Pakistan’s de facto caste system makes it regionally uncompetitive
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Dr. B.R. Ambedkar, a principal architect of the Indian Constitution, once argued that “caste has killed public spirit. Caste has destroyed the sense of public charity. Caste has made public opinion impossible. Virtue has become caste-ridden, and morality has become caste-bound.” His critique highlights how the caste system stifled competition and undermined the moral and ethical foundations necessary for societal progress.
Inspired by Ambedkar and his colleagues in the independence movement, India has gradually worked to dismantle the caste system. Despite its deep roots, which make this a complex and long-term endeavor, this effort has been driven by a robust democracy characterized by intense political contestation, especially around economic and educational opportunities for marginalized communities. Empowered by the power of the vote, these communities— significant electoral blocs— have influenced policymaking and advocated for legal, political, and social reforms. Although caste-based discrimination and inequality persist, India has made notable strides in breaking down the caste hierarchy and enabling the emergence of a growing middle class founded on competition and merit.
Competition is essential for societal progress and human development. In a competitive society, individuals and groups are motivated to excel in education, the arts, sports, and other fields. This pursuit of excellence fosters innovation, spreads knowledge, and elevates societal standards. For instance, competition in education drives students to achieve higher learning standards, while in the arts, it stimulates creativity and cultural enrichment. Overall, competition catalyzes continuous improvement.
Pakistan however, has largely failed to cultivate such an environment. Historically privileged groups have maintained exclusive control over resources that could have been used to enhance human capital. Instead, they have shaped policies to maximize their benefits. As a result, Pakistan’s Human Capital Index (HCI) is just 0.41— below the South Asian average of 0.48, with Bangladesh at 0.46 and India at 0.49. Pakistan’s human capital outcomes are comparable to those in Sub-Saharan Africa, with an HCI of 0.40.
India has made notable strides in breaking down the caste hierarchy and enabling the emergence of a growing middle class founded on competition and merit.
Javed Hassan
The ruling class’s aversion to competition has significantly contributed to the poor performance of businesses and the broader economy in Pakistan. Economist Ahmed Pirzada from Bristol University and his colleagues note that between 1990 and 2018, Pakistan’s labor productivity grew by only 45 percent, with an average annual growth rate of just 1.33 percent. Meanwhile, other South Asian economies more than doubled their labor productivity; Bangladesh and India saw increases of 191 percent and 263 percent respectively, with average annual growth rates of 3.88 percent and 4.72 percent.
An industrial sector heavily dependent on protection through a high tariff regime has not only been shielded from necessary productivity gains but has also missed out on becoming part of the global value chain (GVC) revolution embraced by most fast-growing emerging economies. According to the 2022 World Bank Country Economic Memorandum, Pakistan increased import duties “from 15 percent on average in 2010 to a maximum of 21.3 percent in 2020.” The average weighted tariff in Pakistan is among the highest of the 68 countries with more than $20 billion in annual exports.
This raises a critical question: what has enabled a small segment of the population to continue exerting disproportionate administrative and economic influence while institutionally denying the broader populace the full expression of its potential? Daron Acemoglu, a leading economist and co-author of Why Nations Fail, argues that political contestation is essential for economic progress. He contends that inclusive political institutions— where competition is robust and power is not concentrated in the hands of a few— are crucial for fostering economic development. As Acemoglu states, “Economic institutions are endogenous; they are outcomes of the political process, and it is the nature of political institutions that determines what type of economic institutions will arise.” In other words, political competition and contestation lead to the creation of inclusive economic institutions, which are necessary for sustained economic growth.
The absence of political contestation in Pakistan has allowed a small segment of society— historically endowed with land, financial access, and the education necessary for controlling state institutions— to pursue policies that perpetuate their economic power and grip over state resources. They have often collaborated with undemocratic forces to undermine the legitimacy and effectiveness of Pakistan’s formal institutions that could check the concentration of power.
While the idea of a caste system might seem antithetical to the tenets of both Pakistan’s constitution and Islam, in practice a social hierarchy persists that preserves the privileges of the few while denying the vast majority access to education, economic opportunities, and political power. Low investment in education and health, limited global trade integration, and resistance to growth-enhancing reforms can all be traced back to their desire to maintain their stranglehold on political power and economic dominance. The perpetuation of a de facto caste system has led to a stagnation of ideas and innovation, ultimately weakening societal vitality. Consequently, Pakistan lags behind its competitors in nearly every sphere of human endeavour.
– Javed Hassan has worked in senior executive positions both in the profit and non-profit sector in Pakistan and internationally. He’s an investment banker by training.
