Why do Arab nations fail?

Last year James Robinson and Daron Acemoğlu, two American academics, released a book entitled “Why Nations Fail: The Origins of Power, Prosperity and Poverty” (Crown Business, 2012). The book received widespread coverage, and was praised by major European and American newspapers, becoming one of the bestsellers in the US market. However, the commercial success of the book suddenly collided with critical responses from prominent names in academic and economic spheres. Bill Gates—founder of Microsoft—criticized the book’s scientific methodology, claiming that it lacked accurate definitions and valid examples. But what really angered Gates, apparently, was him being likened to billionaire Mexican Carlos Slim, considering this to be an unfair comparison. Gates contended that Microsoft had never engineered a monopoly in its history, and thus could not be compared Slim’s company “Telmex”, which controls 90 percent of the fixed-line telephone market in Mexico. Gates also criticized the two authors’ depiction of Slim when describing him as an opportunist benefiting from weak competition laws, considering this description to be unfair. Positive and negative reactions to the book continued throughout the year. One of the most prominent was provided by Jeffrey Sachs, a well-known economist at Columbia University, who described the book’s arguments and examples as simplistic, misleading, and wrong in a lot of cases (Government, Geography, and Growth: The True Drivers of Economic Development, Foreign Affairs, September/October 2012). In turn, the reaction of the two authors was that Gates was ‘ignorant’ when it comes to academic affairs, and Sachs was angry because the book refuted his theory about “The End of Poverty”. So what is the importance of this debate? And what it its relationship to the Arab region? The above discussion may seem elitist, but in fact it reflects what is happening around the world today with severe economic crises plaguing European and Asian countries alike, regardless of the ruling regimes or economic models in place. This is not only what makes this an important debate for the Arab region; it is also because the authors cite what happened in Tunisia and Egypt in the book, and whether the gamble on the “freedom” that came with the Arab Spring will necessarily bring about prosperity for those countries. The main idea of the book is that prosperity and economic growth depend on inclusive political institutions, which lead towards the emergence of a pluralistic political system that protects individual rights. This in turn, leads to the creation of economic institutions believing in private ownership and encouraging investment, and giving opportunities to all. The result, in the long term, is to increase income and improve human welfare. According to Robinson and Acemoğlu, the theories that attribute the failure of nations to cultural or geographic reasons, or other such factors, are in fact an expression of the symptoms and manifestations associated with failure, but they do not express the reasons behind a country’s failure economically and developmentally. The authors argue that there are two prerequisites for economic prosperity: First, there must be a coup against the beneficiary political elite exercising a monopoly over economic opportunities and disrupting free competition. Second, freedom and the equitable distribution of political rights are the only guarantee for social and security stability, which in turn are necessary for economic prosperity. The authors put forward several examples to illustrate what they are talking about, perhaps the most notable being Egypt before 25 January 2011. The country at this time, according to the authors, was a victim of a small social elite and its monopolization of political and economic opportunities under the leadership of an elderly military dictator. In the past, there were socialist institutions and populist policies such as the nationalization of the private sector and the distribution of land during the era of Gamal Abdul Nasser, and this—as the authors argue—provided an institutional balance to some degree. However, the openness during Sadat’s era, the reduction of political freedom in the decades that followed, and the privatization drive that ultimately rendered public sector institutions redundant, eliminated the partnership between the authority and the elite, and thus a clash occurred. It is strange that the authors accuse major business figures of benefiting from the Egyptian regime, such as the well-known Sawiris family, despite the fact that one of its members, Naguib Sawiris, was an ardent supporter of the demonstrations at the time. With regards to the countries of the Arab Spring as a whole, the authors believe that the main common factor between Egypt, Tunisia, Libya, and Syria is that there is a political elite that uses its influence for the distribution of economic resources in its favor. Ultimately, those who had been deprived for decades erupted in anger in the aftermath of the global economic crisis. But is the absence or presence of inclusive institutions the sole cause of poverty and wealth? All indicators point to the contrary. This is not a defense of the regimes that have fallen or those that will fall, but rather a simple fact, because the current models refute this argument. India is a long-standing democracy, with institutions of a populist-socialist nature and active trade unions, while China is an undemocratic country, ruled by a party consisting of the rich and dominant elite. The volume of China’s economic growth over the past three decades is 9.8 percent, while India’s does not exceed 6 percent. With regards to the growth of per capita income and the decline in poverty rates, the Chinese example is superior to its Indian counterpart, as there are twice as many living in poverty in India than there are in China. In the Arab world, Robinson and Acemoğlu’s argument may satisfy the liberal left, which advocates individual freedoms, but the reality reveals that individual and public freedoms have declined in all Arab countries without exception since the Arab Spring. It is true that elections were conducted in a fairly even manner among the candidates, but the power that was previously concentrated in the hands of the military elite has now been transferred into the hands of the religious elite—fundamentalist leaders and parties—who won it democratically. Furthermore, it is hard to say that Libya, which did not have any institutions, failed for the same reasons as Egypt, which at least had a minimal degree of independent institutional work. I think that the main element of weakness in the liberal left’s argument, including Robinson and Acemoğlu’s book, which is based on a structural understanding of democracy and civil rights, is that these visions do not see the complex system of ideas behind, or the cultural or historical particulars of certain communities. The left assumes that anyone who raises the banner of “freedom” or demands “democratic elections” in their country must be supported in their confrontation with the ruling elite, forgetting that conflicts between groups, parties, and sects often reflect religious and historical residues. They have nothing to do with the existence of democratic institutions or the establishment of regular elections. The problem of the Western liberal left, and those influenced by it in the Arab region, is a lack of understanding of “power”, or at least a misunderstanding of it, because they assume that it is an impartial tool that is only exploited by the bad guys. The issue is much more complicated than that. Iraq, for example, is currently marking ten years since the overthrow of the odious Ba’athist regime. Within that timeframe the country has established regular elections and democratic and constitutional institutions, but we cannot say today that Iraq is a democratic country, because titles and electoral mechanisms do not necessarily make people democrats. The liberal left’s problem is that it assumes that the Western democratic model is the only criterion for prosperity. However, there were those in the Arab Spring states who called for the Western model, but it has since transpired that the freedoms it is supposed to protect may not actually materialize. Institutions are important and vital, but alone they cannot make the difference. Overall we can say clearly that the Arab states and others fail because of multiple, overlapping reasons. At the same time, the complex issue includes cultural, historical, economic, and even geographical aspects, whether inclusive institutions are present or not. --- The views expressed by the author do not necessarily represent or reflect the editorial policy of Arabstoday.