The Economic Development of the Middle East

Alfred Bonne

• Publisher: Routledge
• Year: 2013
• Print ISBN: 9780415863209
• eBook ISBN: 9781136227851
• Edition: 1
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

First published in 1998. This is Volume II of eleven in the Economics and Society series. This book provides an outline of the economic development of the Middle East and planned reconstruction and the problems of transformation after the war.

The Economic Development of the Middle East

Chapter I

The Orient and the Western Concept of Reconstruction

Any economic and social reorganization of the territories of the Old and the New Worlds must allow for the inescapable fact that the countries linking the continents of Europe, Asia and Africa function at an exceedingly low social and economic level. As long as communications between the various parts of the world and within the Orient itself could be maintained only by dint of great effort, the marked differences between the standards of living of the population of the various countries were not sufficient to provoke social unrest and discontent. The resignation of the inhabitants, the frugality of their lives and their own ignorance of all that was going on beyond their own particular districts prevented them, so to speak, from realizing their hard lot. This fatalistic attitude has gradually altered. Following the political liberation of the peoples of the East from foreign dominion, their sense of economic welfare and independence has been stirred considerably. The linking of even remote regions and localities with centres of trade and communications and with the capitals of their countries, the development of modern means of transport, the dissemination of modern social ideas, have all combined to inculcate new notions of state and society among the under-privileged classes, who form the bulk of the Oriental population. As a result it is incumbent upon the governments of Oriental states to bring their countries into accord with modern social and economic standards, and to devise ways and means for achieving this end. There can be no doubt that such a policy will assume added importance after the present war ; the slogans “freedom from want” and “social security”, pointing to the necessity of far-reaching social reforms, are probably nowhere so justified as in the countries of the East.

These are confronted with a number of exceedingly complicated issues. In the first place comes the rapid growth of population. This phenomenon has been operative in Eastern countries for decades. With an annual increase of more than 600,000 persons in Middle East countries alone, it aggravates the problem of existence of the indigenous population in its present form. There are furthermore the vast differences in the material position of the inhabitants, the inadequate general education and the low level of civilization in those countries. Illiteracy is still so widely prevalent that, bearing in mind its restrictive influence on the development of the economic potentialities of the region as a whole, one can hardly expect the population to display much initiative and activity of its own in the near future. Only once in modern times has there been any attempt on the part of a great state to solve problems of such magnitude, namely, the Russian Revolution. The Western world did not approve of the methods used in the course of this experiment; but it does recognize that Russia can teach important lessons when similar problems have to be handled in other countries. On the Twenty-Fourth Anniversary of the Russian Revolution, The Times wrote, on the 7th November, 1941, that if the English-speaking democracies justly pride themselves on the establishment of individual freedom and individual worth as the corner-stone of society, they had in recent years come to understand that the freedom of the individual could be made secure only by a measure of that collective planning for social ends which had been the proclaimed ideal of the Soviet order. If the English tradition had in the past dwelt rather on political rights, and the Soviet system on social and economic rights, it might now be recognized on both sides that exclusive concentration either on the one or on the other produces an imperfect society. Similar quotations from no less representative sources could be easily adduced. It therefore appears that collective planning can now be regarded as a key concept for the reshaping of the economic and social destiny of large parts of the world.

A question of major importance is the interpretation of the term “collective planning” and “planned reconstruction”, For the purpose of the present study these expressions must be taken in the sense accepted by the leading protagonists of a Planned New Order.

These do not rely on a sudden revolution for achieving those ends, but believe in the possibility of eliminating many of the economic problems and evils of our days, raising the standard of living, preventing the periodic recurrence of unemployment, diseases, etc., by well-planned state intervention. The world does not consider these problems to be insoluble, nor does it regard every approach to them as illusory. Much has, in fact, been achieved since the various movements for the betterment of economic and social conditions first commenced some generations ago; and despite considerable scepticism and deprecatory comments on the unrealistic approach, far-reaching changes have been effected in most countries. The speakers of the New Order, as their positions indicate, are by no means unworldly academicians but leading statesmen and practical economists who have placed themselves at the head of the movement. A characteristic example of this school of thought, which is founded on the belief in a new form of international economic collaboration, is provided in a speech made by Mr. Winant, the American Ambassador in London:

What we want is not complicated. We have enough technical knowledge and organizing ability to respond to this awakening of social conscience… . When war is done, the drive for tanks must become a drive for houses. The drive for food to prevent the enemy from starving us must become a drive for food to satisfy the needs of all people in all countries. The drive for physical fitness in the forces must become a drive for bringing death and sickness rates in the whole population down to the lowest possible level. The drive for man-power in war must become a drive for employment to make freedom from want a living reality. The drive for an all-out war effort by the United Nations must become a drive for an all-out peace effort, based on the same co-operation and willingness to sacrifice.¹

It is certainly possible to belittle the ideas outlined in such statements as these, in view of the fact that no far-reaching planning policy can be pursued without general consent. But the critics make their task somewhat easy by depicting planned reconstruction as a tremendously complicated issue or a target too lofty for practical men. Certainly, if every detail of private life and work would require to be regimented and planned in advance, the task would be impossible and undesirable. Nor is there any intention here of providing a blue-print for the establishment of a fully socialist economy with all that the latter may imply from the extrusion of the present ruling classes to a full planning of production and consumption. Planned reconstruction has a more modest and immediate meaning. It is to be understood here in the sense of devising and co-ordinating all measures at the disposal of governments in order to make the best use of a nation’s human and material resources for the maximum wealth and welfare of its subjects. There exist, of course, differences in the points of departure and approaches to these objectives on the part of the various sections of the population within one country, and between the various countries themselves. This would not matter so long as certain general implications in the trend of economic and social development of most progressive countries, which can already be traced during recent decades, are definitely acknowledged. Foremost among them comes the need for increasing world productivity and for achieving a more equal distribution of the produced goods. Both ends can be attained without the introduction of a totalitarian economy; yet at the same time the old liberal notion of freedom within the economic sphere will definitely have to be abandoned.

That these are no mere generalizing formulae is seen from the growing practical preparations for comprehensive reconstruction projects in the Western world and the great importance attached to them by competent and objective observers like Harold Butler, who with all due caution stresses their far-reaching consequences for the future reshaping of world economy:

Though the thinking which it inspires is necessarily based on American experience and looks first to the solution of American problems, it conceives American prosperity as a condition and as a consequence of a general prosperity diffused over the world. It recognizes that the preponderant economic position of the United States imposes upon it a special responsibility, inasmuch as by its policies the economic and therefore to a large extent the political harmony of the world-community will be determined. At the same time it is also aware that reconstruction cannot be carried out by the United States alone. It involves an extensive system of co-operation with other nations, which cannot be made effective without a great deal of international organization. Accordingly Americans are beginning to look to the adaptation to peace uses of the extensive machinery already created by the United Nations for the successful prosecution of the war. It is safe to assume that all this thinking will not be without practical consequences. To regard it as an interesting intellectual exercise unrelated to future American action would be a dangerous error… .²

It is not improbable that during the war and the immediate post-war period there may be some changes and modifications in the various concepts of planned reconstruction. But this would not affect the main issue.

Without entering into any detailed discussion of all their implications and contradictions, the principles for the establishment of a new economic order can be summarized as follows:

1. Raising the standard of living through adjustment of wages and enlarged industrial and agrarian production;
2. Prevention of mass unemployment;
3. Free access of all countries to raw materials and natural resources and the elimination of all forms of discriminatory treatment in international commerce;
4. Use of the scientific and economic apparatus, state control and organization, etc., which have proved so vital during the war, for future international planning. Among the institutions to be established after the war should be some form of price stabilization and control as well as joint allocation of markets and of production.
5. Financing of government and other development schemes through international co-operation. The internal financing of reconstruction programmes undertaken by governments would be made possible by the maintenance of a high rate of taxation in peace-time as well.

Vigorous measures are thus planned for the countries of the West with a view to rectifying or alleviating the social and economic evils which have so gravely affected them, and there is no hesitation about profiting for this purpose from Russia’s experience. Such projects and plans should be of even greater weight in the countries of the Middle East. Certain of the requisite conditions for intervention by the state or international bodies can be found here even more than in European countries. Economic organization is far less developed and complicated. Extensive measures to regulate economic life will therefore not be felt so keenly as they would be in the highly differentiated economic structures of Western countries. Years before the present war, some Middle Eastern countries entered the field of comprehensive planning in important economic spheres, preponderantly industry and transport. They understood that planning in Oriental countries means the use of state power for increasing production, whereas in Western countries planning was intended, as a rule, to restrict productive forces in order to avoid the consequences of plenty. Thus planning will find a partially paved way in Eastern countries after the war. In other respects, however, the application of such a policy will be more difficult; firstly, because a state-minded population prepared to co-operate fully in comprehensive schemes of economic and social reconstruction can scarcely be claimed to exist; and secondly, because the champions of the new reconstruction ideas in the West usually belong to the community on whose behalf they speak, whereas in Oriental countries hardly any voice hitherto raised in favour of the new concepts has come from the indigenous population itself. Planning depends for its success on the consent of the peoples concerned and their capacity for carrying it through. Here involved issues are at stake, which do not lend themselves to any rash conclusions as to the right kind of approach to the problems in question. One of the major problems arising in this context is the attitude of those at present controlling economic and political power. However, to do this subject justice a lengthy discussion of both the economic and political aspects would be required. We therefore content ourselves with pointing out that a mere change in the men occupying leading positions would not necessarily pave the way for reforms. The entire population has to be won over to the new programme, and trained for them. But governor and governed alike still need a large amount of education in this direction. The Oriental countries may therefore be regarded as occupying an intermediate position; they have neither reached the stage of highly developed capitalistic economies and the personal liberty and progress found in the West, nor have they advanced along the lines conducive to all-embracing collective planning of the kind practised in the Soviet Union. It would therefore mean a great deal for these countries, while undergoing a far-reaching and deep-seated transformation, to be spared both the disorganization resulting from unbridled economic activity based on private initiative and monopoly capitalism and such costly and cruel experiments as those tried in Russia in order to ascertain the most expedient method of establishing an economy planned or controlled on modern lines. To decide on the possibilities of development and the methods to be adopted in each case, it will be necessary to study conditions and their causes in the countries concerned. Without such close and as far as possible accurate knowledge of the facts, plans for development are doomed in advance. True, the difficulties encountered in the field of Oriental statistics are manifold and for certain specific problems still insurmountable. Thus, for instance, one of the most significant groups of facts in modern planning, namely that referring to the composition and distribution of National Income, is known only to a very limited extent in Oriental areas. Hence other concepts had to be resorted to, although this sometimes involved the employment of coarser and more summary methods of computation and estimation than those applied in the well-explored countries of the West. For this reason alone an all-embracing and tight system of economic planning will prove impracticable in these parts of the world, whereas a policy of planned development, being a less rigid pattern, would definitely constitute an attainable goal.

In view of the great importance, in this context, of population increase in Oriental lands, we propose to deal first with the population trends and then with the standard of living and the level of income with a view to establishing a basis for development plans. At the same time, we shall be able to observe how far the social and economic features that have evolved in those countries are parallel to, or divergent from, those in Europe.

¹ The Economist, No. 5160, July 18, 1942, pp. 66–7.

² Harold Butler, “The American Approach to Reconstruction,” Agenda, 1942, p. 104.

Chapter II

Trends of Population in the Middle East

The population history of Oriental lands in the nineteenth century and down to the immediate present points to the existence there of certain trends that are no longer operative in other regions. This impression derives from tendencies observable not only in the Middle East itself but equally in the Mediterranean countries, beginning with Spain and Morocco and continuing deep into the territories of Southern Asia. It is true that figures illustrating the movements of population in the regions under consideration here, particularly during former periods, are remarkably scanty; nevertheless they provide a basis for conclusions which may facilitate the understanding of this biological phenomenon. In all cases where no preventive measures are applied or where the desire for reproduction and family increase was and still is effective, which in practice is true of many of the countries in question, a remarkably high reproductive rate is met with. The birth-rate per mille of the population is several times that of the countries of the temperate zones, with the sole exception of Russia. There, according to official figures, the fertility of the population is not lower than it is in Oriental and Mediterranean countries; even though family and group connections, together with the entire social structure, have been subject to tremendous changes since 1917.

The exceptionally high birth-rate, however, is balanced by a much higher mortality than can be found in northern countries. One is tempted to bear in mind the processes of the vegetable kingdom, and to compare the biological activity of the human beings of these zones with the unchecked vegetative growth of warm countries, where productive conditions are favoured by the climate and the decay is as considerable as the sequence of generations. Without further elucidating basic causes, the data assembled in the following table show the gap between the high birth- and death-rates of the Mediterranean and Oriental countries and the low figures of countries lying farther north. This can be particularly observed in the figures for surplus births (column 3 of the table on next page).¹

Although the death-rate in the countries of Group A ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface
• Chapter I. The Orient and the Western Concept of Reconstruction
• Chapter II. Trends of Population in the Middle East
• Chapter III. Population Trends and National Income
• Chapter IV. Major Economic and Social Problems in Oriental Countries
• Chapter V. The Standard of Productivity in Oriental Economy
• Chapter VI. Progress through Planned Development
• Chapter VII. The Finance of Planned Development
• Chapter VIII. The Position of Palestine
• Chapter IX. The Problem of an Oriental Federation
• Chapter X. Conclusion
• Appendix I: The Agricultural Absorptive Capacity of Middle Eastern Countries
• Appendix II: List of Development Schemes
• Appendix III: The Effect of the War on Post-War Finance in the Middle East
• Index