Is an "Islamic political economy" in the making across the Middle East and North Africa?: a path-dependent institutional change analysis.

• Author: Akan, Taner
• Position: Case study

Contemporary Muslim countries were either derived from the transformation or breakup of earlier regimes, such as the Ottoman Empire, the Iranian monarchy, and the Tunisian, Moroccan, Egyptian, and other Sultanates, or built up as new territorial entities, such as Syria, Iraq, Jordan, Indonesia, Malaysia, Nigeria, and Senegal. (1) In the Middle East and North Africa (MENA) countries, which became independent after World War I, World War II, and up until the 1970s, three main forms of political regimes were established: elective, parliamentary, or quasi-democratic (Syria, Egypt, Iraq, Sudan); authoritarian constitutional monarchies (Jordan, Morocco, Kuwait, Bahrain) or absolutist monarchies (Saudi Arabia, Oman, Qatar, the UAE); and single-party states (Algeria, South Yemen). To institutionalize these regimes, in most cases, the civil-military political elites structured a fragmented typology of political economy (PE) primarily by boiling norm-contingent Islamic action down into the civic sphere and forming an extractive coalition with rent-seeking business circles. Over time, this fragmentation evolved through the intermingling of Islam, secularism, liberalism, socialism, nationalism, and militarism in various combinations, ranging from the adoption of state capitalism or socialism by the military elites in Egypt, Syria, Iraq, and Algeria to petroleum-sponsored authoritarian regimes in Saudi Arabia and the Gulf states, acquiring an ethnic component particularly with the catalyst of anti-imperialist sentiments.

In broad strokes, the Arab Uprisings can be suggested to be the upshot of the accumulated dynamics of change emanating from the interrepulsive dialectics embedded in the institutional failures of these fragmented regimes. Further, these movements are fueled not only by the sparks of dissent amassed by countercylical Islamic, leftist, or liberal movements across the region but also, and in fact more directly, timely, and conclusively, by the unorganized civic forces arising from each segment of the society, particularly the youth, who suffered from such endemic ills as unemployment, soaring bread and basic food prices, increasing poverty, and the lack of freedom. (2) During this stage, the complete overturning of or partial revisions to the formal rule of these regimes--such as in Tunisia, Yemen, Egypt, Libya, and others and as in Jordan or Kuwait, respectively--have unleashed a process of chaotic transition at the crossroads of developing a new institutional stock, revising the old establishment, or protecting the vested interests of political or economic actors.

In PE terms, what emerges from the long evolution, particularly in the 20th century, and the current praxis of Muslim nations in the region is an ongoing ambiguity among the pure theory of Islam, its practical manipulation, and restriction by the contemporary political monopolies to keep their rule afloat. There is also a blurring of the lines between the praxis of these Muslim communities in the region under the assimilative and adaptive power of national authoritarian regimes and of popular dynamics of transnational communication and exchange, and the demands of structural change in these regimes by the unorganized ordinary masses and the revivalist Islamic political movements, whose role seems to be more impelling in the reorganization of these societies. In this respect, the main debate on current transformation revolves around whether the embedded PE dynamics of the region's countries would incur a substantial change and whether the direction of this change would be towards an orthodox Islamic model. (3)

The objective crystallization of this contentious spiraling of Islamic theory and the flawed praxis of contemporary Muslim-majority countries requires avoiding the assumption that a theory of PE would excuse its malpractice or that malpractice would debunk its theory. Structured upon this methodological distinction, this paper aims to clarify the above-noted ambiguities and delineate the possible trajectories in the MENA region using the case study of the high-income Gulf countries, the upper-middle income Tunisia, and the lower-middle income Egypt. To this end, the paper examines, in the first section, the current institutional stock of the case countries. In the second section, the agenda of the countercylical Islamic factions under the aegis of the theory of Islamic PE is explained. In the third section, the continuity and discontinuities in this stock during and after the Arab Uprisings through the conceptual framework of the eight patterns of path-dependent changes that the author develops are outlined. Finally, in the concluding section, what type of path-dependent changes would be expected during the current transitional period of these countries between their institutional path-dependencies and the structural dynamics of an Islamic PE is analyzed.

A concise examination of the basic institutions of Islamic PE in the third section will enable us to pin down not only the institutional stock that underlies the PE programs or ideals of the Islamic movements or political parties in the case countries but also the institutional deficits between the theory of Islamic PE and the praxis of the Muslim communities. This allows us to contemplate the next step on the path of a potential Islamic transformation at the hands of these Islamic organizations with popular democratic support. Thus, the developments, such as the closure of the Freedom and Justice Party of Egypt, cannot outdate our analysis, as the successive parties of the Egyptian Islamic movement are likely to adapt a similar political or economic program in compliance with the building blocks of Islamic political economy. This was in fact the case for the five parties affiliated with the National Outlook Movement of Turkey. From the early 1970s to the early 2000s, the former four of these political parties were closed down by the Turkish Constitutional Court, in most cases in the aftermath of a coup detat, but the building blocks of their programs, adapted from the basic Islamic institutions, remained the same to a great extent.

Muslims' Political Economy at Praxis in the Gulf Countries, Egypt, and Tunisia

This sub-section aims to examine the institutional stock of the high-income Gulf States, upper-middle income Tunisia, and lower-middle income Egypt. Figure 1 illustrates the main institutional interactions among polity, economy, market, and society in the Gulf countries. In this sub-section, instead of delving into the context-specific nature of each institution shown in Figure 1, I concentrate on the overall systemic impact of their interactional implications. In due course, I also elaborate on the points of divergence between Egyptian and Tunisian PE from the depiction in the figure. Table 1 documents the basic national and international macroeconomic and social indicators in these countries. Where data are scarce, I give the average of one or two decades under the headings of average 1980s and 1990s, 1990s or 2000s.

Despite munitias in the architecture of legislative and executive bodies in the Gulf states, the prevalent praxis is that the ruling Emir, Sultan or King governs the country with a consultative or advisory council or a council of ministers that he can appoint, suspend, dissolve, or change. In the case of national assemblies or bicameral legislatures, as in Bahrain, Kuwait, and Oman, the ruler is predisposed to contain the council, whose members are appointed by him, and to manipulate the electoral law to prevent the oppositional groups from acquiring a majority in the selected councils. (4) The lack of vigorous judiciary or subversive civic movements to structurally constrain these autocratic discretions consolidates the systemic power of political monopolies. (5) Thus, under ordinary circumstances, the opposing ethnic, sectarian, civic or political groups, if any, are not the de facto alternative for the ruling families but are spontaneous voicers of urgent socio-economic demands on sharing economic surplus. Before their overthrow, Mubarak and Ben Ali incessantly ruled Egypt and Tunisia between 1981 and 2011 and between 1987 and 2011, respectively, no more democratically than the political monopolies of the Gulf states. In Egypt, for example, certain corporatist organizations with compulsory membership, such as student unions, were founded and served as the mechanism of the state's control over the masses.

The model of PE in the Gulf states, as observed in Figure 1, was structured upon congealing a potential social uprising through corporatist welfarism and through direct or controlling repression by military force. Corporatist welfarism refers to the provision of generous social benefits and subsidies, including housing health, education, electricity, water, and fuel, to the public to buy more submissive time, thereby perpetuating the vested structure of rentier states. Indiscriminate subsidies are also easily bestowed on productive industry and agriculture in the form of capital, electricity, water, and fuel. The total amount of explicit and implicit subsidies makes up a high proportion, causing resource misallocation, particularly by distributing these subsidies through informal patronage channels. (6) The mainstay of corporatizing welfarism is the extremely low rates of direct or indirect taxation in all of these countries, except Qatar, along with moderate inflation. However, such passive welfare provision does not yield an equal division of labor and income. (7) As shown in Table 1, the Human Development Index for the region decelerated during the period of 1990-2010 compared with 1970-2010. Despite the existence of comparatively decent working conditions in the public sector, the lack of protective private sector employment law or its ineffective implementation results in labor abuse and poor compensation. (8)

The budget surpluses, which are in...