Towards a New Political Economy of State

Int. J. Middle East Stud. 16 (1984), 251-265 Primed in the United States of America

Michel Chatelus and Yves Schemeil TOWARDS A NEW POLITICAL ECONOMY OF STATE INDUSTRIALIZATION IN THE ARAB MIDDLE EAST INTRODUCTION

Over recent years, scholars and politicians have grown to recognize the increasing obsolescence of models and patterns applicable to the development crisis. This crisis affects both 'liberal' capitalist systems and state-controlled 'socialist' systems, and can be analyzed on two levels. On the theoretical level, the development crisis is one aspect of the crisis of paradigms in social sciences, especially in economics. New ways of thinking originate with the denial of all those dogmatic approaches which have flourished in the realm of economic development for the last three decades. However, we cannot be satisfied with a predominantly empirical investigation devoid of theoretically explicit background. On the empirical level, some sweeping situations emerge; development processes, either unpredicted by, or contradictory to theoretical forecasts have arisen. First, it is increasingly difficult to regard "developing countries" as a sufficiently homogeneous category for an overall, undifferentiated analysis. Although there are still some global explanations, more and more attention is paid to differences and to specific categories: newly industrialized countries, petroleum-exporting countries, semi-industrialized countries, or countries that export manufactured goods, etc. The gaps between the various developing countries have widened greatly in recent years; Brazil, Upper Volta, and India, for example, can hardly be classified in a single 'Third World' category. Second, the former distinction between objectives (per capita income, maximum growth rate) and means (increasing production and accumulation rates, so-called investments in human capital) is not only deprived of any operational dimension, but is also becoming dangerous. Rather than being mere instruments of a deceptive growth, parameters such as income distribution, a self-sufficient food supply, the meeting of basic needs, etc., become essential aims of the development process. An excessively economy-oriented bias seems responsible for these errors. The re-introduction of politics on an equal footing with economics in a new political economy is an absolute necessity.1 To underline this shift of emphasis from one approach to the other, we propose a rapid comparison (see Table 1): under the label 'Development economics' are gathered some major aspects of predominantly economy-oriented analysis of development, while the 'New political economy' column introduces a wider perspective in which politics plays its role. © 1984 Cambridge University Press 0020-7438/84/020251-15

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Michel Chaielus and Yves Schemeil TABLE

1 Major variables involved in development approaches Development economics The radical approaches

The liberal approaches

New political economy of development

Diagnosis Third world exploitation Center and periphery Development of underdevelopment Imperialism and neocolonialism

Third world poverty Vicious circles Gaps, stages, take-off Self-sustained growth

Diversified situations new industrial countries less advanced countries oil exporters Plurality of experiences Importance of political behavior and social attitudes towards change

Policies Modernization. Savings and accumulation. Optimal use of 'scarce' and 'abundant' factors. International division of Labor International. Aid and transfers. Positive role of multinationals. Open door policy: free zones, low wages Export led growth

Modernization and surplus mobilization Development planning State intervention and public entreprises Industrialization and import substitution Negative role of multinationals Collective self-sufficiency Appropriate technology

No universal models or dogma Full advantage of specificities taken Growth-development opposition Growth-redistribution opposition Ambivalent role of multinationals Agricultural priority and food self-reliance Fundamental needs Economic diversification Appropriate technology Political agreements with foreign economic partners

Main obstacles to development Bureaucracy Lack of incentives Protectionism Financial repression Controlled economy

Imperialist domination Financial orthodoxy Deteriorating terms of trade Compradore bourgeoisie Multinationals World market constraints

Administrative weaknesses Corruption Political biases in economic choices Contradictions between objectives Instruments inappropriate to objectives

In the Middle East the paradigms we contest are particularly irrelevant: they fail to give an accurate picture of the current situation. The irrelevance of standard development criteria is obvious when they are read against figures for the Middle Eastern Arab States (MEAS): —Global and per capita GNP are 'production linked' concepts—they have little significance in economies dominated by rent and transferred resources, as MEAS economies are.

Slate Industrialization in the Arab Middle East 253 —The sacrosanct growth rate itself is put into question. It is difficult to assess what is growing. To a large extent, the pertinent accounting category should be 'National Spending' and not 'National Product.' —An income distribution which is not very dependent upon production as a genuine activity leaves little meaning to well-defined economic categories such as wages, taxes, transfers, savings, and so forth. —Employment figures and manpower problems cannot be studied using standard methods in a region where immigration and emigration are determinant aspects of the labor situation. Beyond the incapacity of standard criteria to describe the MEAS situation, we are faced with major paradoxes, which no clear-cut analysis can explain: —Even in free economies, the state is omnipresent. It is the necessary mediator collecting and distributing oil rent and external monetary flows, in either centralized or market-regulated economies. In some countries (Saudi Arabia, Kuwait) the public budget accounts for over half the 'domestic product,' and most economic activities are determined by public spending.2 Monetary figures manifest this 'abnormal' situation. State deposits are 'liabilities' of the monetary system, while in a normal situation they figure as 'assets' (state debt to the banking system). Strong currencies do not lead to independent monetary policy, since efficient instruments are lacking; foreign currency abundance does not necessarily prevent a chronic shortage of local currency. —Intense human and capital movements are a well-established characteristic of the region. Contrary to economic integration theory proposals, they do not, however, lead to greater intra-regional cooperation. The interdependence they create is more frequently a source of conflict than a basis for shared undertakings. —Explicit policy goals always emphasize the urgent necessity of economic diversification (apart from direct oil rent or transferred payments), though the actual picture is, at best, a stagnant productive economy and even—in most countries—declining agriculture and increased food dependency. The Arab Middle East typifies various trends which converge to give some credibility to our hypothesis. Industrialization in the Middle East exacerbates these trends: for this reason, we have chosen the variable of industrialization for our case study. In the first section of this paper, we focus on the negative impact of rent and circulation economies upon the successful MEAS industrialization process, and to compare 'circulation' and 'production' systems favoring or precluding industrial development. The second section will deal with MEAS strategies of state-building through industries, both in a historical perspective and in the contemporary context. In so doing, we will stress the concepts of internal power and external strategy and their significance in a political economy approach. 2. MIDDLE EASTERN ECONOMICS REVISITED

Both oil and non-oil economies are showing signs of apparent economic success. According to World Bank figures, they rank favorably in many respects. Although one might argue about the relevance of global figures for such oil

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countries as Kuwait or Saudi Arabia, statistical data and trends look promising for the region taken as a whole. Strikingly high growth rates and sky-rocketing per capita income, high investment ratios, increasing import rates, and strong public commitment to industry are some salient features of this 'success story.' According to the Economic Commission for Western Asia,3 social conditions are also improving. Public works construction and infrastructures are still expanding in many of the countries under discussion here, despite political and military threats to stability. The growth of industrial output, to take a single example, cannot be totally dismissed: 4.7% in Egypt between 1960 and 1970, reaching 7.6% between 1970 and 1978; the figures are respectively 5.6 and 11.6 for Syria, 5.9 in Iraq for the first aforementioned period; 12.2 and 5.4 respectively for North Yemen and Saudi Arabia during the last period.4 During recent years, global growth rates have been even more impressive, though erratic. GDP at constant prices fluctuated as follows in a few selected countries: Bahrain: 27.2% in 1976, but 'only' 8.8 in 1977; Iraq: 12.1% (1976), 17.3 (1977), 12.2 (1978); Jordan: 29.3% (1976), 3.8 (1977), 11.4 (1978), 5.4 (1979). A rather peculiar slope for a growth curve.5 Notwithstanding these figures, the economic situation is less favorable than such a glance would lead one to believe. From many points of view, the economic imbalances and shortcomings are rapidly getting worse. The observed evolution actually runs against the explicit goals of economic policy statements. Among the many factors which cast doubt on the apparent economic success in the Middle East, the following aspects or tendencies might be enumerated: —Most standard accounting categories do not cover what we propose to call 'circulation economies' like those of the MEAS: those concepts were devised to study productive economies. In the context of a circulation economy, average per capita product—among other indicators—seems especially subject to misinterpretation. —Food dependency is quickly increasing, causing food import bills to reach dangerous levels. According to recent FAO surveys, wheat imports will exceed 3.4 billion dollars in 1985 for the whole Middle East. Food self-sufficiency rates have regularly decreased since 1970, from 85 to 60% in Egypt, 50 to 23% in Saudi Arabia, 73 to 56% in Iraq.6 —High investment rates, rather than showing strong determination to implement a process of rapid economic growth, might be considered as signs of inefficiency in the allocation of economic resources. To put it bluntly, high investment could mean high waste, especially in the case of industry, where diversification is very limited. —Intraregional trade is limited; joint industrial ventures between countries are extremely rare. —Intraregional labor migration is very great. It should not be taken as an indicator of growing integration; on the contrary, it attests to the failure of economic complementarity: labor migration is not balanced by capital transfers. At a higher cost, complementarity of economic factors is a substitute for a missing complementarity of political actors because without regional planning, no oil revenue will ever be invested in labor-exporting countries.

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—Productive activities and resources arising from production of goods are low in all countries, whether oil-producing or not. All the MEAS are predominantly 'circulation economies' strongly dependent on rent income. 2.1. The concept of a rent-dominated economy and its significance Here is not the place to deal with the various dimensions of the economic views of 'rent' from pre-Ricardian times to the oil era. We will simply delineate rent as any income not originating from the productive activity of the concerned unit, the flows and dimensions of which are not directly linked to the beneficiary's activity (i.e., any income the amount of which is determined for the most part by decisions the concerned unit cannot control). We will then distinguish 'production economies' and 'circulation economies.' Rent economies are an 'ideal-type' of the latter: individuals, groups, even the state, compete for the control of rent. In our view, most economic activities are to be considered as means of ensuring income circulation, rather than productionoriented behaviour. We would point out that MEAS economies exemplify this ideal-type perfectly,7 since their rent bias is the product of several intermingled and superposed factors: —The historical context, about which more will be said in section 3.1. —The contemporary world crisis and its major aspects (inflation, high interest rates, currency instability, declining business profits, huge public and private debts, high unemployment, etc.), which generate a growing premium for speculative attitudes antagonistic to industrial and production-oriented behaviour. Today, judicious speculative choices, financial or not, are often more rewarding than efficient productive decisions. —The overwhelming importance for the whole region of oil as a rent. For major producers, oil is a quasi-exclusive source of original income depending to a great extent on non-national decision centers. Most activities are therefore 'subsidized' by-products of oil revenues. For non-oil countries—even when a genuine productive sector exists—a growing part of economic activity is linked to oil money accruing to them through labor and capital movements. Developing countries often show a considerable imbalance between 'resources' and 'uses' in national accounting terms. When accepting the World Bank view as a rough, though explicit, approximation, the balance of resources8 is extremely negative for minor Arab oil exporters. To put it simply, domestic investment by far exceeds domestic savings, the gap being filled by inflowing incomes. On the average, these transferred resources reach 3% of the GDP in the intermediary income developing countries, to which category the MEAS belong. Compared to this 3% deficit, the 1978 figure was 14% for Egypt and Sudan, 18% for Syria, 43% for North Yemen and 59% for Jordan. Conversely, Kuwait showed a 37% surplus, and Saudi Arabia 26%. These figures are, no doubt, less impressive than the United Arab Emirate score.9 In such a context, the role of the state is paramount: it is the unavoidable instrument of resource allocation whether in 'liberal' or 'socialist' regimes. Paradoxically, the state plays an even more determinant role in the economic activities

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of 'liberal' countries through budgetary expenditures (in Saudi Arabia public spending accounts for over half the GDP), state-controlled or state-supported enterprises, food subsidies, administered prices, etc. In most MEAS, a growing part of the population depends for its living, either directly or indirectly, on unrequited transfers. Money comes from expatriated relatives, patrons or tribe elders, state allocations. There is at best a tenuous link between individual income and activity. Getting access to the rent circuit is a greater preoccupation than reaching productive efficiency. 2.2. Circulation or production economies: MEAS antiproductive biases Antiproductive biases both influence economic behaviour and distort economic choices. Economic behaviour is biased in a rent-dominated economy by individual or even corporate group tendencies competing to increase their share of the circulating income. Given that goal, productive activities are not efficient means. They stand as second-best choices for groups or individuals who are more or less excluded from the rent circuit. In most cases, handling productive activities is the 'privilege' of expatriates, immigrants, and minorities. Reluctance to do productive work is a widespread attitude in dominant groups; in any case, most people have not much to gain from the risks and pains of active work when they can get easier benefits from rent sharing through sponsoring, import trade, brokerage, or real estate and housing speculation. Contrasting with the lack of ambition and initiative otherwise associated with industrial entrepreneurs, political bosses show a remarkable dynamism which leads them to invest in the rent circuit and divert symbolic and material benefits for their own clientele. Far from being considered illegitimate, such behaviour is largely accepted. Assets are distributed through these non-economic channels which parallel the economic circuit. A position in the patronage system is an excellent alternative to an actual job in the productive system, and might look even more attractive to many. The aforementioned biases may be observed, whatever the type of economic agent taken into consideration: Private firms and businesses. These are rather hostile to developing local production, since profits in import trade are much greater and less risky. They feel satisfied with entrepot trade. At best, some physical transformation of imported goods, making them 'national,' improves the political status of the firms.10 Public enterprises. Including state-owned enterprises in liberal states, public enterprises are salient features of economic organization in the MEAS. In many cases, they work more as income-distributing devices than as productive entities in quest of rentability. Overemployment in such enterprises is a significant aspect of income distribution (cf. infra 3.2.). Government and ruling elites. These have vested interests in keeping the rent as liquid as possible in order to mobilize their resources rapidly when facing social or political turmoil, internal and external unrest. In any case, the risks attached to these types of unrest are greater in production economies than in circulation economies (class struggles, strikes); labor concentration, technical education, even general education can also result in later unrest.


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Economic choices are distorted by the contradiction between rent-controlling political strategies which aim at stability and the unavoidable emergence of new social values which a successful economic strategy would necessarily imply. The case of industrialization is a good example of this contradiction which compels economic agents to follow the path of what we call a 'failure-oriented policy.' In that respect, industrialization policies are less committed to selecting objectives (give them priorities, implement those goals), than to selecting appropriate means (of spending money, distributing income, providing power, hegemony or rent control). This is because economics is even less an end in itself than in Western countries. Though we will not here theorize on the question, we must, nonetheless, underline this contradiction between objectives and means. Since Arab societies are usually depicted as end-oriented societies or 'holistic' cultures, it is rather paradoxical to note how impotent they are when confronted with powerful instruments which fascinate them and remove their faculty to define genuine objectives." —Even though most MEAS rulers pay lip-service to industrialization, their allegedly consistent industrial strategies hardly go beyond mere spending programs. No real answers are given to such fundamental questions as linkage effects, economies of scale, labor training, market size, or insertion in world economy. —Despite some remarkable exceptions (such as the Bahrainian dry dock and aluminum plant), there is little or no coordination between industrial perspectives in the various MEAS. Competition for prestige or leadership often leads to redundant projects. Optimal allocation of resources on a regional basis is not a determinant preoccupation (concerning the impact upon regional cooperation of strictly political constraints, see 3.2.). —Most 'productive' investments reveal a preference for infrastructure, public works, construction, and expensive 'big projects' that are vulnerable in an unfavorable economic environment. —Of most importance are manpower problems. Emigration and massive immigration both cause growing concern. Worker concentration, country-to-city movement, the precarious status of migrants, the massive brain drain from non-oil countries: all these problems add up to an explosive situation. Confronted with the major problem of building domestic order and regional stability, the MEAS tend to use economics as a way of solving strategic puzzles. It is the very industrialization process which contributes to state-building rather than the state which helps to build a national industry. Industrialization strategy is therefore part of a strategic plan. 3. MIDDLE EASTERN STRATEGIES OF STATE-BUILDING THROUGH INDUSTRIALIZATION

Strategies can both answer and anticipate the problem of mobilizing resources to minimize constraints and dependency. In a way, the Middle East might be defined as a subordinate system in which each subsystem strives for an uncertain survival while trying very carefully not to subvert the very system which sustains

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its existence. There are only two solutions to this logical problem: leadership or partnership. We can trace the roots of this politically biased type of economy back to its historical origins: central city-states threatened by peripheral empires. A brief overview shows how Arab history displays very strong tendencies to build socalled states on city models. The reason why the city-state is a dominant form of political organization in the region might be found in a strong preference for circulation economies over production economies. City-states are in fact well fitted to the circulation of rents, royalties, tributes, tithes, etc. Hence the present world economic situation only emphasizes the features of a deeply anchored economic practice. 3.1. State-building and rent/circulation economy in historical perspective In the ancient or Islamic eras, the Middle Eastern States were either empires or city-states. Those city-states bore the names of their capital city (Shaba, Babylon, Tyre, Palmyra), or of their ruling dynasts (Nabateans, Hamdanids, Hachemis). City-states were scattered along the Fertile Crescent and the Arabian peninsula. Empires, on the other hand, flourished on the periphery of this central zone: the Nile valley and the Persian plateau, Asia Minor. The Islamic caliphates themselves followed the paths of the empires which they replaced. They nevertheless remained unable to prevent the emergence of semi-autonomous sultanates, Islamic avatars of city-states. With the overthrow by French troops in 1920, ^uruba (the ideal type of an Arab community, designed on the first Islamic community model) was badly weakened. Moreover, a contemporary version of city-states still plays a central role in the Middle Eastern political configuration. When Arab lands are rather arbitrarily clustered in the single category of 'citystate' whatever their historical specificity, some salient features emerge: —City-states were deprived of well-drawn and stable boundaries. Contrasting with the legal situation in their Greek or Italian counterparts, Middle Eastern legal codes use citizenship as a vague and elusive concept. Assur itself, so often taken as a typical empire system, was actually closer to a city-state, deprived as it was of any territorial administration (on the subsequent model of Persian Satrapies). The heart of the city was not located at its geographical center (such as the Greek agora) but on its outskirts (like Sumerian twin cities), or in market places (as in Aleppo). In this context it is understandable that Assyrian kings did not consider that they had any superiority over the ordinary inhabitant of Assur, whatever his origins.12 —The state was an intricate combination of political and religious dimensions, with palace and temple sometimes merged into the single person of the king. Palace or temple were stocked with foodstuffs, precious metals, and money; to which were added booties from military campaigns and profits from overland trade. It was quite close to a modern 'central' bank. At any rate, it acted as the center of distributive justice, enforcing market rules, controlling prices and fixing interest rates—functions devoted in Islamic times to the muhtasib, one of the most popular 'civil servants' in the Middle East. It might not be pure coincidence

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that the national currency, banking institutions, customs and communications were the last pillars of the state in wartime Lebanon. From an economic viewpoint, the major difference between empires and citystates is the absence of a centrally organized productive system as exemplified by, though not limited to, hydraulic undertakings like those of Egypt, Persia, or even Babylon. With no private industry or public works (at least not on the huge scale required to qualify for 'empire' status); resting on the protection given to trade and finance; and restricted to a mere function of distributive justice (the main criterion of fair government) these city-states were, and still are, circulationdominated economies. However, empires and city-states were so intermingled in the ancient or past Middle East that they shared and borrowed from each other a common function: laws, registers, records of all kinds were issued, kept, or stored in palaces and temples, later in churches and madrasas. While Hammurabi is famous for the code which bears his name, many others followed with their major focus on economic transactions. It should not be difficult, however hypothetical this assumption can turn out to be, to show how production was almost forgotten in city-state codes—not to speak of the personal and property rights required by any capitalistic and productive pattern of development—while empires devoted an army of scribes, secretaries, and archivists to control crops, cattle, or mining. Obviously to label as city-states all the etatic or semi-etatic forms which flourished in the Middle East would be excessive. Nevertheless there are striking similarities between Tyre, Palmyra, Hatra; Mekka before Muhammad;13 Bahrain under the Quarmatians; Aleppo subjected to Janissary rule; Mount-Lebanon during the Maan or the Chehab era; Kuwait, Jordan or the United Arab Emirates today.14 All are dynasties (it is worth noting here that dawla means both dynasty and state) built on commercial networks which are more vivid or legitimate in their citizens' minds than fluctuating and sometimes disputed boundaries. Apart from displaying a strong tendency to fragmentation which Islam aimed to fight in stressing unity (of society and of god: tawhid), ancient societies or resurgences of them in modern social organization emphasize the importance of distributive justice as a major component of social contracts which led to state building in the Middle East. As in the family model, a fair government was expected to give to each member, whatever his position in the sibling system, his fair share of the family income and property. No 'feudal' reciprocity was stipulated, but rather a shared responsibility in individual or collective aggressions (crimes and wars respectively). Therefore the head of the family, clan, or lineage had no right nor incentive to make people work and produce any economic surplus on the scale found in imperial or feudal systems. Well adapted to a world deprived of natural resources (except for land and water in remote plateaus and oases) this scheme of political rule could not easily be replaced by Westernized states at the beginning of the oil era. As sporadic raids (ghazwa) gradually turned into organized tributes, and tributes into rents from overland trade, the latter was substituted by oil revenues whether directly or indirectly (Jordan, Lebanon, Yemen) or both (Syria, Egypt).

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2 Two ideal types of Middle Eastern systems Characteristics

Field

Type I

Type 2

Economy

Circulation (trade, rent, distribution of benefits)

Production (extraction, industry or exported knowhow)

Society

Allegiance (clientelism, protection mediation)

Aggregation (articulation of individual or collective horizontal interests)

Polity

City-state (network of populated points linked by defence pacts and trade; or tribute and garrison network; some bureaucrats)

Empire (centralized, local coordinated units; fullfledged bureaucracy)

To sum up: however divergent in their religious or external military components, most Middle Eastern attempts to build strong administrative institutions in order to be validated as actors in regional and inter-'national' relations were devised on the frame of reference of the city-state and not of the empire, hence on a circulation and not on a production economy, as is shown in Table 2." The system described in Type 1 seems predominant in the contemporary Middle East. However, the MEAS today are confronted with the task of building what might be called a 'Type 3' structure: a 'modern state' as close as possible to the ideal type of Western nation-states, which is necessary to become a reorganized and credible partner in international relations and even to allow the society to survive. 3.2. Contemporary strategies of power and state industrialization: A preliminary assessment Any social institution aiming at statehood should provide the people with a certain amount of justice, security, and freedom (in French revolutionary words: fraternity/solidarity, equality, and liberty). Both domestic and external politics are subject to the logical constraint of these three requirements. The MEAS' own way to statehood is made easier by the legitimacy perennially attached in their respective societies to such objectives. Nevertheless, they are so specifically endorsed that they might hinder the access of the new Arab states to the complex structure of nation-states. Now, the MEAS are seeking inter-national validation from Western nation-states. Hence the choice of a partnership strategy rather than the hazardous and hard-to-handle strategy of crude hegemony. In this section we propose to f'cus on the impact of industrialization upon the aforementioned function of prov.aing justice, security, and freedom. Let us start with justice. The MEAS obviously qualify as welfare states since the concept of maslaha (public interest) rules all the endeavours for reform


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(whether in Khair ed-dine's Tunisia or Muhammad Ali's Egypt) as exemplified by Muhammad Abduh's interpretation of Muslim law. Contemporary leaders, as different as Michel Aflak and Pierre Gemayel, still put some stress on this necessity. Authors more conservative than Islah reformers were just as eager to underline the central functions of justice, particularly distributiye justice, defined as equal opportunities offered to each member of a solidarity reference group, and not to each individual 'citizen.' Nowadays, justice as a value is equally praised by Arab peninsula amirs and Ba3athi rulers. Industrialization accurately fits the necessity of implementing justice through distribution networks as shown by the allocation of international capital (world bank loans, oil revenues, intergovernmental aids, or even planning).16 The locations of industrial projects seem to be chosen in order to benefit specific communities rather than to obtain the maximum accounting return foreseeable according to economic criteria. If we now turn to security, both physical and financial, with an evolution from the former to the latter, Middle Eastern societies have always displayed a strong preference for corporate organization—whether relying on kinship groups, craft guilds, merchant communities or patron-client relationships. Middle Eastern cities are thus divided into clear-cut areas, physically closed to each other when necessary: to a large extent they have enjoyed the privileges of self-governing bodies. This corporate organization is the base upon which state industrialization is constituted. A cohesive society can be ruled through a network of protection (material or financial) without resorting to any 'strong' administration. Protection against every risk is exactly what MEAS institutions allow every Arab to enjoy. Social insurance, a pension and allocation of incentives—all brought with state industrialization—give the worker a feeling of safety. The benefits from this system might even take an unexpected course: some workers feel secure enough to give a second priority to their official position and look for a more profitable job after—or even during—a very short workday.17 As for freedom—according to Lutfi as-Sayyid, "the necessary food of life"—it is a more complex case. Inclinations to dictatorship in MEAS should not hide the historical fact that rulers have always had to compromise with a society roughly equivalent to an association of minorities. These minorities often expressed harsh demands for effective freedom. The demand for freedom is not more alien to Sunni majorities, even though its foundations and expressions are different from those of minorities. At first glance, law and order rather than freedom would seem to be the dominant values of Sunnites who are conscientious watchkeepers of their neighbor's behaviour. This restricted social vision often led to political conformism, on the grounds that politics was unavoidably deceptive. When both minorities and Sunni majorities are excluded or self-excluded from the political realm, 'economic pluralism' (i.e., freedom of opinion and intervention in the planning process) might be the best approximate substitute to political pluralism, and at the same time the most fruitful deviation from it. This is why economic experts attempt to implement their policies through discussion processes and open criticism less alien to the right-wing Islamic majorities than are

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Western 'democratic' systems. Industrial planning conforms to a political thought where God's will (mulk) and people's consensus (ijma^a) merge in the person of the ruler (khalifa) through consultation (shura). Among domestic policies, industrialization fits very well the goals of what political scientists call a 'state': justice, security, and liberty seem better guaranteed by economic than by political processes. Is this rather optimistic view modified by a minute analysis of international relations? Whatever the importance of endogeneous components in the process of monetization, salarization, and emergence of local entrepreneurs and engineering capability, state industrialization is shaped by exogeneous influences. The essence of validation for state managers is their ability to negotiate with industrialized countries. The MEAS, anxious to complete their nation-building process, tend to use their 'industrial achievements' as a symbol of identity, a sort of flag allowing them to display the colors as Great Britain and France did with their dreadnoughts. While in Western countries the concept of state is not separable from the sophisticated and deeply rooted administrative and judicial machines, the MEAS are deprived of such fundamental structures; therefore, the concept of state shrinks, and is reduced to little more than a public works enterprise.18 Spectacular public works are supposed to open easy access to the restricted circle of powers which have a say in international relations. Since this objective cannot be achieved through light industries, they are often neglected by MEAS industrial policies. Lebanon and Jordan stand as notable exceptions. This strategy, in which politics plays a more central and salient role than economics, may be called a strategy of hegemony or the strategy of potential power (montee en puissance). Huge industrial plants or gigantic refineries are designed to look impressive to international experts: can any international consultant remain indifferent to projects worked out by a government which has just inaugurated the biggest and most modern hydrocarbons complex? Would it not deter potential adversaries from becoming open enemies? The 'Arabian' strategy needs no additional comment to be fully understood as a vital way to build an 'oriental' industry. It would even strengthen some controversial labels such as 'oriental despotism' (without hydraulic centralization) or the more fashionable 'Islamic industrial state.'19 Following British or Japanese imperialistic models of yesterday, the MEAS are trying to obtain recognition as indispensable partners in major areas of international politics and economics. However, they cannot operate on a scale allowing hegemony: MEAS rulers are therefore compelled to strip away the more marked hegemonic components of their strategy. In so doing, they limit their ambitions to building a network in which they constitute a necessary link. Hence, stabilizing their power through international agreements and symbolic validation is not necessarily obtained through successful development policies. For instance, Saudi Arabia's future depends less on its ability to achieve a significant industrial output than does Iraq's. Moreover, true economic growth may sometimes sharpen conflicts of interest


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between MEAS because of obvious links between economic leadership and political hegemony. Conversely a strategy of partnership emphasizing mutual interdependence helps maintain the status quo without modifying the balance of power. Finally a common dependence on oil rent which dominates the MEAS leads more easily to mutual allegiances and compromises than to aggressive economic policies. When assessing economic performances of state industrialization in the Middle East, it is worth noting that the chief objective is to build a state, with industry being chiefly a means to reach that end. As a further hypothesis, we postulate that full economic success might jeopardize precarious domestic order without bringing any substantial reinforcement of membership in international clubs. From this discussion, we may draw the conclusion that MEAS circulation economics are to be interpreted as part of a general system of circulation including political assets. Moreover, the concept of circulation is two-fold: both internal and international. Far from being the cornerstone or the prerequisite of a productive economy, industrialization in a circulation economy might preclude economic efficiency. Antiproductive biases arising in such a circulation context tend to convert productive efforts into distribution instruments. CONCLUSION

To conclude on a less pessimistic note, we would like to draw attention to some positive by-products of state industrialization. State-building can gain more than is expected from the so-far abortive efforts to develop MEAS economies. Where nothing but a segmentary political system indigenous to traditions of the Arabian Peninsula and Fertile Crescent prevailed, there is now a plurality of states supported by the international network in which they manage to play a role. These states are built without too much spending of political energy, i.e., without mass suppression and administrative centralization comparable to their European counterparts since the XVIIth century. Victorian workhouses are not part of the Middle East landscape. Restricted to its core functions, state is just gas and power, water, sewages, and industry. Paraphrasing Lenin when he stated that socialism meant electricity plus the Soviets, could we not premise that Arabism today is industry plus allegiance? The MEAS are minimal states, sustained by the subtle articulation of an anthropological model (segmentation) and an economic device (industrialization) where politics according to Western political thinkers is mostly absent. In other words, politics has fled from its natural milieu (state administration) to find shelter in economic policies, whether domestic or international. This adds some grounds to our initial statement: nothing is left of disciplinary approaches to the MEAS, be they political science patterns or economic models. Combining economics and politics into a true political economy is a necessary intellectual

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Michel Chatelus and Yves Schemed

reorientation if we are to understand contemporary trends in Middle Eastern areas. INSTITUT D'ETUDES POLITIQUES DE GRENOBLE, FRANCE

NOTES Authors' note: We are grateful to the anonymous editor whose observations contributed to improve a paper delivered to the Philadelphia MESA meeting in November 1981; here published with minor changes. ''Political' and 'economic' theories are both under criticism today. Political theories, in challenging 'Development economics' deprive it of its main asset, the coherence of a simplifying model. 'Development politics' does not provide better answers since voluntarism does not lead to noticeable results and liberalism is not a solution. See, for instance, the remarks of a political scientist fascinated by economic constraints: Lindblom, "The Market as a Prison," Journal of Politics (May 1982). 2 For instance, David Morgan, "Fiscal Policy in Oil Developing Countries," Staff Papers (March 1979). 'United Nations Economic Commission for Western Asia (E.C.W.A.), Survey of Economic and Social Developments in ECWA Region, 1980 and 1981. 4 World Bank, World Development Report, 1978 to 1982. 'E.C.W.A., Survey, statistical appendix, various international and national sources. 'E.C.W.A., Survey, p. 57. 'This is a broader and more general concept than that proposed by Ann Krueger, "The Rentseeking Society," American Economic Review (June 1974). She describes India as a rent-seeking society where it is more important for businessmen to compete for state-allotted privileges than to be efficent producers. 'Balance of resources, i.e., the difference between a country's "uses" (private and public consumption and investment) and its "resources" (Gross Domestic Product as different from G.N.P.). 'World Bank, World Development Report, 1981. '"Moreover, local firms benefit from preferential governmental contracts, equivalent to subsidies, which do not encourage efficiency and productivity. "For further elaboration, see Y. Schemeil, "Une nouvelle strategie de coalition? L'exemple du cartel petrolier," Revue Francaise de Science Politique (Avril 1980); "Du cadi au caddie: attitudes envers la modernisation dans les pays arabes du Golfe," in P. Bonnenfant, La pe'ninsule arabique aujourd'hui (Paris: C.N.R.S., 1982), Tome 1, pp. 245-276. 12 On that point, cf. P. Oppenheim, Ancient Mesopotamia, Portrait of a Dead Civilization (Chicago: The University of Chicago Press, 1964); J. Sauvaget, Alep (Paris: Gauthner, 1941); A. Bujra, The Politics of Stratification, A Study of Political Change in a South Arabian Town (Oxford: The Clarendon Press, 1970). "On this point, see M. Ibrahim, "Social and Economic Conditions in pre-Islamic Mecca," International Journal of Middle East Studies, 14, 3 (1980), pp. 343-358. l4 See in particular M. Ibrahim, The Social and Economic Background of the Umayyad Caliphate, University of California at Los Angeles, Ph.D. Thesis, 1981. l5 Whether this is a typical feature of the Middle East or not is still open to question. Here is not the place to discuss at length the historical specificities of the area. Nonetheless, Peter von Sivers' general comment during the Philadelphia panel (MESA meeting, November 1981)—while stressing the difficulty of defining production without being too rigorous in a region which lacked and still lacks the average population density required to foster technology—admitted that the pre-industrial past still functions in the present. We take this opportunity to thank von Sivers for his stimulating comments. I6 A. Khader, Development Planning in Jordan 1952-1970, American University of Beirut, M.A. Thesis, 1970; M. Mazur, Economic Growth and Development in Jordan (London: Croom Helm, 1979).


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" j . Hannoyer, M. Seurat, Etat et secteur public induslriel en Syrie (Beyrouth: CERMOC, 1979), p. 93. "Page 784 og. in the 'civic gospel' of Birmingham under Chamberlain; see A. Briggs, Victorian Cities (Harmondsworth: 1968), pp. 185-240. "Financial Times, April 1979.