Rethinking development—V Democracy without equality cannot deliver inclusion

Development cannot be inclusive when citizens possess equal votes but radically unequal power over property, knowledge, technology and public policy. Daron Acemoglu explains why liberal democracy lost its working-class foundation; Thomas Piketty shows how concentrated wealth acquires political authority. Pakistan must confront both failures while recognising that its own egalitarian democratic settlement was never permitted to mature.

Part IV concluded that Pakistan cannot import Asia’s next growth story without first acquiring a constitutional State capable of making privilege conditional and power answerable. Administrative capacity, however, is not enough. A capable State controlled by concentrated interests can organise extraction more efficiently. The missing foundation is not capacity alone, but democratic equality: the ability of those who work, pay taxes and bear economic risk to influence the purposes for which public power is used.

The promise that narrowed

Liberal democracy never guaranteed equality of outcome. Its egalitarian promise was equal citizenship, political voice and freedom from arbitrary power. During the twentieth century, that promise acquired economic substance through mass education, organised labour, progressive taxation, social insurance, competition policy and public services. These were not charitable additions to democracy. They supplied the countervailing power without which a formally equal vote could coexist with profoundly unequal control over life chances.

In What Happened to Liberal Democracy?, Acemoglu argues that liberal democracy flourished while it pursued shared prosperity, democratic governance and the free pursuit of knowledge. It faltered when post-industrial liberalism turned away from these commitments. Economic decisions became technocratic, organised labour weakened, and a college-educated elite became culturally influential while separating itself from working people. Populism is not explained by material deprivation alone, but deprivation makes anti-democratic mobilisation easier when citizens conclude that established institutions neither hear nor protect them.

Knowledge is governed

Acemoglu’s recent essay on collective knowledge is especially relevant to the IMF’s enthusiasm for artificial intelligence and digitalisation. Knowledge includes scientific discovery, but also the social learning through which communities cooperate and restrain power. It creates common prosperity only when institutions direct it towards the common good. Early industrialisation raised productivity while imposing long hours, low wages and dangerous work. Gains became widely shared much later, after workers organised, participation widened and technology moved in a more labour-complementing direction.

Technology has no distributional innocence. Tax rules, procurement, intellectual property, credit and research funding determine whether innovation replaces workers, equips them or creates new tasks. For Pakistan, subsidising artificial intelligence while neglecting foundational education, collective bargaining and local problem-solving would not constitute modernisation. It would use public resources to enlarge the bargaining power of owners over workers and of connected firms over excluded communities.

Wealth writes the rules

Piketty identifies the other mechanism. Capital in the Twenty-First Century demonstrated how accumulated private wealth can grow faster than the economy and become hereditary unless institutions interrupt the process.

Capital and Ideology goes further: durable inequality requires a story that presents a particular distribution of property, taxation and opportunity as natural or deserved. The legal structure of ownership is a political creation, not a fact of nature.

Piketty’s warning that private money can purchase parties, media and influence connects wealth concentration directly with democratic decay. His remedies—highly progressive taxation, inheritance reform and broader participation in ownership—invite legitimate questions about valuation, avoidance, investment and State capacity.

They cannot be copied mechanically into Pakistan. Their lasting lesson is harder to evade: once economic power can write the rules by which it is taxed and regulated, electoral competition ceases to provide political equality.

Pakistan’s unfulfilled equality

Pakistan does not need to borrow the constitutional case for egalitarianism. Article 3 of the Constitution requires elimination of exploitation. Article 38 directs the State to prevent concentration of wealth and means of production, adjust rights equitably between employers and employees and landowners and tenants, provide work and social security, and reduce disparities in income and earnings.

Article 29(3) requires annual reports to the legislatures on implementation of the Principles of Policy [Article 29 to Article 40]. These commands have been treated as ceremonial prose when they should provide a framework for measurable democratic accountability.

Pakistan’s electoral history has instead coexisted with constitutional interruptions, the domination of representative and civilian institutions by one institution, dynastic party structures, concentrated land and regulated businesses, weak labour organisation and dependent local governments.

The poor enter politics principally as voters; powerful groups participate continuously as financiers, contractors, licence holders, media owners and policy interlocutors. The result is not liberal democracy that first achieved and then abandoned equality. It is an egalitarian bargain repeatedly prevented from taking institutional form.

The UNDP Pakistan National Human Development Report 2020 organised inequality around power, people and policy and estimated elite privileges at Rs. 2.66 trillion in 2017–18. The latest official Tax Expenditure 2026 reports Rs. 2.353 trillion in concessions for fiscal year 2025. The estimates are not directly comparable, but both reveal the same evidentiary failure: Pakistan records categories of privilege more readily than beneficial owners, promised performance and distributive results.

An egalitarian-democracy test

The International Monetary Fund usually tests inclusion through jobs, women’s participation, financial access, small enterprises and social spending. These indicators matter, but they describe entry into an economy whose power structure is left largely unexamined.

An egalitarian-democracy test must also ask who owns productive assets, finances politics, controls data and technology, bargains over wages, receives public support and captures productivity gains. Inclusion after these choices have been settled by dominant groups is compensation, not participation.

Parliament and the provincial assemblies should begin by enforcing Article 29(3) through an annual Equality and Democratic Economy Account.

Building upon the capture ledger proposed in Part II, the price ledger in Part III,  and the Productive Transformation Compact in Part IV, it should disclose the effective tax burden across income groups and sectors; concentration of land, credit, procurement and media ownership; beneficial owners of exemptions, guarantees and subsidised finance; movements in real wages against productivity; and access to education, health, transport, technology and elected local government.

The Pakistan Bureau of Statistics, Auditor-General, Election Commission and competition authorities should produce the underlying data for public legislative hearings.

Redistribution must then be joined with pre-distribution. Federal and provincial governments, acting within their constitutional fields, should tax true net income, large property holdings, agricultural income, capital gains, inheritances and gifts coherently while reducing arbitrary withholding and consumption burdens. The proceeds should finance universal foundational education, nutrition, primary healthcare, safe transport and social insurance.

Large enterprises receiving protection, credit or procurement preference should publish pay ratios, recognise collective bargaining, provide elected worker representation and accept time-bound productivity, training and employment obligations. Public support for AI should reward technologies that equip workers and create new tasks, not merely eliminate payrolls.

Economic equality also requires political safeguards: real-time disclosure of political finance, beneficial ownership of media and public contractors, enforceable conflict-of-interest rules, and elected local governments under Article 140A with predictable fiscal authority. These measures do not abolish markets or differences in reward. They stop wealth, official position and coercive power from becoming hereditary vetoes over collective choice.

Neither Acemoglu nor Piketty offers Pakistan a ready-made constitution of equality. Acemoglu’s working-class liberalism emerged from histories; Piketty’s participatory socialism presumes formidable fiscal and administrative capacity.

The Pakistan applicability test remains essential. The authoritarian alternative, however, is false: combining concentrated wealth with concentrated coercion aggravates the disease. Inclusive development becomes possible only when democracy reaches beyond the ballot to the economy—when citizens acquire the capabilities, organisation and information needed to decide how growth is produced and who receives its gains.

References

Acemoglu, Daron. 2026. What Happened to Liberal Democracy? Remaking a Politics of Shared Prosperity. Dutton.

Acemoglu, Daron. 2026. “We Have the Knowledge to Build a Better World. But Is That Enough?” Big Think, September 2.

Anthony, Andrew. 2020. “Thomas Piketty: Why France’s ‘Rock Star Economist’ Still Wants to Squeeze the Rich.” The Observer, February 23.

Bhatt, Gita. 2026. “Asia’s Next Growth Story.” Finance & Development, September.

Government of Pakistan. 2026. Tax Expenditure 2026.

National Assembly of Pakistan. 2025. Constitution of the Islamic Republic of Pakistan, as amended up to November 21, 2025.

Piketty, Thomas. 2014. Capital in the Twenty-First Century. Harvard University Press.

Piketty, Thomas. 2020. Capital and Ideology. Harvard University Press.

Sen, Amartya. 1999. Development as Freedom. Oxford University Press.

United Nations Development Programme. 2021. Pakistan National Human Development Report 2020: The Three Ps of Inequality—Power, People and Policy.

(To be Continued)

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.