Neoliberal Pregnancy and Zero-Sum Elitism in the Arab World (Part 2)

In the first post (here) I introduced the topic of the new Arab elitism, or, more accurately, the emerging nexus of power between the political and economic elite. In the next post (sorry about posting another series) I`ll discuss ways to pursue research on the topic. But below I will start by debunking some anticipated counterclaims regarding this phenomenon, particularly the claim that some on the left assert--ironically.

Another potential critique to consider is that this new nexus of power between the political and economic elite is simply a manifestation of a coincidence of interests. This critique emanates from a perspective that gives too much credence to existing regimes and their policies at the expense of the underlying social shifts that provide the larger context for regime policies. Thus, according to this perspective, whatever we observe in autocratic Arab (or other) regimes becomes a function of regime policy or will.

Finally, the third potential critique comes almost squarely from leftist circles—at least some of them. Namely, that this phenomenon has its roots in the external influence of international financial institutions and their sponsor countries who imposed neoliberal policies on developing countries. It is thus a waste of time to look at local origins. I will give this argument a bit more attention here because it allows us to hone in on some important aspects of this phenomenon.

The Syrian case is quite instructive here. As opposed to a host of developing countries, Syria has had no binding relations with international financial institutions (IFIs henceforth) such as the World Bank and the IMF since 1985. Nonetheless, the homegrown set of economic reforms in Syria since 1986 has been similar to most of those prescribed by IFIs (e.g., trade liberalization, currency devaluation, fiscal reform and austerity, encouraging private business), even if the pace is slower. Moreover, developmental outcomes have been remarkably similar (e.g., high unemployment coupled with a demand for unskilled labor, concentration of wealth, socioeconomic polarization, and growing poverty, dramatic expansion of the informal sector and the shadow/unregulated economy, stringent labor laws, and decline of education). How might we account for such similarities and the decision to adopt IFI prescriptions in a country where the regime prides itself for being insulated from the tentacles of imperialism and the exploitative reach of globalization and its institutions?

Some may assume that this “coincidence” speaks to the sound nature of IFIs’ prescriptions, as they are adopted voluntarily by countries like Syria with no relations to them. However, a closer look at why such policies are adopted in cases like Syria attests not to their problem-solving validity but rather to the fact that the interests of IFIs coincide with the interests of indigenous elites, even of self-proclaimed socialists. 

What Syria and the IMF (and sponsor governments) Have in Common? “Development” . . .  of Capitalist Relations?

Discussed in the literature as a “laboratory case,” Syria is indeed instructive, even if the “laboratory” itself is not completely isolated from global trends. Syria remains relatively more impervious to such trends than, for instance, either Egypt or Jordan, not least regarding relations with IFIs. What, then, prompted the quasi-socialist Syrian regime to emulate reform conditionalities imposed on Egypt by global capitalist institutions? 

My provisional answer was discussed above, namely, that local and global elites share similar preferences regarding choices of reform strategies. However, there remains a variation across local elites as to the timing, scope, and pace of reforms. Egypt’s reform, for instance, was initiated earlier than that of Syria and, by contrast, ultimately included an official IMF package, with conditionalities (not always official) and other trappings. Egypt has long ago allowed for private banks to operate, established a stock market of sorts, and engaged in privatization of state owned enterprises, all of which were unheard of in Syria until 2004/2005 (precluding on paper). Such variations, so far, have not produced vastly dissimilar developmental consequences.

The source of whatever differences may exist in terms of developmental outcomes is governed by positionality and resource endowments: local elites are simply differentially positioned vis-à-vis their own polities and the composition of state revenues naturally differ. Local decision-makers must therefore approach the formulation and implementation of liberalization processes accordingly so as to preserve their political power. But all roads lead to Rome, it seems. A more structural factor is at work, one that explains similar outcomes despite differing starting points and contexts. 

I’ll provide a preface here. Alongside the narrative of unraveling of state-centered economies, we have been witnessing the unfolding of a new stage, not in “development,” but in the development of capitalist relations within peripheral countries such as Egypt and Syria, a stage where a new elite (call them what you will) is coalescing from the remains of the old bourgeoisie, the new bourgeoisie/”entrepreneurs,” and the state bourgeoisie. We are concomitantly witnessing the transfer of assets not from the state back to society (empty/depoliticized categories in more than one way) but from the control of groups in their official public capacity to the same groups and their networks in their private capacity as citizens; i.e., the form of ownership is undergoing change, but the social content (social carriers) remains the same, though more consolidated in terms of political economic preferences. We can also observe an order of unfettered capital accumulation that is re-subordinating state and community to the preferences of its (capitalist) social carriers and their structural (if not official) links to global capitalist relations. After a period of state capitalism building in the mid-twentieth century, compelled by post-colonial social structural and political realities, capitalist development resumes with vigor, but now with a relatively more educated and skilled labor force capable of being turned into consumers and laborers in support of local and global capitalist relations.

The requirements of power and markets globally are mirrored locally: in both cases, the disempowerment of masses/constituents through the use of various mechanisms and technologies of power is a constitutive factor. The intervention of IFIs may catalyze the process of disempowerment, but does not necessarily cause it: broader impersonal agents such as market relations in an increasingly globalized world are hard at work, regardless. In sum, one may observe that the development of global capitalism coincides with the development of state capitalism in peripheral countries (or perhaps its demise and transformation to a yet unknown formula that remains guided by capitalist development).