rapid poverty reduction under democratic mimicry may hold some useful lessons in this regard but will have to remain a topic for another article.

The writer is Research Director, Bangladesh Institute of Development Studies (BIDS).