The Arab World at a Crossroads: Creative Chaos or Creative Destruction?


Budapest - April 17, 2013


On December 17 2010, Mohammad Bouazizi, a young street vendor from a small village in Tunis set himself on fire in a protest against police brutality, violation of human dignity and humiliation. By doing so he immediately became a symbol of all grievances and frustrations throughout a region of 22 states with a population of about 360 million people, and covering a territory three times larger than the European Union. His refusal to accept and tolerate injustice and indignity has led to spontaneous acts of social protests from Tunisia to Tel Aviv to Wall Street as noted by Thomas Friedman of the New York Times. To be sure, Bouazizi’s desperate act of self-immolation unleashed the powerful aspiration of the youth for freedom, liberty and social justice into the Arab streets, and set in motion the dynamics of political transition in the Arab world.

 Currently, two and a half years after Bouazizi, the streets of Egypt, Iraq, Algeria, Jordan, Bahrain and Yemen are in constant state of popular protest. Sudan is now divided into two hostile states to each other. And Syria is embroiled in savage civil war with more than 100 thousands civilian casualties. In short, the Arab world is in a state of CHAOS.

Some of the neoconservative members of the American political elite propagated the idea that chaos is a necessary, and sometimes sufficient, condition for political transformation. They point to the experiences of the east European countries after the collapse of the Soviet Union, and the chaos that characterized the transitional trajectory from dictatorial centrally planned economies, to vibrant free market democracies.  They draw inferences from these experiences and project them against the Arab regimes.

The Neocons’ conventional “wisdom” is that the tyrannical Arab regimes had been suppressing a volcano of liberal democratic discontent. All what is required for the masses to achieve their destiny is to encourage “creative chaos“, thus allowing the eruption of long suppressed emotions, desires and dreams. It follows that the violence against the regimes is a natural and expected reaction to long oppression by corrupt political leaders. Thus, according to the Neocons, the “creative chaos” that is sweeping across the Arab world, will produce a genuine political reform with freedom, democracy, justice and human rights for all.

However any casual observer will notice a significant deviation from the promising narrative predicted by the neocon model. If anything, there is more chaos now than creativity as can be seen by the sectarian clashes in Egypt, political assassination in Tunisia and serious insurrection in Yemen. Given these disturbing developments, Many observers start wondering what was the Arab spring all about? Is it about liberal democratic values? Restoration of Islamic identity? Class struggle? Or simple power grab?

 Ishac Diwan(2013) in his paper " who are the democrats?" Tried to tackle these issues in the context of the Egyptian uprising.  He posed the following questions: what are the possible explanations of the social phenomena that led to the uprisings in the Arab world? What systematic forces or structural constraints that might lead a society to erupt in political violence? :

1. Is it the conflict between conservative traditional values against more liberal and secular ones?

2. Is it the “Youth Bulge Theory of Change”? This asserts that countries with youthful populations face a higher probability of political violence and armed conflict, than countries with older populations.

3. Is it the ancient distributional conflict between the haves and have not’s?

4. Or is it the rise of Political Islam?

In Diwan’s analysis of Egypt, the data did not support the youth driven theory of change. The data also show that between 2000 and 2008 there has been a major increase in popular support for democracy, concern for inequality and a drop in support for Political Islam. But most importantly, the data asserted thatgrievances and the aspirations of the more educated population were the principle trigger of the Egyptian uprising.

If that’s the case, then why did the Arab world languish for so long in an equilibrium state of autocracy? Why there was such a huge “democracy deficit” in the Arab world according to the UN’s Human Development Report?  Could the answer for these questions be found in the Arab’s cultural values, their religious beliefs, their system of education or the insufficiency of financial resources at their disposal?

To be sure, for the last forty years, the Arab world went through one of the best economic growth periods in its modern history. The average rate of growth in real terms was between 4% and 5% per annum over that period. However, population growth rate in the Arab countries over the last forty years surpassed the real growth rate in GDP, thus lowering per capita income.

 Furthermore, the UN’s Human Development Report of 2010 stated that among the top ten world best performers in human development over forty years, from 1970 to 2010, were five Arab countries, namely Oman, Saudi Arabia, Tunisia, Algeria, and Morocco. Up until then, Arab countries had never been considered as success stories. In fact, during the last four decades, the Arab world had been developing faster than other regions. Admittedly, economic growth had been modest, but progress in health and education had been impressive. The director of Arab Fund for Economic Development, Mr. Abdlatif AlHamad reported that the Tunisian life expectancy in 1970 was lower than that of the Congo’s. Morocco had, in that year, fewer children in school than Malawi. Forty years later, by 2010, life expectancy in Tunisia and Morocco grew from 51 to over 72 years, while it increased by just 8 years in Sub-Saharan Africa. The share of children in school grew from 37% to 70%, while it grew by only 23% in countries with similar starting points.

Notwithstanding these accomplishments, and in contradiction to Seymour Martin Lipset’s thesis of positive correlation between economic development and democracy, there was no credible progress towards democratization in the Arab countries over the past forty years. In fact, the Arab world’s record on political liberties and democracy was quite miserable. Arab countries accounted for almost a third of the world’s autocracies according to the economist intelligent unit index. More specifically, the Freedom House index of 2009 considered 61% 0f the Arab countries NOT free, while the ratio for the Sub-Saharan African is only 31%, and that for the Asian-Pacific countries is only 21%.  It’s rather disconcerting to realize that the poorest regions of the world have outperformed the Arab world in the race for human dignity and democracy. And again we ask the perennial question..Why?

Acemoglu etal (2005) in their paper “From Education to Democracy” tried to address some of these issues. They pose the following question: Is a given country more likely to become democratic as its population becomes more educated? Their research came back with a resounding NO. And in their other paper “Income and Democracy”, Acemoglu etal(2008) show that “ there is no positive relationship between income per capita and various measures of democracy”. So, economic growth and/or the spread of education, does not necessarily lead toward more democratization.

To be sure, Harvard economist Eric Chaney in his paper of 2012 “Democratic change in the Arab world: past and present”, provided evidence suggesting that the Arab world’s democratic deficit has deep historical roots. The results of his research “cast doubt on claims that Muslim theology, Arab culture, the Arab-Israeli conflict or oil wealth are systematic obstacles to democratic change”. Instead, Chaney argues that the Arab democratic deficit can be traced back to, what he called, the region’s “historical institutional equilibrium”. The prevailing political model that generated this equilibrium, and perpetuated the traditional autocracy in the Arab world, can be found in the power sharing arrangement between the military and religious leaders that was established in the middle ages. This, of course, doesn’t mean that the Arab world is condemned to eternal autocracy by its own history. Some non-Arab Islamic countries like Turkey, Indonesia, Bangladesh and Malaysia managed to break this military-religious alliance, and went on to develop vibrant civil societies with strong political parties and a self sustaining private sector.

Be that as it may, the Arab uprising succeeded in rejecting, defeating and deposing the existing regimes in Tunisia, Libya, Egypt and Yemen. The euphoric early stages of the Arab Spring are over, and the serious work of defining the new political order and reestablishing the socio-political equilibrium is yet to be accomplished.

What are the guiding principles and the fundamental pillars of the new regime? What are the constraints on the political parties, religious institutions, military establishment and civil societies in the new order? What is the economic philosophy of the state? What are the constitutional guarantees for gender and racial equality, and minorities’ rights? But, most importantly, how would the new regime deal with the urgent need for post-conflict national reconciliation? Can the new leaders confront, control and restrain the popular culture of victor and vanquish? These are but a few examples of the complex issues that need to be settled before the country can go forward.

Let us all agree that the implosion of the Soviet political model, and the persisting constraints that former centralized economies continue to face to this day- including those in the Arab world- are not the result of their religious and cultural values. On the contrary, the fundamental cause of their crisis can be found in the economic doctrine they have followed. A doctrine of economic totalitarianism which inhibits freedom and liberty, stifles private initiatives and innovations, and kills “creative destruction”.  This Schumpeterian concept of creative destruction is a process of challenging and eventually destroying the old outdated modes of production, in favor of more innovative and efficient ones. It is also a process that frees human ingenuity to create better and smarter ways to increase productivity. And creative destruction can only be nurtured by free market democracy with minimum government domination. 

Ironically, 600 years ago Ibn Khaldun had warned us about the dangers of government domination and hegemony over the economy. In his masterpiece al-Muguddimah, he described how the dynamic interaction of the principle players of society had a direct impact over the enter-temporal growth of the economy. He showed us that as the society moves, away from free market economy, it risks the dangers of economic dislocation, stagnation, and ultimately social demise.

Ibn Khaldun’s analysis about the free market system was published some 400 years before Adam Smith’s Wealth of Nations. It’s quite conceivable that Adam Smith, while he —was a student at Oxford, came across the great work of Ibn Khaldun. As the Oxford historian Arnold Toynbee said "..[Ibn Khaldun] has conceived and formulated a philosophy of history which is undoubtedly the greatest work of its kind that has yet been created by any mind in any time or place".

The interdependence between economic reform and political reform makes democracy part of the solution, and not the whole solution. We look at the risks and pains associated with political reform as a reason for caution and not one for inaction. As we continue to advance reforms on the political front, we must bear in mind that the sustainability of those reforms cannot be secured without economic decentralization and openness. The pace and sequencing of economic and political reforms is, therefore, a critical issue that must not be lost in the waves of our enthusiasm and optimism of the Arab Spring. If the issue at stake is just elections and parties, then democratization would have been completed a long time ago. The lessons of social and political upheavals associated with the transition to democracy are numerous from the Latin American cases as well as the case of Eastern Europe. Any of you who read the classic works of Schmitter and O’Donnell on Latin America would appreciate this point.

So, in advancing reform, the Arab regimes should not be merely creating institutions; but rather reformulating the historic relationship between people and their governments. Reformulation of this relationship involves not just political liberalization, but first a reconfiguration of the economic equation—and here at this point is when economic reforms come to play. This also requires delicate management of the process of transition. As long as governments continue to hold close to themselves the means of production, society will never be empowered in any meaningful way.

Therefore, before we talk about mechanisms of accountability we must begin by addressing the issue of societal autonomy from the state, and this autonomy will never be possible as long as the state remains the dominant player in the economy.

In his powerful book The Road to Serfdom, the Nobel laureate Friedrich von Hayek reminded us that the institutional changes that accompanied the implementation of a paternalistic state with its socialist policies potentially carried within them the seeds of political tyranny and servitude.

To be sure, the great Hungarian economist Janos Kornai of Harvard and Corvinous universities stressed the fact that socialist economic systems were introduced only after the implementation of political dictatorships. And when the dictatorship of the communist parties collapsed, the socialist economic system was dismantled. In other words, if democracy and accountability are the sine qua non of good governance, economic liberalization, embodied in the institution of free markets, is what gives meaning to it all.

Let me end with final observation. One thing for sure, the current escalating sectarian & tribal tensions throughout the Arab world is rendering the existing Arab paradigm of governance obsolete. Old polices are leading the Arab world toward chaos and destruction. New model of governance is urgently needed. As the Cambridge economist John Maynard Keynes said, the challenge lies not in accepting new ideas but in getting rid of the old ones. 

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