Just days before the end of the year, the World Bank announced that Iran’s economy had contracted by 1.7%. In April, it had projected a contraction of just 0.7%. Next year, expectations are even worse: a contraction of 2.8% is foreseen. Iranian newspaper Jahan Sanat, which specialises in economic affairs and is close to the regime, summed up this catastrophic decline in a single, telling phrase: this is what happens when the economy is ruled by the ethos of the state.
It drew derisive snorts from Iranian elites, given its ideological metaphors and political insinuations. Yet the system is one of only a small handful around the world that remains bound to a primitive theory of political economy. In Iran’s case, this stems from a deep-rooted, ingrained fear of free enterprise, even at its most limited levels of freedom and capacity.
That fear stems from the conviction among those in power that money is one of the most important sources—and deepest reservoirs—of public power. If a social class or popular current were able to accrue wealth independently from state institutions or instruments, it could organise and pose a threat to the regime’s stability and dominance.
This inclination is not related to modern socialist systems that argue for state intervention in specific areas to create a balance in favour of the most vulnerable, such as by raising taxes, setting a minimum wage, and ensuring a degree of state dominance over highly profitable sectors. It does not even resemble traditional communist systems which provide high levels of care for different social classes within the public sphere.
Serving the state
It is a political and security preoccupation alone that frames and drives the Iranian regime’s view of economics. At its core lies an intensely rigid doctrine that holds that resource wealth (such as from oil) and other monopolies must be exploited by the political system to finance the functions of the state and the instruments of governance, buying the loyalty of certain segments of society.
In essence, then, this is the extension of the state into economics, beginning by tightly controlling the private economy so that it conforms to the conditions set by political authorities. For countless reasons, this has been a factor in the collapse of Iran’s economy, of declining living standards, deteriorating public services, and social unrest.
