Austerity meets fresh resistance in Iran


by Karim Pourhamzavi

Mass protests are occurring across Iran, taking place in over 100 cities.  The protests have been sparked by the government’s cutting of fuel subsidies, a measure which caused fuel prices to double overnight.

Mass protests are hardly new in Iran, but there is an important difference between these protests and previous periods of upsurge against the government .  In the past people have protested for more democratic freedoms.  While democratic freedoms are important, they can be classless; poor people can have formal democratic rights and remain poor, and even become more impoverished.  This time around, economic issues are central.  Moreover, economic issues automatically raise issues of political rights and the power of government and state.

In Iran up to 80% of the population are living on the margins of the society.  Like most of the Middle Eastern states in the 1990s, the ruling elite of the Islamic Republic in Iran found no problem adopting the combination of marketisation and austerity some label neo-liberalism; the result has been to widen the historically-existing gap between the few rich and poor masses in the country.  So these latest measures are very widely and deeply felt.  Perhaps even more so when so many sons of the ayatollahs drive around in Maseratis and will continue to do so after the fuel price hikes – and the Maseratis themselves cost the equivalent of a month’s salary for several thousand industrial workers combined.

Despite all the evidence, liberal voices, which are hegemomic over Iranian and Middle Eastern discourse, doubt that what is going on is ‘neo-liberalism’ (ie commodification and austerity).  This is based on arguments like those of Deirdre McCloskey who claims that liberalism and neoliberalism are built upon “freedom” and “values” of freedom. Therefore, despotic regimes such as the Islamic Republic in Iran cannot be ‘neoliberal’ or ‘pure neoliberal’ (if there is such a thing) in essence.

Apart from the ideological nature of the above-mentioned apology, it is not consistent with either history nor the facts on the ground.  Indeed, under both free trade/free market capitalism and more regulated capitalism alike, imperialist powers plundered the region for resources and actively prevented the development of indigenous democracies.

Throughout the 19th century liberalism operated as a colonial ideology to commit massacres, displace populations, impose harsh terms on subordinated peoples and nations to smooth the process of exploitation for the benefit of the colonial forces. To put it in a different way, liberalism set the foundation for the emergence of all the post-colonial despotism that authors such as McCloskey claim to detest.

The short celebration of the United States post-1945 hegemony and world order had reached its climax and came to end in the 1970s, with the end of the post-World War II boom.  Similar to previous economic crises, chief among them the Great Depression of the 1930s, the root of the problems was to be found in capitalism itself.  When Keynesian policies failed to revive the imperialist economies, they turned to ‘new right’ economics of commodification and austerity in the imperialist heartlands and tightening the screw even more on the masses of the Third World.

The instruments for tightening the screws on the masses of the Third World were their bagmen/dictators in those countries, people like Pinochet in Chile, who carried out the most famous ‘experiment’ in ‘new right’ or ‘neo-liberal’ economics.  (It’s of note, that the most hard-core version of such economics used outside the Third World dictatorships like Chile was actually New Zealand under the 4th Labour government.)

In a Third World state such as Iran, where capitalism is still developing, there is not much accumulation of capital based on production. Therefore, the capital has to be extracted from public assets via privatisation.  The formula has been simple: declare a war on both the poor and middle class population. The government would stop subsidising public services and the ruling elite and their foreign partners (foreign corporations) would own the means of production and services, and the public would be forced to pay for things it once used to receive for free – and more efficiently than it does now under the ‘private enterprise’ model.

Moreover, despite McCloskey et al’s fantastical linkage of democracy and the free market, in the IMF Country Report (No. 18/93, issued in March 2018), it is recorded that the Iranian government was told by the IMF that it would need to cut fuel subsidies and further reduce the minimum benefit it allocates to the poor.  The government agreed to do this.  That is how the free market actually works, in the real world.

Another factor that drives the ruling elite in Iran to move toward more and more marketisation and austerity  is to avoid the fate of Iraq and Libya and, instead, to be incorporated as a partner by the United States and the West in general.  This element is yet to be observed clearly by many, given that the US and its Western allies-rivals are accumulating more capital from their rich Arab friends in the Persian Gulf if Iran is isolated as an enemy rather than incorporated as a partner.

The substantial implementation since the 1990s of marketisation and austerity – albeit delayed from time to time by mass oppositional protests – has also taken place in the context of ongoing economic sanctions.
in Iran since the 1990s.  There is also the looting of public assets in favour of the ruling elite, including family members, and their foreign allies.

In the western imperialist world, ruling elites have not only what they exploit from their own working classes but also what they plunder from the rest of the world.  This additional surplus-value, the product of super-exploitation – and just sheer plunder – means they can usually ‘buy off’ opposition through concessions.  In Third World countries ruling classes don’t have that kind of additional surplus-value at their disposal.  Class relations are – inevitably – much more blunt and violent.

Thus, the Iranian government has responded to the protests in its usual manner: vicious repression, including shooting protesters down in the streets.  These shootings have taken place in the context of a total internet black out.  The state has even used machine guns in the streets and helicopters in the air.  Hundreds have been killed and wounded.   According to the British-based Guardian newspaper, about 7,000 have been arrested.  And while people were busy mourning the deaths, in less than two weeks the government has transferred the ownership of over 25 ports and other public assets such as online broadcast of football matches to mostly anonymous owners in the “private sector”.

For the mass of the Iranian people both economic prosperity and political freedom remain to be fought for and won.  Hopefully the current protests will help move the Iranian masses further along that road.