After the ‘financialisation of the economy’ holding global sway over the past few decades and faltering now, there are some voices with significant weight, calling for a return to ‘people-centred development’ which was under spotlight during the 1970s. Focus on ‘people-centre development’ (PCD) was the advice the UN Secretary General Ban Ki Moon gave Pakistan last week while inaugurating the Centre for International Peace and Stability at the army-run National University of Sciences and Technology. His is not the lone voice. In his just published book on ‘Safeguarding Sovereignty,’ Mr Yusuf Shirazi, chairman of the Atlas group of companies, who combines business acumen with scholarship, laments that ‘many developing countries are content in putting up a facade of development mainly for internal consumption as a defensive reaction against rising expectations….. Pakistan is an example of this façade.” Ban Ki Moon elaborated his development approach in the following words, “Budget priorities should reflect peoples’ priorities: education, health and energy, empowerment and good jobs — putting in place long term foundations of peace —through sustainable development.” While health and education are necessary for socially sustainable economic growth, empowerment and good jobs are essential to move towards social justice. Good jobs imply fair wages, and empowerment is necessary for teeming millions to fend for themselves. Empowerment of the people is an imperative in an era in which the welfare state has become unworkable, and big corporations are shedding labour to become thin and agile to face fierce global competition. The best way to achieve social inclusion is to enable the teeming millions to improve their quality of life by themselves. As it is, the informal sector is more vibrant than the formal sector. But the key challenge for ‘people-centred development’ is the failure of policymakers to formulate a development strategy that would create fewer imbalances, which are easy to correct, and result in sustainable development. There is a need to differentiate between growth and development. Growth is an ‘inadequate measure of living of standards’ of the majority. PCD has to be anchored on an official income distribution policy and an employment policy. As the economy has moved from crisis to crisis because of dismal policy failures, Islamabad has spent much of its time seeking foreign loans and credits, mostly in the nature of fire-fighting, with worsening structural imbalances after each ‘bailout’. No doubt, there is an inherent ‘contradiction between high rates of economic growth and external viability,’ as pointed out by Mr Shirazi, which, he thinks, can be resolved through ‘local investment, production and export, leading among others, to employment and local consumption — Roti, Kapra and Makan.’ Bhutto’s socialism — ‘Roti, Kapra and Makan’ — was an attempt to engineer a people-centred development. Nationalisation of banks was aimed at wide dispersal of credit, which was stated at that time to be too much concentrated in businesses run by ‘22 families’. But his nationalisation programme led to bureaucratic control of the commanding heights of the economy and ultimately to enormous losses in the major state enterprises that is being witnessed today. Here, it may be pointed out that imports make a negative contribution to GDP, while subsidised exports make goods cheaper for foreign buyers and expensive for domestic consumers. The answer lies in increasing productivity — that is, quality goods at globally competitive prices. Rent-seeking must end. The key issue holding up PCD is the precedence of macroeconomic stability over growth, with artificial improvements brought about by heavy dozes of foreign capital at the cost of robust growth and development. Unfortunately, the macroeconomic stability is no longer seen as a product of sound economic development. With the industrialist Prime Minister Nawaz Sharif in power, and the federal Public Sector Development Programme (PSDP) upped by 50 per cent, hopes were raised that development would be on the priority list. The planning commission is being revamped, but the disbursement of funds for PSDP projects in the first month of the current fiscal is reported to be dismally low. While the cash-strapped government cannot find funds for its own PSDP, it is pursuing energy tariff policies and tax collection drive in such a way as would tend to discourage private investment. Press reports also suggest an increase in the State Bank’s policy rate soon when the PML-N manifesto had promised to make interest rates affordable to borrowers. Of course, it has no option but follow the IMF agenda, if it wants credit from the Fund. According to Mr Shirazi, ‘Pakistan‘s self-reliance index is lower than the already low standard of the developing world’ because of the ‘perpetual spoon feeding by international financial institutions and developed nations.’ In his view, the ‘solution to Pakistan’s problems have to be provided by Pakistan itself,’ as he rightly maintains that ‘each country has its own mores and milieu and its own social and specific experience’. With the sway of the Anglo-Saxon financial model in actual practice — the mantra ‘what is good for the Wall Street is good for America and the world’ shaped globalisation and created sharp disparities in incomes between and within nations. In Mr Shirazi’s words, ‘Pakistan must avoid the trap of Anglo-Saxon capitalism, which has failed the developed world’. However, the core issue in people-centred development is to arrive at a right balance between accumulation and dispersal of capital, accumulation for new investments, and income distribution for making domestic market prosperous. Over-concentration of wealth is a recipe for recession.