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Iran: Crisis, capitalism and the rule of the Mullahs

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The depth of the current movement in Iran can only be properly understood if we look at the social and economic developments of recent years and the regime's connection to capitalism.


For years, the Iranian economy and society have been in a deep economic and social crisis. The development of the GDP (gross domestic product) resembles a fever curve. The slump in 2012 (-3.75 %) and 2013 (-1.53 %) was followed by a plus of 4.99 % in 2014. In the following year 2015, however, GDP shrank again (-1.43%). In 2016, it shot up by 8.82 %, but already in 2017 growth declined again to 2.76 %. This was followed by years of recession in 2018 (-1.84 %) and 2019 (- 3.07 %). In 2020 and 2021, GDP did grow again (+3.3% and +4.72%).

This zigzag curve already illustrates how fragile the capitalist development in the country has become, as no "normal" economic cycle lasting several years has emerged for years. In fact, the country's economy has been stagnating for about a decade, especially if we put the GDP in relation to the population, which increased from 76.04 million people in 2012 to 84.98 million in 2021.

Social situation

The situation of wage earners is also particularly dramatic. Since 2012, the average per capita income has fallen from around 8,000 US dollars to just over 2,000 (2020). The main reasons for the real loss of purchasing power and the associated devaluation of the incomes and assets of the masses are the permanently high inflation rate (10-20% per year), the decline in the exchange rate of the currency and the high unemployment, precarious and underemployment. The unemployment rate today is officially 11.13 %, and it is about double the average for women, youth, people with university degrees and national minorities.

But the last ten years have also been a social disaster for employed workers. According to Massarrat, the real minimum wage fell from 400 US dollars/month in 2010 to 100-130 in 2018 - despite many bitterly fought labour disputes, some of which led to short-term wage increases. Alone, inflation is rapidly eating this up, it was over 40% in 2021 and over 30% at present. Moreover, the general situation deteriorated under the pandemic. Today, about half of the population lives below the poverty line.

But all this also explains why the movement was able to take root, expand and anchor itself so quickly and massively in universities and workplaces.

Youth and women

Today there are about 4.5 million students in Iran, about 50 % more than in Germany (3 million), a remarkable number and rate for a semi-colonial country. Almost every second student is a woman. This reflects the mullah regime's attempt to promote state-capitalist industrialisation after seizing power, which is also expressed in the increase in the literacy rate (80 % compared to 20 % under the "modern" shah regime) as well as the compulsion to employ more women as wage labourers or to qualify them professionally.

Thus, on the one hand, a very qualified class of women emerged in Iran, who at the same time remained politically and culturally disenfranchised. The failure of illusions in the reform wing of Islamism also led to the exhaustion of hopes for a gradual opening and liberalisation of the regime.

Today, the universities represent a focus of the movement - and we can see, given the social situation of the students and particular female students, why young women and youth are playing such an important role in the mobilisation, fighting in the front line. For years, the regime promised women and youth jobs, income and even some advancement in return for social oppression and cultural dreariness. After initial industrialisation and economic successes in the 1980s and 1990s, all this turned out to be more and more a fiction. The neoliberal reforms and privatisation of the last decade, especially since the slump in 2012/13, further worsened the situation. For women and youth, the future looks bleak.

The working class is now the most numerous class in Iranian society, especially if we include the sub- and semi-proletarian strata and those parts of the intelligentsia that are undergoing a process of proletarianisation.

For the wage-earners, the dictatorship of the mullahs has always represented a brutal rule of the exploiters - Iranian capitalism and the Islamist regime are too obviously and closely linked.

State and Bourgeoisie

After the counterrevolutionary takeover and defeat of the Iranian revolution in 1979, the regime set its sights on state capitalist industrialisation, financed by the oil business and an alliance with the commercial bourgeoisie, above all the so-called "Bazaaris" (a traditionally religiously conservative stratum of wholesalers based in the bazaar of Tehran who felt disadvantaged under the Shah).

This was to be achieved through revenues from the export of oil and gas as well as through Western investment. This policy had some limited success, as reflected in the growth of the working class.

However, under the mullahs, as under the Shah, the oil revenues were for the most part not invested in the development of a comprehensive national economy and industry, but rather the greater part flowed into the pockets of either a bureaucratic caste or the religious and repressive institutions closely linked to the regime. In the process, a new class of entrepreneurs emerged, such as officers, senior civil servants, leading militia commanders and other officials, who were favoured in privatisations whose business model consisted essentially of state contracts, i.e. a redistribution of oil revenues. This was both more profitable and safer for them than new industrial investments.

This was all the more true for the already established capitalist wholesalers, many of whom had historically emerged from large landholdings in the countryside. The business model of the big trading capitals consisted on the one hand of importing goods for those strata that were supported by oil revenues (and thus replace domestic products) and on the other hand of investing in real estate and financial markets. The reason for this is no secret. These spheres simply promised faster and higher profits than the industrial sector. The oil revenues of the Iranian state acted as guarantors for these deals.

This problem of revenues from commodity wealth not flowing organically into building the domestic economy is, of course, not a specifically Iranian one. Rather, it is typical of semi-colonial countries whose revenues come substantially from the sale of commodities or income in the form of land rent. Countries like Iran, despite sanctions and diplomatic isolation, naturally continue to depend on the world market. This is also reflected in the fact that the Iranian economy has run into further difficulties since 2012/13, because of the lower commodity price for oil and gas. In addition, the sanctions pushed by the USA and also enforced on its Western allies led to a decline in foreign capital investment, which could not be offset by other states such as China.

World market and national capital

However, dependence on the world market also goes hand in hand with a certain orientation of national capital. Not only is the most important economic good oriented towards the world market, the investment direction of the most important capital groups is also determined by it. The fact that "national" capital in Iran prefers to invest its money in speculative transactions and in the import and export of goods follows the simple logic of any individual capital - to invest where the greatest return can be expected with the least risk.

This also explains why the Iranian bourgeoisie is again willing and able to develop the country itself, but has taken on essentially parasitic features. This is all the more true of the "new" entrepreneurs who have emerged from the regime. In addition, the Islamist regime has to support a whole army of repressive forces, the military, paramilitary units like the Pasdaran, civil servants, religious dignitaries - all of them economically unproductive social strata.

Unlike the petro-monarchies in the Gulf, however, the Iranian population is far too large to be supported in its entirety from oil revenues. Since the private bourgeoisie preferred to invest its capital in trade and finance rather than in industry, the Shah as well as the Islamist regime tried to push for a state-capitalist industrialisation for some time. But this failed not only because of the dependence on the world market (oil and commodity prices), but also because the commercial and financial bourgeoisie and their numerous minions had to be served first.

The "rest" was too small and insecure to achieve economic modernisation. Thus, much remained piecemeal, stuck halfway. The neoliberal turn of the regime after 2010 and the sanctions of the West exacerbated the problem. Industry and related parts of the economy suffered from a lack of spare parts, outdated machinery, a lack of markets, a lack of capacity utilisation and especially a lack of capital for new or replacement investments.

The working class has to somehow keep the declining business going and at the same time experiences daily that Islamist capitalism is not only in decline, but also threatens to drag wage earners into the abyss.

For the employed workers, working conditions are deteriorating and accidents are becoming the norm. Many earn less and less due to inflation and production stoppages, others wait months for their wages.

It is no wonder that wage earners have become increasingly alienated from the regime in recent years, especially outside strategic state-owned enterprises, where higher wages are paid. In 2019, however, they formed the central social force in the mass movement against the regime, raising economic demands in conjunction with those for the overthrow of mullah rule.

Under the dictatorship of the Shah and the Islamists, the Iranian bourgeoisie proved unable and unwilling to develop the country. It will not be able to do so in the future either; it has long since lost its role as a progressive force. It is therefore all the more urgent that the youth, fighting women, oppressed nationalities, but above all the working class itself realise that the coming Iranian revolution can only solve the country's problems if it becomes a socialist one.