Thursday, 17 February 2011

Egyptians v. Wall Street

The Yacoubian Building, an Egyptian novel first published in 2002 that later attracted a considerable readership in English, describes the life of several Cairenes and offers valuable insights into why 80 million people were ripe for revolt. The book is a relentless account of the largely unsuccessful struggle for survival by recently arrived peasants from the countryside and concludes with a visit by Muhammad Azzam, a prosperous and corrupt (of course) businessman to the palace of the unnamed Great One, obviously Mubarak himself, who is never seen but only heard demanding a hefty kickback from Azzam’s businesses.

We’re now hearing a lot about strikes breaking out all over Egypt in the wake of and contributing to the revolution of January 25, a reminder of the uprising’s important economic roots. It’s rather funny to realize that we’ve focused far more on the role of Facebook than that of social class and wages—which says a lot more about us than about Egyptians. For example, how many of us know that a labor protest by underpaid textile workers in the northern city of Mahalla El- Kubra in 2008 was the first to link their economic suffering with Mubarak’s repression and, despite its ostensible ‘failure’, sparked the formation of the April 6 Youth Movement so instrumental in bringing Mubarak down this month.

Our commentators here took note of Mubarak’s role in serving U.S. geopolitical interests and maintaining the separate peace with Israel, but few had anything to say about the toppled dictator’s cooperation with the neoliberal economic dream. Egypt under Mubarak became a paradise of cheap labor for international capital. The Egyptians even have a word—infitah—for the move to wrench away protections for local production in favor of integration with the world market. This type of upheaval often, if not always, requires an authoritarian state—Chile and China come to mind as examples—but the Egyptian case was distinct in that it also included an extreme version of crony inefficiency that stifled economic activity just as thoroughly as political opposition.

Early reports that the new military regime had outlawed strikes turned out to be premature, probably a wise move by the generals who may not have been able to control them in any case. It appears that every labor group from airport employees to longshoremen at the Suez Canal is bursting with wage demands that they can put forward now that they don’t fear the secret police and its many dungeons. The latest news (Thursday 11 a.m. EST) suggests that the strikes are multiplying and that the canal employees are not going back to work. These actions may be at least as persuasive as new rallies in Tahrir Square pushing the military toward real democratic reforms.

Naked Capitalism, Real Clear World and others have pointed out, however, that the military chiefs who quickly lined up against Mubarak and now are in control of the country also have benefited from his creation of a low-wage manufacturing sector, an explosion of Mexican-style maquiladoras on the Nile. Many of these young workers are the ones who poured into the streets by the hundreds of thousands to demand a better life, and the armed forces eventually sided with them.

But despite the unfair competition generated by Mubarak’s mafia-state aligned with international investors, the generals also took advantage of cheap, intimidated labor to extract big profits from their dairy, textiles, piece-work and other businesses. That won’t be easy to give up, but they could also decide that a less corrupt economy with broader distribution of income will be better for them in the long run.

Matt Stoller, who once advised Rep. Alan Grayson, concludes that the Egyptian uprising is really a revolt against the Goldman Sachs/Republicrat formula of global integration, unleashed private sector greed and a sharply reduced role for state. He notes that one of the principal triggers of the revolutionary surge was the beating death by bribe-seeking police in Cairo of Khalid Saeed, a young guy trying to run an Internet café business.

The dead fellow was a typical mini-entrepreneur forced into a micro-credit scheme consistent with the neo-liberal answer to anyone crushed by the ruinous impact of its favored strategy: become a capitalist yourself. But in a pervasively corrupt state where cops are all underpaid, free-lance Tony Sopranos authorized to milk defenseless little guys, the Friedmanite theories don’t really hold up.

It is not surprising, in retrospect, that the assault on Mubarak quickly attracted support from powerful business interests shut out of his family pyramid that siphoned off such huge portions of national income. One of Mubarak’s sons reportedly went after the other for killing the goose that laid the golden eggs by reinforcing the corrupt buddy system—but there is no reason to expect these privileged scions to see that far ahead to their own destruction, any more than the next Lehman Brothers will steer clear of the next equivalent of sub-prime mortgage bonds.