Food has to be paid for, but not wages

‘Wrong sort’ of privatisation

In the first of two articles, Yassamine Mather examines the development of Iran’s economy since the Islamic revolution

The economy of any country inevitably plays a significant role in its politics. Yet, when it comes to Iran’s Islamic Republic, for both its defenders in the ‘anti-imperialist’ left and its opponents on the political right (ranging from neoconservatives in the Trump administration to royalist and bourgeois liberal Iranians), the nature of country’s economy, and the effect this has on class struggles, is completely ignored.

For supporters of the regime in the ‘anti-imperialist’ camp, it seems that the best solution is not only to turn a blind eye to what is going on inside country in general, but also to remain silent about the neoliberal economic policies of the capitalist Shia rulers. For the rightwing opponents of the regime - many of whom have rallied around the cult of opposing the Islamic ideology of the religious state, as opposed to its economic and political policies - defending liberal democracy and ‘civil society’ with the aid of ‘regime change from above’ also requires ignoring those neoliberal policies. The immediate question that comes to mind is: if US-style regime change from above can produce such heaven on earth, why we are not witnessing such a phenomenon in Iraq, Afghanistan and Libya?

I intend to deal with two issues that arise from the above in this and a subsequent article: firstly, Iran’s economy and the root of recent protests; and, secondly, the issue of the state and ideology under capitalism.

On the question of Iran’s economy then, the following paragraph from a report by the World Bank is a reasonable summary of the situation:

Iranian authorities have adopted a comprehensive strategy encompassing market-based reforms, as reflected in the government’s 20-year vision document and the sixth five-year development plan for the 2016-2021 period. The sixth five-year development plan is comprised of three pillars: namely, the development of a resilient economy, progress in science and technology, and the promotion of cultural excellence. On the economic front, the development plan envisages an annual economic growth rate of 8% and reforms of state-owned enterprises, the financial and banking sector, and the allocation and management of oil revenues among the main priorities of the government during the five-year period.1

Let me summarise: privatisation and the maximisation of profit for the sake of ‘growth’ (plus the ending of welfare subsidies) - does it sound familiar? This is ‘austerity’ economics we are so familiar with in the UK. And the consequences these policies have had in Iran are well known. On February 25 workers from the Foulad Ahvaz steel company were demonstrating in their thousands against the non-payment of wages. Their placards sum up the consequences of these policies: “We have not been paid for seven months.”

My question to those on the left who defend Iran’s internal policies is: Are you saying we defend western workers against capitalist exploitation and neoliberal economic policies, but Iranian workers have to put up and shut up, because their country is facing the threat of war? No doubt that threat, along with sanctions, has played its part in the country’s disastrous economic situation. However, no-one can deny the role of successive governments - both ‘reformist’ and conservative - in creating the current situation.

Supreme leader Ali Khamenei has responded to the working class protests engulfing 75 towns by admitting that after 39 years the Islamic Republic has failed to deal with the gap between rich and poor. Many Iranians will go further and say the gap has widened since 1979. Ayatollah Ahmed Jannati, chairman of Iran’s influential Guardian Council and speaker of the Assembly of Experts, stated: “People’s quality of life is terrible … whenever I eat, I am disturbed because we have all the necessary means, while regular people cannot afford to buy food.”2

How can those claiming to support the Iranian people ignore the policies that have led to this catastrophic situation? How can they ignore the daily struggles of Iran’s workers against the religious state’s capitalist policies? How can they ignore the systematic non-payment of wages - which has become part and parcel of the government’s conscious policy of weakening the working class in pursuit of further privatisation? Both strands of the regime have been competing with each other over the implementation of the neoliberal agenda - let us not forget that it was Mahmoud Ahmadinejad - the darling of the conservative factions and the man who claimed to represent the poor and the disinherited - whose government was applauded by the International Monetary Fund as a model when it came to the implementation of ‘restructuring’.

So how did we get to this situation, when the working class played such a significant role in the downfall of the shah? The reality is that the Islamic government’s first task was to suppress the working class - something that started only weeks after it came to power. This was followed by a savage attack on the radical left, followed by general repression against even those sections of the reformist left who had supported the new regime.

Throughout the last three decades the Iranian working class has continued its struggles, although mostly in a very secretive and circumspect way. But that is no longer the situation. Everyone admits that what sparked the protests of December and January were the daily demonstrations and sit-ins carried out by workers demanding payment of the wages they were owed, as well as job security and an end to corruption.

Surely at a time when the Iranian working class has such a prominent role our internationalist duty is to act in solidarity with them, while at the same time continuing to oppose threats of war from the US. I am not sure why such a position is so hard to grasp for those writing on websites such as Counterpunch and Global Research, and claiming to be on the left.

Three stages

In a valuable article on the various stages of capitalist integration in Iran, Ramin Motamed Nejad has described three distinct periods and what follows is my summary of his work, which is currently available only in Farsi.

1. The 1950s-1980s covered both capitalist development during the Shah’s era and the inevitable slowdown immediately after the 1979 revolution and during the eight-year Iran-Iraq war.

2. The second period is defined as the transition to a bureaucratic capitalism in the 1990s - a period of reconstruction and the rebuilding of the economy after a devastating war. It also featured the establishment’s recognition of the nuclei of a modern state, in terms of both the expansion of the state bureaucracy and its effect on the private sector. This period saw the growth of a new middle layer of bureaucrats, who were in favour of capitalist development and pursued it by granting deals to contractors in both the private and public sectors in exchange for personal or group financial gains.

Here we see the start of what was to become an endemic part of Iran’s economy: corruption. However, contrary to what most Iranian bourgeois commentators believe, this process in not unique to Iran. It is not even unique to the developing countries. Of course, levels of corruption in the developing countries are generally much higher, but, as an article in the Financial Times reminds us, it also afflicts contemporary capitalism in advanced industrial countries.3

The 1990s in Iran coincided with a period of establishment or renewal of major industrial complexes, as well as the establishment of newer small and medium-sized enterprises. Motamed Nejad reminds us that “some of these were created (others reconstructed from what existed prior to the February uprising) within the framework of governmental institutions (such as the ministries of oil, energy and transport), or quasi-governmental organisations (such as military institutions or various organisations like the Foundation of Oppressed Persons). Undoubtedly, along with large private industrial units and groups belonging to governmental, quasi-governmental and non-governmental institutions, these were highly influential in the development of industrial capitalism in Iran.”

Inevitably the transition to a modern bureaucracy has created competition, along with disagreements between state administrators and successive governments. Ideological differences and pursuit of contradictory interests between the various factions of the regime is often reflected in differences over political programmes and current priorities.

3. The third stage started in the early 2000s. According to Motamed Nejad, the government faces many problems in the economic arena. It is not able to raise sufficient taxation and as a result has inevitably begun to eliminate subsidies. It faces a crisis of non-payment of claims from all sectors of the economy, and in return for a portion of these debts, makes concessions, which have included giving away shares in many state-owned companies. Since the mid-2000s, the government has become ever more dependent on the owners of capital, and on the shareholders and managers of large economic groups. As a result, there is interdependence between capitalists, shareholders and private institutions, and various public, governmental and quasi-governmental institutions. This is crystallised in various economic, political and social networks, and this has meant that large industrial, financial and commercial groups within these networks (and not just in different markets) are cooperating with each other.

In summary, capitalism in Iran can today be described as neither a state-run nor a market economy. It is an economy in which its various sectors (industrial, commercial, monetary, banking, finance, etc) are loops of an integral and inseparable chain.

We know from research done by many economists that the Saipa automobile group and the Ghadir Investment Company have become major financial-industrial complexes. The pattern is described by Motamed Nejad in this way: “The concentration of industrial, monetary, financial and commercial capital within such groups represents the emergence and consolidation of major economic powers that embrace various structures and layers of the Iranian economy.”

Since the early 2000s we have also seen the emergence of numerous ‘private’ banks. Some are associated with large economic industrial groups, while others are part of a myriad of governmental, semi-governmental and non-governmental institutions. For example, Saman Bank is involved in retirement funds for steel and copper companies, while the car manufacturer, Iran Khodro, is the main shareholder in the bank, Parsian.

In other words, following the recommendations of the World Bank, successive governments, including that of Ahmadinejad, have overseen the transfer of state-owned shares to the private sector, including cement, steel, mines, shipping, the petrochemical industry, automobile and power plants, together with a major part of the service sector, such as telecommunications, banking, insurance and hospitals. In addition government agencies, including ministries, are encouraged - at times forced - to sell ‘surplus property’ in order to finance their expenditure.

World over

Bourgeois liberals in Iran keep complaining that these are not examples of privatisation proper. Individuals and groups associated with various factions of the regime have been amongst the beneficiaries of the selling and redistributing of state-owned companies. While this is true, it is precisely the route privatisation has taken all over the world. Was post-Soviet privatisation in Russia or eastern Europe any different from what has occurred in Iran? The answer is no. Was the privatisation implemented in Iraq or Libya after US ‘liberation’ any different? Again the answer is no. Is there anywhere in the world where privatisation has led to a decent ‘civil society’ (the liberal bourgeoisie’s term, not mine)? Not as far as I know.

The Iranian state, economic and academic institutions together act as a major propagandist for neoliberalism. They might have turned up late at the party - indeed at a time when neoliberal capital is facing a crisis. However, they are in substance no different from their counterparts in the rest of the third world.

Our bourgeois liberal opposition’s portrayal of the ideal ‘market economy’ flourishing in a post-regime-change Iran remains a far fetched illusion. What is left for them is to go on and on about the ‘ideological state’. In response to that, the second part of this article will address the issues of capitalism, state and ideology.



1. www.worldbank.org/en/country/iran/overview.

2. https://en.radiofarda.com/a/iran-jannati-concerned-about-regimes-future/29023152.html.

3. www.ft.com/content/ca43edee-8bdd-11e6-8cb7-e7ada1d123b1.