Development Under the Threat of War in the Arab World

The Dye Workers
Inji Effla­toun, The Dye Work­ers, cir­ca 1950s

A State in the grip of neo-colo­nial­ism is not mas­ter of its own des­tiny. It is this fac­tor which makes neo-colo­nial­ism such a seri­ous threat to world peace.
– Kwame Nkrumah
Neo-colo­nial­ism: The Last Stage of Impe­ri­al­ism, 1965

On any indi­ca­tor one wish­es to use, main­stream or alter­na­tive, there is a devel­op­ment cri­sis in the Arab world.

We must under­stand this cri­sis as an out­come of the ways this region is woven into the glob­al econ­o­my. The oil and war economies, the destruc­tion and waste side of cap­i­tal accu­mu­la­tion, are the main chan­nels by which the region is artic­u­lat­ed with the glob­al mar­ket. Waste and mil­i­tarism are prin­ci­pal ele­ments in an accu­mu­la­tion regime that pro­duces val­ue by con­sum­ing not only the val­ue of labor-pow­er, but also the val­ue inher­ent in human lives.  Accu­mu­la­tion by waste, real­ized through encroach­ment wars and envi­ron­men­tal degra­da­tion, is con­stant under cap­i­tal­ism.

Cap­i­tal­ism as a his­tor­i­cal stage is not sole­ly about the pro­duc­tion of trousers, lap­tops and chew­ing gum – things whose con­sump­tion sat­is­fies social needs. It is also, in great part, about the pro­duc­tion of waste and harm­ful things like bombs. Cap­i­tal­ism dif­fers from past modes of pro­duc­tion. It is a pre­dom­i­nant­ly a mar­ket econ­o­my in which the pro­duc­tion of waste itself is at the same time intrin­sic to cap­i­tal and alien­at­ed from social con­trol. Waste, capitalism’s war side, does not serve a func­tion that resolves a prob­lem fac­ing soci­ety. It serves its own end and, more per­ti­nent­ly, it is itself a domain of accu­mu­la­tion. It is the neg­a­tive dialec­tic that stead­ies the rate of cap­i­tal accu­mu­la­tion, not only because it metab­o­lizes social­ly nec­es­sary labor time at a high­er rate, but also because it redress­es real and ide­o­log­i­cal pow­er bal­ances at the lev­el of the labor process and the state, which in turn ascer­tain the rule of cap­i­tal.

This neg­a­tive dialec­tic, the bar­bar­ic side of cap­i­tal, begins the moment labor-pow­er sells as a com­mod­i­ty – this point is said to be Marx’s great­est dis­cov­ery. The repro­duc­tion of this com­mod­i­ty (labor-pow­er), which is itself val­ue, entails the con­sump­tion or the set­ting aside of the such value’s sources. Peo­ple are the sources of val­ue stored/delivered in and through labor pow­er. Humans are both sub­ject and object of val­ue. They pro­duce com­modi­ties and are con­sumed by the things they pro­duce. Dying in wars is the extreme exam­ple. In this loop, the pro­duc­tion of labor pow­er, includ­ing its repro­duc­tion, is the first and last stage of real­iza­tion in the cycle of val­ue for­ma­tion.

Because val­ue for­ma­tion is an unend­ing cycli­cal process, where one begins or ends to assess the accounts of sur­plus val­ue becomes a choice that answers to ide­o­log­i­cal incli­na­tion. Mea­sur­ing val­ue in terms of West­ern devised dol­lar-pro­duc­tiv­i­ty and dol­lar-price forms is nev­er inno­cent. Pow­er, the colo­nial­ism of the past and the many U.S. mil­i­tary bases of today, decides the val­ue of the dol­lar. To mea­sure val­ue in terms of dol­lars, with­out quan­ti­fy­ing the dimen­sion of pow­er and the com­modi­ties serv­ing as inputs or pro­duced by waste and mil­i­tarism, short­changes the third world. It makes Arabs and Africans triv­ial to glob­al accu­mu­la­tion because they do not pos­sess the ‘right machines.’ Where­as the globe has long been a sin­gle fac­to­ry, lim­it­ing our under­stand­ing to what is abstract and con­crete to devel­op­ments in the west­ern fac­to­ry and its machines, omits war as a domain of accu­mu­la­tion, a sphere of pro­duc­tion and simul­ta­ne­ous­ly, as a man­i­fes­ta­tion of the class strug­gle. Val­ue the­o­ry does not explain every­thing, and no the­o­ry does. How­ev­er, what to include in it and what to leave out, must obey the method of ascent from the abstract to the con­crete in Marx. How pri­vate labor, the abstract cat­e­go­ry trans­forms into social labor, the con­crete cat­e­go­ry, is not an issue of ideas auto-negat­ing in log­i­cal space. It is about the medi­a­tion of the very object of study, that is labor, as it pro­le­tar­i­an­izes by the class strug­gle. That process is glob­al, and there­fore the con­crete cat­e­go­ry of val­ue as val­ue rela­tion­ship is also glob­al, as in the world becomes a sin­gle fac­to­ry blight­ed by the pro­duc­tion of waste. Illus­tra­tive­ly, as the sale of chew­ing gum in the metrop­o­lis of empire dwin­dles, the ten­den­cy to bomb ris­es not only to real­ize the bomb itself, but also to real­ize the lives of humans. Cap­i­tal also reg­u­lates the pro­duc­tion of labor-pow­er by mea­sures of depop­u­la­tion. For­mu­laical­ly, the more the civil­ian-end use com­mod­i­ty real­iza­tion fal­ters, the more one wit­ness­es pro­duc­tion by means of waste and impe­ri­al­ist wars. Hence, war’s per­ma­nence.

Just as in any pro­duc­tion process, waste qua mil­i­tarism real­izes a com­mod­i­ty as an object and recon­sti­tutes the sub­ject. It con­sumes humans, the envi­ron­ment, and war mate­r­i­al, and it shapes the ideas that pro­mote its own expan­sion. Impe­ri­al­ist wars enhance the pow­er of impe­ri­al­ism or tip the bal­ance in the class strug­gle – his­to­ry – in its favor. Just as it col­o­nized and enslaved peo­ple in the past, impe­ri­al­ism in its neo­colo­nial mode rais­es the inten­si­ty by which it rips apart states and com­mands their sov­er­eign­ty. To take away the will of peo­ples, their sov­er­eign­ty, is to enslave them par­tial­ly or total­ly. Exploita­tion assum­ing forms of slav­ery, that is com­mer­cial exploita­tion, gen­er­ates high rates of sur­plus-val­ue, which in turn under­gird high prof­it rates. The Arab region is sub­ject to a dynam­ic of com­mer­cial exploita­tion by wars of encroach­ment that con­sis­tent­ly break apart attempts by nations to under­take state-led devel­op­ment projects.

Although the strate­gic con­trol of oil is cause for impe­ri­al­ist war, war for war’s sake is no less a fac­tor in the prop­a­ga­tion of region­al vio­lence. Wars that set back devel­op­ment efforts in a short times­pan rep­re­sent more than just actu­ar­i­al risk fac­tors; they are com­plete his­tor­i­cal uncer­tain­ties. Instead of hedg­ing the shocks of future vio­lence, the Arab macro­eco­nom­ic set­up has exag­ger­at­ed the neg­a­tive shocks atten­dant upon a busi­ness cycle large­ly deter­mined by oil and wars. It has thus wors­ened an Arab devel­op­ment per­for­mance whose suc­cess may have been a par­tial anti­dote to war. In the fol­low­ing, I dis­cuss how some key macro­eco­nom­ic eco­nom­ic mech­a­nisms have worked against devel­op­ment.

To begin with, the Arab coun­tries are either in con­flict – Syr­ia, Yemen, Pales­tine, Libya, Iraq, Soma­lia and sev­er­al Gulf states – or near-to-con­flict either spa­tial­ly or tem­po­ral­ly. The con­stant prospect of war com­pounds the fragili­ty of their devel­op­men­tal process­es, even when they are not in con­flict. From small­er oil exporters like Yemen or Syr­ia, to say noth­ing of mas­sive ones such as Iraq, these coun­tries still depend on the export earn­ings from a pri­ma­ry prod­uct for eco­nom­ic growth. When oil prices fall, eco­nom­ic growth stum­bles. An already poor devel­op­ment show­ing suf­fers yet anoth­er set­back, there­by fur­ther deny­ing Arab devel­op­ment.

Oil is more bane than boon. It is the major flow tying most of the Arab coun­tries into glob­al com­mod­i­ty and finan­cial spaces. It is mixed up with ongo­ing mil­i­tary inter­ven­tions from out­side the region, prin­ci­pal­ly by U.S.-led impe­ri­al­ism. Mean­while, minor oil exporters– for exam­ple, Tunisia and Yemen – have his­tor­i­cal­ly export­ed labor to the major oil-states, there­by mak­ing remit­tance flows and thus cap­i­tal avail­abil­i­ty depen­dent on oil prices (apart from the geopo­lit­i­cal rents).

Thus, we might note that for the under­achiev­ing Arab coun­tries, which is in fact the over­whelm­ing major­i­ty of them, the crunch on their course of devel­op­ment is four­fold.

First, the deter­min­ing under­cur­rent in their devel­op­ment is the fact that the deci­sion-mak­ing cir­cles often involve pow­er­ful exter­nal forces, who do not want anoth­er small coun­try devel­op­ing its pro­duc­tive capa­bil­i­ties in a world already drown­ing in over­pro­duc­tion. Fur­ther­more, the lead­ing glob­al exter­nal forces, name­ly the rul­ing class­es in the Unit­ed States and the Euro­pean Union, extract val­ue and derive ben­e­fit from war and its social, polit­i­cal, and finan­cial impact. As I argue else­where, the rate of sur­plus-val­ue under­gird­ing high­er prof­it rates in the West is not relat­ed to high­er pro­duc­tiv­i­ty.1 Pro­duc­tiv­i­ty pre­sup­pos­es accu­mu­la­tion. Sur­plus-val­ue can­not be quan­ti­fied by the prices that impe­ri­al­ist pow­ers impose upon the devel­op­ing world – such a rec­on­cil­i­a­tion of price with val­ue, or appear­ance with essence, is after all alien to his­tor­i­cal mate­ri­al­ism. The rate of sur­plus-val­ue is deter­mined by the degree to which impe­ri­al­ism con­sumes the liv­ing labor­er and labor-pow­er in a glob­al­ly inte­grat­ed pro­duc­tion process. There­fore, quan­tifi­ca­tion of val­ue is not about the quan­tifi­ca­tion of the com­mod­i­ty in terms of its dol­lar price, which in fact is the result of var­i­ous inter­na­tion­al impe­ri­al­ist mech­a­nisms. Val­ue is a rela­tion­ship, and for that rela­tion­ship to be quan­ti­fied, it is best gauged in terms of the pow­er that cap­i­tal and, its more fero­cious side, impe­ri­al­ism, exer­cise in order to expro­pri­ate the direct pro­duc­ers. Because war as pro­duc­tion and a form of class strug­gle is a fur­nace of sur­plus-val­ue cre­ation, the impe­ri­al­ist his­tor­i­cal bent is to envis­age the sort of devel­op­ment that leads to more war. In the Arab world, there has been almost zero invest­ment  since the 1980s in long-term agri­cul­tur­al or indus­tri­al sec­tors that respond to the needs of the pop­u­lar sec­tors.

Sec­ond, the imme­di­ate dam­ages of war or the prospects there­of impose a drag on eco­nom­ic, social, and insti­tu­tion­al devel­op­ment. In many cas­es, impe­ri­al­ist war rein­forces com­mer­cial exploita­tion and acts as a mas­sive prim­i­tive accu­mu­la­tion mea­sure. It dis­en­gages labor and oth­er resources from pro­duc­tive link­ages, in sync with the depth of the over­pro­duc­tion cri­sis. Once uproot­ed due to war – for exam­ple in Lebanon and Iraq – most peo­ple and resources remain so. Post-war devel­op­ment is a chimera.

Third, although eco­nom­ic growth, rapid indus­tri­al­iza­tion, and tech­no­log­i­cal advance­ment are tout­ed as indis­pens­able con­di­tions for devel­op­ment, they are point­less when gov­ern­ments con­strain pop­u­lar par­tic­i­pa­tion or the capa­bil­i­ties of peo­ple to achieve dif­fer­ent valu­able human func­tion­ings (as per the salient con­ven­tions on the right to devel­op­ment), or achieve mean­ing­ful par­tic­i­pa­tion in social life as pro­duc­ers. For devel­op­ment to occur, work­ing peo­ple have to be rep­re­sent­ed in the state.2 Over­whelm­ing­ly, region­al gov­ern­ments are not inter­nal­ly demo­c­ra­t­ic. They effec­tive­ly exclude large por­tions of the pop­u­la­tion from par­tic­i­pa­tion in deci­sion-mak­ing. Fur­ther­more, because the share of de-indus­tri­al­iz­ing or mer­chant-com­prador cap­i­tal ris­es more as it dips into the share of labor than by pro­duc­tiv­i­ty, the con­se­quence is for low­er wages to pre­vail. The famil­iar specter of a bloat­ed ter­tiary sec­tor, pover­ty employ­ment, and endem­ic and under­count­ed unem­ploy­ment abounds.

Fourth, the Arab World is a region with acute income inequal­i­ty.3 With­out more even­ly dis­trib­uted income and wealth among dif­fer­ent class­es of soci­ety, the demand com­po­nent that would dri­ve the momen­tum for auto-gen­er­at­ed and knowl­edge-infused growth slows down. There is a demand cri­sis. Demand-led growth is impos­si­ble in the cur­rent con­text, and with­out the social strug­gles that would expand the social pow­er, and thus pur­chas­ing pow­er, of the region’s poor­er lay­ers.

Since the begin­ning of the neolib­er­al era, Arab economies have most­ly grown from “with­out.” The incon­gru­ous forces of war prospects, com­mod­i­ty prices, and geopo­lit­i­cal rents, tak­ing the form of aid infu­sions, are large­ly exoge­nous. Put dif­fer­ent­ly, exter­nal forces have deter­mined the region’s fate to an unusu­al degree.

Hol­low growth has gen­er­at­ed very low employ­ment rates and a poor devel­op­ment expe­ri­ence over the past three decades. Despite that, Arab macro­eco­nom­ic struc­tures, the cru­cial mech­a­nisms of resource allo­ca­tion and income dis­tri­b­u­tion favor­ing the pri­vate sec­tor, remained unchanged. The his­tor­i­cal agency, or social class, in charge of devel­op­ment – which is also the class man­ning the state – has repeat­ed­ly repro­duced the same poli­cies and mea­gre out­comes. Pat­tern reflects pur­pose.

A slow rise or even decrease in pro­duc­tiv­i­ty indi­cates a near absence of “growth from with­in,” or growth based on the infu­sion of nation­al research-and-devel­op­ment and knowhow in pro­duc­tion.4 Because of labor’s weak­ness, there are no ris­ing liv­ing stan­dards tail­ing pro­duc­tiv­i­ty growth or vir­tu­ous cir­cles of devel­op­ment. The pro­duc­tiv­i­ty imbroglio is more severe in the Gulf states. Only around a decade ago, Gulf states for­mu­lat­ed bud­gets based on around $20–30 per bar­rel oil price. In 2015, bud­gets required around $80–100 per bar­rel to be bal­anced.5  Social wel­fare com­pacts adjust­ed for high oil prices, and oil depen­den­cy grew at very high rates. Vul­ner­a­bil­i­ty increased, and bud­gets slid into deficit once oil prices fell in 2014. State bud­gets are acute­ly vul­ner­a­ble to oil price move­ments which are out­side of local states’ con­trol and are arguably under the stew­ard­ship of the impe­r­i­al core.

In times of high oil prices, out­put per work­er growth appears pos­i­tive and unusu­al­ly high. But when oil rev­enues are deduct­ed from total income, out­put per work­er growth is more often neg­a­tive than pos­i­tive. This is a per­ni­cious result that per­tains most­ly to the Gulf states, and less so for oth­ers. It means that the pro­duc­tive cap­i­tal stock per work­er, or equip­ment of the mod­ern tech­nol­o­gy type that grows from the need to cap­i­tal­ize both cap­i­tal and labour to meet demand, is not ris­ing.6 It also means that diver­si­fi­ca­tion poli­cies failed. Such an out­come is due to the insti­tu­tion­al deci­sions of the region­al rul­ing class­es. They are part of a glob­al hier­ar­chy in which the final strate­gic deci­sion lies with Amer­i­can impe­ri­al­ism. As part-and-par­cel of that, they refuse to set in motion devel­op­men­tal process­es involv­ing improved agri­cul­tur­al and indus­tri­al out­put.

It is true, but more so a tru­ism, to assert that reviv­ing these debil­i­tat­ed economies requires an end to con­flicts and the cre­ation of a polit­i­cal­ly sta­ble envi­ron­ment con­ducive to both domes­tic and for­eign invest­ment – invest­ment of the high­er out­put to cap­i­tal ratio type. Along with ris­ing inter­nal demand, this would entail job cre­ation. Such out­comes would almost cer­tain­ly and sole­ly be the fruit of state plan­ning deci­sions, or some form of dirigisme. Yet as true as this asser­tion may seem, the region­al secu­ri­ty arrange­ment, heav­i­ly based on accu­mu­la­tion by means of war and U.S. sup­port for Israel and only sec­on­dar­i­ly on Gulf arms pur­chas­es from the Unit­ed States, is now anchored in a con­tin­u­ous war con­di­tion emerg­ing from acute inter­na­tion­al divi­sions, espe­cial­ly the wars to con­tain the influ­ence of Chi­na. This may fur­ther inhib­it any seri­ous invest­ment over the long run, unless of course recon­struc­tion plans pro­ceed in times of con­flict, tie devel­op­ment to war effort, and strength­en states.

The nation­al polit­i­cal scene in many of these states is char­ac­ter­ized by a process of  “selec­tive democ­ra­cy,” which enshrines the right of the few at the expense of the many – as opposed to more uni­ver­sal or pop­u­lar democ­ra­cy. Except where work­er rep­re­sen­ta­tion in the state is per­mit­ted in order to split the work­ing class (to cre­ate a cor­po­ratist labor aris­toc­ra­cy), the peo­ples of the region are denied the right to self-rep­re­sen­ta­tion. On the macro­eco­nom­ic side, poli­cies may have tak­en a turn into an extreme neolib­er­al­ism. One exam­ple of this pol­i­cy suite is lift­ing sub­si­dies on essen­tial com­modi­ties in coun­tries such as Egypt that already expe­ri­ence a high rate of child mal­nu­tri­tion.7 Such poli­cies can only push more chil­dren over the edge into mal­nour­ish­ment.

It would be prac­ti­cal to devel­op macro­eco­nom­ic poli­cies that envis­age devel­op­ment even while account­ing for ambi­ent risks, name­ly those which exter­nal vio­lence has imposed at an increas­ing rate since the ear­ly 1990s. How­ev­er, the cur­rent pol­i­cy inter­face between exter­nal shocks-con­flicts and the nation­al econ­o­my under the state of ten­sions is based almost entire­ly on the non-exis­tent assump­tion of an even-play­ing field, a risk-free envi­ron­ment, and a mar­ket that works best with lit­tle gov­ern­ment inter­ven­tion. Demand­ing a lim­it­ed role for the gov­ern­ment in the econ­o­my would not nec­es­sar­i­ly be of effi­ca­cy any­where. But to pro­pose small gov­ern­ment under war or war-like con­di­tions, as have the Inter­na­tion­al Finan­cial Insti­tu­tions (IFIs), is beyond the pale. When the cross-nation­al agen­cies and insti­tu­tions that could spur devel­op­ment process­es over­look the ele­phant in the room, the wars or their rever­ber­a­tions and the lop­sided insti­tu­tion­al con­text, then it is no longer myopia that is caus­ing the rep­e­ti­tion of past errors. Instead, there is a rather marked lack of will to devel­op.

Because of declin­ing indus­tri­al­iza­tion and a delib­er­ate­ly low indige­nous indus­tri­al sup­ply capac­i­ty, the type of pro­duc­tion that issues from a mul­ti-lay­ered and nation­al­ly-based sup­ply chain, Arab coun­tries have remained depen­dent on raw mate­r­i­al exports. For fast neolib­er­al reform­ers and slow reform­ers alike, the present con­di­tion of low oil price and steep deficits-cum-low out­put growth is telling of how past and present parochial poli­cies failed or were unin­ter­est­ed in iden­ti­fy­ing the prin­ci­pal con­duit of region­al malde­vel­op­ment. To reit­er­ate, that con­duit has his­tor­i­cal­ly been overde­ter­mi­na­tion by their mode of inte­gra­tion with the glob­al econ­o­my through the inter­twined chan­nels of oil and war.

This is not to say that that there have been no excep­tions to the rule of devel­op­ment fail­ures. But in case there is an odd achiev­er, such as Jor­dan, the expla­na­tion of devel­op­men­tal suc­cess ought to be chalked up to geopol­i­tics, or a result of geopo­lit­i­cal rents, rather than on “indige­nous eco­nom­ic per­for­mance” grounds. The region­al cor­don san­i­taire is a pri­ma­ry explana­to­ry vari­able of devel­op­ment. Cer­tain coun­tries are per­mit­ted to par­tial­ly devel­op or to be spared the wrath of Islamist ter­ror, at times indi­rect­ly spon­sored by the U.S. state, due to their geopo­lit­i­cal alliances. But region-wide pros­per­i­ty can­not occur under the pre­vail­ing insti­tu­tion­al arrange­ments and exter­nal­ly-imposed wars rip­ping across the region.

The refrain that one often heard as of the ear­ly 1980s was that devel­op­ment required diver­si­fi­ca­tion away from pri­ma­ry prod­ucts – essen­tial­ly, oil. How­ev­er, diver­si­fi­ca­tion requires infra­struc­tures, legal, social and phys­i­cal that expand mar­kets with non-preda­to­ry and sim­i­lar­ly devel­oped region­al part­ners. Region­al­ism and/or trans­form­ing coun­tries into region­al build­ing-blocs to com­bine domes­tic mar­kets or entice economies of scale requires, in turn, the pro­mo­tion of invest­ment in intrare­gion­al infra­struc­ture. Giv­en the low rate of region­al inte­gra­tion – intra-region­al trade and invest­ment are quite low in glob­al stan­dards and that the Arab coop­er­a­tion treaties are mean­ing­less non-bind­ing accords, the region’s coun­tries have not seri­ous­ly pur­sued mov­ing away from oil.8 Once a mer­chant-com­prador mode of accu­mu­la­tion takes hold, based on prof­it­ing through imports and extrac­tive indus­tries, as opposed to an indus­tri­al mode, exploita­tion shifts from val­ue-added pro­duc­tion and mar­ket expan­sion of civil­ian-end use com­modi­ties to vari­ants or sub-com­po­nents of com­mer­cial exploita­tion. The des­ti­tu­tion of low­ly paid Asian domes­tics and ser­vice sec­tor employ­ees in the Gulf and else­where is an exam­ple of the lat­ter case.

Oil extrac­tion requires lit­tle labor, and its pro­duc­tive link­ages quick­ly lead to pro­duc­tion chains or process­es exter­nal to the pro­duc­ing coun­try. Exchange-based trade of pri­ma­ry prod­ucts alone cre­ates lit­tle added val­ue. His­tor­i­cal­ly, rather than opt­ing for a pol­i­cy of increas­ing mar­ket size to increase the num­ber of con­sumers, region­al entre­pre­neurs became sort of eco­nom­ic intro­verts. Their spoils arose from liq­ui­dat­ing nation­al assets and rais­ing their shares of nation­al income with­in their own fiefs at high turnover rates and, sub­se­quent­ly, stor­ing their wealth in the more sta­ble dol­lar form. The cen­tral banks sub­si­dized the rich as it sup­port­ed the dol­lar peg of the nation­al cur­ren­cy with tax­es drawn from the work­ing class. The emer­gence of a Yemeni elite maneu­ver­ing amidst con­stant war, prof­it­ing from bro­ker­ing grain com­mod­i­ty imports and hydro­car­bon exports, is a cru­cial exam­ple.

When address­ing the macro allo­ca­tion frame­works in a class of war-risk-exposed coun­tries, such as Iraq and Lebanon in the past and present, and now a suite of states sweep­ing clear across the Arab and African regions, we must pose ques­tions dif­fer­ent­ly. There is already the inher­it­ed weak­ness of being born a colo­nial­ly-bred “late-devel­op­er,” in which every region­al econ­o­my entered their post-colo­nial era with extreme­ly small indus­tri­al bases and, often, inter­nal mar­kets stunt­ed by colo­nial under­de­vel­op­ment. Their devel­op­ment had been stunt­ed and they thus came small and inse­cure into a world where size and secu­ri­ty mat­ter in the race for devel­op­ment. Mean­while, it is not only the weight of colo­nial­ism that these coun­tries have to grap­ple with. The post-colo­nial impe­ri­al­ist assaults nev­er ceased, whether mil­i­tar­i­ly, as Israel either bull­dozes through the region or cre­ates an uneven pow­er plat­form that drains resources, or in the impo­si­tion of terms of exchange and aus­ter­i­ty poli­cies that under­price labor and oth­er resources. It is not in the Sykes-Picot demar­ca­tion lines that the caus­es of under­de­vel­op­ment are to be sought – as ped­dled by the main­stream. It is in the neces­si­ty of war as instru­ment of his­tor­i­cal sur­plus-val­ue and pow­er cre­ation that the caus­es of under­de­vel­op­ment rest. The his­tor­i­cal sur­plus-val­ue of which I speak and was ear­li­er defined Abdel Malik (1981) is more than just the pile of com­modi­ties, it is also the pile of ideas cor­re­spond­ing to expand­ing cap­i­tal, which for instance includes the acqui­es­cence of West­ern fem­i­nism to the Amer­i­can bomb­ing of Iraq, Syr­ia, and Libya, states where women enjoyed rel­a­tive­ly expan­sive rights.

Regard­ing the drainage of resources, con­sid­er why when rev­enues from the export of pri­ma­ry com­modi­ties have risen region­al­ly, the rate of retained sav­ings dwin­dles after­wards, just as in the aid syn­drome where impe­ri­al­ist aid tar­gets poor invest­ment or con­sump­tion, which lat­er low­ers the sav­ing rate. As the com­po­si­tion of Arab con­sump­tion shifts to afflu­ence and ris­es, steadi­ly draw­ing on nation­al sav­ings and reserves, less and less sav­ings are left for invest­ment in pro­duc­tive activ­i­ty when oil rev­enues fall. More­over, less oil-endowed coun­tries, such as Egypt, Syr­ia, and Yemen, do not secure enough for­eign exchange reserves to smooth out the exter­nal­ly-deter­mined fluc­tu­a­tions imposed by oil mar­kets. With invest­ment lodged in short term ges­tat­ing cap­i­tal and deficits in the cur­rent account fre­quent­ly mount­ing, these coun­tries expe­ri­ence pro­longed eco­nom­ic con­trac­tion. In point of fact, Arab coun­tries exhib­it a one per­cent real GDP per capi­ta growth on aver­age between 1980 and 2010.9 It is impor­tant to note that shift­ing away from the so-called white ele­phant invest­ment projects of the post-inde­pen­dence peri­od wors­ened eco­nom­ic per­for­mance. Nkrumah’s and the Arab mega projects did not fail on their own. It is the implic­it and explic­it impe­ri­al­ist war and sanc­tions that shut them down.

Anoth­er cru­cial piece of evi­dence regard­ing impe­ri­al­is­ti­cal­ly spon­sored eco­nom­ic col­lapse is that the gov­ern­ing insti­tu­tions had fore­knowl­edge that they had to diver­si­fy and sup­port nation­al indus­try, and yet for near­ly four decades there was no learn­ing curve. They per­sis­tent­ly failed to imple­ment such a project. Such path depen­dence can­not be hap­haz­ard and must be rel­e­gat­ed to the ide­ol­o­gy of the dom­i­nant class, which is sub­or­di­nate­ly artic­u­lat­ed with impe­ri­al­ism.

The Arab world freed the envi­ron­ment to invest, but the results were repeat­ed­ly dis­as­trous. Invest­ment rates fell from over 30 per­cent in 1980 to less than 20 per­cent in 2010.10 With­out an invest­ment guid­ing insti­tu­tion and an insur­ance frame­work under­writ­ing war-like con­tin­gen­cies or force majeure attrib­uted loss­es, small, risky, and frag­ment­ed mar­kets can­not pro­mote pro­duc­tive invest­ment. The mer­can­tilist-com­prador class chan­neled invest­ment into short ges­tat­ing cap­i­tal, spec­u­la­tive or non-pro­duc­tive activ­i­ty. It par­tic­u­lar­ly tar­get­ed invest­ment in the sub­sis­tence sec­tors, espe­cial­ly agri­cul­ture, the sec­tor most required for nation­al wealth to incu­bate. Of course, neolib­er­al or spec­u­la­tive type invest­ment entailed low pro­duc­tiv­i­ty ser­vice-sec­tor jobs or infor­mal sec­tor pover­ty employ­ment. To boot, reduc­ing the pub­lic sector’s job cre­ation rate and spend­ing did not bet­ter employ­ment con­di­tions. Along­side pub­lic-sec­tor cuts under the region-wide dic­tate of the IFIs, from Egypt to Iraq, dein­dus­tri­al­iza­tion reduced the rate of decent job cre­ation far below the rate of new entrants into the labor force.

One must keep in mind that pop­u­la­tion growth rates tapered down steadi­ly as of 1960. Unem­ploy­ment can­not be attrib­uted to ris­ing pop­u­la­tion lev­els because the neolib­er­al pre­scrip­tion reduced the rate of job cre­ation to below the rate of new entrants into the job mar­ket. The demo­graph­ic argu­ment is only sup­ply-sided. The macro poli­cies adopt­ed, since cir­ca 1980, have low­ered the growth rate, changed its input com­po­si­tion (more growth from the com­merce side) and relied either on deskilling or dis­en­gag­ing nation­al labor. Hence, ris­ing unem­ploy­ment and pover­ty were the nec­es­sary out­comes of uncon­di­tion­al lib­er­al­iza­tion pol­i­cy.

It seems unlike­ly that the social forces that have cap­tured the state across the region, includ­ing to a large extent the Arab republics, would have devel­oped wel­fare poli­cies in which pri­vate inter­ests are entrust­ed with the ful­fil­ment of pub­lic inter­ests – the so-called trick­le-down effect. In a sit­u­a­tion in which extra-nation­al, and sub­or­di­nate­ly nation­al, deci­sion-mak­ing class actors seek the immis­er­a­tion of the region, Mil­ton Friedman’s “bang for buck” propo­si­tion appears to hold, but in reverse. He argued for cuts in pub­lic spend­ing because much of it is pur­port­ed­ly waste­ful and gen­er­ates no tan­gi­ble returns. Hence, bang for buck. In real­i­ty, wars of depop­u­la­tion and envi­ron­men­tal decay, the waste side of accu­mu­la­tion that is so rel­e­vant to cap­i­tal, turned out to be quite a shrewd impe­ri­al­ist invest­ment which more than paid off the ini­tial costs.

Over the long term – that is, the long-term plan­ning hori­zon of the nation­al­ist peri­od, rough­ly the mid-to-late 1950s until the ear­ly 1980s, when state-direct­ed economies reigned rough­ly from Alge­ria and Tunisia to Egypt and on to the Mashreq states of Syr­ia and Iraq – there were high­er devel­op­men­tal returns from social invest­ment, so-called mar­ket rigidi­ties and gov­ern­ment inter­ven­tion. Until today, all such spend­ing has con­tin­ued to impart a mod­icum of insti­tu­tion­al integri­ty. Even in the ongo­ing neolib­er­al peri­od, state-owned com­pa­nies and bureau­cra­cies have con­tin­ued to con­tribute to plan­ning and coor­di­nate some eco­nom­ic growth. In that sense, they have more than paid back their ini­tial costs.

In imple­men­ta­tion, macro issues are inter­re­lat­ed and inex­tri­ca­ble from one anoth­er. Ques­tions about their effi­ca­cies beg their own answers. For instance, to what extent is the prob­lem of unem­ploy­ment in some of these coun­tries an out­come of mon­e­tary pol­i­cy that tar­gets low rates of infla­tion with no regard to unem­ploy­ment? To what extent is the prob­lem of stagfla­tion in some coun­tries an out­come of a pol­i­cy-mix of increas­ing short-term inter­est rates along with nation­al cur­ren­cy deval­u­a­tions? To what extent has the adverse impact of a chron­i­cal­ly high rate of unem­ploy­ment aggra­vat­ed the con­trac­tion trig­gered by an exter­nal shock (falling oil price) and thus cre­at­ed a debil­i­tat­ing path depen­dence?

The mech­a­nisms behind these ques­tions and the pol­i­cy deci­sions that under­lie them can be seen as var­i­ous irri­ga­tion valves chan­nel­ing resources between var­i­ous nation­al­ly based stra­ta and inter­na­tion­al­ly based finan­cial inter­ests.

Put anoth­er way, they are about who – which class – has enough pow­er to get a high­er share of income, and how much. The decline of state inter­ven­tion in the econ­o­my and the retool­ing of state mon­e­tary and fis­cal poli­cies have not been class-blind deci­sions. They have reflect­ed an ascen­dant bour­geoisie push­ing back against labor. A con­se­quence is that labor share from total income fell to the low­est glob­al ranks due to infla­tion and wage com­pres­sion. That meant in coun­try after coun­try, more of the local­ly-denom­i­nat­ed wealth con­cen­trat­ed in few­er hands – for exam­ple in Egypt and Syr­ia. In turn, the steady­ing of the nation­al cur­ren­cy against the dol­lar – that is, cur­ren­cy pegs – meant more of the that local­ly-denom­i­nat­ed wealth could then be con­vert­ed into the reserve cur­ren­cy. The pegged exchange rate ceased to be a mech­a­nism for pre­vent­ing hot cur­ren­cy flows and turned into a means to chan­nel wealth not only up with­in the same soci­ety, but also abroad.11

Indeed, a coun­try can­not peg to the dol­lar under an open cap­i­tal account and still hold on to an effec­tive mon­e­tary pol­i­cy. How­ev­er, it is not the effec­tive­ness of mon­e­tary pol­i­cy that mat­ters first. It is the own­er­ship of pol­i­cy or pol­i­cy auton­o­my ema­nat­ing from the mar­gin of state sov­er­eign­ty. The sov­er­eign­ty of Arab states has been less and less marked by devel­op­men­tal capa­bil­i­ties, human well­be­ing, and pro­le­tar­i­an par­tic­i­pa­tion. Put dif­fer­ent­ly, sov­er­eign­ty inevitably has a class com­po­nent.

In times of war or war-like con­di­tions, such as clear­ly pre­vail in Yemen, Syr­ia, Iraq, and thus in the Arab World more broad­ly, the ulti­mate sov­er­eign may be alle­gor­i­cal­ly drawn from the inscrip­tion on the side of Louis XIV’s can­non: ulti­ma ratio regum (the final argu­ment of kings). The mil­i­tary bal­ance of forces, includ­ing Israel and America’s mil­i­tary bases, has become the bro­ker of sov­er­eign­ty; it has decid­ed on what terms coun­tries can be sov­er­eign. The inva­sion of Iraq is a telling exam­ple. Along with the ide­o­log­i­cal avalanche of neolib­er­al­ism, exter­nal vio­lence can explain much of the lost pol­i­cy auton­o­my since 1980.

Regain­ing devel­op­ment means regain­ing pol­i­cy auton­o­my, or the capac­i­ty for local states to act in the inter­ests of the pop­u­lar stra­ta. The pos­i­tive rela­tion­ship between pol­i­cy space and pos­i­tive devel­op­men­tal out­come is a straight­for­ward ques­tion. Many have stressed its sig­nif­i­cance.

UNCTAD, for instance, says “the idea of pol­i­cy space refers to the free­dom and abil­i­ty of gov­ern­ments to iden­ti­fy and pur­sue the most appro­pri­ate mix of eco­nom­ic and social poli­cies to achieve equi­table and sus­tain­able devel­op­ment.”12 Yet, in a patron­iz­ing tone, UNCTAD would also attribute the shrink­age of pol­i­cy space to caus­es devoid of real forms of pow­er – as if state sov­er­eign­ty for the need­i­est coun­tries is a by-prod­uct of a uni­ver­sal­ly demo­c­ra­t­ic inter­na­tion­al law. What pur­pose would it serve UNCTAD to attribute loss of pol­i­cy space to “var­i­ous legal oblig­a­tions emerg­ing from mul­ti­lat­er­al, region­al and bilat­er­al agree­ments,” oth­er than to obscure the truth?13

The high­er rate of real val­ue and resource dis­lo­ca­tion result­ing from vio­lence, over­whelm­ing­ly caused or lubri­cat­ed by for­eign actors such as the Unit­ed States and Euro­pean Union, con­tra­venes all the covenants of inter­na­tion­al law. There is in such half-truth an effort to con­ceal the hier­ar­chi­cal­ly artic­u­lat­ed social pow­er struc­tures, cut­ting across nation­al bound­aries, whose ide­ol­o­gy tar­gets a high­er input metab­o­lism of the devel­op­ing social order (the con­sump­tion of humans and nature), often by fero­cious means, as a nec­es­sary pre­cur­sor to glob­al eco­nom­ic growth.

We sim­ply can­not drop the study of social rela­tions, vio­lent social restruc­tur­ing, and their accu­mu­lat­ed his­tor­i­cal effect to dec­i­mate and recon­sti­tute val­ue in the devel­op­ing world. His­to­ry mat­ters, and side­step­ping the con­sti­tu­tive his­to­ry of exter­nal vio­lence is not social sci­ence. It is sci­ence fic­tion.

  1. Ali Kadri, The Cor­don San­i­taire: A Sin­gle Law Gov­ern­ing Devel­op­ment in East Asia and the Arab World (Sin­ga­pore: Pal­grave Macmil­lan, 2018). 

  2. Unit­ed Nations Gen­er­al Assem­bly, Res­o­lu­tion 41/128, “Dec­la­ra­tion on the Right to Devel­op­ment,” Decem­ber 4, 1986. 

  3. Uni­ver­si­ty of Texas Inequal­i­ty Project, Esti­mat­ed House­hold Income Inequal­i­ty Data Set, 2008. 

  4. Ali Kadri, “Pro­duc­tiv­i­ty Decline in the Arab world,” Real-world Eco­nom­ics Review 70 (Feb­ru­ary 2015): 140–60. 

  5. Sau­di Ara­bi­an Mon­e­tary Author­i­ty (SAMA), “51st Annu­al Report,” 2015. 

  6. Ali Kadri, “A pre Arab Spring Depres­sive Busi­ness Cycle,” in The New Mid­dle East: Protest and Rev­o­lu­tion in the Arab World, ed. Fawaz Gerges (New York: Cam­bridge Uni­ver­si­ty Press, 2014). 

  7. John Ever­ing­ton and Shereen El Gaz­zar, “Con­sumers hit hard as Egypt sub­sidy cuts send fuel prices soar­ing 78%,” The Nation­al, July 5, 2014.  

  8. Unit­ed Nations Sur­vey of Eco­nom­ic and Social Devel­op­ments in West­ern Asia, 2007–2008 (New York: Unit­ed Nations, 2011). 

  9. World Bank, World Devel­op­ment Indi­ca­tors, (WDI) (Wash­ing­ton, DC: World Bank). 

  10. Ibid. 

  11. Coun­tries with bal­ance of pay­ment con­straints are short leashed by insti­tu­tion­al lenders who can wreak hav­oc on the nation-states by sim­ply delay­ing dis­burse­ments to sup­port the nation­al cur­ren­cy (if nation­al cur­ren­cy deval­ues, infla­tion ris­es). 

  12. Unit­ed Nations Con­fer­ence on Trade and Devel­op­ment, Trade and Devel­op­ment Report, 2014. 

  13. Ibid. 

Author of the article

is a Senior Fellow at the National University of Singapore and has been a Visiting Fellow at the London School of Economics (LSE) and Head of the Economic Analysis Section at the United Nations regional office for Western Asia. He is author of Arab Development Denied (Anthem Press, 2013), and The Cordon Sanitaire: A Single Law Governing Development in East Asia and the Arab World (Palgrave Macmillan, 2018).