Neoliberal Pregnancy and Zero-Sum Elitism in the Arab World (Part 3)

This is the third and next to last entry in a series of posts on the emergence and consolidation of a new nexus of power between the political and economic elite across much of the Arab world (See Part 1, Part 2). This development extends far beyond the Middle East, influenced for the most part by the overlap of interests between global neoliberal economic policies/institutions and various manifestations of local power structures (primarily political and economic).[1] For instance, both international financial institutions and local elites after the 1980s were interested in having markets play a bigger role alongside the state—irrespective of the “democracy” question which was/is usually subordinated to market development and openings, among other political considerations (locally and internationally). The main issue/conflict in extending the role of the market is internal to the concerned regimes: how to privilege the market, or wealth, without disrupting/undermining political power? This is tricky business for authoritarian regimes in the absence of the instruments of hegemony in late developing countries—in early developers, a host of factors (which I might discuss elsewhere) made the transition of the locus of power from states to markets a smoother affair. Hegemony (domination by consent), is not within reach in most developing countries because of low levels of legitimacy associated with inefficient, exploitative, and/or repressive rule. Hence, it is likely that this transition in developing countries today will never be as complete as it was among early developers, a prospect that is not all negative because it potentially carries within it the seeds of a transition to a third or fourth better alternative (to markets and statism). Nonetheless, the direction in which most of these developing political economies are headed is unmistakable, and the new emergent business actors are carrying the (every) day (affairs), even if regime strongmen have the final say regarding high policy matters. These “business” actors can be traditional private sector entrepreneurs, state officials who went into business, or para-officials (relatives of powerful state officials whose allegiance is with the state), giving an organic quality to the new nexus of power one witnesses in the region.

In the narrow sense, business influence amounted to an “elite capture” of policy-making that further polarized society and marginalized various groups—and sent many workers to the swelling informal sector. In fact, reading Asef Bayat’s Life as Politics one gets the other side of the coin/story: how the marginalized and those outside the market and the formal sectors are dealing with this environment and carving their own spaces through what Bayat aptly calls “quiet encroachment.” His account is significant in that it debunks the available explanatory canons that focus on the “culture of poverty,” “survival strategies,” “urban social movements,” and “everyday resistance,” as ones that (over)emphasize reaction, helplessness, and passivity at the expense of various forms of agency and active presence, or that do not sufficiently take into account the constraints of the context in which the marginalized operate. Bayat’s book, particularly the first five chapters, is a must read for those working on the economic sociology or political economy of developing countries, with a focus on the “Muslim World”—I can’t believe I used this phrase . . . a topic for another post.

In the broader historical sense, this new nexus of power is forging a new social order that rests on an inordinate amount of contradictions held together by a combination of strategic alliances (locally and internationally), repression, a return to communalism, and, well, temporary helplessness/encroachment—“temporary” because shit is likely to begin exploding in spurts here and there in the coming decade, and some of it WILL be televised or youtubed/facebooked/etc. (note that this kind of shit will also begin happening in less tragic ways in the—ياي—First World. So, you’re not alone).

Researching The New Business Breed

So, who are these new business people and where does their connection to power come from? Whether on the streets, in academia, or in the news, we hear murmurs and “theories” about a new (exploitative) economic class or group that has emerged in the last three decades in “liberalizing” economies in the Middle East, the former Soviet Bloc, and beyond. Some call it the new upper class or the new bourgeoisie, others the rentier class or cabal/network, and yet others call it the new Mafia, presumably because it is viewed as economic usurpers with political muscle derived from their proximity to, if not synonymy with, power.

Speaking of this group or of its conquests no longer evokes the shocks and head-swings that met such accounts towards the end of the last millennium. This is not a sign of validation. Rather, it is a sign of realist acceptance that, even in currently or formerly socialist and populist republics, the new political-economic reality is dominated by such businessmen (and women) and the political powers they represent, collaborate with, and/or upkeep. However, in contrast to the power and importance attributed to this social category, rarely do we see it systematically unpacked—sociologically, politically, and historically—in order to determine its origins and characteristics, its dreams and aspirations, its relations and loyalties, influence and constraints, and, finally, its potential political and developmental weight, and impact, on the polities it inhabits. I will close this post with a brief note on avenues of research that might yield some good research beginnings. [If readers are researching this phenomenon in different parts of the Middle East and the developing world, please chime in in the comments section or send your own post to post@jadaliyya.com].

There are different ways and methods to approach studying the new nexus of power in Arab countries, primarily in non-oil rich states, though there are strong similarities on this count across the board. We can easily identify empirical, historical, and conceptual avenues of research. As this is a work-in-progress, it is by nature not exhaustive, and what I lay out below is a starting point that might yield it’s own research trajectories based on the cases selected.

One can do empirical field research in the following areas:

• New institutional sites that represent this growing set of partnerships (e.g., Parliaments, Business Associations, “Civil Society” Associations, even charities!).

• Direct interviews with the individuals concerned (invaluable, but requires a special skill of sifting through form and content of comments to elucidate the genuine, the expressive, the rhetorical, and the codes.

• Promotional efforts of NGOs, IFIs, and sponsor countries that tap into this growing alliance by trying to enhance its chances in the economic or social market. These efforts are not always explicit nor necessarily intend to strengthen these alliances, but the outcome is usually similar, with some variation regarding country, economic sector, and time period.

• Social amalgamation: upward social mobility and recreation of self-image can occur in a variety of ways, from re-writing family histories to discarding them, and from inter-marriages to delinking from extended families. Such practices are worthy of careful investigation as they can yield much insight. One must take care, though, not to exaggerate certain observations beyond what aggregate analysis merits.

Analytical work is also needed to probe the close relations between the state and business actors, which is based on a number of factors. As these factors change, so does the form and nature of the relationship/partnership/alliance. The most prominent factors include:

[The starting point here goes back to the 1970s/1980s when state-run economies began to experience trouble]

• The state’s need at the time, based on the (depth of) economic crisis and/or the need for entrepreneurship: not all states were in the same need for private capital/initiative/entrepreneurship or legitimation. Here, mutual vulnerability issues between the state and the business community can be detrimental to development (i.e., vulnerability issues between state and business, where state officials lack entrepreneurship and business actors lack security/guarantees, are dangerous because compromises between two weak parties tend to undermine productivity and various forms of public welfare). Similarly, not all economic crises push the limits of the state in terms of concessions and compromises. We must avoid a rigid cookie-cutter approach to understanding these trajectories, but not at the expense of seeing the forest.

• Class changes within the state elite: i.e., the extent to which the state elite become embourgeoisified (yes it’s a word, but you can say it only if your career forces you to do so and if you’re getting paid for it somehow. Anyway, I took it from Hinnebusch, so argue with him) in relation to the rest of society. The motives can range from sheer self-interest to a combination/bundle of motives that include a desire to acquire social legitimacy that hitherto was not accorded to certain groups—who now are in power.

• Source of patronage and capital accumulation/revenue: initially, it is the public sector, which explains the initial informal relations and networks that develop between state officials and businesspeople using the public sector as the cash cow or the golden goose. Here the direction/nature of investments are also molded by public sector priorities or their vestiges. But with time, the public sector dries up. At that point, the structural starting points for the independence of private capital become at hand. However, the sources and direction of new investments are not always clear. New private banks certainly play a role in filling part of the gap, but international organizations and expatriate savings are important too. There are other sources as well.

• What alternatives exist for business actors (locally or globally)? If business actors do not want to partner with the state, do they have alternative for developing their business beyond a certain threshold? This factor speaks to variations across somewhat similar political economies, like Syria and Egypt, which are usually grouped together depending on the fine/thick print of research agendas.

• The growing structural power of capital (i.e., when big capital becomes meaningful/decisive even in the absence of close relations with the political elite, a situation that reflects the increasing dependence of the state on big capital, hence big capitalists are less/neither monitored or harassed). The more business actors can accomplish without state patronage, protection, facilitation, the more they can be independent and, depending on how political economies develop, this can lead to even more mutual interests between power and capital—because capital becomes power. This phrase “structural power of capital” admittedly is amenable to serious abuse and ideological steering. So, just like “culture,” it must be used with a lot of care. (I may be guilty of violating this advice in the absence of an opportunity to expand on its usage/relevance to the argument here).

• The fear of state and business of the disruption of the social order: if all else fails, state and business can always depend on how they (both sets of actors) are concerned about the collapse of the entire social order (nearly all state officials and at least most businesspeople are concerned because they are not likely to do as well under new arrangements—an understatement, really). This is a last resort that keeps the “peace” between these parties. And it is not to be taken lightly as time goes by and higher stakes are at hand. Opportunities for defection/divergence will manifest themselves in ways that involve intra-alliance dynamics because the amalgamation is moving from economic to political to social: i.e., we will not be speaking of state and business as two completely separate corporate interests for too long in some developing countries. Welcome to governance in capitalist times. [check out John Dryzek’s work to get a sense of what the future holds for democratizers in capitalist times].

Finally, historical analysis is much needed to contextualize relations and developments. Several areas are important to research, starting with the origins of private wealth creation beyond the parameters of the state—though the two overlap, and when they do, researchers ought to consider those instances as part of the “private” category as such sources of income seldom remain within the confines of the state in due time. More structurally, research efforts here cannot bypass what I have been discussing in earlier parts, namely, the history of the unraveling of state-centered economies, including its causes, dynamics, and consequences. This historical research overlaps with the analytical part above (not to say that historical research is not analytical]: the process of unraveling of state economies has, in most cases, gradually contributed to the growing structural power of capital, making it very difficult for the regime to ensure its survival without nurturing the process of capital accumulation: increasingly, the interests of the regime, the entire political elite, and the top business actors are coalescing under the rubric of capital accumulation. Relatively speaking, this coincidence (?) of interests limits the range of maneuvering options available to the regime. Conversely, for the time being, business actors are policy-takers and therefore can only benefit from the regime’s increasing interest in capital accumulation. Ultimately, this is what I refer to as the new nexus of power between the political and economic elite.

Below are some areas that require research over time. The unraveling of state-centered economies represents, or is concomitant with, several important shifts that often have their own trajectories, and each merit our attention/research:

• A shift from authoritarianism of the left to the authoritarianism of the right over the past 4 or 5 decades (depending on the case) in the context of a larger shift from global bi-polarity to uni-polarity.

•  A shift from populism or diluted versions thereof to a new elitism that crept up globally and locally beginning in the mid- to late-1970s

• A shift from industry-based economies to an information(-technology) based economies world-wide, and, particularly to service and tourism-based economies in many developing countries—involving the export of labor from the "Global South."

The local reverberations of these shifts domestically are associated with the unraveling of state-centered economies (notwithstanding specific case-related causes for the moment). Here are specific research areas to consider under that banner:

• States changed alliances from labor to capital: the challenge was to prevent new wealth from being transformed into political power, as discussed above.

• Bringing business back to the political-economic equation however which way was conducive to their (business) disempowerment as a collectivity.

• Creation of new successive forms of state-business relations: from individual-based relations to networks-based relations and finally to associations-based relations. A fourth stage involves the dominance of large conglomerates/corporations that do away with other forms of representation.

• State elites going into business: this occurs nearly everywhere in developing countries (and beyond--but under different circumstances) for at least two reasons—both of which ended up molding their long-term preferences: 1) Personal gain; and, 2) to ensure the dominance of the new private sector by friendly economic players and thus reducing the disruptive potential of the unraveling of state-centered economies.

In the fourth an final post, I will be discussing some preliminary implications of this new nexus of power for such societies, with implications for cases I am most familiar, including Syria and Egypt. The emphasis will be on the apparent zero-sum outcome of the current elitism (i.e., how the current developmental equation is unraveling in a way whereby advances by the political and economic elite is occurring largely at the expense of the rest of society.