Egypt’s Withering Paternalism and the Future of Its Political Economy

The 25 January revolution can be considered the final showdown of the Nasserist socio-political order, which has been slowly decaying since the 1967 defeat. Nasserism was based on a paternalistic authoritarian state where political rights were sacrificed for social and economic ones.

The collapse of the remnants of the Nasserist political apparatus implies the absence of the institutional framework through which the social conflict was traditionally managed in Egypt for over six decades. This poses the greatest challenge to the current ruling party, which has to find a new ruling order — one that differs from the Nasserist system of Gamal Abdel Nasser and his military successors.

The Six-Day War of 1967 leveled a lethal blow to the whole Nasserist order, setting it on a long-declining trajectory. Under Anwar Sadat, attempts were made to generate economic growth through partial economic liberalization while trying to appease the traditional Nasserist constituencies made up of state employees, public-sector workers, officers and students. Yet the January 1977 riots revealed the fragility of Sadat’s regime.

Under Mubarak, the authoritarian state could no longer manage its fiscal crisis as oil-related rent plummeted in the second half of the 1980s. In 1990 and 1991, the regime adopted the Structural Adjustment Program under the auspices of the IMF, the World Bank, USAID, and later the EU. Gradual yet consistent trade and financial liberalization, deregulation, and privatization took place throughout the 1990s. The pace was accelerated and the scope widened since 2004 under former Prime Minister Ahmed Nazif’s cabinet.

As the state was no longer capable of delivering the side-payments necessary for the appeasement of the traditional Nasserist constituencies, the authoritarian regime could only survive through more oppression, yet broad social bases no longer supported authoritarianism. Political and social protests started to challenge the security apparatus and to claim parts of the public sphere since 2004. Political protest remained confined to intellectuals and middle-class activists whereas socio-economic protest mobilized the sum of millions of workers on the factory-level calling for higher wages and better working conditions.

State paternalism was crippled by the state fiscal calamity and the wider socio-economic crisis. New social strata and generations had the will and means to challenge authoritarianism while corruption, the deterioration of public services and the inability to increase state revenue all combined to accelerate the regime’s breakdown. Whereas political protest aimed at the toppling of Mubarak, socio-economic protest operated within the classical paternalistic moral economy, which demanded the state to deliver. However, both forms of protest were merged in April 2008 during the riots in Mahalla, which was, to some extent, the precursor of the January uprising. In brief, Mubarak’s regime collapsed under the weight of a severe social crisis that could not be borne by the regime’s ossified authoritarian institutions.

The collapse of the remnants of the Nasserist regime with the toppling of Mubarak in the aftermath of the January revolution mandates a new modus operandi — specifically vis-à-vis socio-economic rights — by the conservative newly-elected Islamists. Unfortunately, there seems to be some kind of a tacit accord between almost all to insulate the future political sphere from potential demands of socio-economic change. The military council, which was solely in charge of managing the transitional process, confined political rights to political parties while denying rights and freedoms to more grassroots organizations such as unions, cooperatives, syndicates, chambers of commerce and industry and student unions. The Muslim Brotherhood has no clear socio-economic vision. Their agenda for state restructuring, the nature of the economic order, and the extent of political freedoms is quite vague. A strong faction within the group is explicitly in favor of further neoliberal reforms blaming the rather weak economic performance under Mubarak on corruption.

Will that suffice to forge a broad social coalition on which the Brotherhood can build its future hegemony? The Brothers’ ideas about state reform are quite technical and apolitical. The group seems not to be prepared to mobilize its popular, electoral, and organizational capital to reinvent the political order in a way that could ease and manage the social crisis. Socio-economic protest has increased since Mubarak’s ouster as economic hardship persists and the police state is no more. This implies that the coming elected parliament and government will be subject to tremendous pressure to deliver side-payments for some time to come.

The current governing bloc has three options to (re)establish a stable and representative political order. The first option is to pursue macroeconomic populist policies to raise wages and deliver services. This will depend on heavy public indebtedness and large deficits. This option is not realistic, as Mubarak himself had been running such populist schemes to overcome the legitimacy and fiscal problems. The coming government will have to be fiscally conservative and to spend from real resources. Otherwise, the chances of overall economic recovery will dwindle.

The second option is even less attainable, namely to resort to state terrorism to oppress demands and reestablish some bureaucratic authoritarian order. Had this option been on the table, the military would have been the most capable of doing so without giving in to political concessions. The third option is to treat the state fiscal crisis through taxation with all the implied political, economic and administrative reform. This would mean igniting class conflict as the state collects from the wealthy in favor of the poor, necessitating the formation of a socio-political coalition in support of the reconstruction of the Egyptian state, and the redistribution of political and economic rights alike.

If the ruling bloc decides to defend the status quo, then this would mean the perpetuation of the socio-economic and political crisis, i.e., instating an illegitimate and unstable, albeit elected, order. Egypt is facing a historic transformation. A democratic and developmental order is demanded for the first time in the country’s modern history. This is a clear break since “development” was historically delivered through a paternalistic authoritarian setting.

The real question that lurks in the horizon, however, is this: which socio-political groups can forge a coalition in support of a democratic developmental order in Egypt?

[This article originally appeared in Egypt Independent.]