All countries have mutual relationship in modern world economics. However developing countries are dependent on modern world economics instead of coexistence whereas developed countries are in a position to dictate world economics. This situation is applicable to Pakistan as well. However, salient features of modern economics are listed below prior to writing about economy of Pakistan.

(a) Capital is the most important aspect of the modern world economics system. Therefore capital formation is the basis of the system. There are many institutions which exist in the world for this purpose like banking or insurance system or stock exchanges etc. Old world economic system had commodity as most important aspect. Therefore its basis was not capital formation inspite of existence of currency.

(b) The need for capital has germinated the necessity of loan. Loan is not only needed by industry or agriculture for its establishment or for labour or for input like raw material etc. it is needed even by individuals for building house or for purchase of house or for purchase of other amenities of life.

(c) Loan has enhanced the concept of interest to such an extent that it has gained importance in economics equivalent to capital itself.

(d) Another important aspect of modern world economics is industrialisation which is dependent upon sale for the sake of its survival as well as for the sake of further development. Therefore export is an important factor for developed as well as developing countries.

(e) The factor of export has granted great importance to the currency which has resulted in establishment of international currency market. This has resulted in two things namely economic disparity in the world indicated by the developed and developing countries or north and south etc. The second thing is trend in extensive circulation of currency both in internal market of a country as well as in international markets. This has ended up in constant price rise of all types of commodities due to easy availability of currency through many means thus price rise has caused economic instability in the world.

(f) Efforts have been made to find solution to this problem like creation of economic blocks e.g. European common market or Asian etc. However, this too has not proved satisfactory despite creation of IMF or World Bank or Euro etc. This fact is evident from recent expression by finance ministers of G8 in Italy that world economy is subject to recession.

(g) The basic reason for recession is:

(1) to increase production constantly in industry to enhance its capital potential in order to meet price rise effect in its production cost due to fact listed in (e) above as well as to increase income of owner to meet the effect of price rise on his personal expenditure.

(2) The internal markets get saturated quickly due to continuous rise in production.

(3) This necessitates increase in export. However, export is restrained due to economic disparity in the world. That is the reason of expression by G8 finance ministers about economic recession.

Pakistan's economy is subject to recession due to its dependence on world economic system. Therefore most important point for economy or Pakistan is to adopt the policy of coexistence instead of dependance. Measures which will be necessary for this purpose are listed in subsequent paragraphs.

Western teachings about economics will have to be amended to the extent that industrialisation is the primary means to reduce unemployment. Industry is the main economic factor in the west because countries there remain covered by snow for six months and hence they cannot cocenterate on agriculture development. This is the reason for such teaching of the west. The fact of existence of unemployment allowance in those countries is a proof that industerialisation cannot eliminate unemployment.

Another point about industerialisation in Pakistan is that this country cannot establish heavy industries due to lack of financial resources. Small industries cannot prosper in the absence of heavy industries because heavy industry is the primary consumer of production of small industries. Medium size industries in Pakistan are faced with tough competition in the world markets. All the developing countries of the world are possessing only medium size industries due to lack of fiscal resources and it causes tough competition.

Economy of Pakistan must be run in accordance with the economic principals to achieve good results. However, Pakistan's economy has been governed by politics and political considerations. The reason is that country inherited poor economy at the termination of colonisation. Therefore, it germinated a desire of development amongst people which gave an opportunity to the politicians to exploit this factor for political support of majority. They utilised many means for this purpose. In fact, bifurcation of Pakistan has been due to this reason. Even now claim about ethnicity or regionalism etc. is cause for obstruction to development of economy according to correct economic principals.

Political parties as well as media, both print and electronic, which is also a form of politics use concept of poverty to pressurise any existing government since many years due to existence of poor economy. They term lack of modern amenities. The real problem in Pakistan is disparity which is due to capital oriented economic system -- not poverty. There is no one in Pakistan who sleeps hungry and trend of suicide or killing of children or family is due to greed -- not hunger.

The concept of greed has been germinated in people due to desire for capital i.e., money which is the prominent feature of economic system of the world as well as of Pakistan. Modern amenities are the basic elements which germinate the desire for capital i.e. money in every mind and hence generate greed. Various measures like winning of prizes through draw and advertisements for this purpose etc. in order to build capital cause generation of greed in public as well as it enhances steps which spoil society e.g., increase in abduction for money or dacoity or cheating etc. The fact of orientation of mind to capital is evident from the fact that even sports are used to accumulate capital. Orientation of human mind towards capital creates desire to seek capital i.e. money and thus germinates greed which ends up in disparity in the society and this is the real problem of economic system of Pakistan.

Another fact which needs attention is that definition of strong and good economy to be prescribed correctly. Developed countries define it as budgeting without deficit. This is so because it helps them to establish superiority of their currency in international currency market and thus earn through high cost of export of their industrial production as well as earn through interest by granting loans. Whereas media and politics of Pakistan define it as elimination of poverty and unemployment.

The correct definition of strong and good economy is the one which progresses in a manner that it ensures its own progress at a pace in consonant with its capability and ensures correct utilisation of its own resources both fiscal generated by itself as well as natural national resources developed by economic itself.

The fundamental economic error committed by leadership of Pakistan has been that economy of the country was and still is agrarian and it was essential to undertake rural development first instead of urban development which has not been done due to political considerations. This is so because rural development could not gain political support due to the fact that rural population is spread in wide area and any type of development project in rural area would have benefitted small numbers at a time causing small political support whereas lack of developmental attention in urban areas due to major attention to rural areas could generate political agitation causing problem to politicians in power and hence great attention was paid to urban areas. This has resulted in shifting of rural population to urban aras resulting in provision of basis for political instability which is the basic cause of still failure to take correct economic decisions to ensure strong and good economy.

The above noted mistakes in economic sphere of Pakistan have been listed to induce thinking in public to suggest measures how to remove the effects of these mistakes. This is one aspect of improvement in economic system of Pakistan. There is another aspect also which is framing new design of economic system which can coexist with world economic system instead of being dependant on it. There can be many suggestions for this. However, some are listed below.

Capital orientation

Present economic system should be redesigned so that its orientation is not dependent on capital only. Its orientation should be based on capital and commodity jointly. This objective can be achieved by following measures:

(a) to introduce trade in internal market on commodity exchange basis or partly capital i.e. money and partly commodity exchange basis. This will be possible by charging tax on capital transaction only.

(b) to introduce partial commodity exchange system by inducing Pakistani importers to make deal on the basis that the exporter will be willing to purchase either some type of commodity produced in Pakistan or import some quantity produced by importers from raw material imported by Pakistani importers on the basis of partial capital and partial commodity prior to import.

(c) to introduce joint venture between agriculture and industry in the country. There can be many ways to achieve this which can not be listed here for the sake of brevity. However, government can encourage it by granting tax exemption to the industry already existing and not to new venture, when existing industry adopts joint venture for its first year. Then impose tax in second year at small scale and enhance it on yearly basis on its income production basis by monitoring it. Also agriculturist may be granted revenue exemption for first year.

Price rise

This is one of the byproduct of present economic system. An increase in sale enables price rise due to rise in demand. Price rise enhances expensiveness which is vicious circle and it is not possible to get out of it. Thus it ends up in economic recession. Major element which leads to price rise is stock exchange because survival of stock exchange is dependant upon price rise only. This institution has been introduced by the west in order to achieve capital formation for industrial development which is main source of survival of their economy. However, economy of Pakistan is agrarian and its development will depend upon system operating upon joint capital and commodity. The stock exchange in fact is an institution for betting and sale of shares is possible only on the hope or earning by the purchaser and this hope fulfills often which ends up in price rise of commodity. Stock exchange is an institution of capital formation which lures every government to encourage it in order to achieve rise in investment and thus enable government to achieve an increase in its financial income through tax apart from political support of traders. However, it harms economy, instead of benefit, through recession after a period. The claim by stock exchange operators that price rise or increase in sale of shares is an indicator of economic development is wrong. Therefore, stock exchanges should be closed. This will help to introduce an economic system based on commodity and capital jointly which is prominent feature of new economic system as proposed above.

Loan

This is a most prominent mean of capital formation through interest by financial institutions. Agriculture of Pakistan carries heavy burden of loan. Therefore, its progress suffers from this impediment. Measures should be adopted to relieve the agrarian economy from this burden so that it achieves self-reliance and progresses at good pace. An agriculturist of Pakistan depended on loan even prior to end of colonisation and he obtained loan from 'hindu bania' where as he has been replaced by banks. Every government supported this to ensure political support instead of adopting measures to eliminate burden of loan on agrarian economy by pleading that progress is sought in agrarian economy which is not the fact as evident from past history of more than fifty years. The progress in agrarian economy is possible only through rural development e.g., increase in water supply or roads from field to market etc. as well as relief of this economy from burden of loan. Rural development policy has been adopted but it should be augmented by this decision also. There can be many measures to achieve it but are not listed in view of brevity.

Investment

This is dependent upon capital formation to a great extent. However, it is possible only on assurance of earning which is dependent upon price rise which can cause recession occassionaly. Therefore, correct policy for Pakistan will be to lay equal emphasis on local investment in transit trade in addition to agriculture. Foreign investment will be possible only on its chance to earn more than its earning in own country. Therefore, they will prefer decrease in value of Pakistan currency in international currency market. It is pointed out that transit trade was only mean of economy of state of Madina during period of holy Prophet and its adoption will be Sunnah.

Interest

It has importance equal to capital in modern economic system. However, Supreme Court appellant bench has termed it as riba which is forbidden by Allah. Holy Quran terms riba as a battle with Allah. Battle with Allah does not mean that Allah comes out with sword or gun etc. against human beings. Allah has stated in Holy Quran that one form of punishment by Him is that He induces difference of opinion and thus cause conflict in human beings to kill each other. Presence of terrorism in Pakistan is a proof of this. Therefore, interest should be eliminated from economic system. Privatisation of banks will not make it possible. Joint system of capital and commodity in economics will make it possible. Details of methods to do it are not listed for the sake of brevity.