The rapid pace of technical change means that technical superiority in any given labour processes is an inadequate basis for long-term economic domination over competitors. Over time, every process becomes more commonplace and ceases to be advanced in relation to competing producers. Reproduction of dominance by any given section of capital requires constant involvement in innovation of new technology through the systematic organisation and acceleration of research and development. In this context, competition between capitalist firms tends to shift from the sphere of production to the sphere of research, development and other preparation of the conditions for production. The highest and most important of these conditions is the development of the labour force and especially of highly skilled labour of all types. In Late Capitalism, Mandel observed that, in the conditions of modern imperialism, competition between countries moves tendentially from the sphere of production to the sphere of social reproduction. However, Third World societies experienced colonial subjugation and continue to be excluded from the benefits of humanity’s common social development. Where a given society’s level of development is not equal to the rich, imperialist countries, that society is forced into a process of production and reproduction on a qualitatively lower level than the imperialist states and cannot compete with them. This inequality is reinforced because national development and the development of advanced science can never be adequately built upon a productive foundation specialising in the simple labour processes assigned to Third World countries within the contemporary global division of labour.
The starting point for Chinese technological development is essentially the same as for any other Third World society – relative scientific underdevelopment in most areas compared to the rich, imperialist countries. Lack of basic research and scientific knowledge (at least outside of the military sphere) is proving to be an insurmountable obstacle to Chinese attempts to upgrade the technological level of its production processes. Even designated priority areas, such as the Chinese-built midsize passenger airliner, the C919, demonstrate the extreme limitations and dependency of Chinese high-technology production. The so-called trade war has also shone a light on severe Chinese weakness in what is perhaps the key strategic technology today – microchips. While China produces some microchips domestically, these are not the high-end chips needed to manufacture advanced products, such as Huawei’s top-shelf phones or top-of-the-line 5G telecommunications infrastructure. The trade war has further uncovered China’s inability to respond to US aggression with any technology bans of its own – as might be expected if China were the rising technological power house that so many commentators appear to believe. The historical transition from British hegemony to German power and then US hegemony was associated with the independent development in those countries of revolutionary new technological advances. There appears to be no such technological leadership associated with contemporary China despite for several decades now being the largest producer of and market for many important goods and services.
The substantial posse of Marxist writers and academic specialists who have for decades declared Lenin’s Imperialism as wrong and antiquated could be expected to have unearthed and popularised countless errors and misjudgements from the book. Yet no such list appears to exist. In place of one, various caricatures of ideas that do not actually appear in Lenin’s book Imperialism: The Highest Stage of Capitalism keep getting repeated. Two common caricatures are that Lenin viewed colonialism as a necessary form of imperialist domination and that Imperialism is overly fixated on the ‘export of capital’ (that is, foreign investment). The first is supposed to show that Lenin’s work is irrelevant now that colonialism is over. The second was supposed to show the same. Even though foreign investment has now bounced back, the label still sticks. However, Lenin emphatically rejected the idea that export of capital is the central question in understanding imperialism. This is evident both from the text of Imperialism itself and also from arguments Lenin made in the Bolshevik party and elsewhere about how to understand imperialism. Similarly, Lenin explicitly argues both in Imperialism and elsewhere – such as against Bukharin – that colonialism is not a necessary feature of imperialist domination. On this question Lenin makes a whole series of insightful observations on national independence, national struggle and anti-colonialism that were later proven correct by the national liberation movements and political independence after the Second World War.
Since 2006, Egypt has shown the puzzling trend of being a country that imports energy yet does not benefit economically from lower international oil prices. Despite being a net energy importer, Egypt remains heavily dependent on crude energy for its foreign currency earnings, directly through exports and indirectly through foreign direct investment, external aid, and workers’ remittances from oil-rich countries. Egypt’s twisted dependency is explained by two predominant and largely interrelated factors: institutions and geo-economics. Sustained rent dependency weakens the state institutions necessary for regulating and extracting resources from the economy, as well as those required for state–business coordination of diversification or upgrading. These state institutions instead reproduce capacities that are allocative in essence and that involve rent. Institutions are sticky. They do not readily change in response to economic shocks or downturns, nor do they adjust automatically and functionally to changing economic conditions. Regionally, oil-rent recycling from the GCC to Egypt mitigated the overall impact of becoming a net energy importer. It kept the Egyptian economy and state dependent on higher oil prices through aid packages, cheap credit and investment, and the flow of workers’ remittances, even when the country itself was becoming a net importer.
How federalism encourages economic diversification in the United Arab Emirates
Karen E. Young
The goal of economic diversification away from oil revenue dependence is not new, but there is an urgency to find new policy responses since late 2014 when oil prices declined sharply. The United Arab Emirates (UAE) has been successful in part because of the federal structure of the government, which has encouraged policy differentiation, learning, and even competition between the seven emirates. Because resource endowment is not equal across the federation, nor are the proceeds of oil wealth evenly distributed, policy experimentation and change has flourished, furthering the pace of economic diversification. This policy learning and differentiation between emirates predates the 2014 oil price collapse, but it has set the stage for a pattern of policy flexibility now embraced and accelerated by the central government between 2015 and 2019. This chapter focuses on a series of policy choices and reforms, from labour market regulation to fiscal reform, to policies affecting the investor and business climate. In the UAE, while we have seen centralisation of state authority, especially in foreign policy, there remains a benefit to new economic policy formulation, experimentation, and competition between emirates. Breaking down the policy agenda post-2014 in the UAE, we can identify three core economic response policy areas: fiscal policy, social development policy, and diversification policies.
This chapter analyses the relationship between lower oil prices and the Lebanese economy since 2014. First, it discusses the different transmission channels through which oil price fluctuations affect economic activity. In his discussion, the author reviews how key macroeconomic variables have evolved during the recent oil price decline period, and he evaluates the relevance of each transmission channel. Overall, the author finds that the 2014–16 oil price decline was beneficial for the Lebanese economy. Second, he studies the 2015 deflation and investigates the different sources behind it. Despite the different negative aggregate demand shocks that hit the Lebanese economy during that year, GDP increased. This empirical evidence suggests that the 2015 deflation was primarily caused by the reduction in oil prices. Finally, the author explores the effect of lower oil prices on the oil and gas sector. He explains why lower oil prices have negatively affected the oil and gas sector at its current embryonic stage. He also presents the pre-resource curse concerns and provides arguments on why Lebanon is unlikely to fall into this trap. Moreover, the author discusses the Dutch disease and emphasises the importance of why Lebanon should adopt a long-term development strategy to avoid this economic anomaly.
Saudi Vision 2030 was touted as a plan to move the Kingdom away from dependence on oil, aided by the 2016–2020 National Transformation Plan. However, as this chapter argues, the rapid and concurrent changes taking place in Saudi society and political economy are profound on multiple levels. Some incidents and trends have led to reputational damage, which is affecting the Kingdom's economic policy and revenues through its immediate ability to retain capital, complete large-scale public–private projects, and attract foreign direct investment. Others, such as the Yemen conflict, mean that the national economy cannot be disconnected from equally profound changes taking place in Saudi Arabia’s regional and international politics. The chapter builds on a wide range of literature on rentierism, Saudi economic studies, political economy, and international relations. The chapter’s main contribution lies in explaining the interplay between the pace and nature of structural reform and the consolidation of governance that utilises unprecedented measures aimed at supporting the bottom line, elite, and national security interests in the near term.
This concluding chapter focuses on two aspects of the Middle Eastern political economy. It initially examines the major consequences of the post-2014 oil price decline and also deals with the oil price crash as triggered by the COVID-19 pandemic. First, migrant workers in the Arab Gulf are the main social losers of policy adjustments. Second, citizens who are predominantly employed in the well-paid public sector were capable of repelling burdensome adjustments. Third, adjustment policies show some of the institutional weaknesses characteristic of rentier states. Fourth, for the three semi-rentier states of Egypt, Jordan, and Lebanon, the expectation that they could profit from the oil price decline in 2014 has not been fulfilled. Beyond major empirical developments, this conclusion also highlights three conceptual dimensions for the theoretical advancement of rentierism. First, it is important to bring state–class relations back into the discussion. Second, the authors stress the importance of institutions during periods of policy adjustment within countries shaped by the inflow of hydrocarbon resources. Third, the authors call for a more nuanced understanding of rentier state autonomy. Based on these discussions, they argue that rentierism still prevails with regard to both empirical dynamics in the Middle East and academic discussions on its political economy.
This book contains the first comprehensive analysis of the Middle Eastern political economy in response to the oil price decline in 2014. The introductory and concluding chapters also touch upon the oil price crash in the wake of the COVID-19 pandemic and discuss some of the relevant responses by Middle Eastern actors. Its findings connect oil market dynamics with an understanding of sociopolitical changes. Inspired by rentierism, the volume presents original studies on Bahrain, Egypt, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. Results show a large diversity of country-specific policy adjustments. Among the most pertinent findings are that migrant workers in the Arab Gulf are the main social losers in the post-2014 period, while citizens were capable of repelling burdensome adjustment policies. For Egypt, Jordan, and Lebanon, the expectation that they could benefit from the oil price decline in 2014 has not been fulfilled. Three conceptual dimensions for the theoretical advancement of rentierism are highlighted: first, in the light of increasing exploitation and coercion, by bringing state–class relations back into the discussion; second, by paying closer attention to the role of institutions during periods of policy adjustment; third, by exploring the issue of rentier-state autonomy vis-à-vis society in a more nuanced way. Overall, this collection signifies that rentierism still prevails with regard to both empirical dynamics in the Middle East and academic discussions on its political economy.
Jordan’s adjustment challenges amid local and regional change
Riad al Khouri and Emily Silcock
This chapter investigates impacts of low oil prices, from 2014 onwards, on Jordan’s fiscal and foreign policy. High prices of oil have long been blamed for amplifying Jordan’s fiscal deficits, also counterbalanced via aid and remittances from Gulf Cooperative Council (GCC) states. These economic linkages in turn deepened GCC states’ influence over Jordanian foreign policy. By contrast, has cheap oil lightened Jordan’s fiscal deficits and political dependency on GCC states? This chapter argues that it has not. Jordan’s fiscal deficits expanded with cheap oil. While low oil prices and cuts in GCC aid initially buffeted Jordanian foreign policy under the GCC’s pressure, the depth of Jordan’s debt crisis and the public’s mounting discontent over fiscal reform ultimately pushed Jordan to solicit even more aid. This compromised fiscal reform and Jordan’s foreign policy autonomy, despite the low oil prices from 2014 to 2018.