PEN-L message, A reformist line on the causes of slow industrialisation in th

A reformist line on the causes of slow industrialisation in the arab world

In a static and absolute sense, the ARAB WORLD region is overpopulated. Relative to its huge wealth and underutilised capital resources, this region is not overpopulated. The reasons for this gap between available resources and the low rate resource utilisation go beyond a price mechanism that allocates resources. Even in the best of examples of laissez-faire markets, and these are many in the region on account of the nearly complete absence of effective capital or progressive income taxes, the market machinery on its own, as elsewhere, will not socially optimise resource allocation. Moreover, in this region a combination of socially unrelated fiscal controls and the absence of many of the political and judicial controls of the market, which allow it to act as a self-expanding social entity, make matters worse in the sense that the spill-over from private to social benefits becomes rather encumbered. In this region, small markets with low purchasing power conceived at birth in a way that allows their vertical integration into the global economy via the primary product channel dominate the landscape. Countries in the region continue to export primary products with little value added and import manufactured goods from the more developed economic formations. But more importantly, the very small market structure that is rent-based prohibits expansion towards regional neighbours. Already, there exists the fact that ?small? in a globalising world represents in itself a disincentive for capital accumulation unless very specific differentiating roles are adopted in the international division of labour. But there are also other reasons that constrain regional industrialisation. Internally, the articulation or sharing of power and tribute between a ?rent appropriating or bazaar like class? that hoards rent conjointly with the political elite displays little interest in relinquishing a social rapport that has so far worked well for its beneficiaries. Externally, economic expansion or cooperation between neighbouring regional markets would result in strengthening the economic and political position of an Arab conglomeration whose interest may run counter to an international security arrangement tacitly enshrined at the very inception of the regional nation state. Simply, a more integrated Arab market constitutes a potential for a more cohesive Arab regional position. Thus, irrespective of how prices or price ratios move to allocate resources, in the status quo of small markets saturated with capital and lacking labour, existing side by side next to an abundant labour and capital poor neighbouring market, so long as the acquisition of rent proceeds without much labour effort under the existing distributional conditions little will have to change. More importantly, the usual resource allocating mechanisms that may be based on social values will not ascertain themselves here and, subsequently, one regional market will invariably remain closed to the next because it may potentially throw out of balance an already existent indigenous articulation of social classes and an international security arrangement that is at the very foundation of the regional capital accumulation process.

At the heart of this arrangement is the close bond that welds together the interest of the political and merchant elites. Hence, the relationship of the nation state with indigenous capital is not a matter of co-habitation; the state and capital are one and the same with little recourse to conflict of interest clauses or a system of checks and balances mediating differences between social classes. Although there emerges instances where regional industrial capital pushes through with minor reforms, a rent based social class that is strongly wedded to the political power apparatus sees little interest in intra-regional industrialisation. That is why reform in this region becomes an issue of the dominant social class turning against itself. Indeed, there is no record to date in which a rentier class undertook to redistribute assets with the aim of merging small regional markets in a common industrial project. It may be that at times a redistribution of wealth and income between international/national elites and the broad regional mass base are allowed, but if so, never to a degree at which regional integration allows for an indigenously driven type industrialisation cum accumulation process. Consequently and not surprisingly, the region may employ millions of extra-regional workers in the Gulf States; whilst millions of non-Gulf regional workers face the prospect of joblessness next door or, as it is the case recently, even at home. It is invariably the role of an effective demand component that should be ideally driven by additional productivity gains and rising wages that is being wittingly overlooked in the regional framework.

However, the status quo as argued above and, in light of the vested interest of the regional power wielding elites, does not amount to an irrational measure. As a policy line, fragmented small markets, at least because of the similar cultural heritage or the more or less common language factor, deter a relatively culturally integrated whole from being empowered economically. This immovable anti-regional cooperation position represents the prime regional resource allocation mechanism that is, at rock bottom, a product of an internal class articulation that finds a cosy niche in the presently prevailing international security framework. It is this reunion of social relations in which regional and extra-regional forces coalesce to pocket rent and impede regional integration and industrialisation; in it, the dynamics of the social system are for the absolute number of the poor and the unemployed to rise. For matters to take on a different course, before talk of ?prices or price ratios,? there has to be a viable market as a social institution, one that affords a disciplining of the price system through public participation. In the absence of that precondition, which arises out of an internally driven demand for reform, as opposed to the latest extraneously requested calls for change; development is likely to continue to be the lopsided process it has been.

In the ARAB WORLD region the welfare state is not primitive; it has yet to emerge on the basis of rights based culture. What transpires regionally is a vestigial social welfare maintaining function that unfolds in consortium between the modern nation state and the yet un-dispersed extended family system. To both functional entities, taking care of the member of the clan, sect or pre-modern forms of social groupings is a matter of course because in the disarticulated social structure the rise of the state did not supplant the pre-existing social bonds as the principal mode of social organisation. The historical process, which allowed the welfare state to come into being in the western hemisphere, shares some resemblance to the one here, but it is fundamentally not the same. Whereas economic crisis spewed forth welfare enhancing regimes through effective demand management in the West, ones that were meant to calibrate political stability and equilibrate rights; in this region, the nascent nation states were either perennially in crisis or in search of an identity and, in this state of existence, it is the former function that held sway. It may be that at times, in some countries a redistribution of wealth, namely agrarian reform, took place, but these measures were initiated from the top down in a way that excluded broad public participation and kept intact forms or rigid channels of social control. In due course, many of the passed down gains were lost to the same old elites or a reconstituted variant thereof that upheld its control over the state and its politics.

Social welfare tasks continue to be viewed as ?charity? rather than ?right? even when the social system in its existing modalities will never be able to provide decent jobs to a sizeable proportion of the population. This lack of adaptability to new conditions that kept in place rigidly hierarchical forms of management is in fact a preservation of a set of social relations that underpin this peripheral mode of capital accumulation, one in which, rents and rent redistribution between local labour, national and international capital constitute the very basis of its dynamics. That inherited structure is by no means a force majeure, but it is a major force to deal with before contemplating change. Reforms and trade treaties emanating from the outside tend to erect more divisions between the Arab states making more profound the already existing rent and or quasi mercantilist social mode. The Arab states earn the hard currency and transfer it back in one form or another to the their big trading partners. The social impact of this unbalanced mode of integrating into the global economy further widens the gap, economic, social and cultural, between social entities or groups linked to external markets through oil and those that have become marginalised. Already the region displays the highest inequality in income distribution. Social groups left out of the wealth pie, will increasingly distinguish themselves culturally from those that develop western values and may invoke their indigenous culture in the struggle for equality. Governments, in turn, appear to resist the mounting pressure by placating public opinion through reasserting patriarchal mores or habits and delaying overdue reform. It is therefore difficult in this context to introduce the required social reforms when the political agenda remains stagnant. In this globalizing world, the region?s most discrete task of all remains in differentiating between which "values are pertinent" and which "are not" from an increasingly polarised world. ARAB WORLD?s position is to develop social policies aimed at protecting the differentiated rights of the marginalized and to instil a culture of democracy in which social differences are mediated by peaceful means. The redistribution of the wealth pie and the transition cost should not be cause for inflexibility in the region. Setting social conditions on a changing path requires the understanding of many key players in the international community that a ?non-militarised commerce? and a positive correlation between private and public interests need be the international future norm.