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Imperialism and Class in the Arab World

Max Ajl is a doctoral student in sociology at Cornell, an editor at Jadaliyya, and a member of the International Jewish Anti-Zionist Network.
Ali Kadri, Arab Development Denied (London: Anthem, 2014), 250 pages, $40, paperback.

Perhaps nowhere does violence collapse the horizon as it does in the Arab world. Imperial wars have demolished the Libyan state and turned Syria into a charnel house. Yemen, the region’s poorest country, was a U.S. drone shooting gallery before Saudi Arabia, the chief regional satrap for the United States, attacked it, sending it spiraling into famine. Iraq shudders under ISIS’s car bombs after decades of wars and sanctions. And Palestine continues to bleed and resist under the weight of Israeli settler-colonialism.

In this climate of imperial violence—in effect, a war on development—few have held their ground. The Gaza Strip suffers under what political economist Sara Roy calls Israeli-induced “de-development.”1 Syria has been set back over half a century, with life expectancy plummeting and a generation of young men lost.2 Why so much violence? The academic mercenaries of counterinsurgency studies fixate on terrorism as a response to material grievance, and Western war as the response.3 Others ascribe the region’s underdevelopment to a mix of institutional inadequacy and democratic deficits, remediable by the application of U.S. power.

Against this tableau, Ali Kadri in Arab Development Denied offers a coruscatingly intelligent account of how the United States has denied Arab development. Through wars, colonialism, and sanctions, it has sought for decades to prevent working-class sovereignty in the region. Kadri at times takes on a polemical tone, but that ought not to mislead. The argument of his book is built on an encyclopedic knowledge of macroeconomic policy mechanisms, the interactions between currency exchanges, open and closed capital accounts, and the role of public and private investment in setting in motion what Gunnar Myrdal called “virtuous circles” of development. And all of this is embedded in a wide-ranging reading of the region’s history, to which Kadri refers with an almost too fluid ease.

Perhaps most central is Kadri’s recuperation of the concept of sovereignty, and the substance with which he infuses it. He understands sovereignty as “the right of working people to determine the conditions of their livelihood,” immediately making clear this sovereignty’s class basis (3). War is the primary solvent of sovereignty: with each imperial encroachment, each state enveloped by the U.S. security umbrella, sovereignty becomes an increasingly desiccated carapace. Furthermore, any political apparatus which challenges U.S. control, “any social platform from which the working class” might, even potentially, “challenge the hold of U.S.-led imperialism” stands to be dismantled (7). Witness the destruction of Libya, the attempted ruin of Syria, and the ongoing U.S. attack on Iran. As Kadri writes, “wars dislocate workers and farmers and remove national resources from even potential political control by national working classes” (7). He makes clear that the destruction of the state and its institutions forecloses even the possibility of development. Subsequent chapters expand on this basic problematic.

The premise is a ravaging and devolutionary dialectic between imperialism and local ruling classes. After the populist experiments of the 1960s and 1970s, Kadri contends, the region bore witness to the “gradual disengagement of national industrial capital from merchant capital,” with the latter slowly becoming “the dominant mode” (16). Capital, moving rapidly into and out of the statistical aggregates called national economies, decomposes productive linkages, leading the “merchant-capital” class, linked to short-term investment, to fuse more fully with “international financial capital” amid the alloying heat of interaction (16).

The problem is therefore not so much that Arab development eludes earnest yet befuddled policymakers. Instead, they themselves “reshape development as an elusive goal” (16). Furthermore, assets leak from pluggable institutional and structural holes, and capital flows out of national accounts. Meanwhile, the “specter of war” constantly “justifies the rise of the class in power and the security apparatus that sustains Arab regimes,” leading to various forms of social containment and stabilization in lieu of long-term productive investment (30).

This is not due to lack of knowledge about the needed policy remedies. Kadri reminds us that the Arab nationalist “populist regimes controlled capital accounts and tailored interest and exchange rates to equilibrate saving and investment while protecting the basic consumption bundle, which was part and parcel of national security” (45). Prices were set to keep accumulation local and prevent knowledge outflows. The result was that until 1977, real per capita income was equivalent to that in the East Asian economies, exemplars of capitalist development.

Since then, with sovereignty seeping from the region and social resources increasingly diverted to cladding countries for war with Israel or each other, pro-cyclical policies—neoliberalism—set the region on its current course. On the one hand, oil revenues have partially masked this process. On the other, oil was the major reason for the non-stop wars that plague the region, with “the business cycle of the [Arab world] exemplify[ing] a case of an ‘imperialistically determined cycle’ or one mainly driven by outside pressures” (47). Amid the destructive and disassembling effects of war—and one should add, merciless sectarian propaganda from the Gulf Cooperation Council—the Arab working classes started to split along the seams of sect. Furthermore, as Kadri contends, it was not the policies themselves that ran aground. “The transgressions of the Arab socialist period,” he writes, were not at all the “Left macro policies,” but were in fact those of the “class in charge of development,” as the “Arab ruling classes employed the state as a medium for private accumulation.” In turn, “the share of the state bourgeoisie from total wealth rose” (175). Eventually, this led to the robbery called privatization.

War also provided another mechanism for the gradual disembedding of capital from the development of national productive capacity. The result was an increasing element of unknowability: whereas private capital could reliably follow state investments during the period of planned economies, war now foreshortens the planning horizon: “There is not much of a future to plan for when the state may abruptly collapse,” Kadri notes, shifting investors’ calculations and making short-term commercial or service-sector investments more attractive (65–66).

Kadri then gives an excellent exposition of how internal import-substitution industrialization (ISI) peters out, as part of his discussion of the planning period. ISI policies included multiple interest and exchange rates to ensure adequate savings and investment, and their corollary, controlled capital outflows, with bonds floated in order to expand the money supply and finance investment. Under neoliberalism, these capital accounts were opened, and the myriad exchange and interest rates collapsed into one. The currency floated internationally. Oil-poor states often faced balance-of-payments problems as their accounts hit empty, while the interest rate had to rise to prevent capital outflows. Circularly, this process led to delays in investments, and states could not issue money as their receipts of foreign exchange shrank, or were kept in reserves to protect the exchange rate. Finally, in “low-oil-capacity states, the money space opened up as a result of dwindling national currency was filled by the dollar, and implicit or explicit dollarization gradually overtook the money markets” (54).

There does, however, seem to be a tension between the argument that the internal business cycle was subordinated to imperial control, and Kadri’s later contention that internal policies produced their own blockages and contradictions. This may be more an effect of Kadri’s exposition than of his analysis. Although his analytical unit is implicitly the world-system, with the “Arab world” embedded in imperial geopolitics, at times it figures only vaguely his analysis. One must know it is there in order to see it. He notes that within the core itself, external military war was also internal class war, with the militarization of U.S. industry leading to the “partition of value in favor of U.S.-led capital as it imposes austerity measures on the central working classes” (91). But the underdevelopment of the Arab world—that is, the sovereignty deficit of the Arab working classes—is for Kadri “an outcome of the necessities of U.S.-led imperialism,” with “Arab oil and Arab local wars” being fundamental “requisites of capital [which] fall within the purview” of U.S. power (218). Here the keystone was “the Israeli factor alone…[which] engrains a state of defeat,” and which helped to shift the balance of power, after which counter-revolution began to slowly triumph regionally (212).

What would have happened in the absence of Israeli military victory, Saudi counterinsurgency in Yemen, or the Omani-British blitzkrieg of the revolution in Dhofar, is unknown and unknowable. But the blockages Kadri alludes to in the oil-poor states were not simply those of accounts hitting mathematical zero, but of social forces losing the ability to further wrest capital from the rich and invest in local capacity. Current account deficits are linked to the limits of state extractive capacity, especially from the middle and upper classes. They are not natural processes. They are political, linked to the balance of social power, a balance that is never simply national but regional and international.

Herein lies one of my two discomforts with the book. Kadri needs to historicize more, and to be more didactic. For as he knows but does not quite say, the ISI policies and their denouement were embedded in a broader process of social change, a global revolution, including the space for anti-systemic struggle that the USSR opened up.

In turn, Kadri urges the rehearsal of exactly those macroeconomic policies that propelled the Arab world in the 1960s and ’70s. There need to be, he argues, “modes of stemming resource flight, recirculating value nationally, revalorizing labor and redistributing value through social policies” (69). Crucially, this means, before anything else, land reform, and the renationalization of assets “previously stolen via the consortium of merchant and repressive state” (69). For demand to play its role in productive circles, people must be given the means to make demand. Furthermore, this means “multilayered price engineering” to rejigger interest and exchange rate policies to lock in “the resources of the region,” including both people and capital (201). In addition to land reform, this entails setting “guarantees for agricultural output financing industry and agriculture at concessional rates, and integrating agriculture via increased investment in the economy” (201).

Above all, to accomplish this means locating the appropriate plane of struggle. Kadri asserts the centrality of anti-imperialism, noting, in a formulation sure to irk the myriad useful idiots who view imperialist-equipped right-wing militias as “revolutionaries,” that “In development formations constantly subjected to imperialist assault, class struggle is primarily anti-imperialist and circularly contingent upon the security of national working classes” (85). Elliptically, he goes on to argue that the “fullness of security expands sovereignty” (86). Actually, this point is likely to doubly irk imperial apologists, who claim to speak in the name of workers even as they justify the demise of the states in which workers live their lives, all the while emitting a steady flow of neocolonial clichés that one must break eggs to make omelets, revolutions are not tea parties, and other such gabble.

In a cautionary note, Kadri then comments on the weakness of global internationalism. Amid Wahhabi ideology’s corrosive spread, “the anti-imperialist front is Shiite.” That means that “as any sect constituting a form of social organization [it is] capitalist.” However, “the problem with a sectarian front…is that even if it wins the military war, it loses the social one, unless the day-to-day struggles of the Left mark the labor of history” (180). Of course, such a judgment omits the military support from Iran to Sunni organizations within historical Palestine. The word “sectarian” thus seems too strong both empirically and conceptually, in the latter case inadvertently implying a conceptual equivalence between the sectarianism of U.S.-Saudi imperialism and that of those social forces which might deploy communal identification as one of the bonds cementing their sodalities and their anti-imperialism. Nevertheless, the need for a class emphasis on the resistance front is important, and is, of course, being acted upon by regional grassroots forces.

My second unease is Kadri’s distinction between merchant and industrial capital. Both in the region and more broadly, heavy industry has always benefited from state guarantees. Indeed, perceived as unprofitable in the Arab world and elsewhere, it has often been the state’s child, with private investment tailing behind it or benefiting from it parasitically. This is so because state elites have often seen industrialization as the way to deliver social welfare to the population, while also building a scaffolding for private investment in industry. Capital roots itself in industrial processes when it is profitable to do so, and the conditions of profitability are simultaneously political and social. I am apprehensive that implicit in this typology is an ideal-typical course of development from merchant to industrial. But even the European states only saturated their domestic productive base in industry in reaction to mass-mobilizing wars and revolution, including in the Soviet Union and elsewhere.4 (This is not the place to examine the fetish of industrialization itself.) The ebbing of the fear of that old specter may account for the willingness of various elites to simultaneously opt for moving to globalized forms of capital accumulation—the transition from what Kadri calls industrial to merchant capital in the Arab world.

Furthermore, it seems difficult, in any case, to identify what is merchant and what is industrial capital in an era of conglomerates—if indeed it was ever possible. Large corporations or business groups are now often both merchant and industrial at the same time. A more elusive process of disembedding is going on, and I am not sure that the merchant-industrial division helps us theorize it. But this is a long-standing conceptual argument, and Kadri’s argument hardly hinges on the defensibility of this typology. Simply put, Arab Development Denied is one of the most important books on Arab political economy to appear in some time, and ought to be read by all concerned with the region. I cannot recommend it enough.

Notes

  1. Sara Roy,The Gaza Strip: The Political Economy of De-development (Institute of Palestine Studies, 2001).
  2. Syrian Center for Policy Research, “Confronting Fragmentation,” February 2016, http://scpr-syria.org.
  3. Sayres S. Rudy, “Pros and Cons: Americanism against Islamism in the ‘War on Terror,'”The Muslim World 97, no. 1 (2007): 33–78.
  4. Sandra Halperin,War and Social Change in Modern Europe: The Great Transformation Revisited (Cambridge, UK: Cambridge University Press, 2004).
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