‘‘No man can suffer too much, and no man can fall too soon, if he suffers or if he falls in the defense of the liberties and the constitution of his country.’’ Daniel Webster, 1852


Introduction

This mimeo suggests a particular analytic approach to understanding institutional change with particular reference to the constitutional history of Pakistan and India. The distinct appeal of this approach is that it roots institutional change and its economic and political outcomes in a historical and social perspective.

I will begin by briefly outlining the basic framework of analysis drawing heavily on the approach pioneered by North (1990) and then apply it to a specific example from recent history, the differing constitutional experience of India and Pakistan post independence. In doing so, I will endeavour to extend the analytical framework by incorporating some aspects of sociological-institutionalism and organizational competition in the process and political outcomes of institutional change. By introducing sociological-institutionalism and organizational competition into our analytic framework we can acquire a richer picture of the process of institutional change and the political and economic development of societies.

Our analysis suggests that unravelling societies’ political and institutional development is historically and socially context specific. Multiple variables interacting at particular points in time and in particular societal contexts determine the path of institutional and political development.


A basic analytical framework

Institutions lay the ground rules for general play in society, and individuals in general conduct the business of life with in these rules of play. Institutions are humanly devised constraints on behaviour, which structure human interaction in a world of imperfect information and where individuals have limited abilities to comprehend and compute the information that they do have. Their presence can serve to lower ‘‘transaction costs’’ that arise out of imperfect information and thus can facilitate complex exchange. For example the presence of clear property rights and their effective enforcement lowers potential costs (such as from stealing) arising out of transacting with strangers.

Institutions include both formal rules such as a constitution, and informal constraints such as customs and norms. Rules are in general derived from self interest, though we can say far less about what gives rise to many other constraints, in particular informal constraints, such as certain values and norms.

Culture, tradition and history matter in this context and individuals are at times motivated by values that transcend pure self interest. (Polyani, 1944, Margolis, 1982). Available evidence suggests that the pursuit of altruistic or other unselfish objectives is negatively related with the price (in terms of lost incomes or wealth) of doing so (North, 1990).

Within the confines of a given institutional framework (the complex matrix of rules, norms etc) political and economic entrepreneurs and the organizations they bring into being, function so as to ‘‘maximize wealth, incomes, or other objectives afforded by the institutional structure of society.’’ In so doing they ‘‘shape the direction of institutional change.’’ Change in the institutional structure is generally incremental though it times can be disjoint (example war, revolution etc). A changed institutional structure implies a changed set of incentives for individuals within that society, and hence has an impact on the economy and polity. For as a first approximation individuals respond primarily to incentives as ‘incentives are the underlying determinants of economic performance.’’ A changed incentive structure then affects economic as well as political markets, where individual entrepreneurs are active.

During the process of institutional change, for example initiated by the promulgation of a new constitution, there can be a contention between the informal constraints (read norms) that are buried in the depths of human consciousness through habit and tradition, and the new formal rules. This contention can at times be resolved through the conflicting informal constraints either adapting or simply withering away. At other times however they can force a change or a complete repeal of the new set of formal rules. Informal constraints can have ‘‘tenaciousness’’ survival ability for they are embedded within society. Since institutions (especially formal institutions) usually emanate from self interest and tend to exhibit inertia, a given institutional framework at a point in time need not be efficient in the sense of promoting economic growth. It also need not imply competitive political markets which are usually associated with representative democracy.

The matter is compounded when we take into account the existence of institutional path dependence stemming from increasing return to particular institutional structures. Increasing returns provide a self reinforcing dynamic to particular developmental or anti developmental trajectories that societies are on and which stem from the institutional structure that prevails. An example of path dependence in the context of increasing returns and an anti developmental trajectory for society could be an institutional structure which generates groups with vested interests in the prevailing system, that have the economic and political muscle to ensure that the system is perpetuated and perhaps even justified to the suffering multitudes. (Polyani, 1944, North, 1990)


The puzzle and toward an explanation

The subcontinent was carved into two neighbouring states, India and Pakistan in 1947. The post independence political experience has been very different for the two nations. Pakistan has had up to eight major constitutional changes, together with long periods of martial law (Hussain, 2003). Neighbouring India on the other hand has persisted with its original institutional framework derived in 1950 (excluding a brief suspension of the constitution in 1976) and has experienced no military coups. The question that naturally emerges is what explains this dissimilarity of experience? Specifically what prevented the Muslim league from institutionalizing itself within the Pakistani polity? The answer may lie in the history of the two political organizations that took power in two nations after independence, the Congress party in India and the Muslim league, henceforth ML in Pakistan. Extending the framework developed in Section 1, where organizations were modelled as the agents of institutional change we can argue that the distinct historical development of the two political parties and the nature of political competition they faced post independence accounted for the differing political experience of the two countries.

The All India Congress was a populist political party with long forged ties with the peasantry and urban industrialists (e.g. Birlas and Tatas), while the ML was a largely urban phenomenon up until 1937 when a successful attempt was made to co-opt the large landlords in the Punjab and Sindh provinces. However, even then grass root level links with the peasantry eluded the ML. (Burki, 1999)

Our view of organizations suggests that given a particular institutional framework (and the incentives structure it implies) leads political organizations to function as political entrepreneurs seeking to maximize their objective function. As a first approximation we can take the objective function of political organizations as being the establishment and retention of political power. This means excluding other actors such as the Military from the running of the polity. While pursuing their goal the organizations can become the instruments of institutional change through for instance making new rules, which ensure a democratic dispensation rather than one that allows military dictatorships to run the state.

Building into the analysis the sociological-institutionalist view of organizations- where organizations are embedded in society, we can contend that the Muslim Leagues absence of political roots amongst a large chunk of the populace prevented it from making durable the formal constitutional rules it derived. The ML was not able to resolve the tension that can arise between a new set of formal rules and existing informal constraints (housed in norms, conventions etc) resulting in frequent constitutional violations and experiments. The Congress party on the other hand, due to its historical embedded ness amongst the peasant population was able to successfully pursue its objective of institutionalizing its role within a democratic Indian polity.

We can make our model richer by introducing organizational competition. Competing political organizations can not only contribute to institutional change but also impact the direction that it takes in terms of the nature of the polity. Again we treat the ML as a political organization that sought to maximize maximise political power by entrenching itself within the polity. Such entrenchment implied civil society governance for the ML was composed of members drawn from various economic strata within civil society, such as landlords, industrialists etc. However, the ML faced a competing organization, the Pakistani Military. In the organizational competition that followed, the ML lost out given the absence of historical ties at the grass root level and lack of a coercive apparatus which its rival possessed. The organizational competition led to a changed institutional structure where civil society participation was limited within the polity. The Military however, also lacked broad electoral support preventing it from stabilizing itself within the corpus of rules that it imposed on society. The resulting contention for political space between civil political organizations and the military carried through in the decades that followed, leading to a host of constitutional experiences and periods under military dictatorship.

Introducing the element of organizational competition in institutional change and embedding it within society allows us to take into account historically specific comparative advantages of the competing parties. Thus as we have discussed above the Military had the comparative advantage of coercive force. The ML with its already weak association with the peasantry suffered an early set back in its endeavour to entrench itself with the demise of the leader who had galvanized the movement that led to the creation of Pakistan, Muhammad Ali Jinnah. In neighbouring India the Congress party had a similar leader, Jawaharlal Nehru who lived on and aided in warding off potential rival political organizations.


The way ahead: Some avenues for future research

The theoretical approach briefly sketched above provides a new and novel way of dealing with the complex political development of India and Pakistan. The analysis outlined makes no claim to completeness and needs to be substantially filled out. Specifically it would be nice to get empirical data on the relative strength of ties of the Congress and ML with the peasantry. One proxy for measuring the robustness of ties could be disaggregated data on the internal electoral process of the two parties (e.g. election of office bearers) and the breakdown of the 1937 election data by urban and rural regions party wise. This will allow us to gauge the participation of the peasantry in party affairs and their voting preferences regarding the two parties. We could also do with a clearer picture of the organizational structure and functioning of the two political parties post independence. Specifically, we need to address the question of how prepared the two parties were to compete and squelch rival political organizations i.e. the Military in the two nations.

An internally divided organization undermines its chances of competing successfully with a rival that has a unified chain of command. We know from informal observations that the ML with the loss of Jinnah had difficulty unifying the various factions within it. The Congress under Nehru was comparatively stable from within. Some empirical data on the frequency of change of office bearers within the two parties could be productive in making our analysis more rigorous. We also need to look more closely at the dynamics of the political see saw we have witnessed in Pakistan in particular the power sharing mechanisms that emerged between political parties and the military. An examination of the evolution of political parties and the Military as an economic and political organization is also important.