Arab Development Denied: Dynamics of Accumulation by Wars of Encroachment
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Arab Development Denied: Dynamics of Accumulation by Wars of Encroachment
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Product Details
| ISBN-13: | 9781783084326 |
|---|---|
| Publisher: | Anthem Press |
| Publication date: | 03/15/2015 |
| Series: | Anthem Frontiers of Global Political Economy and Development |
| Pages: | 270 |
| Sales rank: | 689,890 |
| Product dimensions: | 6.00(w) x 8.90(h) x 3.20(d) |
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Arab Development Denied
Dynamics of Accumulation by Wars of Encroachment
By Ali Kadri
Wimbledon Publishing Company
Copyright © 2015 Ali KadriAll rights reserved.
ISBN: 978-1-78308-432-6
CHAPTER 1
STOCKTAKING AND ASSESSMENT
The Arab 'development' experience of the last three decades cannot be understood outside a context of de-development. The uprisings that erupted because of misery and repression — and, foremost, because of a crisis of rule by the ruling classes (Gramsci 1971)1 — notwithstanding, wars, civil wars and the continued Israeli occupation of Palestine characterise the recent history of the region. Instead of mobilising resources for development, the surplus petrodollars of the Gulf states fund the formation of divisive sectarian identities, contribute to wasteful consumption and bolster regression. While there are differences as well as commonalities in Arab development, it is somewhat scholastic to define the various discrete shades of developmental malfunction. Rather, the scope of the research here presented addresses the social relations that repeatedly generate disasters over time. In any case, all Arab countries have fallen short of real development by different degrees. Detailing the minute differences between countries would add little to our understanding of the historical dynamics behind the collapse in development common to all Arab countries; the mere accumulation of such detailed distinctions is a form of empiricism leading to theoretical nihilism. Examining the shared social relationships that shape poor development is a more useful form of analysis, because it allows us to conceptually address the underlying causes.
Foremost among these social relationships are those linking Arab ruling classes to international financial capital. These variants of capital have much more in common with each other than they do with their own working classes. Among the many destructive manifestations of this relationship, generating sectarian/ethnic divisions in the working class within and across Arab states stands out insofar as the eruption of civil wars serves to destroy the material basis for the reproduction of working people. States such as Iraq, Syria, Libya, Egypt, Bahrain and Lebanon, among others, face the prospect of continued implosion or have crumbled already. The fragmentation of Arab working classes has reached a nadir in places like Syria and Iraq. There has been little effective effort to arrest the carnage.
Development bolsters security. Hence the Arab working-class population is being splintered in this way precisely because economic and social policies supporting a broader development strategy in the AW can principally be achieved through closer working-class alliances. Hence, to splinter the working population is to underdevelop it. Working-class alliances superseding rent-bolstered sectarian identities would provide crucial preconditions for the self-reliance needed for better growth and distribution, but these alliances have become difficult to form. The retrogression in socialist ideology has worsened steadily since the 1980s and implicates the labour process and its attendant working classes across the globe. Sound working-class alliances mediated through the state, had they existed in the AW, would have generated momentum within the region's policy space to promote productive investment and the environment required for the implementation of a development project. By itself, a cooperative economic infrastructure arising from working-class integration across the AW would for instance turn the Nurkse problematic — small markets or low demand levels resulting from poverty leading to low investment — on its head. But the reverse of rising investment has happened. Because of the divisiveness, all macroeconomic components have been heading in the wrong direction.
Another manifestation of the alliance between Arab merchant classes and international financial capitals is that the process of accumulation has increasingly shifted to commercial activity away from manufacturing. Buying abroad and selling at home has gradually supplanted industrialisation and the homogenising forces of an industrialised market economy. In addition to the role of the imperialist–comprador class alliance that erects and subsidises cultural modes of social segmentation, the move away from industrialisation all by itself entrenches social differences both within and across countries, rendering sacrosanct the despotic forms of political rule in each one. Also, the distinct economic structures of the Arab countries — their respective sizes, their foreign asset holdings, natural resource endowments and differential depletion rates of these endowments, and their subordinated mode of integration into the global economy — together offset the centripetal forces that would otherwise bring Arab working classes together across borders. The closing of factories (where they existed) and the creation of a mass of people employed in patronage-like schemes annul the public or collective spaces in which workers would meet to organise. The inherent and perpetual drive of capital to divide working people colludes with emerging facts that are in themselves promoters of disunity. Harmonisation for economic and social integration both within and across countries confronts the formidable forces of a local ruling class whose principal activity is commerce devoid of industry, and for whom the social contract is signed with international financial capital, not its subject population. For this ruling class, the function of the social structure is to accelerate resource and value grab. These are some of the issues that this book will deal with extensively. In this chapter, however, I start by depicting facets of the full reality by highlighting and exploring some relevant empirical facts. What follows, then, is a short economic history substantiated by data, where the availability of evidence allows us to scan the surface of the AW, before I go on to introduce the process of accumulation as it is determined by US-led imperialist policies and aggression.
A Synopsis of Economic History
The recent history of economic growth in the AW can be divided into three distinct periods: a period of high growth driven by comparatively heavy government intervention beginning in the early 1960s and ending in the early 1980s; a period of low growth typified by collapsing oil prices, 'free market' reforms and gradual structural adjustments extending from the early 1980s until early 2000; and a period of high oil prices and highly inequitable growth beginning in early 2000 and continuing to the present. Vulnerability to external shocks in the AW is crucial to capital's growth process there. In an environment fraught with uncertainty, economic shocks were further compounded by the liberalisation of the financial market, a freer trade regime and a public sector that became increasingly privately owned by the ruling classes. The business cycle moved ever further away from a developmental growth free of external shocks and ever closer to an antidevelopmental process. This evolution reached the point that if economic growth kicked in, commercial as opposed to industrial sources accounted for the rise, industrial value added retreated and inequity grew. This state of affairs continues to characterise the post–Arab uprising economies. The new regimes in Egypt and Tunisia, the two countries that escaped post-uprising collapse, remain set in their ways and pursue the same path as that of their predecessors.
Mainstream research on Arab growth performance using the method of growth accounting finds that the knowledge-based sector and internally developed technologies are either absent or yield a net negative impact on economic growth on account of fiscal leakage (Sala-i-Martin 2002). AW growth is said to be driven principally by its extensive components or net additions to capital and labour without the scale-enhancing effect of the knowledge economy, or what is referred to as the intensive component. This is not, however, unusual in deindustrialising economies. According to the UNIDO data base between 1970 and 2010, the shares of industry in Syria, Egypt, Algeria and Iraq went down respectively from 19 to 5, 21 to 15,3 10 to 2 and 12 to 4 per cent. So the sector that requires the most knowledge to be infused in production is in decline. It is no anomaly therefore to see Arab economies steering away from knowledge-based economies into low-productivity ones.
In the case of Arab economies, the high rate of leakages in assets, low capital-output-ratio investment and capital flight establish the relationship that underlies the allocation of resources. Not only have investment rates declined from a high 30 per cent in 1974 to around 18 per cent in 2010, but much of the investment has poured into areas that are of little or no relevance to productivity growth. The bigger share of investment goes into short-gestation-period capital and into what are commonly known as FIRE economies (finance, insurance and real estate). High imports generate most of the value added in import-led economies. The financial-capital assets that accrue circulate abroad as dollar assets. A greater part of consumption is composed of imported goods; capital flight in the case of Saudi Arabia can represent about a quarter of GDP (UN 2008b). Without the ploughing back of generated money capital into the social infrastructure, and plant and equipment, the mobilisation of national resources proceeds at rates below what is necessary to upkeep the working class and/or to absorb population growth effectively in productive employment. Under étatisme, in the immediate postindependence era and up to the early 1980s, regulating exchange and interest rates to stem the outflow of resources at prices set far below value — as was needed to maintain living conditions for local populations — was the policy choice. Thereafter, in the neoliberal age, macro prices, wages, and interest and exchange rates were deregulated at the behest of international financial capital to restrict/downgrade the expansion of the national capital stock. variations in growth rates became more dependent on the share of oil in total product, which grew over time. Mislaid investment, high levels of imports and a considerable leakage in assets have typified the neoliberal era.
Evidently, oil prices and revenues considerably impact the economies of the AW. However, the issue is not merely the 'oil curse' itself insofar as it invites imperialist aggression. Also crucial to this investigation is the changing macroeconomic environment that veered oil revenues away from contributing to equitable growth and development. The region is beset by conflict and allocates at least twice the world's rate to defence spending (SIPRI and World Bank WDI database, various years). Consequently, defining its economic attributes and establishing the threshold at which oil revenues would seep into development is by no means easy. A priori, what matters for regional development is not so much the level of oil prices or revenues per se; rather, it is principally value preserving policy and, secondarily, the oil price level that offset the costs of uncertainty and begins to trickle into productive investment activity. All other things considered, a higher level of political instability underscored by working-class insecurity and imperialist belligerence necessarily imply that for regional development to take root, oil revenues must offset defence spending, smooth out government consumption and act as a propeller of public investment while defraying an insurance premium for private investment. With persistently high levels of political tension in the Middle East, that may be too much to ask from oil — one of the most volatile export commodities in world trade (Mayer 2002).
For the time being, it appears structurally prohibitive to abandon oil dependency — to 'kick the oil habit'. Persistent dependence on oil is not haphazard; it is defined and reproduced by a consortium of Arab ruling classes and US-headed imperial powers. Assuming that development were to occur, the effects of Arab development on the sway of forces that thrive on accumulation by encroachment and militarism would be significant. This is a war region, in which the state of conflict itself is an input into global accumulation and that the world has come to internalise as a necessity. To say that the AW faces 'difficulty' in escaping the oil gridlock is a serious understatement. The share of oil relative to national output has risen over time and is now at more than half of national income. The forces that tie down development supersede Arab national boundaries. An industrialisation process in the AW resulting in a higher consumption of petroleum at home would reduce the quantity remaining for a world dependent on oil. The obliviousness with which the misery of the AW has been handled is an outcome of that global dependency, which may have led to a tacit accord on encumbering the process of Arab development.
The Impact of Conflicts
Conflicts and the persistent threats thereof exact a heavy toll on the AW. In 1991 there was a 14 per cent loss in AW output (mainly from Iraq's losses in GDP) in the immediate aftermath of the First Gulf War. This was equivalent to about US$50 billion in 1990 prices (around a tenth of total Arab output). Had the war not occurred and where the growth rate in the region would continue to rise at a modest 3 per cent after 1990, the cumulative losses in constant 1990 prices from 1990 to 2002 are estimated at around US$600 billion. (These are the hypothetical values-added losses, not the real losses, which are almost certainly astronomical especially the loss of Iraq as a cohesive entity.) The recovery from the war was lethargic and inadequate. It took about five years for output to regain its pre-1990 levels. Although this number is difficult to assess, the foregone employment possibilities were potentially between six and seven million jobs in the 1990s alone. Directly or through destabilising threats, the calamity of war imposes a heavy and unrelenting burden on the regional economy. The spectre of war also circularly justifies the rise of the class in power and the security apparatus that sustains Arab regimes and, by implication, shifts resources from productive investment to stabilisation efforts.
In the past fifty years, the Middle East has witnessed more wars than any other region in the world (SIPRI database 2009). Despite the heavily negative impact of wars on human development, there are surprisingly few studies that try to assess the effects of militarised conflicts on growth in the AW. Mainstream literature on that subject is limited to the link between militarised conflicts and trade, and assesses the direction of causality between trade and war. However, a broader perspective needs to underscore the negative effects of wars in withering a considerable part of the human and physical infrastructure. Lebanon and Iraq never fully replaced their past losses. Wars affect long-term growth, particularly by destruction of productive capacity and, in an Arab context, by the tailoring of policy to the implicit or explicit terms of surrender. Devastation wrought upon the AW ensures that the balance of forces is further tilted in favour of imperialist powers that have a direct interest in cheapening and grabbing Arab as well as other Third World resources. Notwithstanding the sale and exchange of commodities on the market, imperialism is a relationship in which undervaluing and grabbing resources by more advanced countries contributes to their profit rates.
War is costly in the sense that it increases public debts and tax burdens and distorts industrial production through the disproportionate expansion of militarised manufacture and imports. However, this is not why the impact of war in the Arab region appears to be not merely lingering but permanent. In the AW, there are very low tax rates, the public domain is privately controlled and most weapons are imported; hence, the tax consequences of war are less relevant to economic performance. The artificial exaggeration of world addiction to oil time and again reinforces the scramble for the region's resources to the detriment of the working population — not only in the AW but around the globe, as a result of the costs of war and to the environment. Pauperising the Arab working class and subjecting it to the misery of war serves by the demonstration effect to prop up an ideology of ultranationalism in the centre. By the lifeboat ethic, the hordes of barbarians are said to be at the gate of the great Western civilisation.
(Continues...)
Excerpted from Arab Development Denied by Ali Kadri. Copyright © 2015 Ali Kadri. Excerpted by permission of Wimbledon Publishing Company.
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Table of Contents
Introduction; Chapter 1: Stocktaking and Assessment; Chapter 2: De-development and Conventional Policies; Chapter 3: Class Politics Masquerading as Democracy; Chapter 4: The Stillborn and Decomposing Arab State; Chapter 5: War and Oil Control; Chapter 6: Dislocation under Imperialist Assault; Chapter 7: Arab Disintegration and the Rising Power of Imperialism; Chapter 8: Commodification of Labour Coming to Conclusion in Times of Socialist Ideological RetreatWhat People are Saying About This
‘ “Arab Development Denied” is an exciting and dynamic examination of how and why countries of the Arab League have been impoverished and underdeveloped.’ —Ray Bush, University of Leeds
‘Ali Kadri has written a book that is essential reading for anyone wishing to understand the economics of the Arab world, combining a provocative political economy analysis with careful attention to detail. I strongly recommend it.’ —John Weeks, School of Oriental and African Studies, University of London