Mahmoud Abdel-Fadil, The Political Economy of Nasserism: A Study in Employment and Income Distribution Policies in Urban Egypt, 1952-1972 (Cambridge: Cambridge University Press, 1980).

Selective memory and glorification of the era of Gamal Abdel-Nasser has been a key ingredient in mobilizing left opposition to the regime of his successor. For many, the Sadat regime represented a full-scale counter-revolution against both the Arab nationalist foreign policy and the political economy of the Nasser period. The extent to which Nasserism has been employed as a slogan and a symbol and as a basis for criticism of Anwar al-Sadat and his legacy makes an evaluation of the Nasser era not only a fascinating historical question, but an issue of great current political significance.

Sadat’s “open door” economic policy, formally inaugurated in 1974, was one of the focal points for opposition to his regime. The “open door” policy represented a distinct shift of the Egyptian economy toward closer integration with the Western capitalist world market and the expansion of the role of market forces in structuring and directing the economy. But was this a complete reversal of the economic direction of the Nasser era? The answer depends on our determination of the character of the Nasserist political economy.

Like his earlier work on rural Egypt in the Nasser period, Abdel-Fadil’s book is constructed in a highly technicalist style, based on a plethora of statistical data. [1] The collection of such a mass of data is alone a commendable achievement. Some of the official publications which are the main source of Abdel-Fadil’s statistics are not easily accessible, especially outside Egypt. Publication of such information, with well-informed comments and tabulations, is a real service.

As a prominent intellectual in the anti-Sadat opposition, Abdel-Fadil undoubtedly felt obliged to move beyond a statistical treatment of trends in the urban economy to a broader evaluation of the Nasserist economic system, an effort which his earlier work did not attempt. Unfortunately, his generalizations are not well related to his own and other available statistical data. He is satisfied with imprecise and apparently self-contradictory conclusions which avoid the issue almost as much as they clarify it. In the Nasser period, according to Abdel-Fadil, “the old ruling class coalition of large landowners and big business allied with foreign capital was replaced by a new coalition dominated by the nationalistic sectors of the bourgeoisie.” The regime accepted the capitalist market as the basic framework for the economy, he argues, but the desire to achieve economic independence and growth required the formation of an expanding public sector and, ultimately, less reliance on market forces as the allocator of national resources. “Nasserism, as a socio-economic regime,” Abdel-Fadil writes, “may well be regarded as belonging to the Kaleckian category of ‘intermediate regimes’, characterized by the amalgamation of the interests of the lower middle class with state capitalism.” This classification coincides with what official Soviet economists and others have termed the “non-capitalist path” of development—a path which “creates the conditions for the transition to socialist development.”

No one now argues that an Egyptian transition to socialist development has been achieved or is likely to take place in the near future. One has the choice of explaining what occurred after Nasser as a “counter-revolution,” or of arguing that the “non-capitalist path” is an inadequate and misleading characterization of the Nasser period. A brief review of some of the salient features in the development of the Nasserist economic system may illustrate the advantages of the latter approach.

The 1952-1957 period of the Nasser regime was characterized by an alliance between the ruling Free Officers and the industrial capitalist sector of the old ruling class. This alliance designed the land reform of 1952 to strengthen industrial capitalism as much as to break the economic power of the largest and most conservative agricultural landowners. The Explanatory Note to the land reform law states this clearly: “One of the principal aims of the land reform scheme is to direct new investment into the improvement of land and into mining, industrial and commercial enterprise.” This argument precedes any reference to the lopsided distribution of agricultural land in Egypt. Considerations of social justice, while not absent, were not the principal motivation for the land reform. Only members of the former royal family were expropriated outright. Other large landowners received government bonds as compensation. Although their economic and political power was radically diminished, many were able to preserve their capital during the Nasser period.

The principal result of the land reform was to increase the size and influence of the rich peasant class. The relatively high (by Egyptian standards) limit of 300 feddans imposed on land ownership by the 1952 law was calculated to affect only the wealthiest landowners. (One feddan = 1.03 acres. The limit on ownership under the land reform is usually given as 200 feddans, but any landowner with one child could keep 300 feddans.) It did not provide sufficient land to redistribute to very many of the poorest peasants. Lowering the ownership ceiling to 100 feddans in 1961 did not substantially alter this situation. In his work on the rural economy, Abdel-Fadil generally concurs with this analysis. The Nasser regime established its political relationship with urban workers in its first months in power, and did not change it fundamentally despite the 1960s rhetoric about socialism. In its first substantive act, the new regime ordered the execution of two workers, Mustafa Khamis and Muhammad al-Baqari, for allegedly inciting a strike and riot in the textile town of Kafr al-Dawwar. The evidence presented at the trial was highly questionable; it is most likely that the executions stemmed from the suspicion that the two were communists. In December 1952, the regime enacted comprehensive new labor legislation. These measures did improve the material conditions of urban workers, and virtually guaranteed that they could not be dismissed from their jobs except for gross misconduct. They also stripped workers of the right to strike, and required compulsory arbitration of labor disputes. These and other administrative measures effectively made trade unions an arm of the government bureaucracy, with little independent power. None of these arrangements were in any way significantly altered in the 1960s, and they remain the basic framework for labor organization and control in Egypt today.

The nationalization of foreign-owned enterprises began in 1957 following the British-French-Israeli aggression, but a substantial portion of Egypt’s largest industrial and commercial enterprises became wholly or partly state-owned only after 1960-1961. If Nasserism is a distinct political-economic system, this is its real starting point. Even then large areas of the economy remained open to private enterprise, including some heavy industries, a large share of medium and light industries, one fourth of all foreign trade, three-fourths of all domestic commerce and, of course, the overwhelming majority of agriculture. The principal economic objective of the new system, as articulated in the 1962 Charter of National Action was “to raise both consumption and investment at the same time.”

Abdel-Fadil’s data indicate that the regime’s wage policies significantly improved the standard of living of the urban masses, while the nationalizations and sequestrations of property reduced income from rents, profits, interest and dividends for the very wealthy. The primary recipients of the increased income and consumption were not the very poorest urban dwellers. Skilled workers and the white-collar middle strata received a disproportionately large share of the benefits of the Nasserist regime. There was a substantial growth in the size of the urban petty bourgeoisie under Nasser, especially government bureaucrats and white-collar private sector employees. These are the urban counterparts to the rural kulak class promoted by the land reform.

Nasserism’s Crisis

While the economic advances of the Nasser period are undeniable, Abdel-Fadil does not interrogate his data aggressively enough. His statistics, and others readily available, point inescapably to the conclusion that the Nasserist economic system entered a general crisis in 1964-1965, brought on by the inability to sustain increased consumption and increased investment simultaneously. As a result, many of the benefits of the Nasserist system began to erode. The cost of living index, which had remained relatively stable between 1950 and 1964, rose sharply in 1965. It has continued to climb ever since. The index of real wages peaked in 1964. It rose later only with a substantial increase in the length of the average working week, from 44 hours in 1964 to 55 in 1970. The share of wages as a percentage of the national income also peaked in 1963-1964 and declined steadily thereafter, indicating that the more egalitarian distribution of the national income was only a short-term trend. [2] The rate of investment as a proportion of national income reached a high of 22.3 percent in 1963-1964 and declined to 12 percent by 1970. The effects of the 1967 war are often credited with the economic undoing of Nasserism. [3] It is worth emphasizing that all of these manifestations of crisis were evident before the war, although there is no doubt that the war exacerbated it.

The war precipitated a debate on how to resolve the economic crisis. Following severe rioting and a cabinet shuffle in February 1968, the government formulated a new economic program on March 30, 1968. [4] The regime considered this important enough to submit it to the nation for ratification in the form of a plebiscite. The program called for intensified modernization and strengthening the role of the technocracy. Unrepresented a significant political shift away from the diffuse populism and consumptionism of the early 1960s and towards increasing subjugation of the state and the public sector to the interests of the technocrats. The technocrats and managers of the public sector were among the principal beneficiaries of the Nasserist economic system. They sought to preserve it. Their positions depended on blocking any transition to socialism as a solution to the crisis. The regime consistently and consciously avoided giving real power to workers and peasants, even as it spoke in their name and improved their living standard.

The economic measures which followed the March 30, 1968 economic program reveal its class bias. In June 1968, Egyptians working abroad for more than five years were permitted to open foreign currency accounts in Egyptian banks. The minister of economy and foreign trade publicly identified physicians, lawyers, artists, engineers, publishers and agents of foreign firms and investment offices as beneficiaries of the new regulation. The government relaxed restrictions on the importation of personal luxury items, and abolished the monopoly of the public sector in certain goods. It introduced administrative reforms for public sector enterprises which urged free market criteria on the management in the name of greater efficiency. Minor denationalizations took place in August 1968. A Presidential Decree of March 3, 1969 institutionalized the supremacy of technical over political expertise in the management of the public sector.

The ideology of efficiency, technology and scientific management was the vehicle for a substantive shift in power which strengthened the hand of the managers of the public sector. It advanced the private sector as a center and a model of the type of economic activity which the regime saw as exemplary. As the public sector stagnated and became increasingly less productive, its managers began to use their positions to secure their own futures in the private sector. They, along with the largest interests in the private sector, became the core of the new ruling class coalition which emerged under Sadat’s “open door” policy. They were joined by a significant number of former large landowners who had managed to retain some of their holdings by a variety of subterfuges, or who had kept their capital abroad during the 1960s. [5] Finally, a number of “open door” hustlers and semi-criminal elements trading in black markets and other shady enterprises managed to reap quick and substantial profits, and thereby to catapult themselves onto the top of the economic heap.

All but the last element of this new ruling coalition have roots in the Nasser era or the monarchy. Osman Ahmad Osman began his business career before the 1952 military coup. He and his family were shareholders in the Egyptian Company for Industries and Contracts and several other manufacturing firms. His Arab Contractors was partially nationalized in 1961, but he remained chairman of the board of directors. He was able to use the company as a base for his leap into prominence as Egypt’s premier capitalist and Anwar al-Sadat’s right-hand man under the “open door” policy. Niyazi Mustafa is involved in a large number of “open door” ventures, including the leadership of the consortium of Egyptians which has established a joint-venture battery plant with Union Carbide Corporation in Alexandria. He rose from a relatively modest middle class background to a position of responsibility in the Nasserist public sector and used his influence and power to make a personal fortune with the advent of the “open door” era. Sayyid Mar‘i, a former large landowner, administered the land reform under Nasser. He became one of Sadat’s inner circle and prospered famously under the “open door.”

The central factor in the coalescence of the ruling coalition under the “open door” policy was the transformation of the technocrats and managers of the Nasserist public sector into a state bourgeoisie with clearly defined interests of their own. Given the regime’s consistent resistance to placing real political and economic power in the hands of peasants and workers, this development, rather than a transition to socialism, was almost inevitable. Socialism requires more than development of the economy’s productive forces and slightly improved income distribution and standards of living. These can be, and in some Third World countries have been, achieved under capitalism. Socialism is the product of a conscious political choice, viable instruments of popular power and thorough suppression of former ruling class interests. None of these were present in Egypt under Nasser. Only similarities in the mode of bureaucratic planning and control between Egypt under Nasser and the Soviet bloc states enable some economists to imagine that the political economy of Nasserism was a step toward socialism, or at least a “non-capitalist path” of development.

The coup of 1952 did achieve significant economic advances by breaking the political and economic hegemony of the most conservative and anti-industrial elements of the large agricultural landowners. It cleared away many remnants of precapitalist social relations. The Nasser regime may well be considered a transitional form, rather than a fully developed political-economic system. But in the absence of a commitment to socialism the transition was necessarily in the direction of capitalist development, not socialism.

Endnotes

[1] Development, Income Distribution and Social Change in Rural Egypt, 1952-1970 (Cambridge, 1975). Reviewed in MERIP Reports 64 (February 1978).
[2] Gouda Abdel-Khalek, “The Open Door Economic Policy in Egypt: Its Contribution to Investment and its Equity Implications” in Malcolm Kerr and El-Sayed Yassin, eds., Rich and Poor States in the Middle East: Egypt and the New Arab Order (Boulder, 1982), p. 263.
[3] Ibid., p. 268.
[4] The discussion which follows is based on Mark Cooper, “Egyptian State Capitalism in Crisis: Economic Policies and Political Interests, 1967-1971,” International Journal of Middle Eastern Studies 10 (1979). A fuller treatment of these themes will be available in Cooper’s forthcoming book from Johns Hopkins University Press: The Transformation of Egypt: State and State Capitalism in Crisis.
[5] Tom Miesse of the Department of Anthropology of Wayne State University (Detroit) is currently preparing a study of former large landowners who have become part of the “open door”-era ruling class.

Joel Beinin

To title his book The Political Economy of Nasserism was a decision of courage on the part of Mahmoud Abdel-Fadil. Its accuracy and the success of his endeavor are other matters, but there is no doubt that defining and analyzing what happened to Egyptian society under Gamal Abdel-Nasser remains the most important question for the study of contemporary Egyptian politics. The period between 1954, when Nasser won his struggle with General Nagib and assumed undisputed control of the state, and Nasser’s death in 1970 represents the break between the ancien regime and the present. In his vocabulary at least, Abdel Nasser was clearly distinguishable from the official ideologies of the late 1940s and that of the 1970s.

The problem is that so much seems to have changed under Nasser and yet also so little. Abdel-Fadil contributes much valuable material towards a necessary analysis of class structure and investment policies under Nasser and their impact on Egypt. He does not, however, carry out such an analysis. The first problem is that we never quite learn what political economy is. It seems to have something to do with employment policies and class structure, but the author never defines clearly what we are looking at. Is it a view of which social classes supported, benefited from, and possibly directed the policies of the Nasser regime? Or is it the extent to which the structural features of the Egyptian economy made certain choices and trends inescapable? Both seem to be subsumed in the term “political economy.”

This leads to some contradictory features in the analysis. Even on the basis of Abdel-Fadil’s presentation, it is unclear how radically Abdel Nasser actually changed Egyptian socioeconomic reality. Furthermore, although the size of the industrial working class has grown, it is by no means numerically or politically the dominant urban social force today, just as it certainly was not in the 1930s. That role may still be reserved for the urban artisans, tradespeople and craftsmen.

Abdel-Fadil recognizes that there is a significant urban work force which is by no means an industrial proletariat. He calls this the informal sector, including small-scale manufacturing, handicrafts activities, personal services, petty services and “vague and ill-defined activities.” This sector of the economy has grown quite rapidly since 1947. Abdel-Fadil indicates that some subsectors, such as petty trade (street vendors and the like) have more than doubled in that period. It is this sector which has absorbed the bulk of the migrants from the countryside:

During the period 1947-1966, an inflow of job seekers at roughly four times the rate of expansion of job opportunities has inevitably made it very difficult to absorb rural migrants into productive employment. Consequently, employment in “informal” services has had to expand dramatically in order to fill the gap.

One question concerns what kind of political action it makes sense to expect for this “working class.” Those in the informal sector have very little possibility to create effective organization. They can be “organized,” as it were, only from the outside—by those with significant resources, whether nationalist groups such as the Wafd (as in the 1930s), the Muslim radicals, or even the state.

Politically, moreover, where the informal and “petty-bourgeois” sectors are as large as the industrial sector in terms of employment, they can influence the self-conception of industrial workers to the degree that class-based organizations and politics become fragile. This is especially so when they are under attack from the state, as they clearly have been in Egypt both before 1952 and since. It is clearly relevant that Nasser’s politics sought the “dissolution of class distinctions.” As a consequence, Nasser sought to substitute populist formulas in place of the formation of class-based organization in the working class. This populism finds a “natural” social base among the “oppressed and disinherited” who are not industrial workers but who work in the informal sector.

“The historical importance of the Nasser regime,” Abdel-Fadil asserts:

arises from the structural changes brought about by the regime, by the new pattern of alignment of social forces, and by the new superstructures of political and administrative institutions…. There is little doubt that the Nasser regime has operated major socioeconomic transformations within the Egyptian society. The old ruling class coalition of large landowners and big business allied with foreign capital was replaced by a new coalition dominated by the nationalistic middle sections of the bourgeoisie.

Yet given the ease with which his regime turned into that of Sadat, it is not clear that Nasser’s structural changes were all that profound. The amelioration of the conditions of part of the peasantry and landless laborers through land reform, and of a section of the urban working class, may have amounted more to buying off potential opposition. The shift in the locus of power to the cities may mean not that the old coalition was replaced but rather that it transformed its own hold on power. Abdel-Fadil’s own allusion to Bonapartism in France is instructive: For Bonapartism gave power not to a French working class but to a French bourgeoisie whose links with the rural population and with the urban tradesmen and artisans allowed it to crush any real challenge to its hegemony (in 1871), orient France as an expansive colonial power, and check the influence of the socialists and communists.

Nasser’s program brought economic benefits to particular groups in Egyptian society, especially those who labored in the cities or on the land with their hands. Egypt’s peculiar international situation, in which it secured sizable outside assistance, may have in part allowed it to increase both consumption and investment for a relatively prolonged period. This international aspect of the political economy of Nasserism is absent from Abdel-Fadil’s book. Beyond that, however, it is unclear that Nasser’s policies transformed the nature of the urban work force or changed the balance of contending forces in Egypt. One looks in this book for a sense of how different forms of material production lead to different kinds of social cleavages which in turn shape the policy choices and the interventions of the state in society. Mahmoud Abdel-Fadil’s contribution is just a beginning toward comprehending the nature of Nasserism.

Ellis Goldberg

How to cite this article:

Ellis Goldberg, Joel Beinin "Egypt’s Transition under Nasser," Middle East Report 107 (July/August 1982).
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