Summary
- The answer is not a new saviour Wolf doubts that the mid-twentieth-century industrial compact can simply be restored.
- The compact is not the agent of change; it is an instrument that an organised democratic constituency can use.
- Pakistan adds a prior question: how can equal constitutional citizenship be established where organised power has long stood above ordinary accountability?
Martin Wolf identifies the unanswered question behind every attractive programme of institutional reform: where will the organised political power required to defeat entrenched interests come from? For Pakistan, this is the bridge between a constitutional development compact and its implementation.
- Pakistan never possessed the old compact
- From beneficiaries to a democratic constituency
- Institutions must alter the balance of power
- The answer is not a new saviour
After publication of the concluding Part IX in the Rethinking development series, Dr. Ehtisham Ahmad drew attention to Martin Wolf’s Financial Times review of Daron Acemoglu’s new book, What Happened to Liberal Democracy? Remaking a Politics of Shared Prosperity. The recommendation is important because Wolf isolates the question that remains after diagnosis, evidence and institutional design: who will create and defend the proposed new order?
Wolf’s essay is not a dismissal of Acemoglu. He calls the book timely, thought-provoking, factual and an important call to arms. Acemoglu defends liberalism through fallibility, open debate, experimentation, collective knowledge, protection from domination and a qualified respect for community.
Acemoglu’s proposed “working-class liberalism” would combine freedom of association and expression with redistribution, participation, good employment, effective public services and limits on concentrated power. A summary published by MIT captures Wolf’s broad approval of these objectives.
The decisive criticism comes later. Acemoglu wants to regenerate the shared prosperity associated with the post-war industrial compact. That settlement rested on more than correct ideas. Mass production assembled workers, trade unions organised them, rising productivity made wage bargains possible and electoral competition forced governing parties to respond. Deindustrialisation, attacks on organised labour, technological concentration and artificial intelligence have weakened that social base.
Wolf rightly asks whether the politics of a disappearing economic age can be recreated. In his formulation, the largest question left unanswered is how the political forces capable of restoring working-class liberalism are to re-emerge. This is not a minor omission. A programme without a plausible agent of change can become a catalogue of desirable results addressed to the very structures that profit from preventing them.
Pakistan never possessed the old compact
The challenge is even sharper for Pakistan. Acemoglu is principally explaining why mature liberal democracies abandoned a settlement that had once delivered rising wages, public services and a meaningful share of power to organised labour.
Pakistan never consolidated that settlement. Industrialisation remained narrow, land reform was frustrated, trade unions were contained, elected local government was repeatedly interrupted and civilian authority remained subordinate to an overdeveloped bureaucratic-military apparatus.
Hamza Alavi’s analysis of the post-colonial state remains relevant here. Pakistan inherited a state whose coercive and administrative institutions were stronger than the political organisations of society. Subsequent commercial, landed, bureaucratic, professional and political interests developed around this imbalance. Military predominance became its most powerful expression, although civilian elites frequently accommodated and benefited from the same order.
This is why the constitutional development compact proposed in the concluding Part IX cannot be treated as another technocratic plan. Its Capture and Privilege Account, Price Formation Account, Productive Transformation Contracts, Debt and Development Account and measures of equality, capability and trust are instruments for exposing power. Publication alone will not make them effective. Every disclosure rule creates an opponent among those whose concessions, ownership, guarantees or exemptions it reveals.
From beneficiaries to a democratic constituency
No single class can simply replace the industrial working class described by Acemoglu. Pakistan’s possible reform constituency is widely dispersed. It includes formal and informal workers, small farmers, teachers and health workers. Women performing unpaid care are also part of it. So are independent professionals, salaried taxpayers, small and medium enterprises, students and citizens denied functioning municipal services.
Their occupations differ. Their material interests, however, converge. They need impartial taxation, affordable energy, competitive credit, decent education and secure employment. Above all, they need institutions that do not reserve special rules for organised power.
The first political task is to convert these common injuries into common demands. A shopkeeper burdened by withholding taxes, a worker facing inflation, a farmer denied water, a graduate without productive employment and a municipality deprived of authority are usually discussed as separate policy subjects. They are connected by the allocation of voice, public money and legal privilege. Development becomes political when citizens see that connection and organise around it.
Article 140A of the Constitution is consequently not an administrative detail. Elected local governments with political, administrative and financial responsibility can provide the arena in which scattered citizens acquire experience of collective action.
Municipal budgets, school councils, social audits and open procurement can link taxes to visible services. Provincial autonomy and fiscal federalism are equally important because centralisation removes decisions from those bearing their consequences.
Organisation must extend beyond elections. Independent trade unions, farmer bodies, professional associations, women’s organisations, student societies, investigative journalism and public-interest litigation turn private grievance into sustained accountability.
Such organisations can themselves be captured, so internal elections, transparent finance and disclosure of conflicts are indispensable. Democracy cannot restrain power through organisations that reproduce domination within their own walls.
Institutions must alter the balance of power
Wolf’s criticism also changes how the compact should be understood. The proposed accounts are not neutral statistical exercises. They must reduce the cost of collective scrutiny and increase the cost of concealment.
Beneficial ownership, tax expenditure, public guarantees, land allotments and procurement preferences should be published in searchable form. Failure to disclose should suspend a concession or commitment. Parliamentary hearings, audit findings and judicial remedies should follow on a fixed timetable.
The same principle applies to technology. Acemoglu’s earlier work with Simon Johnson, Power and Progress, shows that innovation does not automatically create broadly shared gains; its direction reflects power and social choice.
Digital systems in Pakistan can widen participation and make budgets traceable. They can also centralise surveillance, displace workers and place public decisions inside inaccessible platforms. Technology must strengthen citizens’ capacity to question authority, not merely increase authority’s capacity to observe citizens.
International lenders cannot supply the missing political agent. The World Development Report 2017 recognises that exclusion, capture and clientelism arise from power asymmetries. The IMF and World Bank should therefore examine who gains discretion, who bears adjustment and whether a reform strengthens accountable institutions. Their financing can support domestic change, but conditionality negotiated with concentrated executive power cannot substitute for democratic organisation.
The answer is not a new saviour
Wolf doubts that the mid-twentieth-century industrial compact can simply be restored. That warning should be accepted. Pakistan does not need to search for a heroic class, charismatic ruler or enlightened institution that will deliver reform from above. Its answer must be a plural democratic coalition held together by equal citizenship and concrete economic interests, operating through the Constitution and capable of surviving changes of government.
This makes the development compact more demanding, not less useful. It supplies a common language through which otherwise separated groups can identify the distribution of costs, privileges and authority. It turns claims about capture into accounts, links public finance with outcomes and provides institutions around which political organisation can form. The compact is not the agent of change; it is an instrument that an organised democratic constituency can use.
Acemoglu explains what liberal democracy must recover. Wolf asks who can make the recovery happen. Pakistan adds a prior question: how can equal constitutional citizenship be established where organised power has long stood above ordinary accountability?
Reports, loans and expert advice cannot answer it on their own. The answer lies in persistent democratic organisation, enforceable disclosure, empowered federal and local institutions, and one rule for every centre of power. A compact becomes real only when citizens possess the collective capacity to enforce it.
References
MIT News. “Financial Times: Is it too late to save liberal democracy?” August 12, 2026.
Wolf, Martin. “Is it too late to save liberal democracy?” Financial Times, August 12, 2026.
Wolf, Martin. The Crisis of Democratic Capitalism. Allen Lane/Penguin Press, 2023.
World Bank. World Development Report 2017: Governance and the Law.
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Dr. Ikramul Haq, Advocate Supreme Court, writer, literary critic, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds an LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996.
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