Isam al-Khafaji, al-Dawla wal-Tatawwur al-Ra’smali fil-‘Iraq, 1968-1979 (Cairo, 1984).

Isam al-Khafaji is a distinguished Iraqi economist who studied at Baghdad University under Muhammad Salman Hasan in the early 1970s. After leaving Iraq in 1978, he studied for a year in Paris before settling in Beirut. There he published his first book, Ra’smaliyyat al-Dawla al-Wataniyya (National State Capitalism), which is a Marxist analysis of aspects of economic development with special reference to the oil states of the Middle East.

This latest book was written during the Israeli invasion of Lebanon, and completed in Cyprus in the early months of 1983. Apart from the obvious physical constraints imposed by having to write under such conditions, the author has faced the problem shared by others writing about Iraq in more favorable circumstances, namely the virtual absence of reliable, detailed and verifiable data. Despite these obstacles, al-Khafaji has produced a highly informative, stimulating and timely analysis of contemporary Iraqi society, and in the process he has given us an extremely perceptive review of the role of the state in developing societies. He has made full use of the available statistical material, but has also been able to supplement this with extensive detailed information on the 75 richest and most influential families in the country, largely through interviews. This part of the book is obviously the most informative, given the very great shortage of detailed empirical evidence of this kind, and the author gives us a tentative but lucid analysis of the role of these families within society, and their relationship, direct or indirect, to political power.

Al-Khafaji’s analytical framework is highly complex, and it is difficult to do adequate justice to his work in a short review. His main thesis is that Iraqi society is passing through a period of transition from pre-capitalist to capitalist relations of production, in the course of which a full-fledged home market has emerged. This process has accelerated particularly since the revolution of 1958, and even more sharply since the nationalization of oil in 1972, after which the vast increase in oil revenues transformed the state itself into the most important source of economic surplus in society. As a result, state expenditure has become the fundamental source of demand within the economy, and the state itself the economy’s largest customer. This theme is elaborated in detail throughout the book. Although al-Khafaji accepts that, at least in the initial stages, the state has a certain degree of autonomy, he emphasizes that the process of accumulation of private capital which inevitably accompanies state expenditure and consumption leads to the formation of a social base for the state, which thus loses its relative autonomy. In Iraq, of course, this process took place very rapidly because of the rapid expansion of state investment.

One result of this has been the total transformation of the structure of the labor force. By 1977, at least 60 percent of the active population -- then about 1 million, excluding those engaged in agriculture -- derived all or part of their income from within the framework of the private sector. Incidentally, “government employees” (the remaining 40 percent) do not include anyone employed in the military industrial establishment, about which no information is available at all. Al-Khafaji underpins his analysis with several tables covering a variety of aspects of the labor force in the different sectors. The fact that the Iraqi working class constituted one third of the labor force at the end of the 1970s is itself another important indicator of the development of capitalist relations of production. The majority of the labor force is absorbed within the private sector, and it is the private sector, in competition with the government, which actually determines the price of labor in the market.

In his analysis of the social classes which emerge in the course of this process, the author draws particular attention to the role of local and foreign contracting and subcontracting companies in the construction and communications sector, probably the most lucrative areas within the private sector as a whole. The predominant role of these activities at this stage is another indication of the transitional nature of this development. Al-Khafaji notes that since the mid-1970s, out of a sample of 31 contractors, a high proportion have begun to invest in construction-related industries -- sometimes employing as many as 500 workers -- making concrete blocks, tiles, asphalt and similar materials. Al-Khafaji’s rigorous and detailed review of the social and regional origins of the 75 richest families in contemporary Iraq reveal that this group is both more heterogeneous in religious and regional terms, and less closely linked to the ruling party, than the contractors.

In his final chapter, al-Khafaji argues that the new bourgeoisie was the most direct beneficiary of the economic policies pursued by the state. This new bourgeoisie originate primarily from the middle and lower ranks of the “traditional” bourgeoisie. These elements competed with and to some extent resented the old “colonial” bourgeoisie, which, together with the great landowners, had blocked their upward advance. An exception to this trend seems to have been the older nationalist families (mainly industrialist and often from Mosul) who have managed to benefit particularly from the new developments which have taken place since 1968. In fact, it seems that within the space of a single decade the new bourgeoisie has been able to accumulate tremendous wealth and capital and to emerge as a significant economic force able to preempt any program put forward by the government which might not take sufficient account of their economic interests.

Hence the state has created, so to speak, its own social base. This is not located within the bureaucracy -- although its links with the bureaucracy should not be overlooked -- but within the indigenous bourgeoisie itself. Accompanying this with a historical analysis, al-Khafaji rejects the notion of the petty bourgeois state in general and in the Iraqi context in particular, taking issue here with Hanna Batatu and Joe Stork. He concludes that the crucial question in such an analysis must be the identification of the dominant class in a given social formation. This means that although the social background of individual members of a regime is by no means unimportant, this cannot be regarded as the decisive factor. Having made this clear, al-Khafaji traces the origins of the most important supporters of the regime back to the “Sunni triangle,” in particular to the small towns on the Euphrates. There, socioeconomic relations were quite different from those prevailing in the south, around Kut and ‘Amara, because of the virtual absence of large landowner ship. He also traces the careers of important personalities within the regime, and shows that most leading Baathists have in fact been ousted over the years, leaving Saddam Hussein’s family rather than “the Tikritis” in power. Although individuals from other families and areas are not totally excluded, decisive positions are held by the family and its very closest friends.

Al-Khafaji also carried out a survey of small (i.e., less than ten workers) enterprises. He observes that this category has undergone the most expansion since 1975, and that the total value added of these small firms is double that of the sum of all the larger firms within the private sector. It would have been interesting to have more information on this, especially in the context of his observation that the owners of these small establishments tend to open up other similar-sized workshops rather than to expand production in any one of them.

In the latter chapters of the book, al-Khafaji investigates the changing nature of Iraq’s relations with the world market. In the course of the decade which the book covers, Iraq has exchanged economic for technological dependence; the war and its aftermath will almost certainly see the return of the first kind of dependence, and the reinforcement of the second. Al-Khafaji’s challenging and thought-provoking book is a major contribution to the study of contemporary Iraq, and of wider issues concerning the nature of the state in the Middle East.