From Feudal Bargains to Developmental Coalitions: What the Meiji Restoration Can Teach Pakistan about State Capacity, Taxation, and Industrial Policy

Abstract

This paper looks at the reasons why certain states that are still late industrializing have managed to develop sustainable developmental capability whilst others have stagnated in the loop of reform and revert. The paper compares the experience of Japan and Pakistan in terms of its transformation process through a comparative historical institutional perspective. It states that modernization is essentially a political act of realignment powered in the reorganization of power among the elite, mobilization of revenue, and correction of economic agents and not merely a result of policy uptake. In the analysis, Meiji Japan was able to destroy the feudal elite bargains and established in its place the centralized developmental coalitions that can enforce the universal taxation, bureaucratic autonomy as well as performance based industrial policy. The reforms enabled the Japanese state to achieve fiscal strength, discipline industry and long-term economic transformation. In Pakistan, on the contrary there has been little change in elite accommodation by means of negotiated political settlements that limit taxation, politicize bureaucratic institutions as well as maintaining industrial rents without responsibility. Consequently, repeated reforms have brought in an outcome that is weak and reversible. The paper combines the perspectives of the developmental state theory coupled with historical institutional political economy to identify elite bargains as an integrative analytical theory to understand the divergent developmental processes. The research adds to the arguments about the state capacity and late development showing that the ongoing modernization requires the reorganization of political power instead of the enhancement of the policy design. Although the historical paths would not be repeatable on the wholesale level, the conclusions made demonstrate the significance of the coalition discipline, fiscal legitimacy, and the institutional enforcement in developing the Pakistan and other states, in which development is lagging.