A WA L L S T R E E T J O U R N A L O P - E D

The Road to Serfdom and the Arab Revolt

July 8, 2011 The late great Austrian economist F.A. Hayek would have seen the Arab Spring for the economic revolt it was right from the start. For generations the Arab populations had bartered away their political freedom for economic protection. They rose in rebellion when it dawned on them that the bargain had not worked, that the system of subsidies, and the promise of equality held out by the autocrats, had proven a colossal failure. What Hayek would call the Arab worlds road to serfdom began when the old order of merchants and landholders was upended in the 1950s and 60s by a political and military class that assumed supreme power. The officers and ideologues who came to rule Egypt, Syria, Iraq, Libya, Algeria and Yemen were men contemptuous of the marketplace and of economic freedom. As a rule, they hailed from the underclass and had no regard for the sanctity of wealth and property. They had come to level the economic order, and they put the merchant classes, and those who were the mainstay of the free market, to flight. It was in the 1950s that the foreign minorities who had figured prominently in the economic life of Egypt after the cotton boom of the 1860s, and who had drawn that country into the web of the world economy, would be sent packing. The Jews and the Greeks and the Italians would take with them their skills and habits. The military class, and the Fabian socialists around them, distrusted free trade and the marketplace and were determined to rule over them or without them. The Egyptian way would help tilt the balance against the private sector in other Arab lands as well. In Iraq, the Jews of the country, on its soil for well over two millennia, were dispossessed and banished in 1950-51. They had mastered the retail trade and were the most active community in the commerce of Baghdad. Some Shiite merchants stepped into their role, but this was short-lived. Military officers and ideologues of the Baath Party from the Sunni trianglemen with little going for them save their lust for wealth and powercame into possession of the country and its oil wealth. They, like their counterparts in Egypt, were believers in central planning and social equality. By the 1980s, Saddam Hussein, a Sunni thug born from crushing poverty, would come to think of the wealth of the country as his own. In Libya, a deranged Moammar Gadhafi did Saddam one better. After his 1969 military coup, he demolished the private sector in 1973 and established what he called Islamic Socialism. Gadhafis so-called popular democracy basically

Fouad Ajami The Road to Serfdom and the Arab Revolt

Hoover Institution

Stanford University

wall street journalopinion

by Fouad Ajami

nationalized the entire economy, rendering the Libyan people superfluous by denying them the skills and the social capital necessary for a viable life. In his 1944 masterpiece, The Road to Serfdom, Hayek wrote that in freedom-crushing totalitarian societies the worst get on top. In words that described the Europe of his time but also capture the contemporary Arab condition, he wrote: To be a useful assistant in the running of a totalitarian state, it is not enough that a man should be prepared to accept specious justification of vile deeds; he must himself be prepared actively to break every moral rule he has ever known if this seems necessary to achieve the end set for him. Since it is the supreme leader who alone determines the ends, his instruments must have no moral convictions of their own. This well describes the decades-long brutal dictatorship of Syrias Hafez al-Assad, and now his son Bashars rule. It is said that Hafez began his dynasty with little more than a modest officers salary. His dominion would beget a family of enormous wealth: The Makhloufs, the in-laws of the House of Assad, came to control crucial sectors of the Syrian economy. The Alawites, the religious sect to which the Assad clan belongs, had been poor peasants and sharecroppers, but political and military power raised them to new heights. The merchants of Damascus and Aleppo, and the landholders in Homs and Hama, were forced to submit to the new order. They could make their peace with the economy of extortion, cut Alawite officers into longestablished businesses, or be swept aside. But a decade or so ago this ruling bargainsubsidies and economic redistribution in return for popular quiescencebegan to unravel. The populations in Arab lands had swelled and it had become virtually impossible to guarantee jobs for the young and poorly educated. Economic nationalism, and the war on the marketplace, had betrayed the Arabs. They had the highest unemployment levels among developing nations, the highest jobless rate among the young, and the lowest rates of economic participation among women. The Arab political order was living on borrowed time, and on fear of official terror. Attempts at reform were made. But in the arc of the Arab economies, the public sector of one regime became the private sector of the next. Sons, sons-in-law and nephews of the rulers made a seamless transition into the rigged marketplace when privatization was forced onto stagnant enterprises. Of course, this bore no resemblance to market-driven economics in a transparent system. This was crony capitalism of the worst kind, and it was recognized as such by Arab populations. Indeed, this economic plunder was what finally severed the bond between Hosni Mubarak and an Egyptian population known for its timeless patience and stoicism. The sad truth of Arab social and economic development is that the free-market reforms and economic liberalization that remade East Asia and Latin America bypassed the Arab world. This is the great challenge of the Arab Spring and of the forces that brought it about. The marketplace has had few, if any, Arab defenders. If the tremendous upheaval at play in Arab lands is driven by a desire to capture state powerand the economic prerogatives that come with political powerthe revolution will reproduce the failures of the past.

Fouad Ajami The Road to Serfdom and the Arab Revolt

Hoover Institution

Stanford University

About the Author

In Yemen, a schoolteacher named Amani Ali, worn out by the poverty and anarchy of that poorest of Arab states, recently gave voice to a sentiment that has been the autocrats prop: We dont want change, he said. We dont want freedom. We want food and safety. True wisdom, and an end to their road to serfdom, will only come when the Arab people make the connection between economic and political liberty.

Mr. Ajami, a senior fellow at Stanford Universitys Hoover Institution, is cochairman of Hoovers Working Group on Islamism and the International Order.
Reprinted by permission of the Wall Street Journal. 2011 Dow Jones & Co. All Rights Reserved.

Fouad Ajami is a senior fellow at the Hoover Institution and the cochair of the Working Group on Islamism and the International Order. He is also the Majid Khadurri Professor of Middle East Studies at The Johns Hopkins University, the School of Advanced International Studies. He is the author of The Arab Predicament, The Dream Palace of the Arabs, The Foreigners Gift: The Americans, the Arabs, and the Iraqis in Iraq, and his forthcoming book Crosswinds: The Way of Saudi Arabia (Hoover Institution Press 2010) . His writings also include nearly four hundred essays, reviews, and columns of opinion on Arab and Islamic politics, American foreign policy, and contemporary international history. His research has charted the road to 9/11, the Iraq war, and the American presence in the Arab-Islamic world. He is a member of the editorial board of Foreign Affairs.

Fouad Ajami The Road to Serfdom and the Arab Revolt

Hoover Institution

Stanford University