Lawlessness and our economy

Co-relation between law and order and economic development
It is only very recently, there has been some empirical research that has focused on the relationship between political instability which is one obvious manifestation of law and order situation and economic growth. Paradoxically, the issue of linkage between law and order and economic development has generally remained neglected in both theoretical and empirical literature concerned with the identification of sources of development. There is no denying that Bangladesh cannot reap benefits from global economic linkage perhaps on account of its internal political turmoil and strikes. The situation continues to persist.

The prevention of crimes in the context of economic development has increasingly become a matter of universal concern. The plan of action adopted by United Nations Congress on the prevention of crime and the treatment of offenders in 1985 stated that crime is a major problem of national and in some cases international dimensions. It added that certain forms of crime can hamper the political, economic, social and cultural development of people and threaten human rights, fundamental freedoms and peace, stability and security. Therefore, there is a need to respond in a concerted manner for reducing the opportunities to commit crime and simultaneously address the relevant socio-economic factors like poverty, inequality and unemployment.

There is an urgent necessity to strengthen crime prevention measures and the criminal justice process by undertaking action-oriented programmes and projects. Crime prevention and criminal justice process should be considered in the context of economic development, political systems, social and cultural values and social change as well as in the context of the new international economic order. The criminal justice system has to be fully responsive to the constantly evolving conditions of society.

The economic impact of organised crime and terrorism
Unlike traditional criminal activity, which largely involved individual responsibility for individual acts, criminal and terrorist associations of persons are now typified by complex organisational structures, frequently using structural models of legitimate industrial and commercial world. Similarities between terrorist and normal industrial organisations include value placed on money or power, capacity to self-finance, allocation of duties, divisions of sectors of activity and the strategy to reinvest profits. The organisational structure of terrorist bodies is indeed their strength and their multi-disciplinary approach necessary to combat them is not a part of the traditional law enforcement culture. Actually, a combination of traditional law enforcement personnel and financial and scientific experts are necessary to identify individual members of organised crime structures.

The growth of financial institutions along with advances in communication and technology has provided greater opportunities for siphoning black money and obfuscating the evidentiary trail. Countries like Bangladesh which for their own protection and development impose currency and exchange controls are likely to find its financial systems targeted by organised crime. As a result of organisational structure and concomitant pooling of talent, organised crime and terrorism have become more innovative. The recent smuggling of heroin to UK by supposedly food stuff exporting outfits of Bangladesh is a case in point.

In Bangladesh we need to be appreciative of the complexity and multidimensional facet of crime and the necessity of adopting systematic strategies and approaches by the criminal justice system. We need to recognise that money earned from illicit drug trafficking threatens to undermine legitimate business. The politically patronised syndicated crime groups are accumulating wealth and power and the economic power of criminal groups gives them the power to corrupt political systems.

Experiences beyond our country
Organised crime syndicates including Italian and Russian Mafia, Japanese Yakuza, Chinese Triads and Colombian drug cartels, all laundered money through deposits in unregulated banks or buying up real estate and legitimate businesses because criminal organisation's businesses enjoyed a competitive advantage. Herein lie the importance of legislation for curbing money laundering. In Eastern Europe and Russia, after the collapse of communist rule there was an explosion of banks which authorities there failed to regulate. There was credible suspicion that a sizable number of Russian banks were controlled or infiltrated by organised crime. Do we have suspicions banks?

A country's need for capital may perhaps lead it to take the short sighted view that money has no smell, that it does not matter what the origin of money is, and that it is all coming in for investment and it is all to the good. However, taking action against money laundering as part of financial reform is essential. The economy needs to be protected from criminal money.

The pursuit of happiness and order
When a society suffer from a law and order situation, the basic propensities such as to develop fundamental science, to apply science to economic ends or to accept innovations, are completely blunted and the society is deprived of the important stimuli and catalysts of growth, which have greater effectiveness and impact in the long term perspective. The primary tasks of any legal government are (a) provision of security, (b) welfare and growth and (c) constitutional order. The constitutional order is preserved by providing justice, maintaining public constraint, individual freedom of action and expression of opinion.

There is a need to underscore the critical role that the rule of law and equitable enforcement of legislation play in effecting lasting economic reforms and building democratic institutions, particularly in developing countries like Bangladesh. One has to understand why nations with abundant natural resources have failed to grow wealthy, while resource-poor countries have become rich. History shows that ideas, ideologies, myths, dogmas and prejudices matter and therefore, there is a need to focus on the role of institutional settings in determining character of economic performance.

Variations in development between countries can often be traced to the resilience of their institutional settings. Such institutions are actually the rules of the game and enforcement is very crucial to the effectiveness of both formal and informal rules. These institutions create a powerful incentive system for a society. If institutions are really the rules of the game then organisations like political parties, bureaucracies, companies and trade union are the players. They will have the desire to survive and benefit in a given institutional setting.

We have to see if there is inadequate attention to the problems of equity and distributive justice if we want to arrest and halt increasing lawlessness. Market forces may not deliver the goods to the non-privileged classes, which is the overwhelming majority of the population. Education and health, particularly, are among those areas where profit-maximisation can only play havoc with an already fragile social framework.

The government being an indivisible entity, its developmental and regulatory roles cannot be separated. It is now being widely recognised that without maintaining rule of law and creating conditions of peace no developmental activity can take place in either the public or private sector.

In Bangladesh we are witnessing the emergence of organised crime of dangerous proportions and a growth of armed militant groups as rival powers to that of the State. Added to such crimes are corruption, loan defaults, non-payment of utility dues, a sizable black economy etc. A natural outcome of this dual crisis of the economy and the deviation from the rule of law is erosion of many of the institutions of the state through which effective governance is exercised. There is an imperative need to conduct in-depth studies on the causal relationship between these two developments which are taking place more or less simultaneously.

The interconnection between lawlessness and pace and pattern of economic development has found place in economic theories though not very explicitly. Classical and neo-classical economists have referred to political instability as a variable affecting economic development. Others have placed emphasis on the importance of human attitudes, social institutions and political power structures. Notwithstanding the complexity of the process of growth, law and order situation has always been a critical factor in determining the course of economic development. In Bangladesh, the economic imbalance and lawlessness are taking place simultaneously. Therefore, the economic impact of lawlessness deserves very serious attention.

The collection of data regarding the exact impact of various types of crimes on economic performance is a mind-boggling task. The quantum and magnitude of capital flight in the wake of uncertainties of law and order are difficult to ascertain. The size of our black economy is anybody's guess. There would be claims and counter-claims. One has to depend on independent sources.

The remedies have to point towards a viable system of criminal justice administration commensurate with the dictates of economic development. The subject assumes importance owing to the fact that the preservation of a smooth law and order condition is a prerequisite for achieving the goal of sustainable economic development.

Muhammad Nurul Huda is a former Secretary and IGP.