13.09.2013 Author: Alexander Filonik

The Arab World: Searching for Development Options

A certain share of those people shaping modern Arab thought speak openly about their doubts as to recognition of capitalism as an incontestable system for optimizing economic and interpersonal relations. Arab ideologists are in search of a special development option for their nations, which do not belong to the “golden billion” club. They believe that a combination of state regulation and distribution, while preventing local capital from transforming into monopolistic groups and loading it with social obligations, may appear as the correct path to follow, and create a real social-economic discourse of Arab development. It is this version of national capitalism that must become an antipode for the Western understanding of the market economy, and a guarantee of not repeating the blunders of the West – which has developed its economy to a degree of corporatism never seen before, thus making its economic subjects superior to society, its political institutions, and economic preferences.

With much certainty, we may suggest that creation of the promised development pattern – as it is seen by its supporters in the Arab world – must be preceded by a long preparatory stage, moving through which can surely be accelerated by closer interaction with market economies of the West. Yet this is countered by the opportunity to compensate for contacts with the West by traditionalism and conservatism of still large segments of the population and business communities, which have somehow adjusted to capitalism or survived the twists and turns of non-capitalist orientation. In any case, they are sceptical about activities of large speculative capital, as well as of other similar forms of private capital, the chosen representatives of which can create a kind of an informal circle of super-rich economic and business elites from among citizens and subjects of various Arab countries. These elites can potentially unite their efforts to solve specific issues at the national, regional and maybe even at higher levels.

In other words, a set of powerful factors exist, which hinder development along some specific path. Even now, they only allow slow transformation of Arabic communities into a modern social and economic system, and they are linked with gravitation to peripheral forms of social and economic organization; they determine the unwilling involvement of society and the entrepreneurship into processes of economic liberalization and privatization. Overall, any powerful breach of the already established state of affairs is perceived as a threat to deep-rooted welfare mentality and the locally recognized ideas of social justice. The long history of this phenomenon does not provide any grounds for us to believe that such a mindset could be extinguished in the nearest future, or that it will not influence development processes even in the long-term prospect.

The way to the future should be through appeasement of wide public discontent and overcoming instability in domestic policies that have developed from the most powerful economic dysfunctions. In other words, such explosive forces are at work now that there are no minimal conditions required to neutralize them at the moment, while the direct effects and aftereffects of these factors on the future events cannot be doubted.

Loss of peace in the society as a result of the Arab Spring and destruction of its productive forces contains a direct threat to economic security, which has lacked any serious guarantees for decades in the Arab world, because of social experiments, wars, local crises and natural disasters. In conditions of a new round of falling behind the industrial leaders of the world, hanging up in the stage of transition to more intensive forms of labour and types of production, with presence of other factors limiting these opportunities, Arab leaders of the new wave will most probably act by the patterns of the preceding period. They will hardly be able to normalize the deep processes, restore the full-fledged reproduction cycle in the economy, optimize their relations with the people, and lay the basis for civilian dialogue – and not even because of historical reasons, but more due to a fierce struggle for power that breaks links within the society, antagonizes it, and hinders economic activity. Intellectual ferment and uncertainty of the future in the opposing sides of the struggle are threatening to become a permanent factor of political life, accompanied by the inevitable weakening of foreign policy positions and melting opportunities for attracting not only foreign investments but also international aid.

This tendency is noticeable even at the current stage, and there is clear evidence to the effect that the process is becoming a long-lasting one, and can develop at a faster rate in the nearest future. This is indicated by the mere extrapolation of events, let alone mentioning the fact that stimuli for exacerbation are increasing because of the permanently aggravating internal situation, depleting resources, broken market links and widening boundaries of what is permitted in the society. Taken all together, these are destructive factors, which will only accumulate the energy of destruction when treated with connivance.

Internal economic and political discord in the Arab world, given the low capacity of the ruling regimes, only encourages external powers to interfere into their domestic affairs in an effort to adjust the existing situation to suit their own interests. It may be expected that in the future, external pressure in different ways will be a dominant method applied by industrial nations of the West in their interaction with Arab regimes of any orientation. Particularly vulnerable to such treatment are the countries which, due to lack of resources and independent course in politics, will have more chances to be “democratized” and “modernized” by industrial nations. It is easy to predict how such methods of accelerated development may impact on the destiny of Middle Eastern and North African states.

Even without crippling methods, the Arab social and economic practices in their progressive advance will be prone to evolve mostly in accordance with their laws, i.e., slowly, cautiously and selectively. At the same time, one should bear in mind the fact of general acceleration of the development processes, and unification of methods of economic activity in the world, along with these being supplied with brand new mechanisms, instruments and models. Such technological discourse will shake up the Arab world and probably even make it act in anticipation in some cases. Even then, though, we would not be able to say this world can leave its usual trajectory, and that both its parts – the oil-exporting and the oil-producing, the capital-excessive and the capital-lacking – will come to level out their growth potentials. The latter has not achieved even a stable growth yet, and the notion of the meaning of pursuing development without a long-run objective will hardly gain a positive meaning in Arab territories in the foreseeable future, as the task by itself is impossible because of conditions of such a contest. In this connection, in the next decades the Arab countries can hardly hope to increase and improve their potential so much as to be completely ready to enter into a new stage of growth, where technological novelties will play an incommensurably more important role than they do now. Most probably, the point will be just to keep the current figures and, in a proportion, maintain the current reproductive performance. This being the case, searching for their development options might turn out to be not so productive.

Alexander Filonik, PhD in Economics, leading research associate at the Centre for Arabic and Islamic Research, Institute of Oriental Studies at the Russian Academy of Sciences, exclusively for the online magazine “New Eastern Outlook”.

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