Beyond the Rentier State: The ‘Uneven & Combined Development’ of the Persian Gulf

The experience of the world economy since the postwar boom has been one of sharp divergence, not convergence, particularly in the developing world. As capitalism interacted with the social formations of the six Gulf States (Saudi Arabia, UAE, Oman, Qatar, Kuwait, Bahrain) during this period, it would shape the character of its societal development and its inter-societal relations. The immense importance of hydrocarbons in greasing the wheels of the global economy meant that these oil-rich monarchies were bestowed with enormous geopolitical significance and striking levels of uneven development. The interplay between domestic development and wider geopolitical pressures created specific conditions for protracted unevenness to persist in the region. These levels of unevenness were reproduced and entrenched further with globalization during the onset of neoliberalism, in turn creating a sub-regional core embodied in the Gulf Cooperation Council (GCC). While originally a security umbrella it also produced a pan-Gulf capitalist class; a class that Adam Hanieh calls Khaleeji Capital – which conceives of capital accumulation on a regional scale.

As the 2010-11 Arab Uprisings have shown, this class configuration had consequences for other Arab states in the region as Khaleeji Capital penetrated their economies following neoliberal restructuring in the 1990s to varying degrees. This reinforced regional patterns of unevenness, as the Gulf continued to entrench itself at the apex of the geopolitical order of the Middle East and North Africa (MENA). Whether through financing of oppositional political forces (Egypt, Syria) or military intervention (Bahrain, Libya, Yemen), it is undeniable that the Gulf plays a principal role in attempting to steer the degree of political and economic change towards one beneficial to regime security and its economic interests. This essentially preserves an existing imperial calculus that allows the region’s uneven accumulation regime – a regime favorable to global capitalism since being piloted by postwar American liberal hegemony – to resume unimpeded.

Insertion of the GCC into the World-System

The GCC has emerged as the Middle East’s most important regional organization and the role its six members play has ascribed them with strategic importance in both the wider region and internationally. The GCC was forged in 1981 during the flames of the Iran-Iraq War, and thus shaped the conditions for the emergence of this first sub-regional organization in the MENA bloc. As a consequence, the GCC is above all a security formation, and this security blanket has been extended to provide cover for the internal security of its ruling elites.

Despite many structural weaknesses – small native populations, weak security and military structures, varied size of member states, geographical domination of Saudi Arabia, collective exposure to hydrocarbon fluctuations – the GCC has survived and prospered. Its survival and development are arguably due to the inherent strengths of its member states and their intuitive responses to regional and sub-regional crises. Their similar regime types, the assuredness of their ruling families, the durability of their ‘ruling bargain’, and the elites’ abilities to globalize without social dislocation are compelling but not the only factors. Their willingness and ability to individually respond to external challenges and opportunities arising from a rapidly changing environment has in turn translated into a much more visible set of tensions in their bilateral relations, and thus tested the strength of the organization’s unity.

To understand the GCC states’ geopolitics more conclusively however, it is integral to grasp not only the nature of decision-making in these states, but the conditions under which decision-making is constructed. Hence, the international pressures emanating state formation – the process by which these tribal communities interacted with capitalist modernity and informed their geopolitical trajectories, should be of primary examination. In doing so, might we be able to answer how the conjunction of the Gulf’s social formation and capitalism corresponds to their regional power projection? And what role ‘the international’ plays in this process?

Indeed, the fact that the majority of the world’s oil supplies rests on the security of these autocratic hybrids has conferred upon the region an intricate set of geostrategic calculi. The extent to which this explains the Gulf’s complex relationship to imperialism is important to understanding how the GCC states, as an important shareholder in maintaining American hegemony, have become conduits in reinforcing western interests in the Middle East. This serves to highlight the ongoing centrality of regime survival concerns in shaping their geopolitics, locating unusual new foreign policy gambits in the heightened or transformed sense of the treats to their rule. Moreover, Gulf capitalism’s class structure is spatially underpinned by temporary labor flexibility (and reason it largely escaped the 2008 financial crisis) that generates this massive wealth polarization.

The process by which the Gulf has been inserted as a critical node of global capitalism begins first with the discovery of oil between 1930s-1950s, and then acquiring strategic power crystallised with nationalization of their oil industries, which was followed by the Oil Shocks of 1973. And so the Gulf’s development became fused with particular tendencies of the postwar economic and political arrangement: the centrality of hydrocarbons to development and the geopolitics of the Cold War. The linkages between Gulf petrodollar flows, US dollar hegemony, and the emergence of neoliberalism were tightly wedded to uneven hierarchies that formed in the region over this period.

Throughout each phase of internationalization and financialization, the Gulf region has become increasingly central to the functioning of the overall system. Precisely because of this, control over the Gulf became a defining element of power the world economy, with this elucidated clearly with how it has become a constitutive element of imperium in the postwar period. Furthermore, being a major element in the reproduction of the global system shaped the initial process of class formation in the region, as its embryonic capitalist class had been subordinated to and integrated with the extension of US power at a regional scale.

Overcoming the Rentier Hypothesis

State and class formation analyses of the Persian Gulf following the British colonial period has largely been dominated by the rentier-state theory framework. H. Mahdavy defined rentier-states as countries “that receive on a regular basis substantial amounts of external rent [which are] rentals paid by foreign individuals” through the sale of oil revenues, whereby production itself did not depend upon the country’s size but from “differential and monopolistic rents that arise from the higher productivity of the Middle Eastern oilfields and price fixing practices of the oil companies”. Crucially, this allows governments to embark on large-scale public expenditure programs without having to resort to taxation. Mahdavy’s concept of the rentier-state, further developed by Beblawi and Luciani, became the main reference point for debates over the nature of state formation in the Gulf monarchies, whereby the rentier-state is considered to be the mediating link between the domestic and the international economy. Using this framework, much of the subsequent debate has focused on the relationship between the state and other social groups in Gulf societies.

From these debates, three key political and economic characteristics of the rentier-state have been extrapolated. First, numerous authors have postulated a link between reinter-states and autocratic regimes. Michael Ross for example, has argued that rentier-governments are able to relieve “pressures for grater accountability” by relying on low tax rates, fostering patronage networks, and blocking the formation of groups that might challenge the dominance of the state. Second, it is argued that the rentier-state has a pronounced degree of autonomy in economic decision-making, and is thereby able to determine which social strata to promote and support. Third, there is supposedly a bias in rentier-economies toward the service sector rather than value-added production. States find it easier to import goods to satisfy consumer demands and increasingly sophisticated tastes, rather than produce those goods domestically. These three characteristics have typically been marshaled to explain the development of the private sector and merchant classes in the Gulf in the postcolonial era.

This framework has certainly provided some useful insights into postcolonial development of the Gulf, and is no doubt crucial for much of the historical analysis of the Gulf in the early periods of state formation. However, I want to depart from this reliance on rentier-state theory in order to unpack the social formations of the Gulf and its subsequent insertion into modernity. In particular, problematizing this form of methodological nationalism is necessary. For example, Adam Hanieh argues that such a framework is highly misleading because its relies heavily upon a notion of “relative autonomy,” in which the state is seen as a distinct sphere of the political economy with a high degree of latitude to maneuver and deploy economic stratagems free from the constraints of their respective capitalist class.

Thus, within the rentier framework, the analytical focus is typically placed upon the state with little attention given to capitalism as a social system. The challenge becomes one of understanding why capitalist social relations developed and took the particular form that they did in the Gulf, and as Hanieh cautions, “while oil revenues and the concomitant development of the state is a central feature of this narrative, the deeper factors shaping class formation must be given analytical primacy.” To achieve this, a perspective that adopts that Gulf social formations are relations that have evolved alongside and within the development of a global capitalist system, is best seen as a specific reflection of that world market as a whole. It is equally imperative to avoid commodity fetishism in ascribing primacy of oil as a ‘thing’ instead of a commodity embedded in a set of globally determined social relations, and how its central location within the reproduction of the system as a whole in turn shapes both the domestic and geopolitics of the Gulf.

Meanwhile, Kamran Matin claims that the rentier-state concept has been deployed for two diametrically opposed arguments: on one hand, to explain the structural fragility in the face of popular pressures from below due to a weak social base; and to explain ‘regime durability’ on the other. Since this conception exhibits an analytical myopia rendered from an internalist construction of societal phenomena, it has “obviated the need for theoretical reflection on the socio-historical and international dynamics that animate the domestic political effects of state- autonomy based on external rents.” He argues that since the political features associated with the modern rentier state have come about under very different historical contexts (colonialism, discovery of oil, geopolitics of the Cold War etc.), their seemingly similar pre-capitalist state formations are in fact driven by a historically specific dynamic of sociological amalgamation.

Bringing in ‘Uneven & Combined Development’

How then, are we to link domestic social processes with the coexistence of multiple societies without abstracting them away as traditional International Relations (IR) theory has done? In an effort to de-reify anarchy by not falling into the trap of ‘domestic analogy’ or ‘reductionism’ neorealist IR theorists have charged their critics of, a theoretical framework which can accommodate a coherent social theory of the international as a distinct and emergent field of causality can go many ways to remedying this lacuna that IR preserves toward hybrid states such as the Gulf. It is here where I suggest that adopting an ontology that underpins the incorporation of IR into social theory, which can posit relationships and processes between and within societies as mutually constitutive and development as intrinsically interactive and multi-linear can be found in Leon Trotsky’s theory of ‘uneven and combined development’ (U&CD). It is this theory, as a Neo-Marxist intervention into disciplinary IR, that can fruitfully be adopted in order to tease out the peculiar formations of the Gulf States as they have interacted with the international system.

Traditional international theories have problematically tended to theorize the coexistence of multiple societies in abstraction from domestic social processes. The strength of U&CD as an approach is that its promise lies precisely in its capacity to account for the existence and emergence of the political multiplicity of geopolitical systems (“the international”) and thus sociologically problematize the reification of anarchy. In providing a social theory of the international, the U&CD approach brings both sociological and geopolitical factors into a single, coherent explanatory framework, while distinctively contributing to the field of IR by highlighting the importance of inter-societal relations for conceptualizing social change and development.

This framework, underlined by international historical sociology method of exposition, importantly seeks to overcome Eurocentric accounts of theorizing modern development of the non-West. This should allow us to effectively tackle how, as capitalism interacted with the social formations of the Gulf, it would shape the character of its societal development and its inter-societal relations in specific ways. Grounding U&CD as a theory capable of accounting for specificity – in being able to articulate the changing dynamics of development in time and space, is integral to being able to explain concrete changes that led to the Gulf’s peculiar territorial and class formation under capitalism.

(I hope to expand upon the theoretical insights of U&CD, its circumvention of eurocentrism, and its application to the Gulf states in more detail in a future post.)

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