Review of Egypt’s Occupation: Colonial Economism and the Crises of Capitalism

Review of Egypt’s Occupation: Colonial Economism and the Crises of Capitalism

Review of Egypt’s Occupation: Colonial Economism and the Crises of Capitalism

By : Rebecca E. Karl

Aaron G. Jakes, Egypt’s Occupation: Colonial Economism and the Crises of Capitalism (Stanford, CA: Stanford University Press, 2020).

In 1901, Liang Qichao, a prominent Chinese journalist, wrote an essay entitled “The New Rules for Destroying Countries” (“Mieguo xinfan lun”). In it, he presented what he had come to understand were the patterns of nineteenth-century Euro-American colonial-imperialist world domination into which China was being drawn. Egypt is the first among five examples he cited of a people and a state crushed by these “new rules.” No simple military invasion or despoiling occupation, the new rules proceeded under a subtler logic. According to Liang, English financial advisers had inserted themselves into the Egyptian court, inducing the state to indebt itself so completely that international bankers could take over from within. This ingenious mode of domination constituted what Liang called “formless dismembering,” hardly detectable as it proceeds, and announcing itself suddenly once it has taken place. Without quite articulating it, Liang was theorizing the advent of finance capitalism in relation to colonialism, with Egypt at its core.

Separately, V. I. Lenin was writing his revolutionary treatise “What is to be Done” (“Shto delats”). In a pointed condemnation of what he calls “economism,” Lenin insisted that only an intertwined political and economic analysis could redirect the spontaneous Russian workers’ struggle hitherto limited to economic concerns. Economism was the error of designating the proletariat as merely a producing class, whose woes could be ameliorated through economic remediation alone. Lenin’s proposition was more radical: that the economic could not be sundered from the political struggle, and that the proletariat was the class that embodied this abstract and concrete historical principle.

Aaron Jakes’s Egypt’s Occupation takes up the relation between imperialist domination through the financialization of capitalism in the colonies and economism as a one-sided analytic mode in his comprehensive account of the British occupation of Egypt from 1882 to 1914. In a clarifying introduction, Jakes places the occupation in the context of intellectual debates over the nature of the capitalist crises of the mid-to-late nineteenth century. The crises, produced in the metropole, were analytically and practically worked out by yoking colonies as productive places and colonials as laboring and culturally marked/racially othered bodies to metropolitan concerns over empire. The yoking required the sundering of economic from political analysis, making Egypt a “laboratory in which to settle those greater questions of the Empire” (25). As Jakes asserts, the debates cannot be read as just so much self-serving justification because they marked out a new direction for global finance capitalism and colonial governance.

Egyptians were not passive recipients of British intellect. Rather, as the British colonial government became more caught up in economism as the only measure of success, Egyptians became more vocal about the politics and lived experiences of occupation. In recasting the static dynamic of nationalism as a rigid reaction to financial distress, Jakes breathes new life into emergent nationalist thinking as a sustained complex effort to understand and respond to conditions of life that could not be neatly divided into economic and noneconomic realms. As with all nationalisms of that era (and after), the conviction that native political control could solve capitalist crises was wrong, as, already by the 1920s, Egypt had been drawn “into a set of dependencies that had long since exceeded the particular institutions, colonial or otherwise, that first set them in motion” (30). This outcome does not vitiate the preceding decades of recognition and struggle. 

Jakes’s theoretical coordinates—Benedict Anderson, Timothy Mitchell, and Andrew Sartori, among others—are familiar. While he builds on their insights, his approach is critical of the idea that nationalism is always already merely derivative of colonial thinking. Instead, Jakes brings out the creativity of Egyptian thinkers and he shows that, as they engaged with colonial thought, they remained relentlessly materialist in their concern with the everyday problems of livelihood and survival.

The first three chapters chart the occupation’s institutional and dis- cursive arrangements from the 1840s through the early twentieth century. As Jakes demonstrates, the original goal of British colonial governance was to enhance the productivity of smallholder farmers by linking their forced turn to cotton-growing for export to the global market and capital investment/ speculation. This original infrastructural aim was underpinned by a discursive justification that the British were ridding Egypt of age-old (oriental) despotism in favor of establishing the foundations for liberal governance, the latter securing and facilitating the financial extraction to which liberalism is inevitably hitched. The British restructuring of rural space and agrarian social relations, operating in concert with Egyptian elite initiatives, severely constrained the room for maneuver of the Egyptian peasantry, who had long used the porousness of the relations among land, property, labor, and power to gain whatever advantages they could. Peasants were now locked firmly in place, and when capitalist crisis hit, their indebtedness left them relatively defenseless. By 1905, superficial prosperity hid roiling discontent with economic development but also with colonial legitimacy.

In chapter 4, Jakes documents how the Egyptian journalist Ahmad Hilmi recognized the British discourse of development as “gilded speech” that created an economistic reality without accounting for the lived complexity of actual Egyptians. As Jakes puts it: “despite the occupation’s command over the means of representation, the shared sentiments and experiences of the Egyptian people were irreducible to the charts and tables that adorned the pages of Cromer’s annual reports” (118). In comparing Egypt’s poverty to the British-produced poverty of Ireland, for example, the economic boom of gushing capital investment was revealed to be a mechanism of wealth accumulation for the few. Not content with noting the gap between rhetoric and reality, Hilmi and others analyzed the colonial infrastructures of finance and credit, of land prices and cotton cultivation, to understand the relation between the flightiness of capital investment and the enduring need for survival. The 1906 Dinshaway incident, when British soldiers and Egyptian peasants engaged in deadly confrontation, was one denouement of this clash. In the aftermath, for the British and British-aligned press, Egyptians were “terrorists,” “fanatics,” a “nation of ingrates” (133); and for increasingly enraged Egyptians, the British were the terrorists, carriers of injustice, domineering and dominating, creators of suffering and fear and poverty wheresoever they roamed.

Yet the nature of the crisis remained confused: was it land? Credit? Market access? Debt? Spontaneous or long-harbored? Jakes’s account makes clear that the multifaceted crisis primarily was linked to the globalized “finance tectonics” of the early twentieth century (146). Egypt’s cotton empire was particularly shaken by the swift move from economic crash to full-blown crisis. If the crisis was financial, and the reins of finance were held in British hands, then clearly Egyptians would need to seize the lead. Eventually the financial crisis had real-world effects: rents rising, wages falling, credit drying up, prices inflating, productivity withering, debt strangling, immiseration spreading throughout the ostensibly prosperous Egyptian peasantry. In strode nationalists, who proposed rural cooperatives as bulwarks against the global market and whose grand ambition was to “devise institutions that would pool the collective capital of the Egyptian public and allow it to grow within the country’s borders” (163). This cooperative autonomy would continue to be based in cotton grown for export.

Movements for self-rule soon followed, with demands for a constitution, British removal, and Egyptian independence. Turmoil in the Ottoman Empire, namely the Young Turk Revolution, lent impetus to the Egyptian unrest. For the British, the unrest was explained through an economistic logic. And yet mass politics was on the horizon. The years 1908–10 present a conjunctural moment, in Jakes’s telling, when economic, political, intellectual, and social roiling came to a popular head. The formation of Egypt’s many political parties took account of the economic and political entanglements. Urban workers surged into political activity; strikes and unions multiplied. These politics tended almost universally toward nationalist arguments for sovereignty, eschewing countervailing British arguments that only colonial governance could cope with economic distress. By 1912–14, the defaults of Egyptian smallholders belied the British claim. That British economism could and would not bring prosperity – indeed, that it had enhanced inequality and crippled the smallholder peasantry—yielded a racialized logic about Egyptian “lack” in British commentary and an anti-British political logic among Egyptians. All Egyptians regardless of class were racially marked by Britain, rendering the nationalist argument about autonomy very plausible. New bards of anti-colonial national unity, such as ‘Abd al-Rahman al-Rafi‘i, subjected economism to strict critique, while relocating freedom from the liberal market and waged labor to the emergence of the independent nation. When the war’s end exposed the scope and rapaciousness of British requisitions and extractions from Egypt, the conditions for the revolutionary movement of 1919 were already well prepared.

In its theoretical and empirical exposition of the relationship between colonial governance and economism, this ambitious book’s reach goes far beyond Middle East studies. It is about the modern global structures of domination and subordination wrought in and through the instantiation of capitalist relations across the world in the nineteenth and twentieth centuries. This history is a past, but it has not passed. Those structures—remade as they continuously have been over the last century—continue to shape our world, albeit now with China joining in the global movement toward “formless dismembering” and with economism wedded to culturalism in as potently poisonous a discourse as ever. In mining Egypt’s past, Jakes’s book contributes hugely to this critique of our present. 


Review of Cleft Capitalism: The Social Origins of Failed Market Making in Egypt

Amr Adly, Cleft Capitalism: The Social Origins of Failed Market Making in Egypt (California: Stanford University Press, 2020).

Cleft Capitalism responds to one of the most ancient questions in scholarship on international political economy: Why does market-based development often fail to translate into actual improvements in the standards of living of the developing population?

Available answers, Amr Adly notes, are mostly marred with ideological essentialism. Critical scholarship cites reasons like the uneven distribution of developmental rewards, the parasitic accumulation of wealth, the decline of the state role as a risk-encouraging safety-net, and the socially divisive nature of capitalism itself. Classical economists, on the other hand, argue relentlessly that the problem resides in the state’s reluctance to go far enough and endure the short-term perils of its resignation from welfare duties. While each side is capable of verifying its theorisation empirically, the fact that both are often correct begs the question of variance: Why does market-based development work in some societies and fail in others? Reflecting on contemporary Egypt, Cleft Capitalism examines this pressing question.

Egypt was recognized by the World Bank as the “top reformer” of economic development in 2006/2007. Shortly after, strikes and labor riots reached their peak in al-Mahalla al-KubraEgypt’s main industrial city. This was the beginning of a series of contentious events that eventually overthrew the aggressively liberalizing government and the head of the state in early 2011. The economically inspired political revolution raised “bread” and “social equity” as its main slogans, underlining the immense failure of the World Bank and its economic indicators to understand the Egyptians’ lived experience of their economy. The palpable tension between the Bretton Woods institutions’ view of the Egyptian economy and that of the Egyptian citizens themselves invited political economists to question “what went wrong?” 

The economically-inspired political revolution raised 'bread' and 'social equity' as its main slogans, underlining the immense failure of the World Bank and its economic indicators to understand the Egyptians’ lived experience of their economy.

Scholarly responses to this question mirrored the traditional left-right divide. On the left, critical political economists like Samer Soliman, Adam Hanieh, and Roberto Rucco emphasized the structural confinement of economic returns to a small group of crony business elite with connections to the West and the gulf, the cross-national diffusion of market resources and transactions, and the systematic crackdown on the public sector. On the other hand, (neo)-classical institutionalists, like the former Director of the World Bank's Egypt Department Khalid Ikram blamed not the neoliberal development policies themselves but their corrupt implementation. Between this and that, cases like Chile, Brazil, Zambia, and Jordan, in which the combination of neoliberal economics and corrupt authoritarian politics did not impede the economic improvement of living standards, stand as immanent challenges. The contradiction between these cases on one hand and cases like Egypt on the other suggests an interrogation that exceeds variable-analysis, to examine the causal mechanism by which corrupt political cultures impede the trickledown of development returns.

Cleft Capitalism pursues this much-needed examination. Following from a theoretical standpoint that rejects the essentialist answers of both contending sides, Adly approaches the issue sociologically. He begins from the premise that economic systems do not operate in vacuum, but are rather constituted through and in reference to their embedded social and cultural relations. Considering this premise makes the question of what market-based development does to living standards a question of the social and cultural dynamics by which the market operates and hence distributes the expanding resources. Methodologically, this approach decenters the state to rather focus on social institutions that constitute the life-worlds within which both the state and the market operate.

The book divides these institutions into three categories: the formal, the informal, and the semiformal. Formal institutions encompass “top-down” legislative, executive, and judicial orders that frame the contours of economic interactions like taxes, tariffs, regulations, and monetary and fiscal policies. Informal institutions encompass the norms, traditions, customs, and standard codes of procedure by which actors constitute the culture of market interaction “bottom-up.” Semiformal institutions encompass the intersection of these two actors. It frames the contours of interactions which appear to be governed by formal regulations but are, in practice, radically structured by pragmatic “bottom-up” dynamics and social relations. These semiformal institutions are highly visible in street vendors, informal services, black currency markets, and other markets that are formally absent, sometimes even illegal, but are practically operating under the eyes of the state and contributing significantly to the economy and its formal and informal codes of interaction.   

Addressing formal, informal, and semiformal social institutions, Cleft Capitalism surveys the developments and transformations in the Egyptian economy since Anwar al-Sadat’s Infitah (open-door policy) in the mid-70s through the revolution in 2011. It contends that it is hardly possible to understand the ways in which the market responded to state policies of Infitah without attending to the social interactions it transpired by both actors who sought to utilise it and actors who sought to resist it. The same applies to the more aggressive neoliberal policies implemented in Mubarak’s later years (late 90s and early 2000s). In all these cases, the policies did not operate in vacuum, but rather through and within the spaces and limits set by social players. These include not only elite business, political, and security actors, but also entrepreneurs, petty venture capitalists, petty services providers, junior bureaucrats and state agents, and the formal and informal labor force. Contrary to the common conception of these non-elite players as counter forces to elite forces, Adly transforms this dichotomy to rather envision both forces as mutually constitutive of the limits and spaces in which the other operates. In such conception, markets are outcomes of the complex relationship between “top-down” policy, “bottom-up” culture, and the standard codes of procedure negotiated in the space “in-between.”

Analysing these three dynamics, Cleft Capitalism classifies the Egyptian economy into three distinct market systems, each governed by a specific crystallisation of policy, culture, and standard codes of procedure. Those are the baladi [lower-class local] market of informal service providers, the dandy market of entrepreneurs and middle-class professionals, and the crony market of real estate, raw material, and other capital-intensive industries that rely more on rent and price escalation than actual production. The crony market has the highest value. But due to its non-productive and capitalist-intensive nature, it distributes this value on a very small class of crony capitalists. The baladi market has the least barriers to entry, but is limited to petty profits. In between those two lies a dandy market that is neither sufficiently productive nor sufficiently open, but rather a “feel good” space where a class that is too privileged to join the baladi market and not privileged enough to aim for penetrating the tightly controlled crony market pretentiously “act as” businessmen. This “cleft” view of Egyptian capitalism makes sense of the variance in the lived experience of Egypt’s economic development and explains why it failed to affect significant improvement in the lives of the majority of the Egyptian population.

This classification is indeed culturally and historically specific. The book findings, therefore, are hardly generalizable as explanations of what goes wrong with market-based developments writ large. However, the common histories of postcolonial states in the Global South render it possible to draw conclusions from the study of one context that applies on others, as the book underlines in reference to comparative cases in Latin America, South Asia, and East Asia. More importantly, the book offers a sociological approach to institutionalism that could and no doubt should be utilized in a variety of other contexts. Cleft Capitalism, therefore, is more than an exemplary analysis of the situation of political economy in Egypt. It is also a significant contribution to wider debates on the possibilities and limits of market-based development in the Global South.

For the latter potential to be further exploited, however, Adly could have engaged more explicitly with the particular commonalities that hold postcolonial states of the Global South together as an analytic category. These include the outflow of financial resources to the Global North, the significant economic activity of security and military institutions, the reliance on the state as the main financial provider, the structural dependency on former colonisers, and the association of power and resources to connections with the west. But it also includes dynamics of resistance, initially germinating to push back against the extractive colonial legal order but later normalized in resistance to the rent-seeking activities of the postcolonial state. On top of these is the supremacy of social customs over legal regulations, or more frankly not taking the law seriously on its face-value. The most common form of this is the normalisation of black markets, street vendors, and informal and illegal economies. Bringing these comparative aspects to the fore would have enhanced the book’s appeal to a wider audience.

As it stands, however, the book is an essential read to students, researchers, and policy-makers interested in the political economy of Egypt, the limits and potentials of structural adjustment policies, and the insights of economic sociology to the study of political economy. It is also an important contribution to several theoretical debates on international political economy, including institutionalism, postcolonial dependency, and neoclassical “trickledown.” But its main contribution, I would argue, is its transformation of the intransigent “left-right” ideological deadlock that characterizes the scholarship on international political economy.