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This book spans a period of dramatic change in modem Egypt. The ten years from 1967 to 1977 were punctuated by two massive popular demonstrations. On 9–10 June 1967 several million people poured into the streets to call Nasser back to power after he had resigned in the wake of Egypt's defeat in the June 1967 war. On 19–20 January 1977 several hundred thousand people poured into the streets in an effort to put Sadat out of power after the government had tried to raise the prices of basic consumer goods. In the decade between these two events, Egypt underwent a major transformation. Politically, in June 1967 it was a single party authoritarian state; by January 1977 it was, at least nominally, semi-parliamentarian with a limited number of parties. Economically, in June 1967 it was strongly etatist and essentially closed, dominated by an inefficient public sector; by January 1977 it was partially open, characterized by high-powered private profiteering and international financial difficulties.
The decade is also marked by two dramatic international events: the Middle East War of June 1967 and Sadat's ‘Mission of Peace’ to Jerusalem of November 1977. Here, too, the transformation is stunning. This book deals with the causes of the internal transformation and the concomitant international transformation. In the Middle East the interaction between the nations of the area and the involvement of the super-powers is so intense that observers tend to look to geo-politics as the predictor of international events. 1 However, this book shows that internal factors are at least as important a cause of international manoeuvres. It is argued that the crisis of the etatist regime in the mid-1960s was a critical factor in causing the 1967 war and a crisis of the semi-liberal regime in the mid-1970s was a critical factor in causing the intensive efforts to achieve peace in 1977. Only by understanding the nature of both regimes, the dynamics of their crises and the links between them can we begin to understand the startling change that occurred in international events.
The period of this study is also marked by two dramatic deaths in Egypt. In late 1970, Nasser died from a heart attack after trying to negotiate peace between the Jordanians and the Palestinians. At his funeral, millions of Egyptians carried his coffin through the streets of Cairo in emotional, anguished mourning. In late 1981, Sadat wasassassinated soon after meeting with the President of the United States, a meeting which was part of the process of making peace between Egypt and Israel. At Sadat's funeral, less than a thousand foreign dignitaries marched in silent procession behind his coffin, while all of Egypt remained silent under a state of martial law. Here too the contrast and transformation are striking.
While it is clear that, to a considerable degree, a heart attack and an assassination are random events, one must not discount systematic factors that were associated with each event. It has been said of Nasser that as leader of the Arab world he worked himself to death trying to end the hostilities between two Arab nations. Because this book stresses the importance of domestic Egyptian factors in creating both internal and external crises, it must be recognized that the political economy created the pressures which seem to have undermined his health. In a similar vein, this book argues that the possibility that Sadat would be the target of violence was dramatically increased because he broke with the Arab world and because he failed to improve significantly either the political or economic lot of Egypt by doing so. Both his break with the Arab world and his inability to provide progress were caused by the weakness of the semi-liberal political economy which he had helped to create. In short, even events which depend in large measure on chance have their structural grounding because systemic factors can significantly raise or lower the probability that they will take place. Again, the critical point of origin for understanding such events lies in an understanding of the domestic political economy – in particular an understanding of the strengths and weaknesses of that political economy.
More important than an understanding of any of these spectacular, headline events is a proper understanding of Egypt. Because Egypt is a complex nation at the centre of geopolitics, a quick caricature drawn at a moment of high tension is often used in place of a balanced, indepth characterization. Such a detailed characterization is the goal of this book and it is formulated on the basis of the belief that the transformation of the political economy was of major importance, not only for the personal fates of the two leaders and for the international situation in the Middle East, but also for the daily lives of the Egyptian people. It may very well be that neither the etatist nor the semi-liberal political economies could have provided a solution to Egypt's complex and formidable problems, but there is a world of difference between the two and traditional explanations have had difficulty accounting for the transformation from one to the other and have underestimated the differences between them.
Marxists have tried to explain the change as simply a minor variation in class relations. However, because their analytic categories are inappropriate, they failed to comprehend the social bases and social limits of the Egyptian political economy. 2 They were forced either to dismiss the changes as insignificant, which denies the obvious, or to seek external explanations. The latter are partially correct, but woe-fully inadequate.
At the same time, behaviourists have tried to explain the change as simply a minor variation in patron-client relations. 3 They denied the institutional basis of the political economy altogether. For them, politics and policy are the result of the will of a few powerful individuals. In order to make this approach fit the 1967–77 transformation, they were forced both to deny the profound nature of the changes and to date them after the death of Nasser. This approach ties all the changes to the personal alliances and personal preferences of Anwar Sadat. While Sadat's personality and alliances are important, this interpretation is woefully inadequate. It overlooks a consistent pattern of social, political and institutional upheaval that long ante-dated Sadat's rise to power and continued systematically throughout his period in power.
One additional approach, taken by a Weberian, interprets the pre-1967 period as an example of charisma and its routinization, therefore overlooking political economy altogether. 4 The author of that approach, when contemplating the analysis of the Sadat period, readily admitted his oversight and called for an examination of the political economy of Egypt. 5
This book provides that analysis of the political economy of Egypt between 1967 and 1977. In so doing, it uses concepts of class which the Marxists offer, concepts of politics which the Weberians offer and concepts of institutions, which the behaviourists seem to deny.
It was institutions, embodying basic weaknesses, that created the conditions for change. It was institutions, weak as they were, that sustained the regime through the defeat of June 1967 and the death of Nasser in September 1970. This is remarkable. Few regimes survive a defeat of the magnitude that Egypt suffered in the 1967 war. Few revolutionary regimes in the Third World survive their leader's death. Yet, the regime in Egypt survived both. It is a transformed regime, to be sure, but its roots go back to the very beginning of the July 1952 revolution, which overturned the monarchy of King Faruk and swept a small group of military officers, including Nasser and Sadat, into power.
The fact that the regime was transformed from within is also remarkable. Etatist, Third World economies often liberalize. Authoritarian polities occasionally do. However, few liberalizations occur simultaneously in both the economy and the polity. If the liberalization in Egypt had gone well in either the economy or the polity, not to mention both, the case would have been rare. That neither liberalization was very successful and regardless of the ultimate outcome, the simultaneous liberalization of the polity and the economy is an interesting phenomenon, worthy of attention. The international transformation that followed the internal liberalizations is of such historic import as to demand careful analysis and consideration.
Thus, as I conceive of Egypt and its relationship to war and peace in the Middle East, I believe that we must not only understand why it liberalized, but why it did so in both the polity and the economy and why neither was very successful. Understanding the pressures and crises associated with the transformation leads us to an understanding of Egypt's international behaviour. None of the existing explanations – Marxist, behaviourist, Weberian – is adequate to interpret either the internal transformation or its relationship to the external transformation. This book offers an interpretation that links the nature of the political and economic pressures placed on the regime in the 1967–77 period to the nature and juxtaposition of the institutions through which those pressures played. Armed with this interpretation of the internal political economy, we can begin to explain the external events.
I do not deny that external and personal factors played a part in both the internal and international changes. However, they have received so much attention that I believe it is necessary to go far in the opposite direction to balance the analysis. After a complete and coherent explanation has been built on the basis of the internal political economy of Egypt, the possibility and necessity of integrating other factors can be entertained on a more balanced basis.
The theoretical framework used in this work is straightforward. On the one hand, I believe that we can explain both the internal and external actions of Egypt by utilizing the concepts and categories of political sociology which are routinely applied to other nations at other times. On the other hand, I believe that the usual concepts of political sociology must be construed in a broad sense to include the economic structure, social classes, political institutions and the international situation. 6 Since this work is empirical in nature, theoretical discussions will be kept to a minimum. They will be definitional and only provide an organizing framework for the empirical analysis. I am not testing a theory, I am analysing the specific history of a nation that has played an important role in the post-Second World War era. The empirical explanation is of greater importance than the theoretical precision. As Arthur Stinchcombe has put it: ‘What makes explaining a social phenomenon worthwhile for me is not that it can be reduced to some general logical skeleton, but that the skeleton carries beautiful empirical flesh.’ 7
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State Capitalism in the Third World
In order to study the dynamic changes that took place in Egypt in the decade after 1967, it is necessary to have an understanding of the political economy that existed in Egypt prior to that date. Choosing a historical starting-point for describing the pre-1967 political economy can be troublesome. No matter what point is chosen, there is always some earlier event or set of circumstances that seem important enough to warrant at least some mention. One can easily end up in an infinite regression into history.
The history of Egypt, both before the revolution of 1952 which overturned the Faruk monarchy and in the decade and a half after it, has been analysed and discussed frequently. 1 In this book no effort will be made to recount that history in any detail. Rather, the starting-point is a conceptual representation of the political economy in the mid-1960s. It is hoped that this will give the reader a ‘feel’ for the nature of that political economy as well as creating an adequate basis for studying later changes in it.
The basic conceptualization used here is one that is being applied to nations of the Third World with increasing frequency. One of the most dramatic developments in the social structures of Third World societies in the post-Second World War era has been the expanding role of the state. Although the extent and precise form of the state's involvement in economic, political and social activity has varied from place to place, the trend towards a more important role for the state and the basic pattern in which this role has expanded seem to have been repeated in nation after nation. As a result, a growing number of scholars have begun to speak of a general form of political/economic organization in the Third World – state capitalism. 2
These scholars seem to agree on a number of characteristics of state capitalism at the descriptive empirical level. 3
1. The origin of state capitalism lies in weak national economies at the periphery of the international economy with weak national bourgeoisies and disorganized popular classes.
2. State capitalism involves a nationalistic reorientation of economic resources through moderate agrarian reform, nationalization of basic industries, centralization of finance and an expansion of social services.
3. There exists a state-centred interest group which is grounded in this reorientation of economic activity and which attempts to dominate society through essentially bureaucratic means.
4. The societies remain capitalistic, in spite of the expanding role of the state. In fact, the expansion of the state is seen as a buttress to capitalism.
5. State capitalism fails to transform the society in its fundamental structure and is quite unstable.
In this regard, Egypt may be a useful general example of what happens in Third World nations. It reduced the private sector without abolishing it. It nationalized or controlled much economic activity without changing some very basic economic relations. It became a form of semi-populist, state capitalist, developmentalist nationalism – a common form in the Third World. In that form, the state dominates the economy, but is unable to transform it either into a non-capitalist form or into a dynamic capitalist one. The dual failure renders the form of economic organization rather unstable and opens it to a perpetual oscillation between various mixes of state and non-state in the economic structure. This oscillation, too, is quite common in the Third World and it is the central concern of this work. This chapter endeavours to create the basis for an explanation of the oscillation in the economic structure by clarifying the link between the economic and class structures and the nature of political action in state capitalist societies.
Theoretical Framework
The Economy and Class Structure
For purposes of this analysis, the economy is defined as that realm of society in which material resources are produced and distributed. The central focus of my economic analysis is on the way that the state interdicts the free appropriation and flow of resources in the economy. By intervening in the economy, groups and individuals are rendered dependent on the state for the conduct of their economic activity. This dependence creates a vesting of interests in the state which alters the class structure, class interests and political activity in society. 4
The economy is conceptualized as constituted by two activities – production and consumption. Production has two dimensions, ownership and control. Ownership is the right to appropriate the surplus of economic activity. Control is the ability to have, or determine access to, inputs for the production process and to determine the disposition of the output of the production process. C...
