How John Maynard Keynes Can Save the Arab Spring

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Beyond freedom of expression and ritualized electoral exercises, democracy is about establishing an egalitarian economic system that empowers the greater citizenry to fully participate in the shaping of the political order. Here the Middle East’s progressives have a huge advantage over their rivals. (Photo: Chris Ford / Flickr)

At first glance, the Arab region appears to have entered a new period of crisis—perhaps the greatest in its modern history. The Arab revolts of 2011 seem to have given way to a “Jihadi Spring,” with the civil war in Syria providing a haven for radical extremist groups from across the globe. As the crisis in Syria spills over into neighboring Iraq, Lebanon, and Jordan, the world is confronting a frightening revival of the al-Qaeda franchise.

In 2011, North Africa witnessed the dramatic downfall of three dictators: Hosni Mubarak in Egypt, Zine el-Abidine Ben Ali in Tunisia, and Muammar Gaddafi in Libya. But in much of the region, “deep state” security apparatuses have proven more resilient than any one political leader. Cabals of military officers managed to frustrate democratic transition in Egypt and hold onto power in Algeria, with Algerian leader Abdelaziz Bouteflika and Egyptian general-turned-president Abdel Fattah el-Sisi recently claiming landslide victories in sham elections that were largely boycotted by the progressive left. The oil-rich sheikhdoms of the Middle East, meanwhile, have brutally suppressed any form of domestic opposition, while leveraging their huge cachet of petrodollars to appease their restive citizens through a combination of expanded welfare and new employment opportunities.

More worryingly, the Islamic State of Iraq and Syria (ISIS), a uniquely vicious offshoot of al-Qaeda, has upended the 20th-century map of the Middle East. The shocking brutality of ISIS—and the overweening ambition of its leader, Abu Bakr al-Baghdadi—prompted the al-Qaeda “general command” led by Ayman al-Zawahiri to disown the group. After pulling off a lightning defeat of the Iraqi armed forces across much of the country’s western and northern regions, ISIS announced the formation of an “Islamic Caliphate,” a new political entity at the heart of the Middle East that connects various Sunni-dominated regions of Iraq and Syria.

Just as the British Philosopher Edmund Burke decried the French Revolution for replacing monarchical stability with republican terror, many modern-day pundits have lamented, in varying forms, how the Arab Spring has supposedly paved the way for a renewed era of instability in an ever-combustible region. This mistaken narrative has allowed autocratic regimes across the world to use the slogan “stability” to smash and delegitimize any organized call for democratic freedom.

On closer inspection, however, German philosopher Georg W.F. Hegel may provide a better framework to understand the likely trajectory of the Arab uprisings. Although cognizant of the immediate and terrifying outcome of the French Revolution, Hegel maintained that a true break with the past inevitably requires a violent rupture with the ancien régime—part of a dialectical transition toward a new historical epoch.

After decades of centralized, autocratic leadership, the advent of popular revolutions has naturally created new power vacuums, which have been temporarily filled by well-organized reactionary groups and extremist terrorist groups. But none of the above groups is likely to provide any lasting solution to the agonies of the Arab street, from massive youth unemployment to economic stagnation and political repression. Although the Wahhabi-Salafist ideology of the al-Qaeda franchise, and particularly the extremist version embraced by ISIS, appeals only to a small minority of people, the secular autocracies in places such as Algeria and Egypt, in turn, are recycled versions of long discredited post-colonial Arab regimes.

This lack of appealing alternatives is precisely where progressive forces can build on the democratic gains of the 2011 uprisings.

Perils of Revolutionary Transition

Strongmen in Algeria and Egypt may have managed to frustrate any meaningful democratic transition in the short-to-medium term, but neither Bouteflika nor Sisi has proposed any remedy to the myriad of political and economic problems that afflict their nations.

The aging Algerian leader is struggling with health issues and has been barely visible to the public. There are serious concerns over the prospect of violent intra-regime jostling once Bouteflika passes away. In Egypt, Sisi’s popularity could melt away as soon as the majority of people realize how he and his colleagues in the military have little understanding of how to run the Arab world’s largest country. By violently crushing the Islamist opposition, the Algerian and Egyptian regimes have opened up the space for the liberal-democratic opposition to take the initiative.

As for ISIS, its emergence as a potent force for mayhem has had the unintended effect of unifying historic rivals such as Washington and Tehran, as both powers scramble to support the government in Baghdad. A warming in the relationship between the two countries could significantly strengthen the domestic position of pragmatists in both capitals, especially the Rouhani administration in Iran, which has tirelessly sought to repair Tehran’s broken ties with the West.

The rise of ISIS has also undermined the largely sectarian rule of Iraqi Prime Minister Nouri al-Maliki, who has come under local and international pressure to step down in favor of an “inclusive” government in the country. Alarmed by the frightening ramifications of an extremist resurgence in their own backyard, Arab sheikhdoms in the region have also cracked down on local supporters, including top-level officials, of jihadi groups in Syria and elsewhere. In short, both the patrons of “counter-revolution” and the forces of “jihadi revolution” are by no means secure, as pragmatists and progressive actors unify against a common threat.

But what of the Arab spring? Today’s gloomy reading of the Arab spring tends to overlook a fundamental factor, which not only explains the regrettable turn of the recent revolutionary upheavals, but also holds the key to resuscitating the democratic aspirations of the Arab street. And it is here that the ideas of John Maynard Keynes, arguably history’s greatest economist, could be of greatest help.

The Keynesian State

Reflecting on the roots of the Great Depression in the early 20th century, Keynes analyzed the immanent instability of capitalism in the absence of proactive state intervention. Unlike Karl Marx, however, he didn’t call for the abolition of capitalism. Instead he proposed a set of macro-economic policies to empower the state to manage the excesses of the markets for the benefit of the greater population.

His direct participation in the establishment of the Bretton Woods system paved the way for a measure of stability and openness in international trade, which in turn facilitated the rapid industrialization and recovery of economies across the world. Many developing and industrialized economies used Keynesian theories to strike an optimal balance between capitalist expansion and sustained national development. The result was the emergence of welfare states in the West and developmental states across Asia. This marked the “golden age” of capitalism.

But as Richard Posner intelligently observed, the heirs of Keynes failed to appreciate the necessity of preventing government “from exceeding the limits of optimal intervention.” It was this particular mistake, coupled with the devastating impact of the Vietnam War and the multiple oil crises in the Middle East, which allowed neo-classical economists to eventually marginalize Keynesian thinking, advocate “pro-market” policies, and call for the retrenchment of the state in recent decades.

The 2007-08 Great Recession, however, served as a wake-up call by violently interrupting almost three decades of neoliberal economic stupor. The economic crisis heavily undermined the naïve belief in orthodox economic models, which stubbornly defended the supposed rationality and self-correcting dynamism of impersonal markets.

Consequently, a growing number of policymakers and academics have come to realize the wisdom of Keynesian thought, which elegantly articulates the inherent necessity of judicious public management of economic cycles. No wonder that recent years have seen a huge push to both re-inject more Keynesian principles into the curricula of the world’s leading economic departments and espouse robust state participation in, and regulation of, both the national and global economy.

An Arab Economic Revolution

As I argue in How Capitalism Failed the Arab World: The Economic Roots and Precarious Future of the Arab Uprisings, the 2010-11 Arab uprisings were fundamentally a reflection of the failure of the post-independence Arab states to internalize Keynesian economic thinking. There was neither a sober appreciation of the benefits of capitalism nor any effort to establish an autonomous, developmental state.

Many Arab states witnessed the emergence of quasi-socialist regimes, which were undemocratic, heavily militarized, and dependent on strategic or hydrocarbon rents. These personalistic Arab regimes failed to institute genuine land reform, blocked the emergence of a vibrant entrepreneurial class, and squandered their national resources in pursuit of autocratic consolidation—all at the expense of sustained industrialization and economic diversification. The result was an economic crisis in the 1980s, which forced much of the Arab world, especially non-oil-exporting countries, to undertake aggressive pro-market reforms over the succeeding decades.

Instead of transforming Arab economies into dynamic emerging markets, however, the economic liberalization of the 1990s allowed many autocratic regimes to outsource welfare responsibilities, transfer the ownership of state-owned companies to favored clients, and abolish support mechanisms for strategic agricultural and industrial sectors. Although the pro-market reforms allowed Arab states to establish a modicum of macro-economic stability, the result was double-digit unemployment, widespread poverty, high dependence on food and commodity imports, and heavy reliance on speculative and service-oriented economic sectors such as tourism and real estate.

It is no surprise, then, that the 2007-08 Great Recession had a devastating impact on the Arab street, precipitating massive food insecurity and a macroeconomic downturn across the Middle East. With minimal assets, fiscal resources, and policy space for intervention, many Arab regimes had limited capacity to cope with the impact of the crises. In the absence of genuine democratic mechanisms to express their economic discontent, it was arguably just a matter of time before the middle and working classes would unite against the autocratic regimes—and spark a revolution.

Today, however, the Arab Transition Countries (ATCs) have failed to adequately appreciate the structural economic roots of the Arab spring. None of the major post-revolutionary contenders for leadership has provided a coherent policy agenda to address systemic economic vulnerabilities. Instead, much of the public discussion has boiled down to questioning the democratic credentials and influence of the Muslim Brotherhood and its offshoots across the Arab World.

A cursory look at the ATCs reveals how post-revolutionary governments have largely pursued the macroeconomic policies of the previous regimes. And this is precisely why there has been a wobbly march toward genuine democratic transition. Unless the ATCs establish a new economic paradigm, focusing on issues of public welfare, inclusive growth, macroeconomic resilience, and industrial and agricultural revival, there will be no genuine democratic transition.

After all, beyond freedom of expression and ritualized electoral exercises, democracy is about establishing an egalitarian economic system that empowers the greater citizenry to fully participate in the shaping of the political order. Keynes’ ideas are the greatest guide to achieving an optimal balance between democracy and economic development, serving as the blueprint for the progressive-democratic forces that hold the promise of resuscitating the spirit of the 2011 revolutions.

In Tunisia, the birthplace of the Arab spring, moderate Islamists (especially the dominant Ennahda Party) and progressive liberals have managed to negotiate, albeit painstakingly, the foundations of perhaps the first truly democratic country in the Arab world. Having established a modicum of democratic political consensus, the next step for Tunisia is to embrace an egalitarian economic policy, which will translate rising discursive freedom and political openness into social justice for the majority of the people. The Arab spring is far from over.

Richard Javad Heydarian is a lecturer in international affairs and political science at Ateneo De Manila University and a policy adviser at the Philippine House of Representatives. As a specialist on Asian geopolitics and economic affairs, he has written for or been interviewed by Al Jazeera, Asia Times, BBC, Bloomberg, The New York Times, The Huffington Post, The Diplomat, Foreign Policy In Focus, and USA TODAY, among other leading international publications.  He is the author of How Capitalism Failed the Arab World: The Economic Roots and Precarious Future of the Middle East Uprisings (Zed, London), and the forthcoming book The Philippines: The U.S., China, and the Struggle for Asia’s Pivot State (Zed, 2015).