The global influence of the West has redefined the very concept of development: the result is that economic development is assumed to trigger development in all other sectors of society. The veracity of this assumption is often tested when economic development does not produce the desired outcomes. In this context, the academia has tried to examine the relationship of law and economics and through it that between the law and development has been advocated. <div>
This write-up will briefly discuss the theoretical perspectives related to the law and economics, and their relationship with the development, and then it will appraise the significance of law for Pakistan.
Theories of Law and Development
Richard A. Posner, a judge of the Court of Appeals for the Seventh Circuit in the US, in his book entitled “Overcoming Law” has stated that the conventional formalism of law, which focused on the relationship of different legal concepts, had transformed into application of concepts of economics to law, resulting in replacement of legal conceptualism by economic conceptualism; the replacement has thus replaced the legal content with the economic one. This precisely happened in religious laws where the religious content replaced the legal one, but that debate of ‘legal versus other content’ belongs to the province of jurisprudence.
For this write-up, suffice is to note that the concept of development also essentially became economic, and this offered an opportunity for researchers to study relationship of law and economics. Resultantly, two chief theories emerged: the Modernization Theory and the Dependency Theory. Professor Lan Cao, while writing a book review of Professor Anthony Carty’s “Law and Development” has explained both the theories.
The Modernization Theory subscribes to the view that the developing countries require to converge their laws and legal institutions on the lines of developed countries, if they want to emulate the economic success of the latter. For example, if a developing country wants to register high growth rate, it has to provide for laws that provide more room to the private sector, etc. The Dependency Theory, on the other hand, does not see much merit in the Modernization Theory. It postulates that one size does not fit all and that the political reform is more important than the legal reform. It states that mere copying of Western laws and legal institutions might not culminate in full fruition. The two theories, according to Professor Cao, did not attract much attention and were ‘declared dead’ by the end of the 1970s.
On the other hand, the international financial institutions (IFIs), the International Monetary Fund (IMF) and the World Bank in the 1990s introduced the Structural Adjustment Programmes (SAPs) in the Far East Asia, which when failed, the aforementioned institutions started arguing that these SAPs failed as the Second Generation Reforms that related to law were not introduced in these countries. Now, therefore, considerable part of the IMF projects deals with the Second Generation Reforms, in which, the programmes insist on convergence of laws of a borrowing developing country to the international (read Western) standards through Structural Benchmarking (SB) processes.
Pakistan is no exception to this. The Twelfth and the Final Review of the IMF Extended Fund Facility (EFF) Arrangement, issued on 13th October 2016, reflects BS, in which the Deposit Protection Corporation Act, 2016 (XXXVII of 2016) is stated to have been enacted; this new law on the statute books of Pakistan is an example of the Modernization Theory’s application to Pakistan. Many other pieces of legislation in Pakistan have been induced in the legal system of Pakistan by following ‘the vehicle’ of IFIs and aid agencies. This essentially is ‘the import of legal content’, and through it, the economic values of other countries, especially developed ones, into Pakistan and other developing countries.
Law as Software of Development
The purpose of underlining the theoretical perspectives behind the law-and-development debate in the foregoing part was to sensitize the reader to the importance of law, in the first place, and then to highlight the fact that indigenous law and legal institutions are as important as introduction of the rule of law itself, in a developing country. Unlocking the potential of indigenous law can become a bedrock for development of a country like Pakistan. Consider the case of Reko Diq, a trove of gold deposits in the backyard of Pakistan, locked and unutilized; the fruits of that abounding natural resource were not denied through waging war, but by not letting it operate due to legal reasons pegged into the underdevelopment of the law related to minerals and the concomitant law of contract.
Likewise, developing the infrastructure of brick and mortar has the same effect of placing a state-of-the-art hardware computer machine: the machine, no matter how advanced, is of little value, if there is no software. A society’s software is law and that too which is pure of archaic and colonial imprints. Pakistan has to focus on developing law by allowing free speech to foster healthy debate, which could finally see indigenous ideas resulting in legislation based on indigenous solutions to indigenous problems.
In this regard, developing only constitutional law will not take us very far; we need to allow law to be developed at all levels: primary, secondary and delegated legislation through changes in substantive and adjective law be considered a policy issue and a matter of national interest. The national interest of the country has to be provided legal content — indigenous and locally-oriented. The China-Pakistan Economic Corridor (CPEC) moment can only be internalized by installing software of development i.e. law: if there is no enforcement of contracts, there is little likelihood of any meaningful investments sustaining. The enforcement of contracts, the sanctity of negotiable instruments (cheques, promissory notes, etc.), the performance of guarantees, the settlement of disputes by non-criminalization, and the possession of property by peaceful means, the enjoyment of intellectual property by lawful orders/certifications and alternate dispute resolution models form the very core and the programming content of the software of law for development.
The law of defamation needs to be strengthened to ensure that all information is legally processed and its integrity is edited before it is shared. The crime control strategy has to be civilized, and that can only happen by strengthening the law; violence begets violence, and there is no chance of violence controlling the crime and terror. The authority and responsibility within the executive of the country has to be zeroed in at one place, instead of straddling it all over. The layering of responsibility and the circulation of authority have created opaque constructs in Pakistan’s governance system, which need to be weeded out by using indigenous legal ideas and modern management strategies.
The operating system for functioning of the software of development (law) is constitutionalism, which is the written contract between the state and its citizens. If the constitutionalism needs to be updated, there is no harm in updating or developing a latest version to provide a workable legal framework for the betterment of the posterity.