Uncertainty, transaction cost and rules of the game

Uncertainty, transaction cost and rules of the game
On December 7, a special court awarded the death sentence to former General-President Pervez Musharraf. The verdict against Musharraf brought to an end a six-year trial since he was first booked for high treason in December 2013, under a case moved by former prime minister Nawaz Sharif’s government. Musharraf, as army chief, mounted a coup against Sharif’s government, arrested Sharif, put him through the legal wringer and then forced the entire family into exile in Saudi Arabia after Riyadh cut a deal for the family.

He can appeal the verdict in the Supreme Court of Pakistan.

However, the army, through its spokesperson hit back immediately, indicating that the verdict had created much unrest within the force and warned against the designs of internal and external enemies. For good measure, the military spox also said that the army was prepared to thwart inimical designs against the country.

The government of the day, led by Prime Minister Imran Khan, stands in Musharraf’s (read: the army’s) corner and has said that it will contest the verdict.

One of the paragraphs in the written judgement expressed the judge’s enthusiasm for a spectacle and called for Musharraf’s body to be strung publicly in Islamabad’s D-Chowk if he were found dead before he could be hung by the neck.

Predictably, the paragraph that could have best been avoided and was wholly unnecessary, caused much firestorm and served to veer the debate away from the civil-military imbalance, the central point of the exercise.

Interestingly, the judge who is said to have penned the paragraph is also someone who in another significant judgement quashed the death sentences of 74 accused that were tried and sentenced by military courts. The judgement noted that all the accused had made confessional statements that were identical and the verdicts did not fulfil the requirements of due process.

Inevitably, the conversation turned from exploring that judgement on its merits and significance to the civil-military cut-and-thrust. TV channels debates have since been all about the tussle between the army and the judiciary and programmes are being conducted depending on which side the anchors lean in which is mostly, you guessed it, in favour of the military.

There’s similar sabre-rattling in the social media space. It got to a point where the outgone Chief Justice of Pakistan noted that a campaign had to been unleashed to vilify his institution.

Just before the Musharraf verdict, the SC took up the case of current army chief’s extension. While remaining short of striking down the extension granted to the army chief by the government, the court raised a number of questions and threw the ball in the court of the legislature. The government has to now pass a law and while it needs a simple majority in both Houses, the Upper House is problematic. Question: will the Opposition bite? Unlikely, without a quid pro quo. Question: what will the quid for quo be? Will it be quid pro quo for the Opposition and quid pro quo plus for the government and the army chief?

Meanwhile, the government also wants to send the case of the Peshawar High Court Chief Justice, the senior-most judge in the Musharraf case, to the Supreme Judicial Council. Whether it does or not remains to be seen. That said, poor judgements, jurists says, are not ground for disqualification. In which case, what other grounds the government (read: Establishment) might find to ‘fix’ the judge?

Another SC judge, let’s note, is already in the wringer.

Then there’s the issue of the Election Commission of Pakistan. The body is dysfunctional because it is short of a chief election commissioner and two members. So far, the government has been unable to strike a deal with the opposition and while there was indication of a breakthrough, the Pakistan Muslim League-Nawaz seems to have reconsidered its position and the issue is in limbo again.

Some sources allege that the recent National Accountability Bureau moves against some PMLN leaders are meant to pressure the party in agreeing to certain arrangements if it (PMLN) wants to get some relief. If this is true, then law is being made to serve political and vested interests.

The long and the short of it is that the situation is uncertain. And when that happens, as it has multiple times in this country’s history, then the cost increases all round. This is precisely why it is important (a) to have rules of the game and (b) to have normative acceptance of those rules.

To use Douglass North’s framework, “Institutions are the rules of the game in a society, or, more formally, are the humanly devised constraints that shape human interaction.” Put another way, humans establish institutions to structure the functioning of their lives and interactions and “reduce the obstacles arising from imperfect and asymmetrical information.” This is to reduce what North described as transaction costs. The institutions are both formal and informal. Together, these constraints comprise what he called the rules of the game.

The relevant question then is: if we do have formal institutions — constitution, rules of business, ways of interacting, contractual laws etc — why do they not work? Or, if there is no ‘design’ problem, why do we find ourselves on terra infirma? Is it that we have failed to evolve normative acceptance of the rules? Could it be that below the formal arrangements we have had other developments that have weakened the formal constraints and developed certain informal attitudes that we actually use and which continue to increase the transaction cost? In other words, why such discrepancy between the de facto and de jure?

These are crucial questions because without finding answers to these and many more questions, the functioning and interaction of multiple organisations will remain uncertain. Additionally, we will continue to see the irony of the rules being violated even as they are applied selectively for reasons of politics rather than the acceptance of them for what inheres in them.

The writer is a former News Editor of The Friday Times. He reluctantly tweets @ejazhaider

The writer has an abiding interest in foreign and security policies and life’s ironies.