Iran: Affluence amid Poverty

Iran: Affluence amid Poverty
Ali Asghar Kazemi
April 11, 2008
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“Wherever riches have increased the essence of religion has decreased in the same proportion.” Max Weber
* * *

Thirty years after the coming into power of the Islamic revolution in Iran, a sharp social disparity and economic inequality is reaching its alarming threshold. While galloping inflation robs overnight the pocket money of deprived citizens, wealthy people are perplexed as how to spend their extra riches. At the turn of the Persian New Year, once again the apparatus of “trial and error” got under way and the president made another decision to fire two key cabinet members responsible for economy and domestic security. Similar changes have taken place last year with other cabinet ministers.

This short paper attempts to comment briefly on the following points.

* How far these cosmetic alterations are responsive to the demand for effective governance, self-sustained development and responsible leadership?
* Do we need to make frequent modifications at the individual level to cure the system or we have to make bold structural changes at the strategic and systemic stratum?

* * *
Three decades after the revolution, the Islamic leaders still blame the defunct Shah regime for their failure to achieve economic and social development. It seems that there is no consensus among responsible people as to the essence of development in the country. Some would like to bring oil revenues on people’s tables through subsidies and cash payments (the populist president); and others prefer to boost imports of luxury goods and consumable for a dual purposes: a) to patronage their domestic protégées in Bazaar for easy business, b) to boost their ties abroad for eventual hard times and crisis situations. Of course both are supposed to understand people’s hardship and pretend to remedy the deplorable condition.

While oil revenues have quadrupled during the past two years, the surplus money instead of being invested in long range development projects is just spent to import useless junk goods from China and few other countries in order to satisfy political partners abroad and insatiable demands of nagging domestic affluent groups. Indeed, this process only benefits the few “haves” at the expense of the large “have-nots.” Luxury residences, flashy cars, lavish parties, sumptuous travel abroad etc. are now common occurrences even among arch-revolutionaries, clerics and pasdaran (Revolutionary Guards) and few other “nouveau riches.”

Optimistic estimates show that about 85% of the national wealth belongs to only 10 to15% of the upper echelon class of the country Traditional middle class is gradually falling below poverty line. The rest of the people have to live on subsistence. It seems that we are facing an amazing paradox in a society where it was supposed to set a model of classless and just Islamic state. Whether this is a symptom of Ibne-Khadun’s decadence of the Moslem urban development, it remains to be seen!

Indeed, the idea of development is many sided. Development in general embodies hope, and onward look to the future. Each individual within a nation has inside him the potential qualities to develop, provided that suitable social and political environment is available.

The Aristotelian idea of “realization of potentiality,” combined with the notion of distributive justice, remains the foundation of all development politics. It is generally suggested that “the best policy maximizes growth with equity; it effects the proper balancing of individual wants and needs against the collective good. Growth plus equity therefore equals fulfillment.

Development usually foreshadows economic inequality, others prefer political inequality and more control over economic growth. This is how actually various political systems set their social objectives and goals to the right or left of the balance, and make judgment on their trade-offs. For example, the communist states of the past repressed political liberties in favor of equal distribution of economic opportunities. A capitalist liberal state, on the other hand, may promote political equalities which may ultimately produce sever economic inequalities. Finding an appropriate synthesis of the middle ground is indeed difficult task.

One important issue in this regard is to determine whether political development shall precede economic development, or the reverse shall take place. There is no clear-cut answer to the question in Iran. But one thing is clear and generally accepted that economic development requires certain prerequisites among which political institutions are very important. Whether economic development shall occur concurrently with political development or one must wait until such time that every thing is politically established and ready for economic take-off, is another issue.

Many assert that there is incompatibility between political development (toward democracy) and economic growth, where political stability and sheer political survival of a regime is the overwhelming goal and criterion. Thus, stability must be accompanied by effective planning, with economic growth leading to social development. Unfortunately, this issue is not yet settled in present Iran.

In Western political thought, those who see development as a recapitulation of historic stages of progress, generally regard the objective not simply as economic growth, but also as the realization of political democracy. Marxists used to regard this idea a foolish one since “liberal developmentalism results in intensified capitalist contradictions, resulting in imperialism.” Experience has fallen far short of both ideals.

Political goals such as greater liberty, greater equality, justice, equal opportunity, and higher productivity, greater range of choices open to individuals within the context of peace, security and stability are often difficult to achieve, especially in the so-called developing world. Furthermore, when religious ideology dominates the society in all aspects of political life, it tends to become an independent objective on its own merit and therefore all other primordial goal of the society becomes overshadowed. In the long run, this creates frustration and political cynicism; a negative process which is not conductive to development.

Political development within a nation requires rational political system. A political system is defined as “a collection of recognizable units, which are characterized by cohesion and covariance.” Cohesion means sticking together, or forming a whole and covariance means changing together. Where there is cohesion, there will be also some observable covariance but when there is covariance, there need not be any cohesion. Use of unconventional (authoritarian) means to strengthen unity and cohesion may be counterproductive in the long run.

It is true that people’s mind can be structured to respond to stimulus of the social environment. Thus, a political system may maintain and coordinates interactions and expectations among people who live under it by means of rewards and penalties. It is suggested that the less rewarding a political community or government is the less likely it is to endure. Since human beings tend to learn more from rewards than penalties, a political system must of necessity encourage compliance through rewards rather than coercion. But, in the long run, without a proper political development the whole system may tend to disintegrate because mere economic rewards no longer satisfy people’s demands.

In conclusion, Iran’s president recent decision to reshuffle the cabinet is merely a cosmetic operation which is prone to conceal structural abnormalities and deficiency of the overall system. In order to tackle with the growing social malaise, disparity and economic inequality which are susceptible to endanger national security and societal fabrics, leaders should make bold decisions in readjusting Iran’s national goals, objectives and structure to the requisites of the present world order and nation’s expectations.

We shall discuss on this topic in our future comments. /