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DEPENDENT CAPITALI ST DEVELOPMENT AND
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DEPENDENT CAPITALIST DEVELOPMENT AND
CLASS FORMATION IN IRAN, 1800 - 1970

By

Nahal Forouzin

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

MASTER 0F ARTS

Department of Sociology

1979

ABSTRACT

DEPENDENT CAPITALIST DEVELDPMENT AND
CLASS FORMATION IN IRAN, 1800 - 1970

By

Nahal Forouzin

This thesis was undertaken in order to determine the
sources and causes for the following two phenomena which
the author recognized to be the main features of Iran's
economy: 1) the underdevelopment of Iran's economy, and
the resulting extreme poverty and deprivation of the coun-
try's population despite the tremendous wealth received by
the Iranian government from Iran's oil resources, and 2) the
dependency of Iran upon the industrially developed countries.

It was determined that to understand the roots and
totality of the factors responsible for the perpetuation of
underdevelopment and dependency, a historical analysis of
the class structure of the society, as well as a study of
the mechanisms and dynamism of its relationship with the
industrially advanced countries of Europe and the United
States, is the sine-qua-non for the comprehension of the
sources of the problem. In this context, a substantial
examination of the theories of underdevelopment and depend-
ency was embarked upon.

The conclusions of the study are that: 1) there is a

direct correlation between Iran's underdevelopment and the
development of capitalism in the industrially advanced
countries; 2) that this underdevelopment is consciously
instituted and fostered by the industrially advanced capi—
talist countries and a benefactor class in Iranian society;
3) Iran's dependency upon the nations of Western Europe,

the United States and Japan for technology, capital, techno-
logical advisement, intermediary commodities, etc. is the
very basis for the continued underdevelopment of the coun-
try's economy; and 4) the indigenous development of Iran's
economy and its flourishment will become possible only as a
result of a complete termination of this dependency relation-

ship.

To the late Bizhan

ii

ACKNOWLEDGEMENTS

To Dr. James McKee, who was more than just an advisor
and the chairperson of my committee, I wish to express my
deepest appreciation and gratitude. This modest humanist
rendered his assistance to me throughout my years of study-
in the Department of Sociology at Michigan State University.

I further wish to extend my gratitude and appreciation
to Drs. Kevin Kelly and Richard Hill, both of whom were
friends, and the former a member of my committee,who provided
important Opportunities for my intellectual development
and offered valuable comments and criticisms of my work
during these past several years.

I would also like to thank Dr. William Ewans, whose
comments and critical reading, like those of the other
members of my committee, provided guidance for revising
and editing this thesis.

I wish to express a special acknowledgement to my
very dear friend Jennifer Davis for her patience and
encouragement during the course of writing this thesis.

I deeply appreciate the hours of selfless work by
my dear friend Kathy Sigman who typed and proofread the
rough draft of this work.

Finally, my thanks to still another friend, Margaret
Vascassenno for her assistance in editing the final copy

of this thesis.
iii

TABLE OF CONTENTS

List Of Tables. 0 O O 0 0 O O O O O O O O O O O O 0

List of Figures . . . . . . . . . . . . . . . . . .

Introduction. . . . . . . . . . . . . . . . . .

Part I. . .

Part II

Introduction to Part II. . . . . . . . . . . . . .
Preface to Part II I O O O O O O O O O O O O O 0

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Chapter 7

Chapter 8

Chapter 9

The Incorporation of Iran into the World
Capitalist Market. . . . . . . . . . . .

The Process of Primitive Accumulation of
Capital and the Emergence of the Iranian
Bourgeoisie and Working Class. . . . . .

'The Constitutional Revolution of

1905-19090 0 o o o o o o o o o 0
World War I and the 1920 Coup d'Etat .

The Great Depression and its Economic
Consequences in Iran . . . . . . . . .

The 1941 Coup D'Etat and the Subsequent
Political and Economic Crisis. . . . . .

The Ascendency of Iran's National
Bourgeoisie to Power . . . . . . . . . .

The Overthrow of Dr. Mossadegh and
the Renewed Domination of the Comprador
Bourgeoisie and Imperialism in Iran. .

The Economic Crisis of 1960-63 and the
Shah's White Revolution. . . . . . . . .

iv

. vi
.viii
O l
a

. 58
O 59
62

73

85

. 98
. 112
. 123
128

O 134
145

ChapterlO

Chapterll
Footnotes .

Bibliography.

The Land Reform Program:
for Dependent Capitalist

Conclusion.

A Vehicle
Supremacy.

154
170
173

183

10.

11.
12.

13.
140

15.

16.

LIST OF TABLES

Capital Invested Abroad (000,000,000 francs). . . .

Percentage of Territory Belonging to the European
Colonial Powers (including the United States) . . .

Direct Investments of the United States in
Manufacturing as a Percentage of Total
Investments, 1929-1968. 0 o o o o o o o o o o o o o

Iranian Imports and Exports, 1831-1848. . . . . . .
Main Exports, 1850's-19l3 (percentage of total) . .
Main Imports, 1850's-19l3 (percentage of total) . .
Imports of Cars, Trucks and other Vehicles

by Non-Exempt Importers, 1924-1929 (value in
million rials, current prices). . . . . . . . . . .
Imports of Durable Producer Goods with an

Expected Average Life of More than One Year

(in million rials). . . . . . . . . . . . . . .

Volume and Value of Total Exports, 1921-1930
(volume in 000 metric tons, value in million rials)

Major Imports and Exports, 1938-1942 (value in
thousands of rials) . . . . . . . . . . . . . . .

Oil Exports, 1946-19580 0 o o o o o o o o o o o o

1954 International Oil Consortium (Percentage
of Control of Iran's 0il Reserves). . . . . . . .

Balance of Trade, 1954-1961 (millions of rials) . .
Domestic Production of Various Commodities, 1947-60

Employed Workers in Manufacturing Industry, 1956 and

1966(000 workers) . . . . . . . . . . . . . . . . .

Indexes of Agricultural Production (AP) and
Per Capita Agricultural Production (PCAP) For
Iran (1952-54 : 100). . . . . . . . . . . . . . . .

23

.108

.108

.109

.119

.130

.136
.138

o 140

.141

.147

17. Rural Population Sectors, 1960 . . . . . . . . . .157

18. Distribution (Approximate) of Foreign Capital
in Different Parts of the Globe (Circa 1910). . . 174

vii

1.

Map of Iran.

LIST OF FIGURES

viii

57

INTRODUCTION

In this work I will analyze the development of capi-
talistic relations of production in Iran, beginning with its
embryonic emergence in the 19th century. In doing so, I
will undertake a comprehensive study (in Part II of this
thesis) of the socio-economic formation prevailing in
nineteenth century Iran, which gave birth to the new mode
of production of capitalism. The growth of the new infant
was a quite gradual and difficult process however, which
never crystalized into full maturity. The totality of
relations surrounding the new infant not only prevented
the development of all its potentials, but it actually led
to its retardation. The sick and crippled economic system
that emerged after a transitory phase of semi-feudalism/
semi-capitalism was the outcome of this process.

The totality of relations in which the emerging cap-
talist mode of production was surrounded has two significant
aspects: 1) the socio-economic formation prevailing in Iran
throughout the 19th century, to which we have already

alluded; and 2) the location of Iran within the capitalist

world market and its assigned role in the international

division of labour.

Thissecond aspect requires serious study. Iran's
contemporary history has been bound by a fine thread to
the capitalistic world economy. Ithas been precisely this
bondage which has prevented Iran from a natural course of
capitalist deve10pment and into an auto-centric, self-
generating economic system and has led instead to the
deve10pment of a distorted capitalist development. The
result has been a dependent capitalist socio-economic
formation.

As such,a theoretical study of colonialism and the
effects of colonial relations on the process of the develop-
ment or retardation of the forces of production, as well as
the relations of production in the dominated society, becomes
inevitable. I will discuss this in Part I of this thesis.

I will, in the course of this study, review and evaluate the
classics of Marx, Engels and Lenin on modern colonialism -
that is, the dynamics of the set of relationships between an
economically advanced country and an economically backward
country, as well as examining the works of contemporary
theoreticians such as Frank, Amin, Laclau, Cardoso, and

Brenner.

PART I

A REVIEW OF DEPENDENCY THEORY

The study of the relationship between the economically
advanced countries of western EurOpe (and later on, the
United States and Japan) with the economically backward
countries of the world, has preoccupied many scholars who
wish to make sense of the nature and dynamics, as well as
the consequences, of this mutual relationship in the soci-
eties involved in the process.

However, a scientific study of the phenomenon in
question should also be a historical one, since the present
cannot be understood without a comprehensive study of the
past. The origin of the phenomena leaves its trademark and
determines the course of the development of the phenomena,
unless, as'a result of a qualitative change, the very basic
terms of the relationship at the point of its commencement
are negated.

A historical approach becomes essential especially
since the problem in which we are interested is centuries
old. It originated in the 1500's when world trade assumed
gigantic dimensions unprecedented in human history.

The study of Marx and Engels' classics, as well as
those of Lenin, is necessary for any student of historical
materialism sincenmnn/contemporary theoreticians who have
addressed themselves to this question have neglected to

carefully examine their works.

Our point of departure is the writings of Marx and
Engels on the role played by Africa and America in the
process of the "primitive accumulation of capital" taking
place in the 16th century in western European societies,
and their evaluation of the resulting type of relations
that came into existence between the then-developing
societies of Europe and the backward societies of Africa
and America. From there we can proceed to the era of
colonialism and the economic patterns which they perceived
to be the result of the relation between England, the most
developed capitalist country of the world, and China, India
and Ireland.

The evaluation of these economic patterns and their
effects on the economic (or to be more precise, capitalist)
development, on every country in the world, within the
framework of the international division of labor, also
became important to Marx and Engels, who understood it as
essential vis-a-vis the advancement of socialist revolution
in EurOpe.

A classic pattern for the emergence of capitalism and
its predominace over the feudal mode of production has as
its prerequisite the simultaneous occurrence of two processes:

1) The expropriation from the peasant of his

means of production and subsistence and the
transformation of the mass of population to
wage laborers, and

2) The accumulation of a mass of capital which

is not based on capital itself but never-

theless progressively realizing it.

This process is known to Marx as the "primitive accumulation
of capital." Marx's analysis of the "primitive accumulation
of capital" rests upon the assumption of a universal exist-
ence of a situation conducive for capitalist accumulation,
but does not presuppose the existence of a capitalist mode
of production.

Without a large-scale accumulation, capital was doomed
to basically remain within the confines of mercantile opera-
tions. But technological and scientific innovations in
navigation and the increasing strength of the developing
European nation-states provided the material conditions
conductive for their foreign expansion beyond the boundaries
of Eur0pe., This formed the base for the subsequent acceler-
ation of the process of the primitive accumulation of
capital.

The discovery of gold and silver in America,

the extirpation, enslavement and entombment in

the mines of the aboriginal population, the

beginning of the conquest and looting of the

East Indies, the turning of Africa into a warren

for hunting of black skins, signalized the rosy

dawn of the era of capitalist production. These

idyllic proceedings are the chief momenta of

primitive accumulation.

The "discovery of gold and silver in America," "the
looting of the East Indies," and "the turning of Africa into
a warren for hunting of black skins," were crucial for the
accumulation and enlargement of capital, which made possible
the exploitation of wage labourers in domestic markets of

Europe, and in turn, the subsequent supremacy of capitalism

over feudalism that Marx called the "chief memento of

primitive accumulation."

In an accompanying footnote Marx describes the strangu-
lation of primitive accumulation in Italy as a result of
not being able to continue its commercial supremacy in the
world market.

When the revolution of the world market, about the

end of the 15th century, annihilated northern

Italy's commercial supremacy, a movement in the

reverse direction set in. The labourers of the

towns were driven en-masse into the country, and

gave an impulse, never seen before, to the peEite

culture, carried on in the form of gardening.

The mercantilist phase of capitalist development and
its transcendence to the industrial phase required the
enlargement of the magnitude of the circulation of commodi-
ties in international trade. That in turn required the
huntingcn’slaves from Africa and their deportation to the
New World to be first exploited in mines and then on planta-
tions.

It is important to note that even though the way in
which surplus value was extracted from the slave was not
based on a capitalist mode of production, that is the
enslavement of the labour power of a free wage labourer,
nevertheless, the plantation system of the New World consti-
tuted an integral part of the international trade relations
of the emerging capitalist system.3 It was immaterial
whether the commodity was produced in the plantations of
London by a British wage labourer, or a Brazilian plantation

based on slave labour, as long as the commodity was produced

for the expanding world market. The expansion of world trade,

the increasing profit, and the enlargement of the capital
prompted the subsequent acceleration of the process of
primitive accumulation of capital. As a result, the further
development of capitalism in Europe only completed its
course at the expense of the human and natural resources of
the less economically advanced countries of the world,
through the employment of brute force and the commission of
crimes and atrocities against the aboriginal people.

Marx quotes W. Howit, a specialist in Christianity who
wrote about the colonial system:

The barbarities and desperate outrages of the
so-called Christian race, throughout every region
of the world, and about every people they have
been able to subdue, are not to be paralleled

by those of any other race, however fierce,
however untaught, and however reckless of mercy
and of shame, in any age of the earth. [Marx
adds,] The history of the colonial administration
of Holland, and Holland was the head capitalistic
nation of the 17th century, is 'One of the most
extraordinary relation of treachery, bribery,
massacre and meanness)

To provide his readers with an example, Marx continues the
discussion with the case of Java where Dutch capitalists
engage in a slave-hunting:

Nothing is more characteristic than their system

of stealing men, to get slaves from Java. The

men stealers were trained for this purpose. The
thief, the interpreter, and the seller, were the
‘chief agents in this trade, native princes and
chief sellers. The young pe0p1e stolen were thrown
into the secret dungeons of Celebesc,uutiiltbeyy
were ready for sending to the slave-ships.

He then proceeds by quoting an official report that said:

This one town of Macassar, e.g., is full of secret
prisons, one more horrible than the other, crammed
with unfortunates, victims of greed and tyranny
fettered in chains, forcibly torn from their

families.5

The economic consequences of the pillage of the back-
ward societies of the world are obvious destruction, devas-
tation and dep0pulation. The p0pulation of Banjuwangi, a

province of Java that numbered over 80,000 in 1750,was

reduced to only 18,000 in 1800.6

India is yet another example. The British East India
Company not only obtained political rule by invading the
country but also acquired an exclusive mon0poly of the tea
trade.

But the coasting trade of India and between the
islands, as well as the internal trade of India,
were the monopoly of the higher employees of the
company. The mon0polies of salt, opium, betel
and other commodities were inexhaustible mines
of wealth. The employees themselves fixed the
prices and plundered at will the unhappy Hindus.
The Governor-General took part in this private
traffic. His favourites received contract under
conditions whereby they, cleverer than the
alchemists, made gold out of nothing. Great
fortunes sprang up like mushrooms in a day,
primitive accumulation went on without the
advance of a shilling. . . . According to one

of the lists laid before Parliament, the company
and its employees from 1757-1760 got $6,000,000
from the Indians as gifts. Between 1769 and 1770,
the English manufactured a famine by buying up
all the rice, refus1ng to sell it again, except
at fabulous prices.

This unequal relationship, maintained and perpetuated
by the employment of brute force (through the colonial army),
was shaped corresponding to the needs of that particular
period in the development of capitalism in Europe. Marx
correctly concludes that: "The treasures captured outside
Europe by undisguised looting, enslavement and murder,

floated back to the mother country and were turned into

1O

capital."8 And later, Marx describes the emergence of capi-
talism onto the world stage in more vivid terms! "if money,
according to Augier, comes into the world with a 'congenital
blood-stain on one cheek', capital comes dripping from head

to foot, from every pore, with blood and dirt."9

********************

At the stage of "primitive accumulation of capital",
the dialectical relationship between the emerging capitalist
countries of western Europe and pre-capitalist socio-economic
formations of the world brought about the development of
capitalism in EurOpe at the expense of the enslavement of
aboriginal people and the pillage of their natural resources,
Without this enslavement and pillage, the cycle of primitive
accumulation could not complete its course. If the most
essential ingredients in this process were slaves, raw
materials and looting, it was precisely because of the
exigencies of that particular stage of capitalist develop-
ment. What was to be exploited and taken away from the
unhappy peOple of the world was determined by and corres-
ponded to the specific needs upon which further development
of capitalism depended.

It was a pivotal necessity that had to be accomplished
by any means, even by the application of the most brute
force. Here lies the secret to the foundation of the rela-
tionship between economically advanced EurOpe and the

economically backward world at the dawn of capitalist

11

production.

The treasures that floated to the mother countries were
transformed into capital, and equipped the industrialists
with the means necessary to purchase the labour-power of
the expropriated free labourers, contributing to the prole-
tarianization of the populace. This further intensified
the development of the means of production. Further indus-
trialization at an accelerated pace and the dissolution of.
the feudal socio-economic formation resulted, leading to the
omnipotent supremacy of capital.

New industries sprung up like mushrooms everywhere.

At the same time great scientific and technological advances
were achieved. European economies were flourishing. Commer-
cial supremacy paved the way for the industrial supremacy

of Europe., Thousands upon thousands of pauperized and
proletarianized peasants, divorced from their means of pro-
duction and subsistence, driven off their lands, were to
labour hard and long, and be paid meager wages to make the
industrial growth of EurOpe possible. Their labour power
was tirelessly exploited in the most inhuman way, only to

be congealed in commodities.. The increasing level of pro-
duction well exceeded the level of consumption and the
purchasing power of the starving mass of the pauperized
people. This over-production necessitated the exportation
of goods to foreign markets. As such, the further expansion
of world trade enlarged the magnitude of foreign trade and

generated more capital. The most backward regions of the

12

world became integrated into the emerging world market.
This specific and historic task of the bourgeois society,
"the establishment of a world market, at least in the out-
line, and of production based upon this world market"10

was accomplished. This task seemed to Marx to be completed
by the "colonialization of California and Australia and the

"11 The drive for expansion

opening up of China and Japan.
of foreign markets brought about a new phase in the history
of capitalist development. Not only were the economically
backward countries of the world to provide the European
industries, endowing their economic surplus to foreign
capitalists, with the raw materials essential for the
production of commodities, but also they had to upon their
markets to profit-seeking capital. Further destruction and
devastation of their economy resulted, and with it, more
misery and wretchedness of the people.

Of all countries the cases of Ireland and India are
the most striking.

Marx notes that in Ireland between 1783 and 1801 "every

12 He proceeds further

branch of Irish industry flourished-"
by evaluating the 1801 Union (of England and Ireland) as the
main destructive force in the industrial life of Ireland.
The Union overthrew the protective tariffs established by
the Irish Parliament and opened the door for the penetration
of British-made commodities and the consequent destruction

of the Irish industry which could not meet the challenge of

cheaper British commodities. When Engels visited Ireland

13

in 1856, he noted "a total absence of any industry at all.
The Irishman knows that he cannot compete with the English-

man, who comes equipped with means superior in every

respect."13

Not only did the Irish industry that once flourished
"in all of its branches" undergo a process of deterioration
and final demise, but so did the entire economy. It was
demolished and reshaped according to the needs of that
particular phase in the development of capitalism in England.

Ireland's agricultural land, productive to the extent
that Ireland had a total "monopoly over England's corn
supply"14 was ravaged and turned into pasture land only to
provide England with wool and meat: "Wool and meat became

the slogan, hence conversion of tillage into pasture. Hence

from then onwards systematic consolidationcoffarms."1S

This process reached such a degree that Marx called Ireland
a pasture land of England.

As to the British bourgeoisie, it has in the first
place a common interest with the English artisto-
cracy in turning Ireland into mere pasture land
which provides the English markets with meat and
wool at the cheapest possible prices. It is
equally interested in reducing by eviction and
forcible emigration, the Irish population to such
a small number that English capital (capital
invested in land leased for farming) can function
there with "security". It has the same interest
in clearing the estate of Ireland as it had in the
clearing of the agricultural districts of England
and Scotland» The 6,000-10,000.absentee-landlords
and other Irish revenues which at present flow
annually to London have also been taken into
account.

Under the British, destruction of the economy and land

evictions forced the migration (If the population.

14

As to the depopulation of Ireland throughout the first
part of the 19th century, Engels wrote: "It is estimated
that an average of 50,000 Irish arrive each year. The num-
ber so far this year is already over 222,000- In September,
345 were arriving daily and ix} October this figure increased
to 511."17

But what was to replace the drained-off population?

In a letter to Engels, Marx made this dramatic comment:
"What can be more ridiculous than to confuse the barbarities
of Elizabeth or Cromwell, who wanted to supplant the Irish
by English colonists (in the Roman sense), with the present
system which wants to supplant them by sheep, pigs, and oxen."18
The poverty-stricken and starved Irish peoplewere forced to
emigrate en-masse to England in order to increase the pro-
fits of British industrialists and merchants and to provide
the rapidly growing weaving and spinning industries of

England with the necessary human and natural resources. But
in addition to raw materials, Ireland supplied England with
"prostitutes, casual labourers, pimps, pickpockets, swindlers,
beggars and other rabble."19

The pillage of Ireland to the point of its economic
and cultural destruction was only accomplished through the
now classic formula, the institutionalization of force.

While in Ireland in 1856, Engels wrote to Marx:

Ireland may be guarded as the first English

colony and as one which because of its proximity

is still governed exactly in the old way, and

one can already notice here that the so-called
liberty of English citizens is based on the

15

oppression of the colonies. I have never seen
so many gendarmes in any country, and the sodden
look of the bibulous Prussian gendarme is devel-
Oped to its highest perfection here among the
constabulary, who are aEBed with carbines,
bayonets and handcuffs.

Naked force was the only means by which an oppressed
people who had nothing to lose but their chains could be
kept in check. The oppressive situation in which the Irish
people were forced to live had to be reinforced and the
pillage continued if the prosperity, British-style, was to.
be maintained and perpetuated. The secret formula of the
era of "primitive accumulation of capital" was as efficient
in the new era. The deve10ping British economy could only
flourish as a result of the destruction of the Irish
economy.

The characteristic features of Ireland during the
early parts of the 19th century, i.e., its submissive rela-
tion to England,were repeated in India in 1853.

Til 1813 India had been chiefly an exporting
country, while it now became an importing one;
and in such a quick progression, that already
in 1823 the rate of exchange, which had gener-
ally been 215 per rupee, sunk down to 21 per
rupee. India, the greatest workshop of cotton
manufacture for the world since immemorial
times, became now inundated with English twists
and cotton staffs . . . In 1780 the value of
British produce and manufacturers amounted

only to £386,152, the bullion exported during
the same year to $15,041, the total value of
exports during 1780 being £12,648,616, so

that the Indian trade amounted to only 1/32 of
the entire foreign trade- In 1850 the total
exports to India from Great Britain and Ireland
were $8,024,000 of which cotton goods alone
amounted to £5,222,000, so that it reached more
than 1/8 of the whole export and more than 1/4
of the foreign cotton trade.2

16

The formula is as simple as it is appalling. Textile
industries that underwent a rapid growth in the late 18th
century and early 19th century in England and constituted
one of the most important sectors of the economy engaged
in foreign trade, needed raw cotton. India was not only a
major producer of raw cotton but cloth as well- However
this could not concern the British capitalists who could
only think in terms of augmenting their raw cotton supply..
As such, an entire industry was to be destroyed and native
communities broken up. The irony is that through a short
process, India was turned into an exporter of raw cotton.

It was the British intruder who broke up the
Indian hand-loom and destroyed the spinning-
wheel. England began with driving the Indian
cottons from the EurOpean market; it then
introduced twist into Hindustan and in the

end inundated the very mother country of cotton
with cottons- From 1818 to 1836 the export of
twist from Great Britain to India rose in the
proportion of 1 to 5,200. In 1824 the export
of British muslins to India hardly amounted

to 1,000,000 yards, while in 1837 it surpassed
64,000,000 yards. But at the same time the
papulation of Daca decreased from 150,000
inhabitants to 20,000. This decline of Indian
towns celebrated for their fabrics was by no
means the worst consequence. British steam
and science uprooted, over the whole surface
of Hindustan, the union between agriculture
and manufacturing industry.

As such an entire industry was destroyed, and with it
so many communities whose population faced starvation,
misery and wretchedness. For a long time, nothing was to
replace the withered away Indian industry. Hence, the
depopulation of India. Marx noted that, "England has broken

down the entire framework of Indian society, without any

17

symptoms of reconstitution yet appearing."23

The problem goes beyond the expropriation of the econo-
mic surplus pivotal for further development of the means of
production. It goes beyond looting, pillage and depredation.
The problem extends to the virtual destruction of a society,
arresting its development and recasting it.

Nevertheless, the historical mission of England was
accomplished. England became an integral part of capitalist
world market, and its production was based upon this world
market- How was this accomplished?

There cannot, however remain any doubt but that
the misery inflicted by the British on Hindustan
is of an essentially different and infinitely
more intensive kind than all Hindustan had to
suffer before. I do not allude to European
despotism, planted upon Asiatic despotism, by
the British East India Bompany, forming a more
monstrous combination than any of the devine
monsters startling us in the Temple of Salsette.
This is no distinctive feature of British
colonial rule but only an imitation of the
Dutch . . . 9

.
o—

The backbone of East India Company despotism was 3
200,000 strong army, made up of Indians, officered, trained
and checked by a 40,000 man English army, free to plunder,
loot and kill at will. When the first Indian war of inde-
pendence erupted in India in 1857, Marx wrote:

English interference having placed the spinner
in Carcashire and the weaver in Bengal, or
sweeping away both Hindu spinner and weaver,
dissolved these small semibarbarian, semi-
civilized communities, by blowing up their
economic basis, and thus produced the greatest,
and, to speak the truth, the only gocial
revolution ever heard of in Asia.2

*******************

18

While the level of capital accumulation was increasing
by gigantic proportions as a result of the extraction of
surplus value andtfiuztransformation of the economic sur-
plus of the non-European world, the now-capitalist countries
of Europe were experiencing another internal process which
was in a dialectial relationship to the first process and
was expediated by it. The enormous growth of industry
and substantial investments in industrial undertakings
resulted in the creation of increasingly large enterprises
with a high concentration of production and capital.

World capitalism in the mid-19th century witnessed
several pronounced technological advances resulting in
new power sources and higher industrial productivity.

Oil and electricity now joined coal to fuel manufacturing
plants. The gas engine and the electric motor increasingly
replaced steam as the source of industrial power. Steel
rails and locomotives made possible the transportation

of heavy loads at high speeds, thus reducing the cost

of transportation and providing the material conditions
for the transformation of local and regional industries
into large national enterprises. In turn, the new techno-
logical achievements accelerated the process of the
concentration of capital and production into ever larger
enterprises.

This new trend, the concentration of capital and pro-
duction, reached such a degree that monopolies were created

and were of such a significance that the competitive market

19

was replaced in almost all of its branches by a monopoly
market. This trend was simultaneous with and accompanied

by the emergence of new sectors of the economy and an
internal differentiation of capitalist functions. The
emergence of the financial oligarchy (the union of banking
capital and industrial capital) and its supremacy over other
sectors of the economy marked, to borrow Lenin's words, a
"new stage in the development of capitalism", that of
imperialism.

On the threshold of the twentieth century we

see the formation of a new type of monopoly.

First, monopolist associations of capitalists

in all capitalistically deve10ped countries;

secondly, the monopolist position of a few very

rich countries, in which the accumulation of

capital has reached gigantic proportions. An

enormous "surplus of capital" has arisen in the

advanced countries.

However, this "surplus capital" was not invested and
could not be invested in relatively less developed branches
of the home market of the developed capitalist countries of
Europe due to the impoverishment of the masses, and the
faster rate of capital growth than that of the internal
market. Needless to say that the surplus capital was never
utilized for the betterment of the living condition of the
"poverty stricken and half-starved masses of EurOpe,"27
since this would have meant a decline in the rate of pro-
fit. Capital was to be utilized where the rate of return
was the highest, where the profits soared. Thus comes the

export of capital to the economically backward countries,

where capital is scarce, land is expensive, wages are low

20

and raw materials are cheap. Hence a new chapter in the
relationship of the economically advanced countries and
the economically backward countries.

The export of capital reached enormous dimensions
through the latter decades of the nineteenth century and

the early twentieth century.

 

Table 1: Capital Invested Abroad28

(000,000,000 Francs)

 

 

 

Year Great Britain France Germany
1862 3.6 -- --
1872 15.0 10(1869) --
1882 22.0 15(1880) --
1893 42-0 20(1890) --
1902 62.0 27-37 12.5
1914 75-100 60 44.0

 

The sum total of capital invested before the outbreak
of the First World War amounted to 175,000 francs, at the
modest rate of five percent which itself yearly augmented
8,000 million francs.* "A sound basis for imperialist
oppression and exploitation of most of the countries and

nations of the world, for the capitalist parasitism of a

 

* It is important to note that in the preceeding years,
"loan capital" and its rate of return reached such a magni-
tude that, for many decades to come, the indebtor countries
were only making the interest payment of the loans because
they were not able to pay back the loans.

21

handful of wealthy states."29

The loan granted to the backward countries of Asia,
Africa and Latin America were not only profitable in that
the interest was returned back to the mother countries,but
also because the capital was to be channelled back into the
advanced economies of Europe through the sale of commodities
and military hardware to the economically backward countries.

Finance capital has created the epoch of mono-

polies and monopolies introduce everywhere

monopolistic principles: the utilization of

"connections" for profitable transactions takes

the place of competition on the open market.

The most usual thing is to stipulate that part

of the loan granted shall be spent on purchases

from the creditor country, particularly on orders

for war materials or for ships, etc. In the course

of the last two decades (1890-1910)3 France has

very often resorted to this method.

The Brazilian railway network underwent construction by
French, British, German and Belgian capital, the necessary
raw materials for such an undertaking also coming from the
named countries. In return for the 1,000,000 given to Reza
Shah, the Russians received the concession for a highway
from Julha to Tehran via Tabriz, certain oil and coal mining
rights and a revision of the Russo-Persian treaty to raise
custom tariffs.

To facilitate this process the tentacles of the finan-
cial octopus were to spread throughout the world strangling
the vulnerable economies of the subjugated countries.

In 1904, Great Britain had 50 colonial banks

with 2,279 branches (in 1910 there were 72 banks

with 5,449 branches); France had 20 with 136

branches; Holland, 16 with 68 branches; and Ger-
many had "only" 13 with 70 branches.

22

Lenin continues his discussion by noting the American's
jealousy of English and German financialists:

In South America five German banks had forty

branches and five British banks had seventy

branches . . . Britain and Germany have invested

in Argentina, Brazil, and Uruguay in the last

twenty-five years approximately four thousand

million dollars and as a result together enjoy 3

4 % of the total trade of these three countries.
Lenin concludes this section on the "export of capital" by
asserting: "The capital exporting countries have divided
the world among themselves in the figurative sense of the
term. But finance capital had led to actual division of the
world."32

But the division of the world that reached its highest
stage before the First World War was not undertaken "out of
any particular malice". The unavoidable necessity for huge
deposits of raw material which became quite diversified as
a result of the diversified production and the large scale
in which production was taking place, and the demand for
foreign markets in which commodities were to be sold and
big sums of profits obtained, necessitated the demand for
markets. More, with the technological innovations taking
place mostly in Germany, the United States and Japan - whose
points of departure were based on a relatively high organic
composition of capital, England, whose hegemonic position
was for long established vis-a-vis other capitalist countries,
was to face new rivals in search of deposits of raw materials

and untapped markets. Hence the mad scramble for the coloni-

zation of more land and pe0ple. Hence the infliction of

23

poverty, misery and starvation on the colonial and semi-
colonial peOple. Hence the intensification of oppression
and the perfection of the repressive apparatus.

As to the development of the practical division of the

world, A. Supan, a geographer, gives this brief summary.

 

Table 2: Percentage of Territory Belonging to the
European Colonial Powers . .

(Including the United States)

 

 

1816. 1220 Increase or Decrease
Africa 10.8 90.4 +79.6
Polynesia 56.8 98.9 +42.1
Asia 61.5 56.6 + 5.1
Australia , 100.0 100.0 --
America 27.5 27.2 - 0.3

 

"The characteristic feature of this period is therefore,

33

the division of Africa and Polynesia." To this Lenin

adds,

As there are no unoccupied territories - that
is, territories that do not belong to any
state - in Asia and America, it is necessary
to amplify Supan's conclusion and say that the
characteristic feature of the period under
review is thgafinal partitioning of the

globe . . .

However Lenin immediately concedes that:
Final not in the sense that repartition is impos-

sible; on the contrary, repartitions are possible
and inevitable - but in the sense that the

24

colonial policy of the capitalistic countries

has completed the seizure of the unoccupied

territories on our planet. For the first time

the world is completely divided up, so that in

the future only redivision is possible, i.e.,

territories can only pass from one "owner" to

"another" instead of passing as ownerless terri-

tory to an "owner". 5
History proved Lenin to be correct. Two world wars, 3
crystalization of inner-imperialist contradictions and
rivalry for the invasion and occupation of more land, mar-
kets, and raw material, transferred some territories from
one owner to another. As Lenin predicted, some "owned"
territories seized the opportunity and emancipated themselves
from any "owners"an;all by embarking on the path of social-
ism and national democratic revolutions.

The transition from competitive capital to monopoly
capital was intensified by the partitioning of the world
which itself was only accomplished through force for the
proclaimed purpose of more markets, more raw materials and
more profit.

In 1895, Cecil Rhodes, a millionaire, a king of finance,
and the invader of Zimbabwe, expressed his intentions as
well as what he thought should be the foreign policy of
England when informing his friend, the journalist Stead, of
his views:

I was in the East and of London (a working

class quarter) yesterday and attended a meet-

ing of the unemployed. I listened to the wild

speeches, which were just a cry for 'bread!

bread!’ and on my way home I pondered over the

scene and I became more than ever convinced

of the importance of imperialism . . . My
cherished idea is a solution for the social

25

problem, i.e., in order to save the 40,000,000
inhabitants of the United Kingdom from a bloody
civil war, we colonial statesmen must acguire
new lands to settle the surplus population, to
provide new markets for the goods produced in
the factories and mines. The Empire, as I have
always said, is a bread and butter question. If
you want to avoid civil war you must become
imperialist.

 

 

Cecil Rhodes could well see the coming crisis of British
capitalism and with that, (if not supplied with foreign mar-
kets) the decline of productive activities, the decrease in.
real wages, swelling unemployment, the intensification of
class contradiction and escalation of class struggle to the
degree of a "bloody civil war".

And what did he suggest to secure British capitalism
from the impending crisis? Imperialism! of which he under-
stood to be the annexation of more land and the expansion
of colonial policy.

It was within this context that the relationship
between capitalist countries at their imperialist stage
and the economically backward countries of the world was
defined: the world was to provide the essential ingredients
of the European industries while capitalist Europe continued
large scale production by exporting commodities and surplus
capital to vast markets created around the globe. The
export of surplus capital became the new item of the trade
protocols. But the introduction of this new item acceler-
ated the development of capitalism in the capital-exporting
countries. Hence, a limited process of industrialization

was to occur in backward countries of the world. It was

26

limited since it was confined to branches most essential

for the production of raw material and their transportation
to Europe. The construction of railroads and other communi-
cation facilities (telegraph lines, telephone networks), the
building of roads and dams, and the introduction of modern
technology for the extraction of minerals and other raw
materials was undertaken to facilitate the process of sur-
plus transformation to metropolitan Europe. Thus another
chapter was added to the economic and political submission

of colony to metropolitan EurOpe.

*******************

While representing a higher stage in the development
of capitalism, imperialism (finance capital and its mono-
poly stage) also marked the beginning of a new stage, that
of its decomposition. The periodic crises of capitalism
were to take on a new significance. Unlike the previous
periods, the crisis that began in 1914 and continued until
the early 1940's (with a short interval in the mid 30's)
not only failed to produce a new wave of expansion but
also reflected itself in an inter-struggle between the
imperialist powers for the repartition of the world, already
entirely occupied by capital. A few important processes
must be noted here:

1) The liberation of vast regions of the world from
the orbit of imperialist capital, during the course of this

crisis and hence, the solution of this crisis within a much

27

narrower geographical framework.

2) The fact that, during and between the wars which
had preoccupied the imperialist powers and had geared pro-
duction to the most essential needs of the war industry and
hence a slowdown of foreign investments, the local bourgeoisie
of many colonies and semi-colonies undertook projects of
industrialization and through the intervention of the state
financed feeble industries, almost at the level of bankruptcy
due to their disadvantageous position vis-a-vis the foreign-
manufactured commodities. Such projects fostered to an even
greater degree the development of capitalism already accen-
tuated by the export of capital in the previous stage.

A national bourgeoisie was able to develop in accordance
with the previous level of capitalist development in each
country. The advance of proletarian revolutions and national
liberation movements on the one hand, and on the other hand,

a national bourgeoisie which was to resist imperialist
penetration in an effort to secure better and more favorable
terms for itself, was the new context in which the new
relationship between the metrOpolis and the dominated
countries was to be defined.

"Capitalism continued its development by deepening
rather than broadening its penetration."37

Realizing that a) between the two world wars and the
period immediately following World War Two there had already
begun a more or less systematic establishment of light

industries in the colonies and semi-colonies springing from

28

the necessity to find substitutes for manufactured goods
previously imported from the metropolis and b) relying upon
the scientific and technological innovation in electronics,
computer systems, atomic power, aerospace, etc., distin-
guished in their higher rate of organic composition of
capital and "rendering out of date the classic forms of
production" it became not only advantageous but also a prime
necessity for the imperialist metropolis to assume the
initiative and "leadership" in further "industrial develop-
ment" in the economically backward countries of the world
undergoing capitalist deve10pment (on which much has been
written and which we shall discuss shortly). This ignited
the process of manufacturing which soon spread to areas
previously reserved for the production of food and raw
materials, hence bringing about a more complex international
division of labor. Capitalist relations of production were
extended and accentuated on a world scale as a result of
this new division, rapidly asserting dominance over archaic
modes of production and as such facilitating the develop-
ment of the proletariat and bourgeoisie on the new areas
and with this a new and more s0phisticated form of capital
accumulation came to the fore and a new chapter in inter-
national relations was commenced. It was in response to
this new trend that the controversy around "development",
"underdevelopment", "dependency" and the relationship
between metropolis/satellite, core/periphery, imperialist/

dependent started.

29

 

Table 3: Direct Investments of the United States38

in Manufacturing as a Percentage Total of Investments,

 

 

 

 

 

1929-1968
TOTAL FOR

LATIN OTHER
YEARS ARGENTINA BRAZIL MEXICO AMERICA COUNTRIES
1929 25 24 1 7 4
1940 20 29 3 8 3
1946 39 39 21 13 6
1950 45 44 32 18 7
1952 50 51 43 21 1
1955 51 51 45 22 7
1956 51 50 46 22 8
1959 _ 43 53 47 17 7
1960 45 54 49 19 8
1961 43 54 50 20 7
1962 51 56 51 22 8
1963 55 59 55 24 8
1964 57 67 59 26 9
1965 62 67 64 29 11
1966 63 68 64 31 12
1967 63 67 66 32 13

1968 64 69 68 34 14

 

30

As is always the case when the metropolitan bourgeoisie
formulates its new economic policy via the "backward coun-
tries" of the globe, the stage was set for bourgeois theore-
ticians to wrap up the new formula in gold foil. Sociologists
were to clothe the new policy in luminous justifications and
make it viable for scientific consumption while the economists
enlightened us by simplifying and popularizing the problem,
since their intellectual product was to be delivered for
public consumption.

This time the stage was the Economic Commisssion for
Latin America where the bourgeois theoreticians were to
"discover" the reasons by which Latin America, as well as
many countries of Africa and Asia, had remained "backward"
and "underdeveloped". They held that Latin America was
experiencing a process of industrialization similar to that
of 18th century EurOpe, and therefore, they advocated the
deve10pment of these underdeveloped countries and, within
them their most underdeveIOped areas would become open to
this new pattern and should be "stimulated by diffusing
capital, technology, value institutions, etc., to them from
the international and national capitalist metropoles."39
To the ECLA's theoreticians the evident poverty and income
differences as well as cultural differences were manifest-
tatians of "dual economies" and dual societies at work in
Latin America, independent from the other with its own his-
tory and structure. They conceded that only one part of

the society and economy had been substantially affected

31

through its contact with the outside world and that that
constituted the basis for its relative development, while
the other part remained isolated, subsistence based and,
hence, underdeveloped. Their solution was, obviously, more
contact with the "outside world".

This was the way in which new-colonial policy corres-
ponding to the needs of this particular stage of the develop-
ment of imperialist capitalism was elaborated, justified and
exonerated. The bourgeoisie had to be challenged and
debunked at a theoretical level. It was to this end that
Andre Gunder Frank embarked upon his article The Develog-

ment of Underdevelopment, the first critique of the ECLA's

 

fundamental assumptions as well as their pr0positions.
In The Development of Underdevelopment, Frank argued
that

. . - our ignorance of the underdeveIOped coun-
tries' history leads us to assume that their
past and indeed their present resembles earlier
stages of the history of the now deveIOped
countries. This ignorance and this assumption
lead us into serious misconceptions about
contemporary underdevelopment and deve10pment.
Further, most studies of development and
underdevelopment fail to take account of the
economic and other relations between the metro-
polis and its economic colonies throughout the
history of the world-wide expansion and develop-
ment of the mercantilist and capitalist system.
Consequently, most of our theory fails to
explain the structure and development of the
capitalist system as a whole and to account for
its simultaneous generation of underdevelopment
in some of its parts and of economic develop-
ment in others.40

In The Development of Underdevelogment as well as his

Capitalism and Underdevelopment in Latin America (where he

32

goes into more detail and provides his reader with a compre-
hensive analysis of the process in which Latin America was
turned into an underdeveloped society) Frank discusses the
factors that lead to the underdevelopment of Latin America.

It is generally held that economic development
occurs in a succession of capitalist stages
and that today's underdeveloped countries are
still in a stage, sometimes depicted as an
original stage of history, through which the
now-developed countries passed long ago. Yet
even a modest acquaintance with history shows
that underdevelopment is not original or
traditional and that neither the past nor the
present of the underdeveloped countries
resemble in any important respect the past of
the now-developed countries. The now-developed
countries were never underdeveloped, though
they may have been undeveIOped.“1

 

Frank traces the relationship between Latin America
and the metropolitan Eur0pe to the fifteenth century, when
Latin America was a provider of raw materials for the
developing European economies (deve10pment in the capitalist
sense of the word) and discusses the way in which Latin
America’s economic surplus was extracted and transformed
to the metropole.

My study of Chilean history suggests that the
conquest not only incorporated this country
fully into the expansion and deve10pment of
the world mercantile and later industrial
capitalist system but that it also introduced
the monopolist metropolis-satellite structure
and development of capitalism into the Chilean
domestic economy and society itself- This
structure then penetrated and permeated all of
Chile very quickly. Since that time and in the
course of world and Chilean history during the
epochs of colonialism, free trade, imperialism
and the present, Chile has become increasingly
marked by the economic, social, and political
structure of underdeveIOpment- This deve10p-
ment of underdevelopment continues today, both

33

in Chile's still increasing satellization by
the world metropolis and through the ever more
acute polarization of Chile's domestic economy.

42

Frank argues that underdevelopment is an indispensable
condition for the occurrence of deve10pment at the center,
alluding to the historic process through which the exploita-
tion of human and natural resources of Latin America
facilitated the development of capitalism in Europe passing
through the phases of primitive accumulation, the pre-
imperialist phase, imperialism and the second phase of
imperialism. On this basis, he further argues that under-
development is inherent in the expansion of capitalism.

The metropolis expropriates economic surplus

from its satellites and appropriates it for

its own economic development- The satellites

remain underdeveloped for lack of access to

their own surplus and as a consequence of the

same polarization and exploitative contradic-

tions-which the metropolis introduces and main-

tains in the satellite's domestic economic

structure. The combination of these contra-

dictions, once firmly implanted, reinforces

the process of development in the increasingly

dominant metropolis and underdeveIOpment in the

ever more dependent satellites until they are

resolved through the agendonment by one or both

interdependent parts.“ '

Thus, development and underdevelopment are caused by
the same mechanism and are indeed, according to Frank, two
sides of the same coin. They manifest the contradictory
nature of one process, that of capitalist expansion, wherein
the metropoles expropriate the surplus of the satellites
and use it for their own development. This process of

siphoning off the surplus deprives the satellites of access

to "their own" surplus. Second, it is through this process

34

that Latin America has become underdeveloped. The fact
that Latin America has been capitalist since the sixteenth
century, according to Frank, has subjected it to exploitive
contradictions which were introduced and sustained by the
metropoles. “Harefute the thesis that the solution to the
underdevelopment of Latin America is more contact with the
"outside world", Frank asserts,

There surely are no major regions in Latin
America which are today more cursed by under-
development and poverty, yet all of these
regions, like Benegal in India, once provided
the lifeblood of mercantile and industrial
capitalist development in the metrOpolis-
These regions' participation in the develop-
ment of the world capitalist system gave them,
already in their golden age, the typical
structure of underdeveIOpment of-a capitalist
export economy. When the market for their
sugar or the wealth of their mines disappeared
and the metropolis abandoned them to their own
devices, the already existing economic, poli-
tical and social structure of these regions
prohibited autonomous generation of economic
development and left them no alternative but
to turn in upon themselves and to degenerate
into the ultra-underdevelopment we find here
today.44

Contrary to the ECLA's manifesto, Frank further argues
that a self-generating process of capitalist deve10pment,
that is the construction of industrial projects corresponding
to the overall scheme of capitalist development in Latin
America (also true in the case of Iran to which I shall
address myself later), occurred at a time when Latin
America was experiencing a limited isolation via the capi-
talist metropole.

Apart from the minor ones, five periods of such

major crises stand out and are seen to confirm
the hypothesis. These are: the EurOpean (and

35

especially Spanish) depression of the seven-

teenth century, the NapoleonicWars, the First

World War, the Depression of the 1930's, and

the Second World War. It is clearly established

and generally recognized that the most impor-

tant recent industrial development - especially

of Argentina, Brazil and Mexico, but also of

other countries such as Chile - has taken place

precisely during the periods of gwo world wars

and the intervening depression.“

As such, Frank asserts that the new trend in the econ-
omic policy of the imperialist metr0pole towards the satellite
societies of Latin America is the modern version of the
classic relationship, different only in form. He argues
that as long as Latin America is subordinated to the imperi-
alist metropole as a satellite or a group of satellites,
their development is only a satellite development corres-
ponding to the whims and wishes of the metropole, and thus,
is neither autonomous nor self-generating. Hence he con-
cludes that the perpetuation of this subordinate relationship
"blocks off" development in the periphery.

Even though it is worthwhile to note Frank's contribution
to the understanding of the mechanism inherent in the rela-
tionship between the metropole and the economic colonies,
Frank neglects to set as his point of departure a thorough
analysis of the socio-economic formations prevailing in the
Latin American societies before their colonialization, let
alone the substantial trademarks it leaves on these socie-
ties. Frank also asserts that Latin America has been
capitalist since the 16th century. This is obviously an

erroneous thesis. Latin America has not been capitalist

since the 16th century since capitalism had not even fully

36

deveIOped in Europe, which was experiencing the period of
mercantile capitalism. This period of mercantile capital,
even though instrumental in the overall history of capital-
ist development does not imply the predominance of capital-
ist relations of production proper.

In his critique of Frank's werks, Ernesto Laclau is
correct in contending that Frank's imprecise use of these
concepts is due to his failure to use the concept of the
mode of production as a unit of analysis, which must pre-
clude any concrete analysis of class forces in a historical
setting.

Frank totally disregards the concept of the "mode of
production" and as such, to illustrate the capitalist
nature of Latin American societies, he confines himself to
the sphere_of exchange, which, although necessary, is not
the sufficient condition fRnr the development of capitalist
relations of production and its final predominance over
pre-capitalist modes of production. Consequently, the
conquest of Latin American countries in the 16th century
and their transformation into a group of satellites, whose
internal production became oriented towards the demands of
the metropolitan economies and facilitated entrance of
Latin American economies into the world capitalist market,
makes it sufficient for Frank to conclude that Latin America
has been capitalist since the 16th century..

To illustrate the process of capitalist development,

one has to start with a concrete analysis of the concrete

37

situation in which, during a historical process a) the
laborer becomes separated from his means of production and
subsistence, and the transformation of these means into
capital at one pole, and the mass or population to wage
laborers at the opposite pole, and b) the accumulation of
a considerable mass of capital in the hands of a sector of
the population.

It then becomes clear that such a process takes place .
at two levels, that of production as well as that of
exchange. Frank's thesis is not well sustained since he
never addresses himself to the most fundamental conditions
ofcapitalist deve10pment.

. . . otherwise with capital. The historic

conditions of its existence are by no means

given with the mere circulation of money and

commodities- It can spring into life only when

the owner of the means of production and

subsistence meets in the market with the free

labourer selling his labour-power. And this

one historical condition comprises a world

history. Capital, therefore, announces from

its first appearance a new epoch in the
process of social production. . . 46*

 

* Robert Brenner, a British historian, in his well known
article "The Origin of Capitalist Deve10pment: A Critique
of Neo-Smithian Marxism" asserts that, unlike Frank, he
does not understand development and underdevelopment as a
result of the transformation of surplus from Latin America
to the metrOpolis. Rather, economic development is a
qualitative process which has its.origins in the deve10p-
ment of the productivity of labor, the development of the
direct producers of the means of production. He further
explains that this development was tied to and made possible
by the emergence of capitalism, which supplied the producers
with the highest level of technology available.

The resulting overall class structure of pro-
duction and reproduction made possible an
unprecedented degree of correspondence between

38

Had Frank addressed himself to this very important
process that occurs in the sphere of production, he would
not have dismissed the existence of the feudal mode of
production in Latin America, which, even though geared to
foreign markets, had co-existed for a long time side-by-
side with the developing capitalist mode of production.
In asserting that Latin America has been involved in a

feudal relationship of dependence, Laclau asks Frank:

 

(continued from previous page)

the needs of surplus extraction and the continu-
ing deve10pment of the productive forces through
accumulation and innovation, especially in agri-
culture, by way of the application of fixed capital
on the basis of increasingly cooperative labor.
The original emergence of capitalist develop-
ment is, therefore, incomprehensible as a
phenomenon of "money", "trade", the "production
of commodities" or of merchant capital. The
very Significance of these forms depends on

the class structure of production with which
they are associated. They perform indispensable
functions in production and reproduction under
capitalist social productive relations. On the
other hand, by themselves, by their "self
development" (the widening of commodity produc-
tion alone) they can not bring about the
emergence of capitalist social production rela-
tions and a pattern of economic deve10pment in
response to the demands of profitability on

the market.“

In so far as Brenner's intention is to demonstrate that
the "self-deVelopment" of trade and "mercantile capital"
should not be confused and equated with the development-of
capitalist productive relations prOper (since these are
deve10pments in the sphere of exchange and not of production)
his argument is sound and there is no basis for disagreement.
However, in criticizing Frank, whose unilateral emphasis is
on the developments in the sphere of exchange, Brenner
extends his argument to the Opposite extreme - unilateral
emphasis on the sphere of production and a total lack of
analysis as to the developments that must happen in the
sphere of exchange.

39

"Did the structural conditions of capitalism exist in 16th
century EurOpe when the process of capitalist domination
started in Latin America? Could we consider free labor to
be the rule then?" He immediately forwards his own answers
to the question:

By no means. Feudal dependence and urban handi-
crafts remained the basic forms of productive
activity. The existence of a powerful commercial
class which greatly enlarged its stock of capital
through overseas trade did not in the least
modify the decisive fact that this capital was
accumulated by the absorption of an economic
surplus produced through labor relations very
different from those of free labor.4

Frank neglects to elucidate the complex process of
capitalist deve10pment in Latin America, where the emerging
capitalist mode of production was bound to co-exist for a
long time with that of the feudal mode which did not consti-
tute an obstacle to production for the world market.
Feudalism was actually consolidated as a result of partici-
pation in the world market.

. - . This pre-capitalist character of the
dominant relations of production in Latin
America was not only not incompatible with
production for the world market but was
actually intensified by the expansion of the
latter. The feudal regime of the haciendas
tended to increase its servile exactions on
the peasantry as the growing demands of the
world market stimulated maximization of their
surplus- Thus, far from the expansion of the-
external market acting as a disintegrating
force on feudalism, its effectagas rather to
accentuate and consolidate it.

Laclau, in agreement with Frank, is clear in his
refutation of the fact that many imperialist dominated

economies of the world experienced a long phase characterized

40

by the co-existence of pre-capitalist modes of production
and that capitalism is by no means comparable with the
concept of "dual societies" presented by bourgeois theore-
ticians. The "modern sector of the economy" came into
existence only as a result of foreign penetration in and
economic subjugationcfl’the "backward" countries. Its
creation has been to the detriment of the economy whose
surplus is drained off and transmitted to the metropolitan-
societies.

However, since Frank's analysis of the causal.process
of the development of underdevelopment in Latin America
does not, in a specific and detailed manner, take the mode
of production into consideration, the class structure of the
dominated countries of Latin America and with that the
complex nature of the forces responsible for the conserva-
tion and perpetuation of the dependent structure, never
becomes quite clear.

Frank's failure to discuss the class structure of
Latin American societies, (the structure in which the
totality of the production and reproduction of the social
means of production and subsistence takes place, and the
position of each class via this process) and his unilateral
emphasis on the part played by the metropolitan bourgeoisie,

has made his work the subject of criticism on those point ~also.*

 

* The neglect to discuss the relations of production
in the dominated societies, and to confine the analysis to
the exploitation of the peripheral societies by the

41

In this connection, Brenner's criticism of Frank is probably
the most famous.

Brenner contends that the extension of the market and
market relations to the newly incorporated areas in order
to stimulate commodity production in these areas cannot
determine a pattern of underdevelopment. UnderdeveIOpment
was caused, Brenner explains, by low productivity of labor
in the periphery which was kept at a minimum by maintaining
the costs of labor and the subsistence level of the labor
force at low levels. This resulted, according to Brenner,
in limiting the growth of a market for capital and consumer
goods, thus limiting it to the consumption of luxury goods
by the privileged minorities.

In other words, the development of underdevelopment

 

(continued from previous page)

metropolitan countries, without incorporating into the anal-
ysis the class structure of both the dominated and dominating
societies can lead to political conclusions with serious
repercussions. Arghiri Emmanuel, whose work Unequal Exchange
discusses the relationship between the underdeveIOped
countries and the developed countries, mainly stays at the
level of unequal exchange, without a serious incorporation
of the class structure of the two societies into his analy-
sis. This has recently led him to the political conclusion
that the contradiction between the proletariat and the
bourgeoisie is now replaced by one between the "rich" and
the "poor" countries- The translation of such a conclusion
in practice is to side with the reactionary and comprador
bourgeoisie of the peripherial countries and to stand
against the exploited classes of the metr0polis. It is one
thing to say that the super-exploitation of the working
masses strengthens the metropolitan bourgeoisie and "makes
it economically possible to bribe the upper strata of the
proletariat and thgaeby foster, give shape to and streng-
then Opportunism." It is quite a different thing to say
that the proletariat class has become bourgeoisified.

 

42

was rooted in the class structure of production
based on the extension of absolute surplus
labor, which determined a sharp disjuncture
between the requirements for the development

of the productive forces (productivity of labor)
and the structure of profitability of the
economy as a whole. On the one hand, this
class structure determined a general antagonism
between the demands of profit-making and the
development of the productive forces in the
fields subject to world market demands, by
discouraging the advance of all fixed capital
and undermining the development of the skill,
since production was based on forced labor
(while low payments to labor power encouraged
the adaptation of labor-using techniques). On
the other hand, it determined a generalized
lack of profitability for the remainder.of the
economy, precisely because this was generally
compelled to support export production through
"contributing" cheap or free labor power and
means of subsistence (by way of forced levies),
without receiving any investment to raise labor
productivity. Thus, the "subsidizing" of the
"export sector" was generally accomplished on
the basis of the intensification of various
forms of peasant production; and this, in turn,
posed powerful barriers to development through-
out the economy, through making difficult the
application of fixed capital and the rise of
cooperative labor, as well as, more generally, 51
the full emergence of labor power as a commodity. *

 

* Charles Bettleheim's contribution to the understanding
of this question merits attention. Even though he is not
very clear and precise in explaining the mechanism by which
the process of "underdevelooment" of dominated.countries
oscurs, and himself concedes that "the complete explanation
remains to be worked out," Bettleheim's view is diametrically
different from those who explain this phenomena by merely
focusing on the crude state of the deve10pment of the pro-
ductive forces in the peripherial societies.

This implies a complex domination, which is
economic, political, and ideological- It
entails an international division of labor that
renders inevitable a polarized deve10pment of
the world's productive forces: a relatively
rapid deve10pment of the productive forces of
the already more advanced countries, which are
the dominant ones, and a relatively slow devel-
opment of the productive forces of the still

43

It almost appears as if our critical critic is not even
familiar with the nature of the problem he is to criticize.
Frank's whole argument is based upon the fact that the
colonialization of Latin America, that is, its pillage by
the metropolitan bourgeoisie, was the main factor for
Latin America's underdevelopment, not its undevelopment.
Frank quite clearly concedes that Latin American societies
were "undeveloped", and the type of "development" that has -
taken place (deve10pment according to ECLA's definition) -
the economic invasion of the continent by metropolitan
Europe (and later by U.S. capitalist interests) and the
transformation of Latin America into a group of satellite
states, complementing the demands of the capitalist metro-
pole, the nature of which is determined by the particular
phase of the metropole's capitalist development, constitutes

the corner stone of understanding Latin American society's

 

(continued from previous page)

poorly develOped countries, which are the ones
dominated. It thus entails the expanded repro-
duction of economic inequalities. This polarized
development results, first and foremost, from

the domination of the world by capitalist pro-
duction relations, which gives rise to a certain
productive force of the poor countries. The
material -basis 13f this expanded reproduction

of economic inequalities is constituted by the
conditions favorable to a rapid development of
the productive forces that appeared with the
deve10pment of machine production in the series
of other elements (themselves rooted in the
nature of the industrialized capitalist coun-
tries), which I shall discuss later, have emerged
to reinforce, at the economic level itself, the
tendency for economic inequalities to increase.

44

"underdevelopment".
On this issue Frank could never be more clear:

Yet even a modest acquaintance with history
shows that underdevelopment is not original

or traditional and that neither the past nor
the present of the underdeveloped countries
resemble in any important respect the past

of the now developed countries. The now-
developed countries were never underdeggloped,
though they may have been undeveloped.

Even though Brenner is correct in conceiving Frank's
analysis to be imperfect and inadequate, since the central

concept of class structure is not incorporated into the

 

early writings of Frank, he errs the minute he begins his
own analysis. On this subject too, Brenner ends up at the
other extreme as Frank. If Frank's analysis only takes one
aspect of the problem intoconsideration, the expropriation
of economic surplus by the metr0pole to the detriment of the
local economies of Latin America, Brenner totally ignores
the surplus drain-off as a "contributing" factor to the
economic "block off" of Latin American societies. On
Ireland, after its invasion by England, Engels wrote: "The
more I study the subject, the clearer it_is to me that
Ireland has been stunted in its deve10pment by the English
invasion and thrown centuries back."54

Brenner does not conceive of the deteriorating effects
of the colonialization of Latin America on Latin American
economies, and the dialectical relationship between the
internal class structure of a dominated society and the

dominating society. The consolidation of the feudal mode

of production and "the intensification of various forms of

45

peasant production" was not only due to the lack of fixed
"capital", "skill", "labor using techniques", etc., but
also the domination of "backward economies" by the
metrOpoles.

In the colonies where colonial powers rule openly, the
natural and human resources are exploited in such a severe
way that societies are "thrown centuries back". The
extraction of economic surplus and the expropriation of the.
surplus value of the colonies not only hinders the develop-
ment of the forces of production, but also restructures the

entire economy in a particular way.* The development of

 

* Since historically in dominated countries "modern
production has neither been ignited from, nor directed
towards the demands of the internal market and has not been
based upon a genuine overall strategy for economic deve10p-
ment, but primarily geared for the world market, it has
resulted, according to Ernest Mandel, iu.a

completely one-sided economic development,
limited to the production of a small number

of products or even of a single product (mono-
production, monoculture). In Chile, the tax

on sodium nitrate exports provided, on an aver-
age, half of the state's revenue between 1880

and 1930; after that, copper took first place.

In Cuba sugar is the backbone of the economy;

in 1937 it accounted for 78-7 per cent of the
value of all exports. In the same year, exports
of tin from Bolivia made up 70 per cent-of all
exports. This percentage is still higher in the
case of cotton exported from Egypt, the Sudan and
.Uganda, of oil exported from Venezuela, Iraq,
Saudi Arabia, Kuwait and Qatar. Coffee provided
in 1955 69 per cent of Guatemala's exports and

84 per cent of Colombia's- In the same year
bananas made up 74 per cent of Panama's exports,
and coffee and bananas together 72 per cent of
exports from Honduras, 75 per cent of those

from Ecuador, and 87 per cent of those from Costa
Rica. Ground-nuts and products derived from them
represented 85 per cent of Senegal's exports, and

46

capitalist relations of production in the colonial societies
occurs in a gradual and supervised way. The economy of the
colonial countries "becomes the compliment of the capitalist
economy of the metropolitan countries and is developed only
within the limits set by this function."55
As to the semi—colonies, where there is no overt
political and military domination, the metrOpolitan bour-
geoisie endows a small royalty to the feudal lords while a-
sector of the nascent bourgeoisie receives a commission
for the sale of imported goods and the export of the raw
material, only to the detriment of the other sector of the

bourgeoisie whose competing position vis-a-vis the metrOpol-

itan bourgeoisie is almost nil.

 

(continued from previous page)

coffee and cacao 85 per cent of those from the
Ivory Coast. In Malaysa exports of rubber and
tin accounted in 1939 for over 80 per cent of
that total figure. In Greece, tobacco provided
between 55 per cent and 60 per cent of all ex-
ports in the inter-war years. India . . .

Mandel concedes that:

monoculture and mon0production make these coun-
tries strictly dependent on the international
business situation, and entail a number of
economic and social defects: a fundamental
instability in the economy, which is subject

to sudden fluctuation, repeated bursts of
inflation and increases in the cost of living;
substantial periodical unemployment; serious
disturbance of the country's ecology through
soil-erosion; over-exploitation of the soil,
causing its exhaustion; undernourishment of

the population owing to the excessive spread of
monoculture with disastrous effects on the
fertility of 3011.56

 

47

Thus in a system of exploitation, whether overt

or covert, colony or semi-colony, there existed

a more or less single formula for foreign exploi-
tation. For this reason, in both types of colonies,
there appeared a more or less similar phenomena.

The most important of these phenomena was the

growth of local bourgeoisie and the contradiction

of thei interests to those of the exploiting

powers.g7

As to this contradiction, the feudal lords sided with
the metropolitan bourgeoisie and the comprador bourgeoisie,
in opposition to the national bourgeoisie. It then becomes
apparent that one cannot undertake a scientific study of
the relationship between 1) the economic and political
practice of the metropole towards the dominated society,
and 2) the class structure of that society, if this totality
is not taken into consideration- In this connection, it is
also imperative to emphasize again, that contrary to Bren-
ner's thesis, the process in which capitalist relations of
production develop in the dominated societies is essentially
distinct from the classic patterns, and as such it possesses
certain features and characteristics quite different from

the classic patterns.*

 

* In his works, Accumulation on the World Scale, (2
volumes), and Unequal Development, Samir Amin provides his
readers with a comprehensive analysis as to this difference.
He asserts that extroverted capitalist development (a term
he uses for dependent capitalist.develapmenfi leads to the
destruction of pre-capitalist handicrafts, the proletariani-
zation of small agriculture, and rural semi-proletarianize-
tion, that is to the "marginalization of the masses."
Urbanization is accompanied by a massive increase in unem-
ployment and underemployment, both having the effect of
minimizing the rewards for labor power as demand originates
elsewhere. Marginalization also guarantees an ever increas-
ing share of the income to a minority who are thus able to
adapt metropolitan styles of consumption and ideological and

 

 

48

The term "development" has itself also contributed to
the confusion surrounding our discussion. At times it has
been understood as "industrialization", other times inter-
preted to mean capitalism. Nevertheless, Frank himself has
never given a precise and concise definition for this prob-
lematic term. (Mithis basis too he has been criticized by
some scholars, the most notable of all, Hernando Henrique
Cardoso. In discussing the nature of dependence, Cardoso
advances his thesis on the viability of an "associated" and

."dependent" capitalist development in the peripery. His

 

(continued from previous page)

cultural values (a phenomena to which I refer as the minority
consumer society). While growth in the center can be char-
acterized as development, for it enhances integration by
means of various mechanisms, i.e. adjustments of wage levels
and the transfer of labor from low productivity to high
productivity sectors, the growth in the periphery is not
development but instead a "mechanism of distortion" resulting
from the subordination of the pro-capitalist sectors and/or
the destruction of some, without a replacement by new capi-
talist sectors. Such distortions, of the peripheral forma-
tions, Amin contends, continue so long as the dynamic is

not totally internal-to the periphery- Peripheral capital-
ism, which according to Amin is characterized by the co-
existence of various modes of production, subjected and
restructured to serve theaneeds of international capital,

is less integrated than central capitalism. In this con-
nection Amin cites the following features: 1) unevenness

or productivity between the sectors, manifested in the sys-
tem of prices transmitted to it from the center; 2) a
:"disarticulation" in the peripheral economic sector because
none of the components are dynamic enough to mobilize other
components and thus, the system is oriented towards serving
the needs of the center; and 3) a peripheral formation
dominated from the outside, as manifested in the forms of
unequal specialization and foreign finance, itself a mani-
festation of the internal division of labor- Amin concludes
the growth of the periphery does not lead to its autonomy
unless it breaks away from the world capitalist system.

49

views are based on observing and understanding the recent
changes and trends of imperialism. The new tendencies that
he perceives are 1) the movement of capital investment away
from traditional sectors and into industrial activities,
and 2) the high degree of development of technology and the
central economy's monopoly over the advanced means of pro-
duction. The combination of these factors, explains Cardoso,
make a process of industrialization in the periphery viable,
given that the class forces and political circumstances are
favorable.

He further contends:

Strictly speaking - if we consider purely

economic indicators - it is not difficult to

show that development and monopoly penetration

in the industrial sectors of the dependent

economies are not incompatible. The idea that

there occurs a kind of development of under-

development, apart from the play on the words,

is not helpful. In fact, dependency, monopoly

capitalism and deve10pment in the sectors of

the Third World integrated into the new forms
of monopolistic expansion.

 

Cardoso has comprehended the essence of the new trend,
the shift from investments in raw material, agriculture,
and oil, to industrial activities. He also vividly demon-
strates that

in spite of internal economic development,

countries tied to international capitalism

by that type of linkage remain economically

dependent, in so far as the production of the

means of production (technology) are concen-

trated in advanced capitalist economies (mainly

in the 0.5.).5

Hence, as long as the monopoly over the advanced means

of production is maintainedtn/multi-national corporations

50

and gigantic financial institutions, the peripheral economy
not only remains in the imperialist orbit, but is also tied
by millions of' visible and invisible threads to the metro-
politan economy. This is the substance of the new trend
which Cardoso so clearly demonstrates. I believe that
despite the misleading term that Frank employs, the content
of his analysis does not contradict Cardoso's and is actually
in agreement with it.

This is not to suggest that Frank and Cardoso approach
the problem in question in affinity, neither is it an
attempt to render a blind eye to Frank's shortcomings; for
Cardoso and to a much greater extent Amin, surpass the
deficienciesrn’the Frankian paradigm and transcend the
limitations of the dependency theory which over-emphasizes
external factors, ignores the mode of production, socio- 9
economic formations, deve10pments in the world imperialist
system vis-a-vis the peripheral societies, and puts forth
a unilateral emphasis on the exchange relations. It is
therefore essential to lay out some of Amin's basic assump-
tions before we conclude our review of the theoretical
history of the internal mechanism by which the relation-
ship before the metropole and the dominated society is
defined.

Amin begins his analysis with a well sustained discus-
sion of the mode of production and social formations, two
central concepts in his theoretical analysis. .According

to Amin, a mode of production is an abstract notion, a tool

51

of analysis used to facilitate the process of inquiry into
the concrete process of social production. It is distin-
guished by general characteristics, but in reality differs
in its attributes from one society to another depending
upon: 1) the stage of deve10pment achieved by the mode;

2) its particular relations to other modes; and 3) the

mode of articulation between one mode and other modes. On
the other hand, he defines a social formation as a more
concrete notion referring to society of equilibrium, or
with one becoming more dominant while one or the other is
undergoing a process of disintegration. It is through
understanding the "social formation" as a whole rather than
apprehension of the dominant mode of production, as well as
the particular process in which the dominant mode articu-
lates its relationship with other modes, becomes possible.
The notion of "social formations" is also important as to
the understanding of the way in which surplus value is
produced and extracted.

The importance of this perspective lies in the fact
that it enables one to apprehend and uncover the essence of
social contradictions between the producers of the means of
production and subsistence, and the apprOpriators of the
labor and/or labor power. As well, it contributes to one's
understanding of class contradictions and the processes
of change particular to the social formation under study.
Amin undertakes a thorough study of the classic pattern of

the development of capitalism and lays out the fundamental

52

distinctions that it possesses vis-a-vis a peripheral
capitalist formation (to which I have already alluded).

Amin's approach to the relationship between the
metrOpole and center is most profound. He takes a historical
and global approach to the question and unveils the essence
of this relationship, the "dependency" of the peripheral
economies to the core economies, based on exploitation and
on an unequal exchange. As to the "new imperialist trend"-
he concedes that a

. . . possible direction is the specializing

of the Third World in "classical" industrial

production (including that of the capital

goods), while the center reserves for itself

theultra-modern branches of the activity

(automation, electrongfis, the conquest of

space, atomic power).
Amin, like Cardoso, suggests that this direction is possible
especially for those economies whose import substitution has
proceeded a high stage.

He further concedes that this shift in the patterns of
international specialization is promoted by the formation
of giant multi-national corporations. Furthermore, since
the organic composition of capital in the periphery is
lower than in the center, the multi-national corporations
will redirect larger proportions of capital investment to

the periphery which is not only in the fields of primary

production but in the medium and heavy industries as well.*

 

* A detailed and elaborated analysis of the "new imperi-
alist trend" is advanced by the late Bijan Jazani, an Iranian
revolutionary and theoretician, based on the study of neo-
colonialism in Iran is presented in his work 122

53

 

(continued from previous page)

SociO-Economic Analysis Of a Dependent Capitalist State where
he asserts that a) the growth Of the bourgeoisie and b) the
growth of the working class through a historical process
which is characterized by the transformation Of the national
bourgeoisie toward comprador capitalism and the dissolution
Of the feudal lords as a ruling class provides the material
base for a historical transformation which causes

the establishment of a new system which we term
"dependent capitalism", in which an imperialist
colonial relationship develops further: imperi-
alist monopolies, in co-Operation with the com-
prador bourgeoisie, succeed in vastly expanding
the system Of exploitation. At the same time
they put an end to extortion through various
concessions that amounted to tyrannical foreign
protection dues. In other words, exploitation

is disguised as a straightforward economic and
commercial relationship. The ultimate formula

Of this era Of exploitation is capital investment
in production, mining Of raw materials, the
incorporation Of these materials into concessions
(e.g. the British consortium's Oil rights in Iran)
and the import Of consumer goods is replaced by
the modern formula of: foreign capital investment
in the form Of partnerships with the public and/
or private sector in production and mining; the
setting up of dependent industries; finished
goods out Of the country (steel and OOpper instead
Of iron ore, etc.; petrochemical and Oil products
instead Of crude Oil and natural gas); the import
of consumer goods as well as capital goods for
dependent industries (assembly, montage). The
formula is developed by allocating the production
Of simple consumer goods (e.g. cement, cloth,
processed foodstuffs) to a dominated country with
joint capital; the production Of sophisticated
products (e.g. aircraft, electronic equipment,
heavy machinery and arms) in the metropolitan
country; and the assembly Of intermediate goods
in the dominated country. Thus we have a limited
and controlled system Of production with a limited
and controlled market in the dominated country.
This, in fact, is a developed form of the "single
commodity and single customer" formula and guar-
antees the economic subservience Of a dominated
country. Therefore, one of the special features
of neo-colonialism is the emphasis placed upon
economic as Opposed to political and military
domination.

54

Amin is proved to be correct. Recent investments of
the multi-national corporations in many Latin American
countries (Brazil, Argentina, Mexico), in some African and
Asian countries is showing the growing investments in the
industrial sectors.

Asaiconsequence Of the new formula, Amin is correct
to conclude that the periphery's dependence upon the metropole
will be intensified, as will the internal contradictions Of.
the peripheral societies. Whereas exploitation Of the
working class is the chief characteristic Of the metropolitan
societies, in the periphery, super exploitation (i.e. labor
equally as productive as that in the metropole is rewarded
by low wages, and the standard of working and living condi-
tions Of the peripheral people is reduced to the level Of
destitution) is the dominant feature of the peripheral
societies.

On this basis it would be correct to conclude that the
huge sums Of profiuswhich are derived from the periphery and
are channelled tO the metropole's economy not only streng-
thens the position Of the metrOpOlitan bourgeoisie but also

weakens the class antagonism in the metropolitan countries.*

 

* In 1869, Marx wrote the following to Engels:

For a long time I believed that it would be
possible to overthrow the Irish regime by English
working-class ascendancy. I always expressed
this point of view in the "New York Tribune".

~ Deeper study has now convinced me Of the Opposite.
The English working class will never accomplish
anything until it has got rid Of Ireland. The
lever must be applied in Ireland. That is why

55

Amin recognizes this important characteristic, which is only
the natural outcome Of the relationship that has existed
between the metropoles and the dominated societies, and as
such is convinced that the continuation Of this relationship
can only reproduce the various circle of exploitation,
dependence, and all the misery and wretchedness that is its
outcome. Amin is convinced, as Frank is, that the only way
to overcome this situation as it exists, is to break the
chains of dependency through social revolutions, the focus
of which is now shifted tO the periphery. Even though Amin
and Frank differ on the nature of the social revolution, it
is clear from their writings that it should be directed by
the toiling and working masses Of the periphery, not only
towards the metropolitan bourgeoisie, but also against the
comprador bourgeoisie which is the partner Of the metropoli-

tan bourgeoisie in this exploitive relationship.

*******************

 

(continued from previous page)

the Irish question is so important for the social
movement in general.

If in 1869 the British working class could "never
accomplish anything until it got rid Of Ireland" could
the metrOpOlitan working class accomplish anything today
where there are so many Irelands? .

PART II

A HISTORICAL ANALYSIS
OF DEPENDENT CAPITALIST DEVELOPMENT

IN IRAN

57

   

   

   
 
 
  
  

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Figure 1: Map of Iran

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v’co

INTRODUCTION TO PART II

In the beginning Of the 19th century, while capitalism
was deve10ping with leaps and bounds in Europe, Iran was a
backward society in the grips Of feudalism (the dominant
mode Of production at the time) and other pre-capitalist
sociO-economic formations (tribal and clan relations) which,
even though at a stage Of decline and demise, were neverthe-
less vigorous forces stifling the development Of a nascent
bourgeoisie and the relations Of production particular to
this class.

It is within the bounds Of this thesis to lay bare the
mechanism by which the declining feudal mode Of production
was able, for many years to come, to produce and reproduce
the antiquated feudal relations and therefore backwardness
in Iran.

It is also the task Of this thesis to unveil the laws
which, by their very virtue, Obstructed a bourgeoisie from
developing in the classic patterns as it did in Europe
during the Middle Ages.

Special attention will be given to colonialism, which
after all left such profound effects on Iran, to the extent
that any sociO-economic change can only be understood and
analyzed in the context Of Iran's relations to the colonial
world.

58

PREFACE TO PART II

Iran of 1800 was a country defined by its geography.
The high mountain ranges Of the north, reaching skyward to
the heights of 10,000 and 14,000 feet and even more, served
to hinder contact with Russia, its neighbor to the north. .
Even more forbearing were the huge expanses of desert,
inhospitable to almost all forms Of life, which stretched
throughout the central regions Of the country. The sparse
population thus was forced to live on the 'rims' Of Iran,
sharing the 400,000 mile long border with the Pakistanis and
Afghans in the east, the Iraqis and Turks in the west, and
experiencing the solitude of the Oman Sea and Persian Gulf
in the south and southwest.

The vastness and at the same time harshness Of the land
presented formidable barriers tO the emergence Of political
and economic centralization; numerous clans and tribes,
living an autonomous existence, characterized the country's
pOpulation. The state was a feudal monarchy headed by the
Qajar Dynasty which represented one Of the many tribes. Its
rule was plagued by the segmentation Of the society, and was
subjected to almost continuous internal challenges.

Given the lack Of a centralized government and the
isolation Of the various tribes of the population from each
other, few statistics exist that would describe the conditions

59

60

Of nineteenth century Iran, and this has presented serious
Obstacles to research for this time period. Despite this,
there are a few general conclusions that can be drawn.

The dominant mode Of production in the country was
feudalism, although other pre-capitalist social formations
existed as well. In particular, those Of nomad relations
were important and were nurtured by the aridity Of the south
which rendered the soil most useful as pasture land. A full
fifty percent of Iran's entire population Of five to six
million is estimated to have been nomadic in 1800.

Including the nomad tribes, approximately eighty-
seven percent of the total population was living in the
countryside. Peasants typically lived in villages composed
Of no more than a few small houses; their principle activity
was to farm the land and share the crop with an absentee
landlord. The major crops were wheat, tobacco, Opium, and
cotton, and all Of these crops were exported to a limited
extent. Agricultural activities were hampered by a lack
of both natural water supplies and irrigation systems, and
as a result, periodic famines were common.

The remaining one-seventh Of the population, including
most Of the landlords, merchants, craftsmen, and state
dignitaries lived in the roughly one hundred urban centers.
These urban areas were breeding grounds for epidemics, with
a complete absence Of all sanitation or clean water systems.
There were nO manufacturers, but some small workshops existed,

producing carpets, cotton, woolen and silk textiles, shawls,

61

leather goods and iron work for both internal consumption
and export.

Iran's traderelations were exclusively with its close
neighbors, India, Russia, Turkey and amounted tO only
‘1?,500,000 worth Of goods imported and exported in 1800.
This trade did little to break the grip Of isolation from
the consequences Of world deve10pment imposed upon Iran by
its location and inhospitable geography. Eighteen-hundred.
Iran was thus poverty stricken, backward and internally
divided, isolated from world developments and ill-prepared

to face the impending events Of the nineteenth century.

CHAPTER 1

THE INCORPORATION 0F IRAN INTO THE WORLD CAPITALIST MARKET

The Indian sub-continent and much Of the Middle East
had become Objects Of desire for both Russia and Great Britain
in the earliest stages of the 19th century when capitalism .
was going through its expansionary phase and increasingly
in search Of raw materials and markets for their manufactured
commodities. 0ne-by-one, these economically backward and
relatively isolated countries were sucked into the orbit Of
colonial circles Of either Russia or Britain to be turned
into sources Of raw materials and recepticals Of EUrOpean
consumer gOOds.

The early years Of the 1800's found Iran squeezed be-
tween the aggressing armies of these two colonial powers and
with neither a strong central government (a characteristic
Of pre-capitalist economic formations) nor a well organized
and trained army Of its own. Irena-Russian wars Of 1813 and
1828, and the Anglo-Iranian war of 1856 were concluded with
the treaties of Turkomanchei and Paris, respectively, only
tO outline comprehensive economic concessions imposed upon
the shoulders of the Iranian people as a result Of devastating
military defeats of the Oajar monarchy.

The newly founded Oajar dynasty, defeated by colonial
powers and internally threatened by tribal rivalries,

62

63

found in the colonial powers 8 source of military and finan-
cial support tO consolidate its rule through the development
Of a central government and an organized army. In turn, the
colonialists conceived Of the Oajar dynasty as an ally that
could provide them with access tO the sources Of raw materi-
als and a vast market Of which they were in need. As such,
Iran was transformed into a semi-colony Of both countries,
and from there on, the course of its development became
intimately intertwined with the world capitalist market.

If at the outset, due to its fragility, the Court could
not afford to alienate more sectors Of the society, and had
to maintain some semblence Of national pride,* then its
consolidation removed all Obstacles to total capitulation.
The European merchants had to convince the narrow-minded
feudal lords and the Court as to the necessity of consumer
goods, luxury items, and cash crops. Fabulous bribes were
to Oil the desire. This accomplished, the traditional

merchants were chosen as conduits for the foreign goods to

 

* A British Official investigating trade potentials in
Iran reported to his superiors that "the Persian Minister
seemed wholly insensible to the claim which England had to
participate in the commercial security and privileges enjoyed
by Russia." He went on to explain, "The Shah takes every
means to check the consumption of European manufactures and
to encourage those of Persia; to effect the latter purpose
he recently advanced money, and Often rewards to the makers
of Chintz, and he insisted that the courtiers shall gradu-
ally substitute Persian and Kerman shawls for the [imported]
broadcloth now used in the dresses. Those attempts to
compell the use Of inferior, and in fact, more costly articles
Of home production, in lieu of the superior and cheaper
manufactures Of foreign countries, find no support beyond
the circ e Of the Court, and will fail in attaining their
Object."

64

reach the Iranian market, and for the Iranian raw materials
en route to European markets.

Thus, British manufacturers and merchants found in Iran
a potential reservior Of raw materials and a catchall for
British manufactured goods. At the same time, the Court,
with a bankrupt treasury and some ambitious plans, along
with the big feudal lords, saw a good source Of revenue and
foreign currency in the cultivation and production Of cash -
crops, such as cotton, silk, Opium, and tobacco. But culti-
vation for export demanded large scale production, and that
in turn demanded vast areas of cultivation. Hence, the mad
scramble for the acquisition Of more land began.

Relying on their political and military power, large
private estates and vast sums Of land were seized from other

rivallandlords by the Oajar family.* In turn, the landlords

 

* Charles Issawi, in his book Economic History of Iran
1800-1914 writes: "Along with the neglect of irrigation,
the complete indifference to improvement of agricultural
techniques and the very cost Of transport, the system of land
tenure, by depriving farmers Of incentive to improve methods
or expand output, was a strong drag on economic deve10pment.
Essentially, Iran's traditional land tenure relations remained
unchanged in the period Of 1800-1914. The three agents -
state, landlords and tribal leaders, and peasants continued
to perform their customary roles. But new factors were
Operating to modify these relations. First there were shifts
Of power between the government and the landlords and tribal
leaders. Second the increasing adaptation of European ways
in warfare, administration, and mode Of living strengthened
the need Of both government and landlords for income. And,
third, the growing profitability Of cash crops for export.
made land ownership more attractive than beforei? This meant,
on the one hand, that there was powerful inducement for the
crown to extend its holdings Of Khalish land, at the expense
Of the large land-crown, and to seek to collect taxes directly,
rather than through the assignment of tuyuls."64

 

65

also converted the vaqu* land and the tuyul** into private
holdings, while, wherever possible, increasing their control
over their peasants or taking over the land. The Qajars also
undertook a process Of land purchasing, which compared to
the land appropriation campaign they waged, constituted only
an insignificant amount.*** With the land having been
seized by the Oajars and other feudal lords whose Objective
was to produce harvest for export rather than local consump-
tion, the traditional rights Of the peasants to usufruct

was seized as well. Where traditionally the peasants,
generation after generation, had certain rights to a given
area without being considered absolute owners, while the
feudal lord's only concern had been to receive a share Of
the crop as well as certain dues and land taxes, now the
traditional rights were being "abrogated, as the wealthy
used their superior power to assert absolute property
rights."66 Hence, the "social contract" was violated. The

traditional sharecropping system was to be assailed and

disrupted as a result Of the new interest in land. The

 

*Vaqu: church land

**Tuyul: land given to high echelons of the military,
civil service, and tribal leaders.for loyal service to the
court.

***Anne Lambton, in her book Landlord, makes an allusion
to this fact: "Crownand State lands were extended in many
ways. Some were acquired by purchase, for example, in
Mazandaran by Agu Mohammad Khan quar, the founder Of the
Qajar dynasty. Much more was confiscated or abandoned by its
owners in times Of famine or other catastrophies, as in the
neighborhood Of Isfahan under Fateh Ali and his successor
Mohammgg Shah, and in Sistan and Bluchestan under Naser el-din
Shah."

 

66

traditional sharecropping system was that Of crOp division
according to ownership Of its five component elements. The
landowner, by the virtue Of his ownership of the land, water
rights, and seeds, had received 3/5 Of the harvest. The
peasant, whose possessions Of shares could not surpass his
labour, oxen, and if lucky, seeds, could never receive more
than 2/5 or 3/5 of the total product. With the new process
in motion, the landowners were at liberty to divide the crop
at their own discretion. A.I. Demin describes this phenomenon
when he cites, "In the neighborhood of Isfahan, peasants
contributing draft animals and seeds tOOk only 1/3 Of the
crop."67

This not only meant the intensification Of the exploi-
tation Of the peasants who were now to produce more quantities
Of harvest1HIWIthe Old, outmoded methods and tOOls Of
production, but also a decrease in their share Of the total
product. New dues and taxes originating from every level
Of the state hierarchy were also introduced to and imposed
upon the mass Of the toiling peasants. The financially
bankrupt court pressed its provincial Officials for ever
greater amounts of tax payments, and they in turn sought

from the peasants an even larger tax payment.*

 

* The very same demand for revenues led the central
government to put up for bid local Offices such as the pro-
vincial governorships and tax collectors. By this means
the feudalists gained access to the administrative and
judicial powers, which in turn enlarged the power base Of
the monarchy and increasingly transformed the state into an
apparatus for the feudal class as a whole to rule. Hence,
the creation Of the feudal state proper. 1

67

When the property belongs to the peasant, the
Governor of the district exacts almost what he
pleases or is able to get from him, for at present,
the poor man has no one to appeal to for redress -
he therefore Often finds it more advantageous to

be without than with landed prOperty Of his own

and accordingly makes the best bargain he can

with his Chief for the disposal Of it and in

this way much property has changed hands from

the poor to the rich man.

Land tax became so significant for the Qajar family that Lord
Curzon concluded that "the main source Of revenues for the

"69 In his study, Persia,

central government was the land tax.
he found that:

Formerly the crown not only claimed one-tenth

[of the product], but this prOportion was

doubled by Fatah Ali Shah. In practice it is

found that the assessment frequently amounts to

thirty percent, and twenty-five percent may be

taken as a fair average. The system, however,

varies absolutely in different parts of the

country, and even in different parts Of the

same province . . 70

Not only were more taxes demanded, but also the form in
which they were to be appropriated had to become substantially
different. The Qajars, who wanted to expand trade relations
with European merchants, had to also understand the new
importance of monetary relations. As such, provisional steps
had tO be taken in order to facilitate the monetarization of
the economy. Not only did the "urgent need for cash lead to

"72 but also

large scale sale Of Khaliseh (crown) land,
demands were made for tax payments in cash rather than in
kind. The feudal lords refused to accept their share of the
crOp in kind and forced the peasants to pay their dues and

the feudals' share Of the crOp in cash. In this way, the

village gates were Opened wide for usurers and merchants to

68

swindle the peasants and reimburse them for less than the
actual value Of the crOp. The decrease in exchange value
of their crops, combined with the increased demand for
payments accelerated the process Of immiserization Of the
peasants who, after a time, could no longer find a money-
lender who would extend to them another loan. Debt upon
debt drove the economic wedge between the peasantry and
their life's blood. Only tO survive, the poor peasants,
always having been the producers Of their own means Of
sustenance, having had no conception Of money, were now to
facilitate the moneterization Of the economy as they were
forced to purchase that which they themselves produced.

The increasing necessity for revenue and revenue sources
by the monarchy (itself a manifestation Of the expanding
commercial_relations with the capitalist world market), on
the one hand, and the increasing demand for raw materials
required by the expanding economies Of EurOpe, on the other
hand, interacted to produce a single solution - cash crop
production in Iran. Entire regions were to be converted
from self-sufficient agricultural communities into single
crOp export centers.

In the mid 1850's when, as a result a civil war in the
United States, British supply Of raw cotton declined, they
turned tO the cotton cultivating Middle Eastern countries,
including Iran, for new supplies Of cotton. In 1863, D.E.
Abbott, the British Consul reported that:

It is uncertain to what extent cotton is grown,
either in this province or indeed in Persia

69

generally, as no statistics exist of this prO-
duction. But it is probable that some millions
Of pounds might be purchased here in the course
of the year. Whether Of the growth Of this or
the neighboring provinces, cotton is produced
throughout the plain, inhabited country Of Persia
and the quantity can not be inconsiderable when

it is considered that the extent Of Persia is73
equal to about twice and half that Of France.

As to the total amount of production, Colonel Pelly
reported that the shipment Of raw cotton from the Persian
Gulf to the British colonial holding Of Bombay, which had
been nil in 1844 to 1845, and 19,200 rupees worth in 1860
and 1861, rose sharply to 1,614,060 rupees in 1863/64 and
to 6,793,845 in 1864/65, and then drOpped back. In 1866,
after the end of the United States Civil War, and the resump-
tion Of cotton production in the United States, the British
Consul in Isfahan reported that nO cotton was exported to
India.

Raw cotton production soon found another stimulus in
1866 when raw cotton began to be exported to Moscow by
Russian and Armenian merchants. In 1866, the British Consul
reported that:

About 6,300,000 pounds Of cotton had been

exported from Mazandaran [a northern province

Of Iran] to Russia. In 1881 . . . about

4,284,000 pounds Of this article reached Moscow,

the produce Of Gasvin, Zenjan, Taroom and

Khorassan; and in 1874 2,500,000 pounds, the

produce Of Mazandaran reached Russia.74
Another document concedes that:

Russian and Armenian merchants advanced money to

Persian cotton cultivators, stimulating both an

expaggion in output and an improvement in qual-
ity.

70

And a British Consul reported that:
. . . the Russian speculators will commence to
appear on the scene and to Offer the proprietor
advances Of money to sow cotton for them, the
seed Of which they provide, or to buy up in76
advance the best part Of his crop Of wheat.
A Russian Consul reported that "between 1900-1905 the area

"77 On the eve Of the

planted tO cotton in Khorasan doubled.
first world war, an estimated 110,000 hectaresxfl’land were
under cotton cultivation with a total output reaching the
level of 33,000 metric tons, ninety-eight percent of which
went to Russia.

The cultivation Of Opium on vast tracts of land was yet
another instance Of production for export. Opium poppy seeds
were cultivated in Iran for internal consumption since the
12th century. However, the scale Of production remained
slight until the middle Of the 19th century when the British
found a vast market in the Far East. N.R. Keddie points out
how Opium production assumed huge dimensions in 1860 with
the encouragement of English merchants.78 Again, the British
Consul in Tehran reported in 1867 that "Opium seems to be in
good demand, and it was expected that about 10,000 shah
mauns (130,000 pounds) or three times the usual quantity will
be exported to China."79 Two years later, production was
reported at 530,000 pounds and exports at 250,000 pounds.

In 1880, exports from the Persian Gulf reached 1,501,500

pounds.*

 

* In addition to cotton and Opium, Iran, in the 19th
century, cultivated two other major cash crOps, silk and

71

The demand for Opium required the conversion Of large
tracts Of land into exclusively Opium cultivating regions.
The British Consul in Bosher reported that

. . . almost all available or suitable ground

in Yazd, Isfahan and elsewhere was utilized for

the cultivation Of Opium to the exclusion Of

cereals and other produce . . . this, accompanied

with drought and other circumstances, resulted

in the famine of 1871/1872.80

The catastrophies in Isfahan and Yazd were the crystali-
zation Of the state's obsession for the accumulation Of more
wealth, and at the same time, a manifestation of its respon-
siveness to the demands Of the world market at the expense
of an essential responsibility Of a traditional type Iranian
state, i.e., the construction of irrigation systems. This
becomes a crucial point when one recalls that drought and

famine plagued Iran even more frequently during the latter

part of the 1800's. Thus, famine became a driving force in

 

(continued from previous page)

tobacco. Both Of these crops, although cultivated prior to
foreign penetration, experiencedconsiderablegrowth in the
rate of production as markets for them increased. Silk,
for example, reached a peak output Of 2,190,000 pounds,
worth £1,000,000 in 1864, while tobacco production attained
the 50,000,000 pound level in the 1850's.

Silk production was instrumental in introducing money
transactions into the Iranian countryside in that imported
silk worms had to be purchased on credit from Greek and
Armenian merchants. It also demonstrated the risks Of regions
becoming wholly submerged in the cultivation Of one crOp.

In 1864, the muscardine disease ravaged the Ghilon silk crOp
and production fell in one year from the above peak level to
a mere 210,000 pounds, worth $055,000. The effect on the
province was disastrous. "Some fifteen years agO the annual
silk crOp Of Ghilon represented a native capital Of two
million sterling - a capital that has since decreased to one-
third that amount; but the province is still assessed the
same rate . . . for the land tax as it was then.

72

the separation Of peasants from their condition Of production,
for their desperate search for another means Of livelihood.
However famine was only one among many factors which drove
the peasants Off their land and initiated the forced immi-
gration to the cities. The appropriation of vast tracts Of
land intensified exploitation of the peasants through the
increased role Of absolute surplus value, imposition Of
heavy taxes and different kinds of dues, monetarization of-
the economy, and hence, the indebtness of thousands upon
thousands of peasants. All in all, famine accelerated the
pauperization Of the peasants and their emmigration to the
cities, where they were to find their natural allies, the
displaced craftsmen, similarly effected by the Qajar-

colonialist axis.

CHAPTER 2
THE PROCESS OF PRIMITIVE ACCUMULATION OF CAPITAL
AND THE EMERGENCE OF THE IRANIAN

BOURGEOISIE AND WORKING CLASS

Prior to the conquest Of Iran, eighty-seven percent of.
the total population Of five to six million were living in
the countryside. The closed, self-sustained economies Of
the rural areas, operating at subsistence levels could not
provide the towns with any significant amount of food supplies,
and in turn, did not depend upon the cities for handicrafts.
The towns, residential areas of the feudal lords only embrac-
ing one-seventh Of the total population, were more or less
self-sufficient economic units, with<£he majority Of the
population engaging in agricultural production to the extent
that the craftsmen themselves had to seek additional employ-
ment in farming or gardening:> Only constituting a minute
portion of the urban dwellers,(the craftsmen were.divided
into three main categories. One worked freely in the
bazaar, responsive only to the customers' orders and consti-
tuting the majority; the second were attached to and respon-
sive to the demands Of the court (mainly employed in military
workshops); while the third group belonged to the individual

feudal lords, who were in fact serf—like dependents on the

Khansl>

73

74

 

 

Table 4: Iranian Imports and Exports, 1831-1848*82
IMPORTS EXPORTS
# of Value # Of Value

Year Parcels (Pound Sterling) Parcels (Pound Sterling)
1831 4,500 - - -
1832 6,750 - 5,302 -
1833 8,875 - 8,040 -
1834 11,250 - 12,660 -
1835 15,525 - 15,800 -
1836 20,615 - 23,278 -
1837 16,710 - 16,031 -
1838 22,360 - 16,618 -
1839 21,095 - 10,891 -
1840 25,830 - 16,770 -
1841 27,092 - 17,483 -
1842 30,985 - 17,493 -
1843 31,690 1,014,080 14,879 251,800
1844 33,100 1,043,200 16,900 368,436
1845 40,028 1,323,957 17,012 370,874
1846 38,980 1,289,259 13,615 316,539
1847 34,850 1,152,273 12,130 278,450
1848 50,277 1,662,380 10,456 181,378

 

 

* The above table does not accurately reflect the bal-
ance of trade nation-wide which in fact remained essentially
balanced between imports and exports until around 1850, when
imports began to consistently exceed exports by ever-
increasing amounts. A lack Of accurate data prevented the
author from providing the monetary value for the years
from 1831 to 1842. '

75

Before the influx of the foreign manufactured commodi-
ties, the craftsmen were the main producers Of the essential
consumer goods Of the society. As with the peasants, their
lives were to be dramatically changed with the flooding Of
the Iranian market by foreign goods.

The previous table records the general trade activities
occurring throughout the first half Of' the 1800's in a single
trading center in Iran. When one recalls that in 1800, the
total value Of all imports and exports for the entire coun-
try did not exceed {2,500,000, and that at least one half Of
the imports were only passing through Iran to reach their
final destination, the magnitude Of the increased trade
becomes crystal clear. The impact Of this commodity influx
on the sociO-economic make-up Of the society could not be
more profound - particularly for those craftsmen of the first
category who produced cotton, silk and woolen clothes and
were metal workers.

Several separate Observations of the impact Of foreign
goods on the Iranian craftsmen were reported by the British

Consul, K.E. Abbott.83

In 1844,

a memorial was presented to His Majesty the Shah
by the traders and manufacturers Of Cashan pray-
ing for protection to their commerce which they
represented as suffering in consequence of the
introduction of European merchandise into their
country.

In 1848 Abbott Observed:

The manufacturers Of England have in a great
measure superseded the use Of cotton and silk
fabrics Of the country, owing to their cheapness,
the superiority Of the style and the execution

76

Of the designs, and the greater variety Of pat-

terns, which both enabled peOple tO make a more

frequent change Of clothing and to satisfy their

taste for novelty'ofpatterns - and even the

higher classes have Often preferred European

chintz to the more expensive silk dresses Of

their own country.

And finally, in 1849, he stated,

The manufacturers have, however, rapidly declined

for some time past in consequence of the trade

with EurOpe which has gradually extended into

every part of the Kingdom to the detriment or

ruin Of many branches Of native industry.

Specifically, Abbott found in 1849 800 silk looms where
there had existed 8000 in the town Of Kashan, and European
textiles worth £4,000 being sold in 28 Of the town's 770
shops.

Within a short span Of time, handicrafts, characterizing
Persian cultures for centuries were rendered outmoded and
began to disappear as the unlucky producers were forced to
find means Of sustenance elsewhere. It was not known to
them that they would soon be joined by the uprooted peasants
whom they believed to be their inferiors. British merchants
and British made products, while uprooting and destroying
the means Of livelihood of the Iranian toiling peOple,
destroyed, at the same time, the walls which kept them
divided from each other.

With the uprooted peasants in the cities and the dis-
placed craftsmen along side them, both exprOpriated from
their means and conditions of production and left with

nothing but their labor power, the first condition for the

embrYonic stage of capitalist development was materialized.

77

The same laws in motion at one pole that facilitated the
process Of pauperization and separation Of the peasants and
craftsmen from their condition of labor, and hence the
emergence of the Iranian working class, were also at work

at the Opposite pole, to facilitate the process Of augmenta-
tion and accumulation Of more and various sources Of wealth
by the court, colonialists, usurers, and the rapidly deve10p-
ing merchant class. The expansion Of trade relations with-
Europe and the extension of commercial activities between
the towns and villages by the traditional merchants who now
had at their disposal modern goods, allowed them to expand
into international companies, with agents in numerous world
capitols. Indeed, these merchants were to become Iran's
first native capitalists.

These capitalists, however, were from their very root
dependent upon the trade and capital from Europe. Britain,
too, recognized the great financial benefit in working
through the Iranian merchants. During the first half of the
1800's, when the Qajars had to keep some semblence Of nation-
al pride, they had demanded higher import duties from the
foreign merchants than Of the native ones. With the total
capitulation Of the Oajars to foreign power, this "law" had
to be changed too. In 1851, the Oajars were demanding more
import duties from the Iranian merchant. Ironically, the
British were still disputing the terms Of trade. A British
merchant named Stevens complained in 1851,

Unless these duties are not [sic] considerably
reduced, the natives must abandon commercial

78

pursuits, and the trade will be reduced in amount,
and remain entirely in the hands Of EurOpeans.
British commerce will especially feel the effects
Of any such result for the withdrawal from the
market of the native merchants must produce a
great dimunition in the amount Of British goods
now imported.84*

It then becomes Obvious how rapidly the Iranian merchants
had become dependent upon foreign trade for their own pros-
perity.

With their increasing wealth, the Iranian merchants
expanded trade activities to regions not yet penetrated and
acquired a position Of influence in areas Of the economy
not traditionally within their realm Of activities. 5.5.
Abdulleav writes the following about one such merchant:

Among the most powerful Iranian merchants one
may mention Hajji Mamed Hassan Amin az-Zarb,
whose business was carried on after his death,
in 1896, by his son Hajji Mamed Husain. The
fortune Of this family was put at 25 million
tumans. The family also carried out banking
Operations and showed much interest in invest-
ing capital in industry and other commercial
enterprises. Amin az-Zarb engaged in widespread
trade in many foreign markets. In all the main
towns Of Iran, he had agents both for the pur-
chase and sale Of goods and for the taking Of
deposits, transfer Of money, and other banking
Operations. He owned real estate not only in
Iran but also in Moscow and Nizhninovgozod.
Amin az-Zarb had a large trading Office in
Marseilles, agencies in London, Paris, and
China, and correspondence in many cities in
Europe, Asia and America.

 

* With the trade terms established, each partner cher-
ished his own dreams. The British wanted to pay less import
duties, so they saw in the native merchants a leeway to
escape higher import duties. In turn the Oajars were in need
Of more revenues, so they raised the import duties as to the
Iranian merchants who indeed became the British scape-goats.
The new law in action again put the British into jeOpardy
since the latter were already turned into conduits for
British goods.

79

The merchants' wealth and power reached the degree that
they were now able to form syndicates through which they
established price and supply levels and thus brought the
market under their control. Warehouses were often stock-
piled with commodities with the intent to produce artificial
shortages. "All local products . . . were bought by him
[the merchant] and kept in store houses to be sold in winter
at three times the price."86

As trade agencies continued to expand, they gradually
incorporated the traditional money lender of the towns and
assumed banking activities, many of which came to play a
crucial role in the economic life of Iran, so much so that
the state had to occasionally depend upon them for loans
and payments of foreign debts.

Not only did the merchants expand their activities to
financial spheres, but also a few of them were now becoming
attracted to manufacturing, particularly of those commodities
in which they specialized their trade. The most pronounced
instances were the growing manufactures of carpet, opium,
henna processing and leather work, fortunately unharmed by
the foreign onslaught.

The merchants at the stage of investing their "money"
into the new ventures found in the villages an in-need labor
force which was about to be driven off the land due to
increasing tax payment, dues, and a steadily declining
standard of living. The "benevolent" merchants were to

encourage the desperate peasants into the production of

80

carpets in exchange for a cash wage.

By 1879, carpet weaving became the livelihood of entire
communities. Some 5,000 loomsemploying10,000 persons, in
150 villages near Sultanabad the neighborhood of Kainat had
2,000 looms with 1,200 workers.87 Curzon explained that:

The bulk of the carpet industry is carried on in

the weavers' homes, the women and children doing

the weaving. These so—called manufacturer supplies

to the weaver the design and the quantities of wool

in different colors required for one carpet. He

also advances sums to account for the price range,

the balange being paid on delivery of the finished

article.8

The design and the color were to meet the tastes of
European consumers, who through the Iranian merchant, were
to be supplied. The Iranian merchants found an immense
source of wealth, as did their European counterparts, while
destitute women and children had to work long and hard.

The mounting profits demanded increased production, and that
in turn demanded concentration of production.* Thus, "home
work" was transformed into carpet "workshops". These work-
shops were of both the manufacturing and factory type, many

of which employed up to 100 workers, recruited from the ex-

peasants or ex-craftsmen and women living in towns. There

 

* The practice of "home work" became increasingly dis-
satisfactory. Curzon stated, ". . . Home employment (is)
slovenly and dilatory work, with little progress towards
skill and finish, as the looms, gfiattered over a wide area,
cannot be constantly inspected."

A bourgeoisie-minded scholar, who understands the vast
difference between home production and workshop production
could only conclude as such. Afterall, he was to represent
the viewpoint of the European shareholders of the trade.

81

are no statistics as to the real number of the newly created
workshOps. However, Z.Z. Abdulleav, a Soviet scholar, be-
lieves that:

The demand for carpets was so great that workshops

based on simple capitalist cooperation were no

longer in a position to satisfy it. The demand

from merchant capital necessitated the further

expansion of carpet making, which steadily led

to the appearance og9carpet workshops, of the

manufacturing type.

However, despite this trend, "home work" often remained
an intricate part of the manufacturers of carpets, although
the quality had been altered. Whereas the entire production
process had once occurred in the home, now home work was
simply a slot on the production line - namely, the spinning
of raw wool into yards which were then collected and sent
to the workshops where they were then transformed into the
finished product by a complex system of labor division.

On other crafts which survived foreign competition, our
information is much more limited. We do know that leather
working and the processing of Opium and henna were taking
place in workshOps with no links to "home work", and with a
high degree of labor division. Sobotsianshii notes that:

In Hammandon, the center of leather preparation

. . . there were relatively large workshops where

labor was divided in definite processes. In

contrast to carpet making, all processes were,

as a rule, carried out in the same workshops,

which frequently had the appearance of a dirty

and dark pit.91

Such was the origin of the newly emerged Iranian indus-

try which crystaflized the embryonic stage of the development

of capitalist relations of production. The material conditions

82

for capitalist development became possible as:

1) a sector (however small) of the population became
separated from their means of production and subsistence and
their consequent transformation to "free laborers"; and

2) the accumulation of a considerable mass of capital
in the hands of another sector of the population began to
take place.

If in Europe, the process of primitive accumulation of
capital was accomplished through the "colonial system, public
debts, heavy taxes, protection, commercial wars, etc."92,
in Iran, this process was realized through the colonializa-
tion of Iran, an open door economic policy, commercial
capitulation, exports (cash crops, goods), and hoarding,
etc. If in Europe, land enclosures were the main factors
in driving the peasants from their lands and divorcing them
from their means of production and subsistence, in Iran,
obsession for more revenue, heavy taxes, costly dues, and
famine exprOpriated the peasants from their means of produc-
tion and ejected them from their lands.

While it is correct that "the history of this expropri-
ation in different countries assumes different aspects, and
runs through its various phases in different orders of
succession, and at different periods",93 the history of
exprOpriation in Iran was not only different, but distorted,
disfigured and imposed.

An imposed process of primitive accumulation could only

be limited in its dimension, and not intertwined or

83

articulated by other branches of economic life of the soci-
ety. The development of commercial activities had only had
a limited impact on the development of industry, and that
only in terms defined by Iran's location within the inter-
national division of labor. In this period, the accumulated
capital was solely invested in the production of commodities
commanded by the world market, and thus, the development of
different branches of industry could not correspond to
internal demands.* As such, the pauperized peasants and
handicraftsmen, jammed into the cities, could not all be
absorbed into the economy and thus, tens of thousands
migrated to Russia where capitalism was rapidly developing
at the end of the century.**

In India, Marx wrote, England had to fulfill a double
mission. 90ne destructive, the other regenerating - the
annihilation of the old Asiatic society, and the laying of
the material foundations of western society in Asia."95

Did not England facilitate the same process in Iran?

 

* For an indication of production trends, see the table
on the following page.

** For example, the Baku oil industry employed 23,500
workers by 1903, of which 22 percent were Iranian immigrants,
and in Tifls, the number of unskilled workers from Iran was
5,000 to 6,000.

84

 

94

Table 5 : Main Exports, 1850's-1913 (Percentage of Total)

 

 

Commodity 1850's
Silk & Products 38
Cotton & Woolen Cloth 23
Cereals 10
Fruit 4
Tobacco 4
Raw Cotton 1
Opium -
Carpets -

1880's

18
1

168

26

1911—13

5
1
12a
13
1
19
7

12

 

a . .
mainly rice

 

Table 694: Main Imports, 1850's-1913 (Percentage of Total)

 

 

Commodity 1850's
Cotton Cloth 43
Woolen & Silk Cloth 23
Tea 9
Sugar 2
Metal Goods 2
Cereals -

Kerosine -

1880's

48

15

1911-13

30
5
6

24

 

CHAPTER 3

THE CONSTITUTIONAL REVOLUTION OF 1905 - 1907

The extension of trade relations with Europe, the
crippled emergence of a nascent bourgeois class arising
from the merchant class, the birth of the working class and
the consequent limited development of capitalist relations
of production under the dominance of feudalism in Iraq was
simultaneous with the development of capitalism to its
monopoly stage in Europe which necessitated, as its sine
quo non, the export of capital. Thus, if in the early parts
of the 19th century, the relationship between Iran and the
metropolitan countries of Europe was distinguished by the
exportation of raw material to Europe and the importation
of finished goods to Iran - as an expanding market was
required for the further deve10pment of capitalism in the
metropolis; then the latter part of the 19th century was
characterized by the export of capital from advanced capital-
ist countries to the backward ones.

A common form by which foreign capital invaded the back-
ward countries was through broad and far reaching concessions
(or as Lenin put it, "the utilization of connections for
profitable transactions") granted by the governments in power,

each motivated by its own needs. The Iranian crown, still

85

86

in the process of establishing a strong central government
and army, and obsessed with royal extravagance, had its need
for ever larger sums of revenue. As such, concessions were
granted and agreements were signed authorizing British and
Russian capital to implement some of the most crucial
developmental plans of the period. Telegraph lines, railway
networks and highways were to be constructed by Russian and
British companies.* The British speculator, William D'Arcy,
received the comprehensive concession to all of Iran's oil
to the south. The British "Imperial Tobacco Corporation of
Persia" was granted the concession of a total monopoly of
purchasing, processing and sale of all Persian tobacco. Yet
another British millionaire, Baron de Reuter, won a concession

to establish the Imperial Bank of Persia. TWfi:to leave the

 

* The construction of railway networks in the north was
undertaken by Russia, while in the south it was the British
who undertook this endeavor. Typical of both, the companies
undertaking the projects were exempted from all taxes and
duties, guaranteed a minimum return of the capital invested,
and were granted mineral rights on the property over which
the railway lines were to be built. While Russian indus-
trialists wanted to develop the railway networks to reduce
the cost of delivering their goods to Iran, "There was the
fear that railways in southern or western Iran would enable
foreign competitors to flood that country with cheaper and
better goods and to even compete within the Russian Empire
more serious still, . . . "96 The construction was never
completed. Instead, to facilitate trade transactions, the
Russians concentrated on road building. Between 1893 and
1914 the Russians laid down approximately 500 miles of roads.

As for the British, Issawi explains: "Railroads in the
North would facilitate Russian economic and political pene-
tration. And above all, it was feared that railways would
enable Russia to threaten Britain's military and naval
position in the Persian Gulf, Indian Oceag, and Afganistan,
and to undermine the defenses in India."9 The British
political and military concerns, like the Russians', blocked
the railway construction in Iran.

87

rival without a challenge, the Russians soon after gained
the right to introduce the Banque D'Escompte to Iran. The
list goes on and on* as the Crown was eager to provide the
foreign merchants and industrialists with still more conces-
sions. Among these concessions, the tobacco, banking, and
oil concessions were the most important and deserve particu-
lar attention.

By the middle of the century, Iran's production of
tobacco had reached the annual rate of 50,000,000 pounds, of
which 22 million pounds were for foreign markets. This made
tobacco one of Iran's most important agricultural products,
both for internal consumption and foreign exchange. Given
the magnitude of this trade, the Iranian merchants could
not have passively reacted when the fifty year monopoly over
the purchasing, processing, and sale over all Iranian tobacco
was handed to the British company whose name was ironically
Imperial Tobacco Corporation of Persia. The concession out-
lines that:

In return for an annual payment to the government

of’ib5,000 plus 25% of the net profits after pay-

ments of a five per cent dividend to share holders

. . . the company was given the right to buy the

entire crop from the cultivators at prices agreed

upon by buyers and sellers . . . All 99188 were to
be made through the company's agents.

 

* In 1903, the Shah, in attempting to gain a loan from
the Russian bank "negotiated secretly with the Russians for
a drastic revision of the tariff rates," the result being,
"highly favorable to Russian imports and equally damaging to
British imports. The intention was to pay off the Russian
loan with the higher duties from British goods, particularly
on ten items whose duty was raised from 5% to 100%."98

88

The contract, if materialized, would have jeopardized
the financial well-beingcn’those merchants primarily
engaged in internal trade and almost entirely independent of
foreign firms, who understood this concession as a link in
the chain of contracts directed against the nascent national
bourgeoisie. As such, the national bourgeoisie turned to
the clergy, and together they launched a popular protest
against the concession. This was also supported by the
Russian Embassy who saw the concession as an infringement
upon its economically dominant position.

The movement was transformed into an insurmountable
force as the entire population participated in a boycott of
tobacco consumption. Popular demonstrations errupted in
different corners of Iran with angry crowds attacking tobacco
shops. "The Shah was helpless, the directors of the tobacco
monopoly in despair, and even the British Legation gave the

"100 The Tobacco Movement marked the

thing up as a bad job.
beginning of the history of the anti-colonialist movement
of the Iranian peeple led by the national bourgeoisie.
However, the Shah was forced to pay the ill fated
English company.£500,000, of which the entire amount was

borrowed from the British owned Imperial Bank. This consti-

tuted the first foreign debt of the Iranian government.*

 

* The three main sources of foreign debt in Iran were
"royal extravagance, rising military expenditure entailed by
the modernization of the armed forces, and the payment of
indemnities to foreign governments and individuals,"1 the
first seeming to be the most important. By 1913, public
debt had increased to £7,650,000, and debt servicing was more
than £500,000. .

89

On the surface it looked as though the Iranian peOple had
rid themselves of British domination, while in reality the
government was becoming ever more dependent upon the British
financial rule. The Imperial Bank of Persia, founded a year
before the tobacco concession with a total capital of
£1,000,000, had been granted an exclusive right to issue
notes for sixty years. It was engaged in commercial transac-
tions, delivered silver bars to mint for coinage, and issued
notes.

In turn, the Russians demanded and received the right
to establish the Banque d'Escompt, with a total capital of
1,875,000 gold rubles. Banque d'Escompt was also engaged
in commercial activities, delivering gold bars to mint
and making loans to the government. When, in 1899, the
Russian government assumed ownership of the bank's shares
and Banque d'Escompte was transformed into a branch of the
Russian State Bank, the Russian empire was provided with
the sufficient tool to exclude other rivals from the scene
and exert unchallenged rule. The objective was realized
when the Imperial Bank refused the Shah a loan, thus provid-
ing the Russian bank with leverage to impose its own condi-
tions.

The quid pro quo exacted by the Russians for

this favor was [in return for a three million

pounds sterling loan] that no foreign loans were

to be contracted for ten years without Russian

consent; Persian custom receipts except from the

Gulf ports, were pledged as security for the loan

and custom rates were not to be lowered without

Russian consent. In addition, the Court was
required to terminate its indebtness to the

90

Imperial Bank183d its debts were assumed by the

RUSSian Bank.

The monopoly stage of capitalist development not only
deprived Iran's economy from its financial reservoirs, but
also financial oligopolies, through their links with indus-
trial firms, gained access to Iran's mineral resources, the
most outstanding one to be oil. In this connection, the
Imperial Bank stands out. The same concession that granted
to Reuter the right to establish the Imperial Bank also -
extended exclusive rights as to the exploration and extrac-
tion of Iran's mineral wealth. Consequently, in 1903,
William D'Arcy, the British speculator, was granted complete
mon0polywrightsto explore oil in all but five northern
provinces of Iran. Typical of the Qajars, the concession was
extensive, providing D'Arcy with the rights to drill and
construct pipelines and refineries in the areas covered under
the concession. In return, the Iranian government was
eligible to receive sixteen per cent of the company's annual
profit, although deprived of any control over pricing, mar-
keting, and the level of production. The bookkeeping of
the company was only to be observed by the company officials
who were at liberty to reimburse the government as they
wished.

With all the crucial veins of Iran's economy in the
hands of foreign capitalists and the exclusion of the national
bourgeoisie from any active participation in the economic
life of the nation, the intensification of the contradiction

between the nascent Iranian bourgeoisie and the feudal

91

regime — the channel through which the foreign capitalists
could obtain contracts and concessions, became inevitable.
The establishment of the Imperial Bank and the Bank d'Escompte
was not accomplished without the resistence and challenge of
the Iranian bourgeoisie. The Iranian trade companies who
were also engaged in limited financial activities were of

no challenge to their foreign counterparts. The Imperial
Bank and the Bank d'Escompte held much of the internally
invested capital within their own realm, and with that, the
monarchy's debts- Hence, they were in a position to exert
significant control over domestic and external investments
of the Crown and the Iranian bourgeoisie.

The lagging growth rate of national industry and the
deformation of Iran's agricultural production\were direct
results of the domination of foreign banks and monpolies.

The same was true of the direction of the economic activities
of the nascent Iranian bourgeoisie, who were now forced to 1
direct investments in the production of goods, primary
agricultural-stuff and raw materials demanded by the world
market. It then became inevitable for the recently emerged
capitalist 01383 to develop interest in land, the "source

of all wealth", and the domain of the feudal lords. The
Iranian commercial bourgeoisie was not only blocked from
industrial activities, which in turn had directed it towards
land, but had also to tolerate the additional burden of ever
increasing tax payments. While foreign merchants were exempt

from internal taxes and duties, the Iranian merchants, as

92

Z.Z. Abdullaev explains:

were subjected to numerous arbitrary taxes, which

constituted serious obstacles to the formation

of a national market. For instance, between

Enzeli and Isfahan, road tax had to be paid in

Rasht, Oazvin, Tehran, Qum, Kashan and Isfahan,

that is, six times. There were also other ues

which were in the nature of direct taxes.

The contradiction between the Iranian bourgeoisie and
the feudal political superstructure intensified as the bour-
geoisie's knowledge of EurOpean standards of bourgeois
democracy (i.e. fixed legal code, parliamentary assembly
. . .) expanded. The dissatisfied bourgeoisie, at the edge
of revolt, found its allies among the intellectuals, religious
clergy and the small urban working class who were oppressed
to varying degrees by a Court which they conceived to be
corrupt and a tool of foreign rule.* United as one and
under the leadership of the bourgeoisie, they launched a
major challenge, a popular movement against the Court in
1905. The Constitutional movement, as it became known, was
to impose elaborate limitations on the Shah's power.

Each of the three opposition groups wanted to

see the influence of foreigners reduced, social

reforms inaugurated, and an institutional check

placed on the tyranny of the Court. To this

extent they were united, and all three agreed
that their objectives could best be acheived by

 

* The defeat of Russia in the Russo-Japanese War of 1905,
and the eruption of the 1905 revolution in Russia weakened
the Czar's grip on Iran. Inspired by the 1905 revolution in
the neighboring country, and influenced by the Russian Social
Democratic Labor Party, the Iranian emigrant workers who had
lost their jobs as a result of political and economic crises
in Russia and had to return to Iran, assumed an active role
in the Constitutional Revolution and made valuable contribu-
tions to the movement.

93

forcing the Shah to promulgate a constitution
which provided for a parliamentary system of
government.104

In a hard fought armed struggle, the Iranian people
were able to win against the absolute monarchy during the
1905-1909 revolution. The economically crippled and poli-
tically impotent bourgeoisie could only win a lukewarm
victory. This was true partially because by 1909, Czarist
Russia, having successfully contained the 1905 revolution,
temporarily overcoming its internal economic crisis and
resolving its contradiction with Japan, was able to quickly
reassert its dominance over Iran.* Equally important was
~ the fact that Iranian bourgeoisie was relatively weak at
that time with potential conflicts of interest among their
own ranks. On this point Bizhan Jazani's contribution is
valuable and deserves to be quoted in length.

The revolution succeeded in destroying the dicta-
torial rule of the Qajars and securing a share

for the bourgeoisie in the Government. The feudal
aristocracy no longer had total domination over the
bourgeoisie; capital received some sort of guaran-
tee and tax collection began to be based on a
proper system; the bourgeoisie acquired a lever

by which to secure its rights. Once it secured
these advantages for itself, the bourgeoisie

turned its back on the revolution. In conditions
where the revolution should have been continued

for the safeguard of its victories and should have
carried on the struggle against imperialism, parti-
cularly the Russian imperialists, the bourgeoisie,
framed by its fundamental weaknesses, settled for
compromise. Here one can safely claim that the
bourgeoisie achieved its "Constitution." The

 

*In the 1907 Anglo-Russian convention, the British
acknowledged and accepted Russian dominance in Iran. As a
result of this agreement, Iran was divided into three
separate spheres of influence - Russia in the north,
Britain in the south, and neutrality in the mid region.

94

compromise, which resulted in a feudal-comprador

Government, divided the bourgeoisie right down

the middle: the section of it that was in favor

of continuing the revolution remained within the

ranks of the people, assumed their leadership and

preserved its nationalist character, but the com-

prador section of the bourgeoisie (this consisted
mainly of comparatively larger bourgeois elements)
created the nucleus of a comprador bourgeoisie
co-operating with the foreign capitalists and

the feudalists, having first ensured a firm

guarantee for its capital and having managed to

rob the aristocratic feudalists of some of their

lands. This division occurred after the Revolu-

tion and during its decline.

"That section of the bourgeoisie which was in favor of
continuing the revolution" is to be characterized as the
national bourgeoisie since their interests were often, if not
always, in direct conflict with thosecfi’the foreign capitalists.
'Huanational.bourgeoisie was vehement in its resolve to rid
Iran from the domination of foreign capital and confine the
power of time monarchy and the feudalists in order to steer
Iran onto a coursetrfindependent capitalist development. The
second trend in the bourgeoisie constituted that sector of
the bourgeoisie whose main source of capital was derived
from partnership with the EurOpean merchants, and whose
existence was dependent upon the capitalist world market. This
reactionary sector of the bourgeoisie rode the waves of the
revolution only to obtain some control over portions of the
internal market, elimination of the arbitrary tax systems and

a guarantee for its capital protection, thus enlarging its

parasitic identity.

95

The transition from the feudal mode of produc-
tion is two-fold. The producer becomes merchant
and capitalist, in contrast to the natural agri-
cultural economy and the guild-bound handicrafts
of the medieval urban industries. This is the
really revolutionary path. Or else, the merchant
establishes direct sway overproduction. However,
much this serves historically as a stepping stone
... it cannot by itself contribute to the over-
throw of the old modecfl’production, but tends
rather to preserve and retain it as its pre-
condition....This system presents everywhere

an obstacle to the real capitalist mode of
production and goes under with its development.
Without revolutionising the mode of production,
it only worsens the condition of the direct
producers, turns them into mere wage-workers and
proletarians under conditions worse than those
under the immediate control of capital, and
appropriates their surplus labgag on the basis

of the old mode of production.

 

 

 

 

 

 

In Iran, not only couldtflueproducer not transform himself
into a "merchant and capitalist", and thereby leave the stage
open for the merchant to establish his "direct sway over pro-
duction" (and consequently preserving the old mode of produc-
tion), but also those merchants who expressed an inclination
toward real capitalist activities were subjected to systematic
discrimination by the colonialist-feudalist axis. In thei”
early parts of the 19th century - the ore-monopolist stage of
the capitalist development, - the merchant's prosperity and
development was to a large part the result of his relation
to the foreign entrepreneurs. Then, in the latter parts of
the century, ushering the era of finance capital, the merchant
found himself increasingly at odds with foreign entrepreneurs.
The merchant's inclination towards investment in non-tradi-

tional sectors of the economy (mining, construction of roads

96

and railways and importation of factories) were all but
crushed. In turn, fabulous concessions and all-inclusive
contracts were signed between the feudal Court and foreign
capitalists, further blocking the development of the
bourgeoisie. At the same time "the absence of security for
capital which was an effect of the political domination of
feudalism, as well as the influence of and competition by
foreign capital had blocked the bourgeoisie's advance
towards industry, thus inevitably pushing the commercial
bourgeoisie towards the ownership of land."107
These two factors: 1) the tendency towards the owner-
ship of land, and 2) thefailureto invest in industry, were
powerful factors in preventing the full growth of the contra-
diction between the developing bourgeoisie and the entire
feudal system of production. In Iran, unlike EurOpe, the
bourgeoisie» was not in need of a plentiful supply of labor
since its very investments in industrial activities were
blocked. Neither was the bourgeoisie in desperate need of
land for raw materials (owned by the feudal lords) which
would have been otherwise neededfknrindustry. In fact, as we
have already mentioned, the bourgeoisie had become deeply
involved in land ownership. Therefore the bourgeoisie's
contradiction became limited and was mainly with the poli-
tical superstructure of the feudal system and its foreign
allies, which prevented its active participation in the
economic and political life of the society. It was actually

and precisely this very contradiction which caused the

97

Constitutional Revolution, and demonstrated the strength of
the bourgeoisie, that was impossible to ignore.

But the very same laws which led the bourgeoisie to
launch its historic assault on the political feudal super-
structure prevented it from carrying on the struggle against
imperialism. Hindered from industrial investment, the
bourgeoisie, by the virtue of its commercial relations with
metropolitan Europe (importing European manufactured goods
and exporting raw material and traditional Iranian goods), was
at the same time deeply dependent on the same force it was
supposed to fight. Thus the Constitutional Revolution did not
constitute an attempt to demolish the political rule of the
feudal lords and the consequent transformation of the feudal
political superstructure to a vehicle for the development of
capitalist relations of production. Neither did the Consti-
tutional Revolution lead to the elimination of foreign
economic domination, as a sector of the bourgoisie created
the nucleus of a comprador bourgeoisie to act as the internal
base of foreign capital. The participation of the bourgeoisie
in the governing political and economic institutions* not
only left the colonial interests unharmed, it in fact extended

them.**

 

*The feudalists' defeat imposed upon them the establish-
ment of the Majlis (the Iranian Parliament) in 1906, only to
be bombarded by cannon fire two years later at the hands of
the Tzar's cossacks.

**To cite a few examples: In 1908 a new concession was
granted to the British syndicate for the chEtruction of a
railway between Mohammerah and Khoramabad. In the same
year, Britian advanced the Shah two loans with the combined

CHAPTER 4

WORLD WAR I AND THE 1921 COUP D'ETAT

The quest for new markets and new sources of raw materials
intensified the inter-imperialist contradictions which finally
crystalized itself in the outbreak of the First World War. I
The geographical and strategic location of Iran became a pre-
text for its occupation. The Tzar's army occupied the entire
northern part of Iran, while the south was invaded by the
British troops. The occupationcn’lran by colonialist powers
and the Court's indifference to the invasion was used by the
national bourgeoisie as a rallying point to organize hundreds
of thousands of oppressed and toiling masses, who had to
starve to death while their foodstuff was being collected for
the troops at gun point. The role played by the national

bourgeoisie during this epoch and against the aggressive

 

(continued from previous page)

value of 2 million, while Russia provided the Shah with a 19
million ruble loan.109 In 1909, the British oil company
"Virus" was granted the concession to extract oil from newly
discovered reserves in the southern city of Masched Sollyman.110
In 1911, on the advice of American President Taft, W. Morgan
Shuster, an American financial expert with close ties to the
Standard Oil company, was dispatched to Iran on assignment to
reorganize public accounts and eliminate annual deficits
through the organization of the tax system.111 In 1913, R.
Bottam wrote, "... the two powers advanced a 400,000 loan,
half of which was to be used for the Swedish-officered
gendarmerie, and the British added another 100,000 for the use
of gendarmerie in the south."112

98

99

armies was a manifestation of its determination to continue
the struggle against foreign imperialists. Throughout the
country pOpular forces went into revolt, not only against
the aggressive armies, but also against the Shah's trOOps
who proved themselves incapable of containing the people's
movement. In the northern province of Gilan popular forces
proclaimed the establishment of the "Socialist Republic of
Gilan" under the leadership of the Jangal movement. In
Khorsan, northeast of Iran, the Pessyan Insurrection shook
the pillars of the Court's rule, while a popular rebellion
was under way in Azarbaijon. The victory of the 1917 reVolu-
tion was a turning point forthe anti-imperialist movement of
the Iranian people. All the colonial agreements were termi-
nated, concessions ended and the Tzar's troops withdrawn from
Iran, thus leaving the British imperialists to swallow the
entire country. The British troops were soon to replace the
Tzar's army in northern Iran.113
With the comprador bourgeoisie already in power and
the feudal lords weakened, the British imperialists saw it
as more advantageous to switch class alliances and side with
this new sector of the bourgeoisie in contrast to their tradi-
tional ally, the feudal lords. The British conceived the now
weakened feudal class as a temporary ally, politically incap-
able of coping with the national bourgeoisie and the popular
movement, and economically unable to respond efficiently to
the fast growing and changing needs of the imperialist world

market. Only a strong and aggressive and at the same time

1OO

reliable and docile force could have ensured the continued
exploitation of Iran's human and natural resources at the
time of extreme instability caused by the outbreak of the
world war and the intenSification of the people's movement.

The time was ripe for the creation of a powerful

central government which claimed it would carry

out social and economic reforms. Feudalism and

its main protagonists, namely the Khans and

the princes, were not able to meet this

historical necessity. The colluding comprador

bourgeoisie, with its economic dependency on

colonialism, was the main instrument of the

reforms.114

If in Europe the transformation of the state from a
feudal state to a bourgeois state was a historic product of
the transition from the feudal mode of production to the
capitalist mode of production, then in Iran, the transforma—
tion of the state from a feudal state to a capitalist state
was itself to be the stepping stone for the transition from
the feudal mode of production to the capitalist mode of pro-
duction. The evolution of the state was not to be the
historic product of a protracted process of growth and
development of capitalism which necessitated a qualitative
change in the political superstructure of the society, but
rather a move for the "imposition" of capitalist relations
of production, through the employment of the state. While
in the classic pattern of capitalist development the develop-
ment of the forces of production preceded the bourgeoisifi—
cation of the state, here the bourgeoisification of the state

preceded the development of the forces of production. Hence,

the state was turned into a vehicle through which capitalist

101

development was to materialize. ifluastate apparatus was
confiscated through a coup by the comprador bourgeoisie and
the metropolitan bourgeoisie and turned into a powerful
capitalist force to enhance the process of surplus appropria-

tion. If in EurOpe the modern state "was purchasedgradually

 

by the owners of the property and by means of taxation ...

through the national debt",115

then in Iran, the "owners of
property", the comprador bourgeoisie, too feeble to gradually

purchase the state, abducted it with the collusion of the

 

metropolitan bourgeoisie, and turned it into an almighty
capitalist force to enhance the process of surplus appropria-
tion.

It was thus Reza Shah, a former illiterate and Cossack
officer, who in 1921, through a military coup, assumed the
state power, donned a revolutionary mask and proclaimed
himself the great social reformer. With the new government
in power three major tasks had to be accomplished: 1) the
liquidation of the widespread national democratic movement
which, influenced by the Bolshevik Revolution, had been
demonstrating increasingly revolutionary tendencies; 2) the
termination of the Qajar rule, and the political feudal
superstructure they had dominated for over a century; and 3)
the construction of a feudal—bourgeois superstructure which,
while allowing the feudal class to retain holdings and
positions in the government, would acknowledge the supremacy
of the comprador bourgeoisie in all political, economic and

administrative procedures.116

102

Thus, the organization and erection of a modern standing
army was on the order oftfiueday, which was not only crucial
to suffocate the monumental waves of anti-colonialist move-
ments spread throughout Iran, but also the sine qua non for
the creation of a bourgeois central government assigned to
introduce and effect bourgeois laws and regulations required
for capital investment and capital's protection. In a short
span of time, the Shah's military build-up became possible as
the war materials eXported from England, France and Germany
flooded Iran,financed by the bulk of Iran's oil revenue.

In 1922 military appropriations accounted for 47

percent of the total budget, and by 1925, a

unified army of 40,000 had come into existence.

In 1926, the first general conscription law was .

introduced; by 1930, the army stood at 8000 men,

rising to 125,000 in 1941. Reza Khan set up two

military schools in Tehran, and sent officers to

France, Germany, and Russia* for training. In

1924, a small air force was established and in

1932 a navy.

With the establishment of such a modern army, Reza Shah was
nowtxainaugurate his reign of terror. It was first Gilan,

the northern province of Iran which witnessed the invasion

of the Shah's troops. After a protracted and heroic resis-
tance, the Jangal movement was contained, as the Shah's forces
indiscriminately massacred men, women and children whose

fighting capacity was no match for that of the Shah's. The

Shah ordered the troops to hang the beloved leaders of the

 

*The training of the Iranian officers by the Soviet
Union was based on a grave misunderstanding and an incorrect
analysis of the nature of the Reza Shah's regime as the
Soviets initially understood to be progressive and anti-
imperialist.

103

movement at the gates of cities throughout Gilan in an act
to instruct the peoole as to their future behavior. With
the heart of the movement strangulated in Gilan, Reza Shah
then turned upon the movements in Khorasan and Azarbaijon and
unleashed an equally merciless assault. A bloody and to the
people's uprising there proved to be inevitable since the
movement lacked sufficient organization and well disciplined
leadership. Having first crushed the revolutionary movements,
Reza Shah was now to march his forces in the southern part
of Iran in an attempt to subdue the locally based, autonomous
tribal leaders. Through mass genocide, destruction of entire
villages, looting and raping, he finally crushed the resis-
tance of tribal leaders, disarmed the tribes, and forced their
submission tothe central government. It was only after the
brutal suppression of all manifestations of resistance that
Reza Shah went on to implement his social and economic pro—
grams. 18

A dependent bourgeoisie whose economic might not rooted
in the widespread development of capitalist relations of pro-
duction, and whose emergence to political power did not
supercede a historic struggle against the feudal class and
feudal relations of production,could not implement a revolu-
tionary economic and social policy aimed at the total destruc-
tion of feudalism in the economic base of the society. Further-
more, such aa dependent bourgeoisie, by the very virture of
its dependent status, is retarded, unable to introduce a

self—centric and self-generating economic policy. Hence, it

104

was doomed to reside within the confines of feudalism,
introducing little more than some alterations in the super-
structure of feudal society and taking measures conducive for
further penetration of foreign capital. As such, leaving
untouched the feudal mode of production (the system of large
scale land holding and sharecropping) Reza Shah's economic
and social agenda was to contain two main items: alteration
of the feudal superstructure and the development of Iran's
economic infrastructure.

Reza Shah began the implementation of his social reform
program by introducing a set of laws deemed important by the
metropolitan bourgeoisie and their local counterparts, who
demanded stable and fixed policies for their commercial and
industrial transactions. The reorganization of the central
government's administration and bureaucracy was followed by
the formulation and enforcement of new laws, most importaat
of all, the codification of the commercial, civil and penal
laws. A new system of taxation (both direct and indirect) was
also adopted as the government deemed it as a vital source of
increased revenue. The power and influence of the church
and clergy also came under the attack of Reza Shah, who con-
ceived them as "conservative" elements which might oppose this
program of reform. Furthermore, he brogght under state con-
trol the property and wealth of the church, thereby enhancing
the state's revenue. Likewise, Reza Shah introduced land
registration, through which the amount of crown land was

119

immensely increased. And the list of reforms goes on ...*

105

New ministries, each in charge of a particular public
affair were formed, as the bureacracy underwent a process of
constant expansion. However, the assigned tasks and specific
duties of many such ministries were either not defined, or
if defined able to be implemented since the society lacked

the technical capacity and with that the needed technicians

 

(Noted from previous page)

*Greatly impressed by the Western-European "way of life"
and objectively impaired from introducing fundamental changes
in Iran's socio-economic formation, he undertook a moderniza-
tion campaign, thinking in vain that his modernization would
lead to the fundamental changes that were themselves products
of the fundamental changes in the socio-economic formations
of Europe.

He unleashed a systematic attack on Islam, blaming the
Islamic traditions and customs as the main cause of Iran's
backwardness.120 Reza Shah abolished the veil, and proclaimed
the "freedom" of Iranian women who were now to dress in
European style clothes. The unfortunate women became the
subject of the Shah's forces' insults as they were attacked
and their veils taken off their heads and bodies. No other
measure could more offend the Iranian women for whom forced
unveiling equalled walking naked in the streets. Likewise,
he ordered men to throw away their turbans and wear European
Style hats and clothing. The ridiculous episodes that the
Iranian people were subjected to with the Shah's "moderniza-
tion program" was grasped by the British businessman, Sir
Edwards, who relayed his experience in Iran in an address
given at Chatham House on October 15, 1935:

In 1928 the Majlis (Iranian'Parliament) voted at the
order of the Shah, that all Persians must wear European
clothes and a special kind of black hat shaped somewhat like
a French officer's "kepi." The Persian custom of wearing
the hat both out of doors and in was retained. On June 6th,
the tenth session of the Majlis was opened by the Shah in
person. When the deputies were ready to receive him, all
wearing, as was their custom, the Pahlavi hat, the Shah
entered the hall and mounted the tribune. To their astonish-
ment, he was bareheaded. He stood for a second surveying
them quizically. Being Persians they were quick to grasp
his meaning: they removed their hats. The Shah gravely
began his speech... That was the end of the Pahlavi hat.

The next day throughout the length and breadth of Persia,
felt hats, straw hats, bowlers, caps, anything that looked
like a hat from Franghistan, was at a premium.

106

to manage the newly built offices. The dependent bourgeoisie
were not only dependent upon the capital, commodities and
technology of the metropolis, but also had to depend upon the
importation of western educated technocrats to run the state
machinery which the bourgeoisie envisaged to be crucial for
its further development. To this end, the Iranian dependent
bourgeoisie began to import experts and technicians along with
the capital and commodities from the metropolis.

...Belgian experts were used to help reform the

customs administration, French experts for legal

and public health reform, an American mission

to reform the financial administration, Swedish

officers to train the army, Italian officers to

train the navy and increasin ly, Germans as

contractors and technicians. 22

The importation of experts (bestowed with all authority
and power to determine the direction of Iran's economic develop-
ment) completed the course of the bourgeoisification of the
state. This new factor, coupled with the institutionalization
and modernization of the state and its military apparatus,
fulfilled the necessary requirements for the new wave of
capital influx. It was then the development of the economic
infrastructure which was required for the expansion of the
"home market", for the exploration of new sources of raw
materials, and for the investment of more capital. As such,
it was the state which, acting on behalf of the local
bourgeoisie and its metropolitan counterparts, undertook the
construction of roads, highways and railroads with Swedish

and German firms. The first project to be undertaken was

the construction of the Trans-Iranian railway. By 1930,

107

6,000 miles of new roads had been built and the Trans-
Iranian railway was approaching completion.* By eliminating
all road taxes enforced by the Qajars the government

removed another barrier to internal transport and trade.124
Whereas before 1924 there were only about 1,000 vehicles in
the country (of which the majority were in the oil company's
concession areas),by 1927 the quantity of vehicles had
expanded fourteen times, now scattered throughout Iran, and -

thus facilitating the commercial and financial transactions

between the metrOpolis and the home market.

The construction of the infrasture not only facilitated
the import of commodities to Iran, but also made possible the
exportcfi’the newly discovered oil reservoirs and the tradi-
tionally export oriented commodities to metropolitan Europe.
(See Table 9). However, with the discovery of large deposits
of oil, the traditionally export oriented commodities began
to lose importance for the metropolitan bourgeoisie who con-
ceived in oil the future life blood of the advanced industrial

world. Oil expansion and drilling took unprecedented

 

*The additional construction that had already taken
place between 1900 and 1920 was based on strategic and
military construction and confined to the needs of the
occupying armies during the First World War. The outbreak
of the war made little difference at first as the Russians,
Turks, and British had few vehicles. But in 1918, the royal
engineers began constructing and repairing main routes in
both the west and the south.cH? the country to enable motorized
traffic, mainly of a military nature, to travel between some
of the major urban areas. After the war, heavy tolls were
charged on these roads, as on the other main roads. Con-
sequently, much of the internal freight was still carried by
pack animals which could avoid such charges.1

108

 

Imports of Cars, Trucks, and 0ther129

Vehicles by Non-Exempt Importers,
1924-1929
(value in million rials, current prices)

Table 7:

 

 

 

 

 

 

 

 

 

 

CARS TRUCKS OTHER VEHICLES
Year Number Value Number Value Number Value
1924 529 n.a. 103 n.a. - -
1925 1,111 n.a. 492 n.a. - -
1926 1,330 10.3 967 12.6 — -
1927 1,112 8.0 977 11.9 - -
1928 1,369 11.1 1,760 23.2 23
1929 1,529 14.1 1,515 19.1 10
Table 8: Imports of Durable Producer Goods With125
an Expected Average Life of More Than
One Year
(in million rials)
Year Value % of Total Imports
1900-27 442 3
1928 96 12
1929’ 161 17
1930 207 25

 

dimensions as oil was increasingly becoming the leading export

item that had to be pillaged in significant proportions.*

109

 

Table 9:

Volume and Value of Total Exports,

1921-1930
(volume in 000 metric tons, value in million rials)

126

 

Year

 

1921
1922
1923
1924
1925
1926
1927
1928
1929

1930

NON-OIL EXPORTS

 

Volume

84
115
147
211
229
152
225
196
201

181

Value

179
174
305
385
485
515
450
663
480

459

OIL EXPORTS

 

Volume

1,928
2,708
2,629
3,614
3,815
4,520
3,965
5,173
5,321

5,407

Value

323
429
383
515
545
654
597
1,038
1,087

1,005

TOTAL EXPORTS

 

Volume

2,012
2,102
2,824
2,776
3,826
4,044
4,672
4,190
5,369

5,522

Value

502
502
734
768
1,000
1,059
1,104
1,060
1,518

 

shipment to the world markets was soon recognized by Reza
Shah as an important source of state revenue that could be

utilized for the development of Iran's economic infrastructure

At the same time,

 

*Foreign currency derived from the export of traditional
goods, even though declining (e.g. carpet), still played the

the extraction of crude oil and its

major role in the export of consumer goods.

110

and the modernization of the military apparatus. The metro-
politan bourgeoisie could never have been more content. Not
only were the raw materials and economic surplus of the
society being siphoned from Iran at bargain prices, but also
the entire foreign currency was being spent on the purchase
of goods and manufactured products of the metropolis for the
construction of roads, railways, highways, bridges, ports,
buildings, hotels, transportation, communication ... and most
important of all, the military machinery. From 1921, the
year Reza Shah ascended to power, until 1930, the state had

spent 2 billion dollars on armaments,129 260 million dollars

on railway construction,130 200 million dollars on government

buildings131..,whilecomparatively little was spent on the
development of Iran's industry (a combined state-private total
expenditure of 200,000 dollars), and investment in agriculture
was virtually nil.132
The unavoidable result of such a lopsided economic
policy was the inadequacy of the domestic economy to produce
the essential consumer goods and intermediary commodities
in demand on the internal market. It then became inevitable
for the dependent bourgeoisie to turn to its metropolitan
patrons in request of the needed goods and supplies including
sugar, tea, woolen and cotton goods, clothing, mineral oil
(benzine and kerosene), metal tools and iron and steel
manufactures.

The dependent bourgeoisie's economic policy, defined as

a) the neglect of agricultural and industrial development;

111

b) the provision of internal demands through the importation
of large quantities of consumer and intermediary goods; and
c) the development of the economic infrastructure with the
influx cfl’ foreign capital, was to continue until the 1930's,
when the Great Depression interrupted the metropole's produc-
tion process, arresting its economic expansion and thereby
preventing the continued export of capital and commodities

to Iran. It then followed that the decline of production

in the metropolis reduced the demand for raw material, and
that in turn curtailed the flow of foreign currency into
Iran's economy. A new process of capitalist deve10pment

was thus forced upon the Iranian bourgeoisie.

CHAPTER 5

THE GREAT DEPRESSION AND ITS
ECONOMIC CONSEQUENCES IN IRAN

The transition from the development of the infrastructure
which corresponds to the demands of foreign capital, to the-
development of Iran's domestic industry, responding to the
demands of the internal market, was characterized by the
increasing rolecrfthe state, whose active intervention in
the economic life of the society was required for the
transition to occur.* To this end, and in an attempt to
prevent the effects of the depression on.tbe ioternal economy,
the state was to take a series of measures to compensate

for the loss of consumer and durable goods from the internal
market as the foreign companies hastily fled Iran.

However, if new investments were to be made, then new
sources of revenue had to be discovered and that in turn
demanded new policy formulations. As such, in an attempt
to increase the state's revenue, 8 regressive income tax

133

law was passed in 1930, entrusting the burden of the

state's expenditure upon the shoulders of the poor, and in

 

*Given the important economic status of the national
bourgeoisie and the state's control over the sources of
national revenue, it was only the state which possessed the
sufficient economic might to redirect the course of capital
investment.

112

113

favor of the bourgeoisie. Another endeavor to line the
state coffers involved renewed negotiations with the Anglo
Iranian Oil Company in 1933 which resulted in increased

134 In still

AIOC payments to the Iranian government.
another attempt to increase the national revenue, Reza Shah
sought to wrest control of 50 percent of the country's
foreign exchange earnings from the British-owned Imperial
Bank and submit them to the regulations of Bank Melli (the
national bank founded in 1927). Not successful in its
initial objective, nevertheless the state gained the monopoly
overtfluenote issue from the Imperial Bank. Between 1933
and 1939, the amount of notes issued by Bank Melli increased
five-fold to nearly 11 million rials. The state encouraged
internal bank development, as evidenced by the establishment
of eighty-four branches of Bank Melli by 1940, as well as
the founding of three new banks - Bank Sepeh, the Agricultural
and Industrial Bank, and the Bank Rahni (Mortgage Bank).135
However, the state's intervention in the economy was
greatest in the realm of foreign trade. The dependent
Iranian bourgeoisie, who, deserted and left helpless by the
metropolitan patron saints, had tousurvive the harshness of
the elements caused by the anarchy of production. As such,
in 1932, the state asserted its monopoly over Iran's foreign
trade in order to "limit the import of certain goods, to
reduce the demand for foreign exchange, to protect new

industries, to encourage and increase proportions of pro-

duction for export, to be able to barter with other countries

114

whose foreign trade was a government monopoly (i.e., mainly
Russia), and to attempt to obtain better terms in world

"136 Consequently, state monopolies were erected

markets.
to control the import of essential consumer goods such as
sugar, tea, and cotton. At the same time, in a conscious
policy to encourage industrial deve10pment and reduce foreign
import dependency, the state exempted capital goods, in-
dustrial machinery and equipment from custom duties. In

this connection, those items not mon0polized by the state
became subjected to import quotas directly related to

export earnings.

With these measures enacted (control over note issue,
increased oil revenues, increased tax income, control over
foreign trade) the state was financially positioned to
undertake enormous industrial development programs. In a
short span of time 64 different state-owned factories,
including eight sugar refineries, rice and flour mills, one
paper factory..., emerged in response to the demands of the
internal market and provided the state with the needed
revenue. Arthur Millspaugh, an American economist who
restructured Iran's tax system in the 1920's, relays that:

The government owned and was operating a tobacco

factory, a glycerine and soap factory ... a cot-

tonseed oil plant, cotton, silk and jute mills,

a sulphuric acid plant, cement plants, an

establishment for impregnating railroad ties,

a limber mill, an iron foundary, a gas mask

factory, munitions factories, an airplane

assembly plant, cotton gins, canning factories,

and plants for cleaning rice and tea. A govern-

ment corporation supervised carpet manufacturing,

handled the commercial side of the industry, and
made progress in the rehabilitation of this

115

ancient craft. Reza Shah ... widened the main

streets of most of the cities, tore down walls,

laid out boulevards, opened vistas. Automobile

and motor trucks multiplied. Commercial truck

and bus services started. Filling stations

appeared. Tehran, half dark at the time of my

Mission with limping electric power and with

houses mostly dependent on kerosene lamps and

candles, burst into li ht at the touch of its

dictatorial Alladin.13

To continue the deve10pment of Iran's infrastructure,
Reza Shah undertook the establishment of a cement factory
to domestically produce this essential ingredient for
construction in order to reducetfiuaimport of cement in
large quantities. In addition, two other heavy industries
~ a steel mill and an iron factory - were under construction
by 1941.138

To facilitate the development of trade between cities
and across the borders, the state also invested large sums
of capital on road and railway construction. By 1938 Iran's
roads were officially stated to total 24,000 kilometers. Only
950 kilometers were asphalted by that date, but the total
length of gravel roads had risen to 12,000 kilometers as
compared to 2,400 at the beginning of Reza Shah's regime.
Even more construction activities were directed at railway
development, in particular the Trans-Iranian Railway. Linking
the Caspian Sea to the Persian Gulf, 1394 kilometers of
railway were completed.139

With the construction of roads and railways, the
expansion of internal trade and commercial relations, and

state protective laws, the development of privately owned

industry was also encouraged and between 1933 and 1940,

116

according to Iran's National Bank Bulletin, the number of
registered companies increased from 93 to 1725, with their
capital surging to the amount of 1,863 million rials from

140 The national bourgeoisie, who pain-

143 million rials.
fully had survived the challenge of foreign capital during
the 1920's, took advantage of the new situation and began
to display its tendency for industrial undertakings. Con-
sumer goods such as woven materials, textiles, matches,
soap, glass, leather, rope, silk fabrics and many others
characterized by small scale and primitive forms of produc-
tion, began to appear on the domestic market. If in the
previous period, the national bourgeoisie was subjected to
severe repercussions when engaged in industrial activities,
now, in the 1930's, it only received encouragement to the
point that, as Edwards notes:

Factories ... have been assisted in some cases

by credits from the National Bank141 and govern-

ment employees and school children had to buy

Iranian, regardless of price or quality.142

The revival of the national bourgeoisie and the state's
increasing investments in industry inevitably generated an
industrial working class whose ranks swelled by 250 percent

between 1930 and 1938.*143

 

*The Iranian industrial working class was composed of
old craftsmen and artisans who had been forced into unemploy-
ment and poverty by the onslaught of foreign capital, and the
city poor, beggers and casual laborers derived from the land-
less peasants who had been forced into the cities. Even
though now employed, the Iranian working class had to labor
hard and long and even their meager wages at times were not
paid to them; MiIISpaugh notes that Reza Shah "used forced
labor on roads and buildings."144 In the midst of capital

117

A final means of the state's advancement of industrial
undertakings was its policy to exert mon0poly control on
export items such as cotton, jute, rice, carpets, and other
products. The British merchant, Edwards, explains the
mechanism by which the export of Iranian commodities was

promoted:

...The balance of trade is, moreover, controlled
by an ingenious system of licences. ...My firm
has exported many thousands of pounds worth of
carpets under this system since its inception
four years ago, and we have found that on the
whole it works pretty well. I will try to explain
it: an exporter of Persian produce, of say
10,000 rials value, receives when the goods cross
the frontier outwards, a certificate which de-
clares that he has exported 10,000 rials worth

of goods. This certificate he sells to the
National Bank and receives a premium of 10
percent of its face value, or 1,000 rials. So
much for the export side of the system; now for
the import side. A merchant who wishes to

import goods must apply tothe National Bank,
which is now in a position to grant a license to
import 10,000 rials worth of foreign manufactures.
For this he has to repay the bank the 1,000 rials
premium which they have paid to the exporter,
plus a further profit which they take themselves.

Edwards then concludes that:

The effect of this system is that exports receive
a subsidy at the expense of imports. The system,

 

(continued from previous page) outlays by both the state and
private investors, barely a garan was spent on the improvement
of the living and working conditions of the Iranian workers.
Israel T. Naamoni observed that "the artisans and weavers

of rugs, the workers in wool, leather and precious metals,
whose workshops and dwellings are combined in the same crowded
dingy quarters" and must slaveflimitless hours" and receive
av"pittance" of an income. '

Any attempt ontlmepart of workers to challenge these
oppressive working conditions was met by the brute force of
Reza Shah's gendarmies. All trade union activity was out-
lawed as was any other attempt by the workers to organize
in order to defend their rights.

118

of course, enables the government to maintain

a fairly constant balance between the totals

of imported and exported goods.”6

The implication of this method to the carpet industry,
entangledznsit was by the world depression, and until recently
under the monopoly control of the European and American firms,
was to sustain an export rate of 40 percent that of the pre-
depression period, which to Edwards was surprisingly good,
considering the sharp decline in the world demand.

The consequent outcome of the state's two-pronged effort
to promote exports of commodity goods while at the same time
restricting imports, was a better balance of payments than
the previous periods, as shown by Table 10.

With a total monopoly over foreign trade, ever increasing

investments in various sectors of the economy and a monopoly
of public resources, the state transformed itself into a
powerful institution assuming a determining role in the direc-
tion of capitalist development in Iran. This facilitated the
growth of a new strata of bureaucrats whose ranks were partially
filled by those sectors of the comprador bourgeoisie most
closely dependent upon foreign trade and thus more vulnerable
to the interruptions of international commerce. The newly
emerged bureaucratic bourgeoisie was empowered to oversee the
expanded economic activities of the state and was thus posi—
tioned to ensure the supremacy of the comprador class, despite
the severe crisis which had temporarily promulgated the
ascendancy of the national bourgeoisie. The bourgeois charac—

ter of this strata is well portrayed by B. Jazani:

119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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120

Why is the administrative and military system

of this period characterized as bourgeois?
Because the elements who were running this

system were devoid of any connections with

the large feudal elements or the Khans and the
Oajar dynasty, and rose from amongst the
petit-bourgeois or bourgeois sections of

society. The new class of bureaucrats ac-
cumulated fabulous wealth by plundering the
public revenues, i.e., taxes and oil revenue,

by confiscating lands from various land-owners,
by sponsoring state and monarchical enterprises,
and by supervising development programmes. It

is thereforerufi:surprising that this bourgeoisie,
like the financial bourgeoisie before it, starts
to scramble for the accumulation of real property
and combines the feature of being a bourgeois
with that of being a land-owner. The Pahlavi
Court and Reza Khan in particular, are clear
examples of these dual tendencies. The reorgani-
zation of the administrative system, the crea-
tion of a new army, the expansion of universal
education, an attempt to "Europeanize" people's
behaviour, a hostile stand towards the clergy,
the setting-up of Chambers of Commerce; the
passing of commercial law; and the creation of
some industries were all measures which explain
the bouregois character of the regime.”8

The state's financial might, backed by unrestrained poli-
tical dominance, left no sector of the economy untouched. In
agriculture, the state, through a land registration law, suc-
ceeded in bringing under its control all church lands. Reza
Shah wielded the power of the state to confiscate vast tracts
of land as the feudalists increasingly lost their independence.
Nevertheless, feudalism, that is the system of share-cropping
and large scale land ownership, continued to be the main form
of agricultural production.

The feudalists had the right to share in the

government through the new political apparatus

such as the Majlis, the administrative and

military systems. This political powercfl’the

feudal lords we? the reflection of their
economic might. 49 -

K.-

121

Israel T. Naamani noted, "some forty families each own(ed)
twenty villages or more."150 In contrast, 60 percent of the
Iranian peasants did not possess a single inch of land, 23
percent owned less than one hectare and only seven percent
could claim ownership of three to seven hectares.

The largest of all landowners became Reza Shah, who
was joined by many other comprador bourgeoisie. However, in
emphasizing industrialization, despite the fact that 80 to -
85 percent of the country's population lived in the rural
areas,151 the state did virtually nothing "in the way of
agricultural development and nothing in the way of reforming
the oppressive and inefficient system of land tenure which
militated against increased agricultural production.152

Arthur Millspaugh, the American financial mentor of the
Shah during the 1920's notes that despite the extensive state
investments in developmental projects during the 1930's,

"not a single major irrigation project (was produced) ...
Famines, caused by crop failures and maldistribution of
grain production, have figured among Persia's most tragic
visitations. No step was taken to cure this malady. Reza
Shah cruelly exploited the peasants who form the mass of the
population.153

As such, conditions of living for the vast majority
of the Iranian peasants steadily declined as they were forced
to produce more foodstuffs, while the burden of the tax pay-

ments which multiplied five times during Reza Shah's rule,

bore down on their bent backs. The peasants' tax payments

122

enhanced state revenue, but the peasants were "constantly

beset by disease, malaria, syphilis, tuberculosis - with

diseases of malnutrition the most common."154
However, inspitecfi’thepeasantry's seemingly desperate

situation, the contradiction betweentfluepeasants and the

feudal lords neither culminated in mass revolt, nor in mass

pauperization and the consequent migration to the cities and

proletarianization. The feudal mode of production largely.

remained intact and still dominant. Its peaceful co-existence

with the developing capitalist modecfl’production was doomed

to be maintained and perpetuated as long as the limited level

of internal production corresponded to the limited capacity

of the home market. The qualitative transfiguration of the

socio-economic formation of the society could only come later

with the enormous expansion of commodity production which

requires an ever—expanding market and that, in turn requires

an ever increasing numbercfl’wage laborers. It is within this

context that the supremacy of the new mode of production assumes

paramount importance. Reza Shah's economic policy and the

general development of capitalist relations of production

during this period were only the first steps in this direc-

tion.

CHAPTER 6

THE 1941 COUP D'ETAT AND THE SUBSEQUENT
POLITICAL AND ECONOMIC CRISIS

Prior to the outbreak of the Second World War, Reza
Shah, who had perceived Germany to be the ascending imperi-'
alist power, and who shared with Hitler many of his fascis-
tic traits, developed extensive political and economic ties,
while the British imperialists,deeply plagued by the Great
Depression, were impaired to block this development. However,
Britain's apparent indifference could not be sustained with
the outbreak of the war. As simple as it was for Britain to
install Reza Shah to power in 1921, it was simple to replace
him. A British sponsored coup d'etat was effected in 1941
which forced Reza Shah to abdicate his crown, go into exile,
and be replaced by his young and inexperienced son, whose
emergence to power was to coincide with the occupation of
Iran by the invading allied forces.155 The occupation of
Iran by foreign troops produced severe strains on the
Iranian economy which had hitherto experienced a decade of
relative growth. The pattern of industrial deve10pment was
interruped as much of the economic activity of the society
was shifted towards responding to the demands of the war,

including the construction of roads, railways and port

installations.*

123

124

A severe shortage in agricultural foodstuffs appeared and

a nearfaminetut both the towns and countryside as the

demand generated by the presence of tens of thousands of
occupying troops far exceeded supply. As such, large

scale immigration of desperate peasants to urban areas as
well as immigration from small to big towns and particularly
to Tehran became the characteristic feature of the period.

At the same time, rampant inflation swept the country because
the heavy expenditures of rails by the foreign trOOps found
no corresponding increase in supplies, and further aggravated
tfimapovertystricken condition Of the populace.157 With the
inflation another blow was struck against the peOple whose
purchasing power fell sharply and in turn contributed to a
decline in production and thus unemployment. Consequently,

it was then inevitable for the masses to not passively

accept this condition, but toresist the source whom they

 

(Noted from previous page)

*The result of the war was to give some impetus to local
production, particularly in the textile industry, but progress
in this direction was however handicapped by the impossibility
of obtaining sufficient supplies of machinery, spare parts
and raw materials. The efforts of the Allies were directed
chiefly towards ensuring that Persia's principal requirements
of commodities such as tea, sugar, cotton piece-goods and
drugs were assured. Also considerable quantities of plant
were exported to the Oil éompany for the extension of its
refineries. Apart from this, imports into Persia were spora—
dic and there was a general shortage of consumer goods which
left the field to local industry as far as it was able tO
supply them. This led to a marked increase in prices and
consequently in the cost of living so that Persia held the
unenviable distinction of being one of the most expensive
countries in the world. With the end of the war, Persia was
in the marketftuipractically every class of consumer goods
and her industries were in dire need Of overhaul and of
replacement parts.156

125

correctly identified as the war and thepmesence of the
occupying armies.

The rage of the people finally crystaflized itself
in the eruption of mass movements throughout Iran which
demanded an abrupt end to foreign occupation. The communist
movement, which was flourishing before Reza Shah, but had
been cut short and was now confused by its own internal
problems, was unable to seize the Opportunity and exert
its leadership on the movement. The stage was thus set for
the national bourgeoise, who, economically regenerated
during the last decade of the Reza Shah's rule, was now in
a position to realize its political aspirations. Hence
emerged the Iranian National Front, a loosely structured
political organization composed Of political parties,
professional groups and dignitaries and with no clear
economic program, as the political representative of
the Iranian national bourgeoise. It soon rallied the sup-
port of the vast sectors of the population who were deter-
mined tO wage a resolute struggle against foreign domina-
tion and the internal reaction. However, incapable of
leadingtfluemass movement in a revolutionary struggle aimed
at structural transformation of the society, the National
Front opted for a reformist strategy. It Confined the
movement within the boundaries of the parliament and parlia-
mentary gains.

The end of the war and the evacuation of allied forces

from Iran in 1942 not only did not resolve the economic

126

crisis, but produced new and greater problems. The Iranian
economy, devastated and deeply in shambles, was not only to
respond to the request of the British metropole, but also to the
whims and wishes oftfmanow powerful U.S. imperialists which

were to challenge the British monopoly over Iranian oil and
assume an active role in Iran's internal market. While
American-based oil monopolies demanded a share of Iranian

Oil, imported consumer goods flooded the Iranian market,

this time labeled "made in U.S.A."158

As a result, the
sagging position of the commercial comprador bourgeoisie was
bolstered as the latter found a strong and powerful ally in
the new metrOpOlitan center, to the detriment of the national
bourgeoisie and the bulk of the Iranian people who were
harshly entangled by unemployment, inflation and starvation.
A new wave of anti-imperialist movement proved itself to be
inevitable.

It was again the national bourgeoisie who became the
forerunner of the anti-imperialist movement of the Iranian
people, which assumed new dimensions particularly when it
was divulged that the Anglo-Iranian Oil Company was realizing
profits approaching.£200 million annually in the late 1940's,
while the Iranian government's share oftflueplunder had only
reached £16 million.159

The National Front, taking advantage of the weakened
status of British imperialism (as the result of the war) and

the unstable condition of the Iranian ruling class, rallied

millions of the Iranian people under the legan of the

nationalization

political power.

loved companion

minister in the

127

of the Oil and finally succeeded in seizing
In 1951, Dr. Mohammad Mossadegh, the be-
of the Iranian people, was elected as prime

first parliamentary election in Iran.

CHAPTER 7

THE ASCENDENCY OF IRAN'S NATIONAL
BOURGEOISIE T0 POWER

Dr. Mossadegh, upon the assumption of political power,
was to inherit an empty treasury. He was to face and
ultimately solve a score of problems, the most spectacular
of all being inflation and unemployment. In an attempt to
increase the state revenue and sever the hands of foreign
imperialists from Iran's natural resources, he initiated his
economic and social program by nationalizing the Oil, a
measure previously introduced and passed in the Majlis in
April 1951. The oil nationalization was not affected, due
to a systematic sabotage campaign caused by the Court-Britain
axis. In response, the British launched an aggressive campaign
against Mossadegh, refusingadl negotiation attempts, calling
on all countries to practice a total boycott of Iranian oil
and disrupting the Iranian economy by a blockade on foreign
trade.* The British continued their efforts to undermine
Mossadegh's government by freezing all Iranian deposits in
British banks; as a consequence, Iran's foreign trade came
to a standstill. In response, Mossadegh ordered the closing

of British consulates in Iran, demanded the liquidation of

 

*In September 1951, the British government requisitioned
a ship's cargo of 3000 tons of rails and 2000 tons of sugar
that was already en route to Iran.160

128

129

Anglo—Iranian institutions and compelled the British Bank of
Iran and the Middle East to withdraw from the country.161
As for the United States' imperialists, Mossadegh
never neglected to expose and condemn their ploy to present

a neutral posture which was based on their lust for rights
to Iran's oil and their misconception of Mossadegh's true
intentions to nationalize Iranian Oil. The American profes-
sor, George Lenczowski said, "the United States became the
target of frequent criticisms in the press and the Majlis.
The United States was blamed for failing to help Iran
financially and for siding with Britain in the Oil dispute.
Moreover, Dr. Mossadegh refused to accept the conditions
attached by Congress to American technical and military aide
under the Mutual Security Program. Only the adoption of
a dubious face-saving formula permitted the State Department
to resume shipments of arms to Iran and to continue the
$24 million Point Four Program." Lenczowski continued by
noting that: "It looked as though Iran were doing the
United States a favor by accepting her aide."162
However, the deceitful face of the United States'
government was to fade away as Mossadegh's nationalization
program materialized. The "neutral" United States joined
the boycott of Iranian oil which was enacted by virtually
every government in the world. The drastic reduction in
Iranian oil was then inevitable. (See table eleven).

With 60% of Iran's foreign exchange evaporated,

Mossadegh went on to launch his new economic policy referred

130

163 which focused on the

to as the "Economy Without Oil",
deve10pment of Iran's indigenous industry and agriculture.
Based on this economic policy, import barriers were erected
on all but capital goods and essential industrial commodities
crucial for deve10ping the production forces. Tariff con-
cessions and favorable discriminatoryexchange rates were
enacted to facilitate the importation of intermediary com-

modities essential to strengthen and enlarge the productive

capacity of national industries such as sugar and textiles.*

 

Table 11: OIL EXPORTS, 1946-1958

 

 

XEEE. Volume lglug
1946 17,928 8,049
1947 17,913 9,993
1948 20,185 17,140
1949 21,507 15,389
1950 31,217 22,184
1951 9,158 6,843
1952 14 12
1953 239 263
1954 3,434 2,008
1955 15,365 9,405
1956 23,051 15,909
1957 31,348 19,298
1958 36,571 22,859

 

*Economic data for 1951-1953 is extremely scarce and

that which is available is largely distorted in an attempt to

discredit Mossadegh.

131

Despite the adverse economic conditions, Mossadegh's
policies instilled an expansionary atmosphere among budding

165 Private investment took place in industry,

industrialists.
transport and housing and statistics for the period indicate
that although planned expenditures decreased by 2/3, produc-
tion levels in these areas remained roughly the same as the
period immediately prior to nationalization. Some sectors
even showed increases. Within this context, it is important
to note that positive equilibrium in the balance of payments
was achieved, this having occurred in only two previous years
since 1900.166
Other than industrial expansion, the Iranian national
bourgeoisie turned its serious attention to agricultural
development, hitherto neglected by the previous ruling
classes. A bourgeoisie that was motivated by the concern to
introduce a progressive program for economic development
(historically, at only one particular juncture can the
bourgeoisie assume such a role) also adopts a progressive
approach to the fundamentals of the Old mode of production
which is understood as backward and reactionary. As such,
unlike other strata of the Iranian bourgeoisie who, when in
power, did their utmost for the acquisition of land, "the
source of all wealth", the national bourgeoisie not only
did not indulge in the accumulation Of more land, but
attacked the very basis of the fuedal mode of production

through the implementation of a land reform program.

A limited land reform was launched, although not based

132

on the immediate distribution Of "land to the tillers" but
rather on a gradual process of modern agricultural technique
introduction including irrigation schemes, agricultural
machinery, chemical fertilizers, pesticides and selected
seeds, and an education of the peasantry on farm management.
Agricultural credit was expanded to encourage compliance, and
landowners were required to return 2 % of their profits to
the producing village, 1/2 to peasant and 1/2 for community-
improvement (i.e., education). Village councils were taken
out of the hands of the landowners and given responsibility
for planning solutions to health, sanitation and irrigation
programs, with the government providing agricultural experts

167 It is important to

to assist and advise the councils.
note that one of the major targets of the land reform was
the Shah himself, who was directed to relinquish all land
illegally confiscated by Reza Shah, to be either returned to
the previous owners or to be redistributed by the government,
an attempt to weaken the status of the feudal class in the
hierarchy of the Iranian society.168
However, Mossadegh's reform program wasrunzlimited to
the sphere Of economics. In the social realm as well, his
progressive ideology was to be reflected. In his 27 months
of premiership, Mossadegh undertook a series of reforms
including the restructuring of the tax system, introduction
of universal suffrage, modification oftfluaelection law and

allowing a broader spectrum of general representatives in

the parliament. Furthermore, he undertook a thorough

133

reorganization of the judiciary by dismissing, first of
all, the supreme court. He also issued new press and security

regulations aimed at the strengthening of the government.*

 

*In July 1952, Mossadegh, frustrated by the constant
intrigues Of British imperialists and its subservants in the
court and Majlis, asked for broader powers including that of
the ministry of war, to fulfill his program of reform. The
Shah refused tn) render Mossadegh further control and Mossadegh
resigned in protest. However the Shah, backed by the army,
was proven to be powerless in confronting the vast majority
of the Iranian people who stood as one behind Mossadegh. For
three days, the streets of Iran were overflowing with con-
scious and determined Iranian people who took their lives in-
to their hands and cried from the depth of their hearts,
"Death or Mossadegh." The Shah was forced to succumb to the
just demands of the masses. Mossadegh was returned to the
premiership and was granted full power by the Majlis. Upon
the assumption of premiership he assumed personal control Of
the Ministry of Defence and within a few weeks effected a
purge in the upper echelons of the army, removed from the
Shah's close entourage a number of "undesirable persons"
forced them to leave the country.16

CHAPTER 8

THE OVERTHROW OF DR. MOSSADEGH AND THE RENEWED DOMINATION OF
THE COMPRADOR BOURGEOISIE AND IMPERIALISM IN IRAN

Mossadegh's social and economic reforms proceeded to
lay the foundations Of a self-generating, self-centered
socio-economic formation, responding to the demands of the
internal market rather than the demands of the capitalist
world market. In that it blocked the channels through which
the economic surplus of the society was siphoned off into
the coffers of the metrOpOlitan bourgeoisie and its allies,
the comprador bourgeoisie and the feudalists, who were nbt
to stand still and mourn their downfall, but to conspire to
the best of their abilities to reassert their political and
economic dominance. Hence, in a conserted and malicious
effort, the British Intelligence and the U.S. C.I.A. coordi-
nated and effected the coup d'etat of August 6, 1953.
Mossadegh fell.

A tremendous wave of terror swept the country. To
mention a few, Mossadegh was the first imprisoned and then
sent tO exile for life. His Foreign Minister, the honorable
Dr. Hossein Fatemi was stabbed, tortured and killed. Shirazi,
a newspaper man, was tortured and burned to death. The Shah
was revengeful. Dozens Of active militants of Tudeh Party

and National Front were tortured and killed. The Tudeh

134

135

Party's underground organization in the army was betrayed.
Dozens Of revolutionary officers were arrested, tortured

and shot. The Tudeh Party's leadership escaped the country,
leaving behind the revolutionary working masses, including
hundreds of its best cadres, in the hands of their

enemy. The most elementary of democratic rights and freedom
of the people were suppressed. Heavy censor fell on the
press and public media. All forms Of organizations were
banned. Yellow unions staffed with police agents were
erected to mark the most class conscious elements of the
working class. Progressive individuals from all walks Of
life were arrested and imprisoned.

Following the suppression oftfimaprogressive and anti-
imperialist movement* the new regime proceded to find a
solution for the oil question. Exactly one year after the
coup d'etat, a new contract was signed, this time between
the National Iranian Oil Company (NIOC) and an international
consortium of major Oil companies which included the

following:

136

Table 12: International Oil Consortium
(Percentage of Control of Iran's Oil Reserves)
COMPANIES OWNERSHIP (in percentage)

British Petroleum Oil Company 40%
(formerly AIOC)

Standard Oil Company of New Jersey 8%

Standard Oil Company of California %

Texas Company (Texaco) 8% U.S. 40%
Firms

Socony-Vaccum Oil Company 8%

(today called Socony-Mobil Oil)

Royal Dutch Shell 14%
(60% Dutch, 40% British)

0’

Compagne Francaise des Petroles 6m

The significance of therunvtreaty was first that Great
Britain's loss of its total monopoly over the Iranian oil was
counter-balanced by a 40% gain by the United States' oil
companies - an indication of the United States' post World
War hegemonic position intimacapitalist world economy, and in
this connection, its increasing influence in Iran vis—a—vis
Great Britain.

Secondly, even though Iran's oil Officially remained
nationalized, in reality the control over production, distri-
bution and pricing of the Oil was left in the hands of the
consortium, while the state's share 10f the pillage was
increased from thirty to fifty percent. As such, foreign
control over Iran's oil necessarily translated into foreign
domination over the cornerstone of thernuvregime's economic

program.

137

With the resolution of the oil question, and the
suppression of the anti-imperialist movement, the reasser-
tion of the comprador bourgeoisie in the economic life of
the society was to occur with the assistance of several
factors which, until 1954, had been either absent, or
negligible in their presence. While oil concessions before
nationalization had afforded Iran only minimal Oil revenues,
now, due to the state's share of the consortium's profits
and an increase in export levels, the revenue accrued from
the oil industry by the Iranian government shop upwards in
the last years of the 1950's to 285 million dollars. Supple-
menting the income from Oil exports, the United States pro-
vided the Shah with almost 1 billion dollars in a series of
grants, and loans from the United States and the World Bank
amounting to $1.2 billion for the same time period.171

As such, the independent course of capitalist develop-
ment initiated by Mossadegh deviated onto a path of dependent
capitalism, corresponding to the demands of the metrOpOlis
(this time under the hegemony of the United States). With
this trend in motion, the national bourgeoisie was also to
descend, as the comprador's role in the dependent structure
assumed paramount importance. Consequently, the renewed
supply Of foreign exchange was not to encourage domestic
production as the post-world war boom of the 1950's necessi-
tated an ever expanded market for the exportation Of American
manufactured goods, which were at the same time the life

blood of the commercial comprador bourgeoisie of dependent

138

sociO-economic formation. TO this end, the state, repre-
senting the Iranian comprador bourgeoisie, announced an
open door economic policy to facilitate the importation
of metropolitan-manufactured, consumer commodities to
Iran. The open door policy funneled hard money out, and
foreign commodities in, which in trun brought a sharp
reversal to the resurgence that the small scale workshop
manufacturers had experienced during the ascendancy and
rule of the national bourgeoisie.

The table below graphically illustrates how quickly

. . . 172
Mossadegh's economic polic1es were reversed.

 

Table 13: Balance of Trade, 1954—1961
» (millions of rials)

 

1333 ' Imports Exports (excluding Oil)
1954-55 7,425 10,288
1955-56 9,125 8,088
1956-57 20,081 7,930
1958-59 33,578 7,941
1960-61 52,657 8,360

 

Furthermore, the state initiated an aggressive campaign
in 1955 to attract foreign capital to Iran. Millions of dollars
of the world market's capital were poured into the country to
be returned many fold in a very short span Of time. The

state founded the Center for the Attraction and Promotion Of

139

Foreign Investment (CAPFI) which was to facilitate this
process. Under CAPFI's supervision, foreign firms which
would enter into joint ventures with Iranian comprador
industrialists were to receive a five year exemption from
taxation, as well as an exemption on the duty Of all
"necessary" imports and "the right to repatriate profits

173 As such,

in the currency in which they first invested."
contracts for infrastructural schemes, such asea11.5 million.
contract for pipeline construction and a £30 million contract
for road construction were received by British firms.

Other "spectacular infrastructure projects" such as
the construction of dams, roads, telecommunication, power
plants ... were also undertaken by the state to further
facilitate foreign capital investment in Iran. One such
extravagance was the development of Tehran Airport at the
expense of 513 million rials. Its cost included the importa-
tion Of all its interior furnishings from Europe "to demon-
strate that Iran had practically attained the standard of
living of the West ... not even Persian rugs could be used.174

In order to promote the deve10pment of industrial
branches, crucial for the production of consumer goods, the
state devalued the rial in 1957, producing $95 million, most
of which was disbursed through an agricultural and industrial
lending program.175 Between 1956 and 1962, 1,575 commencement
permits were issued by the government for manufacturing

construction.

Imports (If machinery for both the textile
industry and all other industries grew

140

rapidly in volume and value; the production
indices of most of Iran's major commodities,
including sugar, cotton and woolen textiles,
cement, cardboard, and vegetable Oil, all
registered continued growth, the number Of
industrial enterprises increased from about
45,000 in 1957 to around 70,000 in 1960;
sales Of industrial fuel oil almost doubled
in the same period while the industrial labor
force expanded by roughly 20%.

Table 14: Domestic Production of Various Commodities, 1947-6O

Sugar Tea Tobacco Matches Cement .
Year (000 tons) (000 tons) (bl. cigarettes) (ml. boxes) (000 tons)

1947 52 5.0 4.2 227 44
1948 35 4.5 ~-— 265 53
1949 27 5.2 5.5 284 56
1950 55 2.8 4.1 308 62
1951 70 3.5 5.0 320 63
1952 71 4.0 5.2 328 42
1953 70 4.0 5.8 380 53
1954 62 6.0 6.7 409 65
1955 76 7.0 6.8 365 132
1956 103 7.9 6.7 318 224
1957 112 6.1 6.1 384 313
1958 134, 8.0 7.2 401 410
1959 146 8.4 7.4 695 579
1960 159 7.3 8.4 487 797

While in 1960, about ninety-eight.factories were either
wholly or partially state-owned, the trend was towards an
increasing dominance of privately-owned industries. Other
trends in industry that could be recognized in the late
1950's and early 1960's were an increased diversification in
manufacturing (while about 300 different products were manu-
factured in 1958, the number had increased to over 450 by

1960).179

Also the growth in industrial assembly plants
(import substitute industries), whose function is to assemble
imported industrial parts, became possible during the 1950's

as the metropolitan economies found it both necessary and

141

Table 15: Employed Workers in Manufacturing Industry,

1956 and 1966 (000 workers)

 

Type of Manufacturing 1956 % 1966 %
Food processing and beverages 84.7 10 140.9 11
Tobacco 5.6 1 4.1 --
Textiles 359.7 44 611.9 48
Footwear, other textiles 125.8 15 163.5 13
Wood and cork furniture and fixtures 57.6 7 74.9 5
Paper and products 1.1 -- 1.9 -—
Printing, publishing 2.8 -- 7.8 --
Leather (excl. footwear) 5.7 1 7.7 --
Rubber products 1.8 -— 3.8 —-
Chemicals and products 11.3 1 12.3 1
Petroleum, coal and other non-

metallic minerals 68.4 8 85.1 7
Basic metal industries 0.3 —- 1.6 --
Metal products 58.8 7 78.6 6
Machinery (non electric) 4.9 -- 0.3 --
Electrical machinery, appliances 2.2 -- 2.9 --
Transport equipment 15.4 2 51.8 4
Miscellaneous 9.7 1 18.9 1
Total 815.7 100 1,267.6 100
Male Workers 538.0 66 759.0 60
Female Workers 278.0 34 509.0 40

profitable to provide the peripheries with basic industries,
further intensifying the diversification process.

The process of capitalist development, as was being
consciously fostered by the state, inevitably found its way
into banking Operations as well. Banking became a profitable
investment arena in the late 1950's and numerous privately
owned banks were founded with either Iranian or Iranian-
foreign capital, giving rise to a financial comprador
bourgeoisie in Iran.

The tremendous expansion of the economy, and the further

penetration of foreign capital and hence its further encroach-

ment in the society, inevitably resulted in the increasing

142

erosion of the national bourgeoisie. Almost totally
incapable to face foreign competition, the national
bourgeoisie was forced into a process of analysis and
polarization. While only a negligible sector (engaged in
economic spheres not yet invaded by foreign capital) re-
tained their position, the bulk of this strata Of bourgeoisie
began to move towards comprador activities and the fabulous
wealth of comprador bourgeoisie. Hundreds of small shop-
keepers became big capitalist import agents; merchants

from the bazaar moved into industrial activities; medium
sized workshops expanded into big industrial factories;

and small pawnshops and userers joined the wave Of modern
banking development. Still a third sector, not swept into
the whirlwind of dependent investment and wealth, was ruth-
lessly pushed out of economic activity. Many of them,
along with the petit-bourgeoisie Of the bazaar, were forced
into the work force, while many others joined the swelling
ranks Oftflueunemployed and poverty stricken, enlarging the
reserve army of labor.

The economic expansion of the 1950's, while immensely
weakening the economic position of the national bourgeoisie,
strengthened and consolidated the economic basis Of the
comprador bourgeoisie who accumulated fabulous amounts of
wealth during this period of expansion. However, reaching
its zenith in 1960, the economy was soon plunged into a
deep recession as the importation and production of commodi-

ties far exceeded the limited capacity of the internal market.

143

The crisis was further intensified with the decline of
Iran's oil income, as the production and export of oil had
continued its market. Coinciding with the sharp oil price
decrease was the exhaustion of the United States' economic
aide plan. With both major sources Of foreign exchange
removed, and with the dependence upon the imports built into
the economy, Iran quickly sunk into near bankruptcy by the
end of 1961, and had the additional burden of 800 million
dollars in private and public debt."180
Surplus production of the dependent industries, as well
as the destruction of independent productive units resulting
from unrestricted competition by foreign made commodities,
forced scores of factories to shut down, idling 113,000

181 Unemployment, high cost of

workers and their families.
living, scarcity of foodstuff and other basic necessities,

all products of the economic crisis of the dependent

 

*Of equal importance as to the source of the 1960 economic
crisis was the "credit inflation" that had been sponsored by
the numerous new banks. Between 1957 and 1961, credit volume
had soared by 500%, with a considerable amount being invested
into non-productive ventures. Amini, the Shah's Prime Minister,
commented in 1961 that, beginning in 1958, the government com-
pounded the problem caused by the bank's liberal credit poli-
cies by providing industry and agriculture with the develop-
ment loans; he further conceded that the productive capacities
of the economy had outstripped the.purchasing power Of the

domestic population. "...Merchants had been enjoying an
abundance Of unplanned bank credits caused by an increase in
the number of private banks - an unnecessary mistake in itself.

Importers accepted commitments in excess of their financial
ability; they over-imported. Goods were stockpiled because
sales did not increase proportionately... A severe shortage
Of currency was then inevitable as loans were unable to be
realized and remained invested in silent factories and huge,
empty office buildings. Other very large quantities of
capital left the country to be stored in foreign banks.‘482

144

capitalist development, made life intolerable for the vast
majority of the Iranian people. Their intolerance was soon
coupled1withtheir fervent anger, and this combination pro-
vided the ground for another confrontation between the peOple
and the comprador state.

The working class was scattered, disorganized and lacking
a militant vanguard. The short historical chapter of the
exhausted national bourgeoisie, diminishing and dissolving
in the face of foreign capital and its political dominance,
had by now been closed. The remnants of the national
bourgeoisie and elements of the petit-bourgeois radicals
took the initiative and became the harbingers of this phase
of the movement too. A loose political organization,
exploiting the prestige and the good memories of the National
front and its charismatic leader, Dr. Mossadegh, was formed,
baptizing itself as the Second National Front. Thousands
upon thousands of the urban pOpulation became organized in
this anti-imperialist front, while demonstrations and rallies
became the daily activity Of the poor and desperate people.
Finally, on June 5, 1963, in a spontaneous episode, hundreds
of thousands of people, professionals, government employees,
but mostly poor and increasingly impoverished workers and
urban toilers, took to the streets of Tehran and the neighboring
towns, sometimes destroying whatever was connected to the
government. The Shah's troops savagely Opened fire on the
unarmed masses Of the people. Fifteen thousand militants

died on this one day.

CHAPTER 9

THE ECONOMIC CRISIS OF 1960-63 AND
THE SHAH'S WHITE REVOLUTION

The economic crisis of 1960-63 jolted the imperialist
comprador axis into the realization of the limitations of
the semi-feudal, semi-capitalist socio-economic formation
of Iran. Each motivated by their own fundamental reasons,
they nevertheless reached a unanimous conclusion: to
transform the semi-feudal, semi-capitalist formation into
a capitalist socio-economic formation.

We should first proceed with the comprador bourgeoisie.
The recession was correctly realized by the compradors as
a reflection of the limited capacity of the internal market.
The compradors, who experienced unprecedented growth and
class unity (i.e., the channelization of a large sector of
the national bourgeoisie into comprador activities negated
the contradictions between the two as the latter was now
almost negated) during the 1950's, recognized that feudalism
had become a fetter on the continued expansion of the
internal market. For the compradors, as long as exportation
and production Of commodities was limited to a small scale,
feudalism also could exist and be accepted. But, if exporta-
tion and production Of the commodities was to assume an

ever larger prOportion, an ever expanding market and an

145

146

ever expanding labor force was the first and foremost
precondition.

Feudalism had not only left the vast and virgin
markets of the villages almost untouched, but also en-
chained a great number Oftfluelabor force to the land and
nature. Hence, the transfiguration of the feudal rural
structure and its articulation into the capitalist market,
as well as the transformation of the agrarian labor to a
seller of labor power became the sine-qua-non for the

further accumulation and realization of capital.*

 

*The character Of the outmoded feudal relations to
obstruct the development of capitalist relations could be
readily seen. In 1960, 66% of the total population remained
in the countryside; the 50,000 villages were constricted to
the level of subsistence, placing little demand on the
market for goods other than sugar, a small amount of cloth
and some elementary household goods (i.e., the utilization
of money was quite low). Moreover, most cultivation
methods continued to be the same as had existed at the turn
Of the century (75% with animal power, 15% with only human
power), and only four percent of all land was being culti-
vated at least partially with the help of agricultural
machinery.183 Lands were depleted by drought and the lack
Of fertilizers which contributed to the slow rate at which
agricultural production was increasing; indeed, it was
unable to keep up with both the growth in population and
the increase in demand, as a result of the economy's
expansion and the consequent increased demand among those
who benefited from such expansion.

In the face of the crisis, the feudalist, rather than
investing in agricultural equipment, irrigation systems and
fertilizers which could have revived the depleted and
drought—destroyed lands and increased production, instead
joined the market for EUOpean and U.S. extravagant luxury
imports, speculated in real estate and hoarded their wealth
in foreign banks. Further, they blocked all efforts by
the comprador bourgeoisie and foreign capitalists to make
capital investments in agricultural and mineral resources.
Once brought into perspective, the comprador forces and
the U.S. could no longer ignore the contradiction which
had always existed between the two modes of production, but
until the late 1950's, had never assumed the dimensions of
a principle contradiction in the Iranian society.

147

Table 16: Indexes of Agricultural Production (AP) and Per
Capita Agricultural Production (PCAP) for Iran
(1952-54 = 100)

 

Leer; 82. 01!:
1935-1939 85 118
1957-1958 117 106
1958-1959 119 108
1959-1960 123 106
1960-1961 118 96

 

As to the metropolitan bourgeoisie, the technological,
economic and political developments of the post World WarII period
(to which we have already alludedimrpart i) had long.
necessitated a structural deveIOpment in the sociO-economic
formations of the peripheries. Feudalism was acceptable
to the metropolitan bourgeoisie as long as the metrOpOle/peri-
phery relationship was confined to the extraction Of raw
materials, the limited importation of consumer goods, and
the exportation of capital. However, the post World War 11
phase of capitalist development had required a more sophi-
sticated form of exploitation.

The ultimate formula of this era of exploita-

tion is capital investmentiJIproduction, and

mining of raw materials. The incorporation

of these materials into concessions (e.g.,

the British consortium's Oil rights in Iran)

and the import Of consumer goods is replaced

by the modern formula of: foreign capital

investment in the form of partnerships with

the public and/or private sector in produc-
tion and mining; the setting up of dependent

148

industries; the transfer of raw materials

and semi-finished goods out of the country
(steel and copper instead of iron ore etc.;
petrochemical and Oil products instead of
crude Oil and natural gas); the import of
consumer goods as well as capital goods

for dependent industries (assembly, montage).
The formula is deveIOped by allocating the
production of simple consumer goods (e.g.,
cement, cloth, processed foodstuffs) to a
dominated country with joint capital: the
production of sophisticated products (e.g.,
aircraft, electronic equipment, heavy machinery
and arms) in the metropolitan country; and
the assembly of intermediate goods in the
dominated country. Thus we have a limited
and controlled system of production with a
limited and controlled market in the dominated
country. This, in fact, is a deveIOped form
of the "single commodity and single customer"
formula and guarantees the economic sub-
servience of a dominated country.

As such, the destruction of the feudal mode Of produc-
tion was placed on the agenda Of the comprador-imperialist
axis as the most urgent task Of the day. As usual, the
state was to be the executor. The Shah's White Revolution,
the core of which being the land reform program, was the
means by which the U.S. imperialists and their comprador
allies in the Iranian state were to bring about the destruc—
tion of feudalism.

However, this was not an easy task for the Shah, as
the par-excellence representative of the state. The Shah
partially owed his crown to the feudalists who persistently
sabotaged the progressive measures of Dr. Mossadegh and
conspired to their utmost to mar his efforts, and who
constituted the main social basis of the coup d'etat. To
unleash an attack Of feudalism was to risk the loss of a

solid base of support. Added to this, British imperialists,

149

whose traditional allies were the feudalists, vehemently
stood against the land reform. For them the land reform not
only meant the elimination Of their allies from the state
structure, but also, and as important, the loss of Britain's
hegemonic economic status, vis-a-vis the new power - that of
the United States. British imperialists well recognized
that further expansion of capitalist relations of produc-
tion in Iran would be to their detriment, since this would be
tantamount to the ever increasing penetration of United
States capital into Iran and the consequent hegemony of

the United States'monopolies. On the other hand, American
imperialists, whose social basis had traditionally resided
in the comprador bourgeoisie, and particularly the sectors
whose development became possible after the 1953 coup d'etat,
perceived feudalism astfluaprime obstacle for their further
and still deeper penetration into the Iranian economy. Even
more, based on their experience in Latin America and relying
on their advancedtemhnology,theprofit seeking U.S. mono-
polies, desperately in need of transferring part of their
industrial production to the perpheries, could not have
incurred the cheap labor and inexpensive land Of the peri-

pheries, sine-qua-nonfkn'lucrative operations. As such,

 

*Fred Halliday's allusion to the American-sponsored
White Revolution is worth mentioning.
"One factor that is systematically underestimated by
most western and official commentaries on this programme is
the international context in which it took place. Politically,
the early 1960's were the ones in which the Kennedy Adminis-
tration was urging its allies in the third world to carry
out necessary reforms in order to stave Off popular unrest -
as we have seen, this is the background to both the White

150

John F. Kennedy, then president Of the United States,
became the standard bearer and'Uueadamentsupporter°of
the land reform program in Iran.

In the beginning the Shah was hesitant and resisted
Kennedy's persuasions, which, as time went by, evolved into
open threats. The United States' Administration threatened
to withdraw a 35 million dollar loan from the already
recession-shocked economy.186 Also, military aid to a
yougg and still vulnerable dictatorship became dependent on
the implementation of the reform program. When in 1960,
the attempted coup Of General Ghorani was discovered, the
Shah realized the gravity of the situation. Not tO be over-
whelmed, the Shah and his close entourage in the Court
attempted to forestall the adoption Of a program through
the sale of much of their own land, mechanizing other
tracts under their control and providing through the state
contracted banks easy credit loans for the purchase of agri-
cultural equipment. This effort was tO little avail, how-
ever, as most feudalists adamantly refused to sell their
lands. Not finding his program impressive, the Shah finally

washed his hands of the feudalists and his British allies

 

(continued from previous page) Revolution in Iran, and the
Alliance for Progress in Latin America. In economic terms,
a noticeable shift occurred from the late 1950's onwards in
the relations between the advanced and less advanced
capitalist countries; whereas up till then the stronger
economies had discouraged industrialization in the third
world, this ceased to be the case for all less developed
countries. A degree of promotion of industry in the less
advanced countries began. This was not true for the third
world as a whole but it was true for a number of countries,
among them Iran.1

151

and changed his power base. Replacing the anti-land reform
hardliners with pro-U.S., anti-feudal Ministers, the Shah

became the main proponent of the land reform.*

 

*In analyzing the present sociO-economic formation in
Iran, some scholars have been unable to sort out the laby—
rinth of reality and dogma. It seems that the analysis of
land reform and its effects are the crux of the matter. The
upshot of their analysis can be summed up as follows.

Feudalism is the governing system in Iran and feudal
relations of production form part of society's infrastruc- .
ture. A fundamental transformation of the society capable
of destroying a system and doing away with the Old infra-
structure can only be achieved in a revOlution. If we
accept that the land reform has succeeded in abolishing
feudalism, then we must also accept that a revolution has
taken place. Andjsince no revolution can come about with-
out a revolutionary force and revolutionary leadership, then
we are inevitably led to believe that the regime in Iran
has a revolutionary character. However, since it is
absolutely clear that the regime does not possess such a
character, than feudalism, with some minor changes, is
still the ruling system, and the semi-feudal, semi-colonial
system of the government is, as previously, dominant.

A penetrating analysis offered by Bihfian Jazani can
only be justly represented through lengthy quotation:

"At the time of the land reform, feudalism in Iran
was not a complete sociO-economic formation. In fact,
since a few decades previously, capitalism had developed and
because of the progress Of various movements and some
general changes, the two systems began to co-exist not only
in the infrastructure, but also when the bourgeoisie
(whether before its division or subsequently in its compra-
dor form and also during its short-lived nationalist phase)
had acquired an increasing share in the government. The
feudal-comprador system was the result Of the growth of a
bourgeoisie under imperialist domination. The bourgeoisie‘s
target during the Constitutional Revolution was the super-
structure of feudalism. After the division Of the bour-
geoisie, during Reza Khan's rule, the comprador section
of the bourgeoisie acquired an important share in government
and achieved an unprecedented growth and position after
the 1953 coup d'etat. However, the domination of imperalism,
with its share in government, must be added to this...
despite their initial disagreements on the advisability Of
the land reform, the imperialists consented to it. Hence
feudalism could not have been a complete formation, alone
in charge of both super- and infra—structures. Neither was

152

In 1962, the land reform was initiated under the
umbrella of the so-called White Revolution. Although the
land reform was its primary component, it also included
nationalization of forests and pastures, reform Of the
electoral‘law to include women, establishment of literacy
corps, establishment Of health corps, public sale of state
owned factories, nationalization of waterways, anteducation
and administrative "revolution," establishment of rural

corps of justice,... Despite the tremendous publicity and

 

(continued from previous page)

the comprador bourgeoisie an oppressed class lying
in wait to attack feudalism from below. A revolution
does not only replace one system with another, but during
it the oppressed class or strata of a society achieves
political power. In the case of Iran neither has a system
been replaced by another nor have the "oppressed" achieved
power. The contradiction between the comprador bourgeoisie
supported by imperialism on the one hand and feudalism
(which had lost such a support) was peacefully resolved
because the comprador bourgeoisie and its benefactors
controlled a substantial part of the government. When the
dominating section of the comprador bourgeoisie, together
with British imperialism, consented to the demise of feu-
dalism, the whole of the comprador bourgeoisie retrieved
its unity and the peaceful abolition of feudalism was
carried out in three stages. Is it not also the case that
in a peOple's democracy where the proletariat holding an
important share of power, behaves in likewise manner to
end the dual nature of the existing system?... It may be
said, Ah, but here a revolutionary class holds power!
Yes, this is true, but then the end result Of this peaceful
contradiction is the establishment of socialism, where-
as the end result of domination by the comprador bourgeoisie
is a new system of colonialism with a continuing policy
of people's exploitation. What do these two cases have
in common? The contradictions in both cases are peace-
fully resolved because the growing aspects of these contra-
dictions have achieved political rule: in a people's
democracy this rule and superiority is achieved by the
proletariat in the course of a people's democratic
revolution, and in our country the comprador bourgeoisie
supported by imperialism achieves superiority over the
feudalists in stages." 88

153

propaganda regarding the White Revolution, only a few of
the programs--nationalization of forest and pasture,
nationalization of waterways, establishment of literacy
corps, and land reform-—did more than exist on paper.
However, the land reform program formed the basis of the
White Revolution. 'The land reform was designed to be
implemented in three stages and over a time period of a
decade. Its gradual character was based upon a least

two considerations: 1) that there existed virtually no
stirrings of protest within the peasant population, which,
had it existed, would have forced the imperialist-comprador
axis to hasten the reform in order to circumvent an open
revolt; and 2) the procedure be accomplished within the
context of channeling the feudal lords into comprador
activities, thereby remaining within the owning and ruling
circles and removing the motivation for a violent resisé
tance. Measures such as the public sale Of state owned

factories were attempts in this direction.

CHAPTER TEN

THE LAND REFORM PROGRAM:
A VEHICLE FOR DEPENDENT CAPITALIST DEPENDENCY

In 1962, the entire 50,000 villages spread thrOUgh-
out Iran, were characterized by a feudal mode Of produc-
tion which involved three kinds of property: private
ownership, mosque ownership, and state ownership. Along-
side these feudal holdings there was a small amount of
land owned by petty landlords as well as mechanized farm-

185 AS to

ing lands (involving bourgeoisie ownership.)
the patterns of ownership, and with that the class

character of the Iranian villages, there exists a hetero-
genous category of information and various analyses. How—

ever, the most accurate picture, it seems, is one presented

by the authors of Land Reform in Iran.

 

The first of the three owned the greatest number
of villages. For example, there were fuedalists
who owned more than 300 villages each. The
Farmanfarma family owned land twice the size of
Belgium; lands owned by the Batmanghilje family
were as big as Switzerland; and I89 Shah's family
owned more than 2,000 villages."

The Fedayees continue their discussion by outlining
the general pattern of landownership as it existed in

rural Iran:190

154

155

1) Big landlords, those with more than five
villages each, owned a total of 19,000 villages in Iran
(38% of the total). This category contained 37 families.

11) Medium size landlords, those with between one and
five villages, owned a total Of 7,000 villages (14% of the
total).

III) Cherch land (holy shrines and their administra-
tors), owned a total of 6,000 endowed villages (l % of
the total). The holy shrine of Razari* holds 400 villages
under its name.

IV) The state itself was in possession of over 3,000
villages (6% of the total). Generally known as crown
lands, they have been gradually sold off since 1931.

V) Petty landlords, consisting of small farmer,
landlord and absentee landlords owned some 15,000 villages,
(3 % of the total). In the absence of any government
statistics as to the proportion of farmer landlords, no
further detail can be provided on this question. However,
statistics indicate that only % of 1.9 families owned
over three hectares of land (an average of seven hectares
being the minimum needed for subsistence).

If there are, on the class structure and the under-
lying relations Of production, sharp differences amongst
scholars and researchers, then there is almost unanimity

of the analysis on the prevailing mode of production of

 

*A pilgrimage city in Mashad, a city in the north-
eastern province of Khoransan.

156

the agrarian Iran, that is, the prevalent system of share

cropping. While the peasants working on the lands Of the

feudal lords were to surrender a share of the crop to

the landlords, in the state owned farms or the church farms,

the administrators or the feudal middle men who would rent

the land from the mosques or the state and at very low

rates, were directly commanded to receive the share of

feudal lands from the peasants. The peasants'payments

were usually in kind and it was on the cash crop cultivated

to lands that extensive money transactions were in Operation.
Alongside the share croppers there were the Nassegh-

holders; they were farmers who rented a tract of land

from a landowner for a certain period Of time, and paid the

landowners a portion of the crops. In addition to the

Nassegh-holders, there were the farm owners, who composed

a very small percentage of the peasant population (130,000

families).l9l

Their holdings were so small and unproduc-
tive that to sustain themselves and their families they
had to work on the land of others. All other members of
the village who were neither Nassegthholders, nor farm
owners, (a total of 1.9 million families) as such deprived
of a stable relationship with the land, were known as
Khosh-Nashin. Not owning any land, they were the casual
laborers of the village, with no right to a share of the
harvest. Khosh-Nashins included village shOpkeepers,
clergy, shepherds, etc. However, the majority of the
Khosh-Nashins, (a total number of 1.3 million) comprised

the most destitute of all the rural population.192

157

Rural wage laborers working on mechanized farms con-
stituted the absolute minority in agrarian Iran as they
contributed only 4% of the total volume of production. In
general, tractors, water pumps and other farm machines
seldom appeared onthefeudalestates whose prime concern
was the collection of dues and share of the harvest, with
no interest in the improvement Of agricultural production.
Consequently, production lagged behind the level of con-

sumption at a rate much slower than the population growth.

Table 17: Rural Population Sectors, 1960

 

 

SECTOR OF # OF # OF VILLAGES % OF ALL193
POPULATION FAMILIES OWNEO: VILLAGES
Big Landlords 37 19,000 38

Medium-sized
Landlords n/a 7,000 14

Petit Landlords
(small farmer land—
lords and absentee

landlords) 1.9 million 15,000 30
Religious

Institutions n/a 6,000 12
State n/a 3,000 6

Nasagh (holders,
small farm owners) 1.9 million 0 O

Khosh-Nashin
(landless settlers) 1.3 million 0 O

 

158

This gives a general picture of the mode of produc-
tion and the underlying relations of production of agrarian
Iran before 1962. Nineteen hundred sixty-two marked the
year that the Shah announced his reform program, which was
to be implemented in three phases. Phase I began in 1962
with three major provisions:

1) Ownership was limited to one village, or to six
dang (parts) of different villages. Exempted were orchards,
tea plantations, groves, and land cultivated with the use
of machinery and wage labor.

2) Landlords were to sell their land to the state
which would reimburse them over a fifteen year period;
in turn, the state would offer the land for sale at a 10%
profit to the peasantry on the basis of Offering it first
to those who already farmed the land, and secondly to the
Nasagh-holders, but only in rare instances to the Khosh—
Nashins.

3) All those who received land had to join state-
operated farm cooperative societies.

We should now proceed with an examination of these
three provisions in practice. Provisions one and two
clearly concede the land only to the peasants who worked
on the feudal's land either as share croppers or tenants.
Provision one further directs that land under mechanized
cultivation and tilled by wage laborers is exempted from
redistribution. If the Shah-Kennedy land reform program

was not to remedy any of the numerous ailments of the

159

peasantry, and was only to develop the capitalist mode

of production in the countryside, then it is crystal clear
that the wage laborers, these previous ingredients of
capitalist production, had to be exempted for life from
land ownership. Furthermore, provisions one and two
discreetly accede that not only could the landlords retain
their ownership of land (however to a limited degree), but
also that their land would be purchased by the state and

in turn compensated. Again, if a revolutionary transfigur-
ation Of the system and the "transformation Of the peasant

"194 on the one hand

from semi-villains into freeholders
and the revolutionary curtailment of the feudal lord's
powerCNIthe other hand, is not on the order of the day,
then it is quite apparent that expropriation without com-
pensation of feudal's land and the distribution of "land

to the tillers" make the ideal of "revolutionary
transition" a sham. In fact, numerous "escape" clauses
written into the land reform laws and regulations permited
the land owners to retain large holdings of land. Con-
sequently, vast lands including the extensive holdings of
the princes, princesses, higher echelons of the bureaucracy
and the Shah's Court were not distributed and thus a
considerable segment of the bureaucracy remained landless.
In any event, following the initiation of the reforms,

many landlords selected their most fertile lands, erected

walls around the plots, redirected their water supply to

160

these areas and began to cultivate orchards.* Others
Obtained a tractor or dug an artisan well and, on paper
paid their peasants a wage (while in fact continuing the
crop sharing agreement), in order that a bribed government
official would classify their holdings as mechanized
farms. Still a third possible advantage of an escape
clause is nicely woven in the official definition of a
land owner: "a person of any age or having any status."
It was not surprising to find many children at the ages

of two, four, six, ten, or twelve as landlords because

the feudalists registered vast tracts of land under their
wives' and childrens' names. Finally, the definition of a
'village' was quite vague and easily manipulated by many
big landlords. Six dang composed one complete village
known as a shish-dang and many landlords would register

a number Of villages within the same geographical area

as a single shish-dang.

There were other "deficiencies" in the first phase
as well. One source estimates that perhaps as many as
60-70 percent of those who received land obtained a plot
which was too small to sustain a family. In addition,
very little fertile land or land with an adequate water
supply was among that distributed. However, such short-
comings Of the reform program should not suggest that the

reform was a total failure, since from the very outset,

 

*The extent of this method of land reform evasion may
be indicated by government statistics which show Iranian
apple and pistachio nut production to have increased by
600% between 1960 and 1968.195

161

the Objective of the program was not any genuine distri-
bution of the land to the landless. Indeed a measure of its
success should be found in the degree to which its unstated
Objectives were achieved, that is, the expropriation of

the peasants from the means of production and subsistence,
their subsequent gradual pauperization and their mass im-
migration tO the cities.

First, the terms of the re-distribution, based upon
the peasants' purchase of land from the government, forced
most of the peasants to borrow cash from village shop
keepers and money lenders, often at high interest rates.
Beyond the fifteen years of payments, the peasantry were
also confronted with the problem of attaining items such as
seed, water or oxen, traditionally supplied by the land-
owner, but whole procurement was now economically diffi-
cult end led to still more indebtedness. Hence, expanded
monetary relations were inserted into the rural economy.

Secondly, while the state-sponsored farm cooperative
societies were primarily money lending institutions,
they also functioned as an important marketing mechanism
for their area's harvest. Moreover, it was through
such societies that new farming techniques, such as the
use of fertilizers and new implements, were introduced.
However, the most important of all among the various
responsibilities of the cooperative societies was their
role to provide the villages with manufactured and consumer

products (such as laundry soap and vegetable oil which had

162

never before found a market in the countryside), thus
transferring the societies from simple money-lending
institutions to an important vehicle for the penetration of
manufactured and consumer goods into the realm of the
Iranian villages.

Thirdly, the poor quality Of land distributed
to the peasants brought about the increasing indebtedness
of the villagersvflui unable to keep up with the payments,
finally relinquished the land and drifted towards the urban
areas in search of employment. Many Khosh-Nashins were
also forced to the urban areas as newly erected orchards
and mechanized farms, which required little labor but at
harvest time, eliminated their occupational Opportunities
in the rural areas.

Hence, in a classic case of bourgeois land reform,
only two generations had to pass for the inevitable
result of "progressive degeneration of agriculture,
progressive indebtness of the agriculturist... their en-
slavement and pauperization'zlg6 In Iran, a few years were
too many for the peasants to painfully experience "pro-
gressive indebtness" (the payment on the mortgage of their
small landholding was enough to keep them in debt for years)
and the deteriorization of agriculture which forcefully

drove them from their land and into the cities.*

 

*The pOpulation of urban areas increased from 39%
in 1966 to 47% in 1976 and in 1976, 15.7 million out of
the total 33.6 million Iranian people were residing in
the cities.

163

Therefore, without a serious threat to the economic
base of the feudalists, the implementation Of the first
phase of the land reform program and the consequent
penetration of capital resulted in an alteration of the
social makeup Of the Iranian villages:

- small farm holders: the rank of the small farm
holders swelled as a large number Of peasants joined this
section. This section is itself subdivided into three
sections of poor, medium size and well to do families;

- poor-farm holders: for these, the land is not
sufficient to support them and their families, therefore
they work for others on the land of the well to do farm
holders;

- medium size peasants: for them, land is sufficient,
and some even employ the Khosh-Nashin peasants alongside the
system of family production.

- well to do farm holders: those who do not work
on the land, but rather hire the labor power Of the Khosh-
Nashin wage laborers and confine themselves to the
management Of their own farms.

As of 1972, less than 30 percent of all Iranian
villages had been effected by the phase of the land reform
and only 10 percent had been entirely redistributed
(that is, in many villages, only one or two of the six
dang had been divided among those who farmed it). Govern—
ment statistics claim that 690,466 families or less than

20 percent of the rural population received land through

164

the implenentation Of this phase.

To cover the land which had not been affected by the
first stage, the second stage Of the land reform program
was commenced in 1964. Phase II provided the feudal lords
with five Options, allowing them to preserve their land
ownership while complying with the land reform.

1. to rent land to the peasants on 30 year leases
(80.8 percent)

2. to sell the land to the peasants at a mutually
agreed upon price (3.67 percent)

3. to divide the land in proportion to the prevail-
ing crop sharing distribution of the:hervest (10.4 percent)

4. to set up joint stock companies in which landlord
and peasants were to be shareholders (5.35 percent)

5. to purchase the land from the peasants (8.6 percent)

As can be seen by the above percentages, the over-
whelming tendency among the landlords was to rent their
lands on long term leases, setting the rented fees well
above the value of the crops that would be harvested and
thus forcing their tenants into debt and bankruptcy.

Therefore whilst the second phase affected

more peasant families than the first phase

(1,600,000 as compared with 700,000) far

fewer peasants actually acquired lend:

57,164 families purchased their land under

phase II as Opposed to the1390,000 who had

received It under phase I.

Begun in 1968, phase III of the land reform was

initiated to convert the tenant arrangements of phase II

to provide ownership. As a result, approximately 740,000

165

families received land under phase III, while 529,000 poor
peasants who could not remit the debts and loans lost their
land, gave up land ownership and jointed their natural allies,
the urban wage laborers.

While sometfl’the land losses in phase III emanated from
the progressive indebtness oftfluapeasants and their deterior-
ating. living conditions, also experienced in phases I and II,
a more comprehensive explanation lies with two new phenomena,
emerging at the end of the 1960's, i.e., the state owned
farm corporations and the encrouchmentrfl’jointly owned
foreign-Iranian agribusiness, with both purchasing thousands
of acres of land (and the subsequent displacement of the
thousands of peasants). The agribusiness furthered the
process of capitalization by eradicating "small villages in
favor of larger, more easily controlled settlements'5200 and
through the implementation of capital intensive family
methods.

Beginning their Operation in 1967, the farm corporation
had proclaimed six Objectives:201

1. to mechanize and expand the scale of operations;

2. to increase per capita income of the share holders;

3. to acquaint share holders with modern methods of
agriculture.

4. to lower the man-land ratio and compensate for the
displacement Of labor by regional planning of resources
between agriculture and industry;

5. to end the fragmentation of holdings, especially

by the process of division after death;

166

6. to extend the cultivated area to previously barren
and unused lands.

Three other unstated Objectives were to eliminate the
stagnation in agricultural production which the first two
phases had failed to alter, to encourage the mechanization

of agricultural production which was.increasing-only

at a very slow pace, and to enable the state to gain economic
and social control over Iran's rural areas.

Membership in a farm corporation was exclusive to land
owners and at the same time mandatory. A village or region's
incorporation was determined by a majority vote of all land
owners in that area, the Khosh-Nashins and other landless
laborers, deprived of the right to express their views, were
forced to abide by the decision. While the members Of these
corporations did not nominally remain the owners of their
lands, in fact. theyincreasingly lost their grip over the
land since the corporation was given permanent "use right"
of it. The owners in return, become share holders and
received dividends in proportion to the amount Of land
granted to the corporations, as well as a wage if the family
had become an employee of the corporation. Thus, those
members who became land owners during the land reform and
who were continuing to pay installments on their purchases
in such a manner, were soon robbed from the distributed land,
while those renting land on the basis Of phase II found their
agreements void and declared no longer applicable. This

group was excluded from corporation membership.

167

State appointed managers, administrators of these
corporations* with decision making power, had under their
control plot size, job assignments, the farms' annual
budget, planting techniques, etc. Cultivation for the
most part, had become mechanized,** and with the exception
of critical times (such as harvest time) little employment
was available for the Khosh-Nashins, thus almost eliminating
their means of a rural existence.

Complimenting the farm corporations was the increasingly
steady flow of agricultural joint-venture investments into
Iran's countryside. Although initiated in the 1950's, the
expansion of such agribusinesses did not begin in earnest
until the 1960's when the State actively became involved in
creating the necessary conditions to attract foreign and
internal capital. Following the completion of the mutli-
million dollar Dez Dam and its extensive irrigation systems,
(both financed by the state with the financial assistance
of the World Bank), the state proceeded to "purchase"
250,000 acres around the dam, forcibly removing much of the
population from the 58 villages within the area, and made
available the entire facility to private investors.

The thrust of the subsequent investments was to

 

*By 1970 there were 19 farm corporations, with a total
sum of 8.2 million dollars of the state investments.2

**According to government sources, "By October, 1970,
there were over 200 tractors and hundreds of sprayers,
scores of combines and other farm machinery, as well as
20 vans Operating on the farms.

168

establish large-scale, capital intensive farming in the
country, which necessarily eliminated employment for

many of the former peasants and created wage laborers

among many others who were 'resettled' in government-

built shanty towns near the huge farms. By 1971, 15,000
persons had been contracted from a total of 40,000 persons.
By 1970, even though the land reform had not reached its
conclusion, the alteration of the socio-economic structure
Of the society to accommodate the dominance of the capitalist
mode Of production had already taken place and was now in
the process of entrenchment. Whereas only a decade earlier,
feudalism had reigned supreme, in 1970, only remnants of
this mode of production could be found. As the feudal
structure of the agrarian Iran underwent phenomenal changes,
the internal market expanded to vast dimensions, trans-
forming 'the em-feudal domain into a capitalist mode of
production and exchange, and this in turn facilitated the
ever-increasing penetrationtifdependent bourgeoisie's
capital and commodities into the most remote areas of the
country. As monetary relations superseded payments in

kind, agricultural production became subservient to the
demands Of the urban market. Mechanized farms increased
production levels and decreased employment, thousands upon
thousands of expropriated peasants relinquished their tradi-
tional occupations and immigrated to the urban centers to
offer their labor power for meager wages, which in turn

further expanded the internal market for the exportation

169

and production of more commodities. With this, the Shah-
Kennedy Revolution achieved its objective, and a new phase
in the relationship between the metropolis and periphery

was inaugurated.

CHAPTER 11

CONCLUSION

With the deterioration of feudalism in Europe and
the emergence of capitalism, a new chapter in the relation-
ship between economically backward and economically developed
countries of the world commenced. Even though this relation-
ship has gone through different phases corresponding to the
different levels of development of the means of production
in the metropolis, the distinguishing feature Of all the
phases, which is at the same time the distinguishing
feature of this very relationship, has been the subordina-
tion and subjugation Of the most backward countries to the
most developed countries. Surplus value and economic surplus
has been drained from the indigenous economies of the back-
ward countries and transferred to the most developed coun-
tires, giving rise to two complementary phenomena. The
unceasing development of the means of production in the
dominating countries, and a general increase in the people's
standard of living in these countries, finds its complementary
phenomenon in the colony: the abstraction of the development
of the means of production, and the progressive deteriora-
tion of the people's living conditions. A corollary to the
advanced stage of capitalist development in the dominating

countries has been a superimposed, and supervised economic

170

171

development of the dominated countries, characterized by
production geared toward demands of the metropolis; the
subsequent dependence of the dominated countries on the
dominating countries is the reduction of their status to
that of satellite states of the metropolis.

The development of the means of production in the
form of the establishment (if the giant industrial concerns,
technological advances and automation have facilitated
colossal capital investment in the satellite and that in
turn contributed to the further development of dependent
capitalism in the satellites. Capital investment and the
metropole's concentration on production of complex and 1
advanced goods paved the way for theproduction Of primary
and simple commodities (technologically speaking) in the
peripheries and by the dependent bourgeoisie of the peri-
pheral countries. The new international division of labor
has made possible the production of petrochemical products,
cement,...important parts of assembly industries (pre-
viously forbidden to produce) in the peripheries, while
the metropolis has become engaged in the production of
complex items such as producers' goods: computers, elec-
tronic equipment, aircraft and any other item whose produc-
tion requires advanced industrial know-how and skilled
industrial labor. Therefore "the economic and industrial
phenomena in the metrOpOlis find their complementary
phenomena in the colony and conversely the phenomena in

204

the latter find their answers in the metropolis. The

172

development of dependent capitalist socio-economic forma-
tions in the peripheries becomes inevitable when popular

and enit-imperialist revolutions under the leadership of

the working and oppressed masses do not occur.

In Iran, the suppression of the anti-imperialist
movement in 1953, and the reassertion of foreign domination
facilitated the rapid development Of the comprador bourgeoisie.
The final stage of this growth culminated in the polarization
Of the national bourgeoisie and the channelization of the
bulk: of this sector Of the Iranian bourgeoisie toward
comprador activities on the one hand, and the disappearance
of the dominant feudal mode of production, itself a catalyst
for the orientation of feudalists toward comprador under—
takings and the subsequent establishment Of the dependent
capitalist socio-economic formation, on the other hand. Thus,
with the total dominance of capitalist mode of production
in Iran, and the disolution of the national bourgeoisie,
the historic chapter of independent capitalist development
has come to a close.

A new, progressive and liberating socio-economic
formation, uncompromisingly committing itself to the termina-
tion of all forms of domination, exploitation and human
degradation, assuring a luminous era of human development,

is, undeniably, on the order of history.

FOOTNOTES

1. Marx, K., Capital, Volume 1, page 751.
2. Ibid., page 716.

3. Gennovese, E. D., The Political Economy of

Slavery, page 118.
4. Marx, K., Capital, Volume 1, page 752.

5. Ibid., page 752.
6. Ibid., page 752.
7. Ibid-, pages 752-753.
8. Ibid., page 754.
9. Ibid., page 760.
10. Marx, K., and Engels, F., On Colonialism,

page 286. _Quoted from a letter written by Marx to Engels
on October 8, 1858, from London.

 

11. Ibid., page 286.

12. Ibid., page 291. Quoted from a letter written
by Marx to Engels on November 30, 1867, from London.

13. Ibid., page 282. Quoted from a letter written
to Marx by Engels on May 23, 1856, from Manchester.

14. Ibid., page 291. Quoted from a letter written
to Engels by Marx on November 30, 1867, from London.

15. Ibid., page 291.

16. Ibid., page 299. Quoted from a letter written to
S. Meyer and A. Bogt on April 9, 1870, from London.

17. Engels, F., "Commercial Crisis in England,"
(The Chertist movement in Ireland), in Marx K., and
Engels, F., Ireland and the Irish Question, page 44.

 

18. Marx, K., and Engels, F., On Colonialism,
page 291. Letter_from Marx to Engels, London, November 30,
1867.

173

174
19. Ibidu, page 285. Letter from Engels to Marx,
Manchester, May 23, 1856.

20. Ibid., page 285. Letter from Engels to Marx,
Manchester, May 23, 1856.

21. Marx, K., and Engels, F., The First Indian War
of Independence. 1857-1859, pages 26-27.

 

 

22. Ibid., page 16.
23. Ibid., page 14.
24. Ibid., page 14.
25. Ibid., page 18.

26. These points are well established by Marx in

Capital.

27. Lenin, V.I., Imperialism, the Highest Stage of
Capitalism, in Selected Works in One Volume, page 212.

 

 

28. Ibid., page 213.
29. Ibid., page 214. “
30. Ibid., page 214.
The distribution of capital invested abroad is

shown by Lenin in the following table.

Distribution (Approximate) of Foreign Capital
in Different Parts Of the Globe (Circa 1910)

 

Great Britain France Germany Total
Europe 4 23 18 45
America 37 4 10 51
Asia, Africa and . 29 8 7 44

Australia

(note that French capital exports were mainly invested in
Russia, the most backward country of Europe)

31. Ibid., page 301. Lenin quotes the Annals of the
American Academy of Political and Social Science, Vol. LIX,
May 1915.

32. Ibid., page 216.

33. Ibid., page 223.

34. Ibid., page 223.

35. Ibid., page 224.

36. Ibid., page 224.

175

37. Movement of the Revolutionary Left (MIR)
[in Chile], "The International Politics of the MIR,"
section 5, page 31.

38. Cardoso, F. H., "Dependency and Development in
Latin America," in New Left Review, July-August, 1972,
page 81.

 

39. Gunder, Frank, A., "The Development Of Under-
development," in R. I. Rhodes, Imperialism and Under-
development, page 5.

 

40. Ibid., page 4.
41. Ibid., page 5.
42. Ibid., page 8.

43. Gunder, Frank, A., Capitalism and Underdevelopment
in Latin America, page 9.

 

 

44. Ibid., page 11.
45. Ibid., page 10.
46. Marx, K., Capital, Volume 1, page 170.

47. Brenner, R., "The Origin of Capitalist Develop-
ment," In New Left Review, July-August, 1977, pages 82, 83.

 

48. Laclau, E., Politics and Ideology in Marxist

Theory, page 26.
49. Ibid., page 30.

50. Arghiri, E., Uneqflal Exchange, page 307.

51. Brenner, R., "The Origins of Capitalist Develop-
ment," in ~New Left Review, July-August, 1972, page 85.

52. Lenin, V.I., Imperialism, the Highest Stage of
Capitalism, in Selected Works in One Volume, page 218.

 

 

53. Gunder, Frank, A.,"The Development of Underdevel-
opmentfi'in R. I. Rhodes, Imperialism and Underdevelopment,
page 29.

54. Marx, K., and Engels, F., On Colonialism, page
298. Letter from Engels to Marx, January 19, 1870, page
298.

 

55. Mandel, E., Marxist Economic Theory in Two
Volumes, Volume 2, page 464.

176

56. Ibid., page 464.

57. Jazani, 8., The Socio-Economic Analysis of a
Dependent Capitalist State, page 7.

 

 

58. Cardoso, F., "Dependency and Development in
Latin America," in New Left Review, July-August, page 83.

 

59. Ibid., page 84.

60. Amin, S., Accumulation on the World Scale, 2
Volumes, Volume 1, page 89.

 

61. Jazani, 8., The Socio—Economic Analysis Of a
Dependent Capitalist State, page 7.

 

 

62. Marx, K-, and Engles, F., On Colonialism,
page 296. Letter from Marx to Engels.

 

63. Issawi, C., The Economic History of Iran,
1800-1914, page 78.

 

 

64. Ibid., page 207.

65. Lambton, A., Landlord and Peasant in Persia,
page 253.

 

66. Ibid-, page 161.

67. Demin, A.I., "Selsko Khozyaistvo Sovremnogo
Irena," page 46, Cited in Issawi, The Economic History
of Iran, 1800-1914, page 223.

68. Issawi, C., page 226.

69. Curzon, Lord George, Persia and the Persian
Question (2 volumes), page 475.

 

70. Ibid., page 478.

71. Keddie, N., Historical Obstacles to Agrarian
Change in Iran, page 6.

 

 

72. Lambton, A., Landlord and Peasant in Persia,
page 6.

 

73. Issawi, C., pages 245-246.
74. Ibid., page 245-246.

75. Ibid., page 246.

76. Ibid., page 209.

77. Keddie, N., Historical Obstacles to Agrarian
Change in Iran, page 4.

 

 

177

78. Ibid., page 4.

79. Issawi, C., page 238.
80. Ibid., page 238.

81. Ibid., page 231.

82. Ibid., pages 102-103.
83. Ibid., page 250.

84. Ibid., page 81.

85. Adbullaev, Promychlenost i zarozhdenie ruboch
ego klassa Irena V Kontse

 

86. Ibid., page 43.

87. Ibid., page 58.

88. Curzon, Lord George, Volume 2, page 525.
89. Abdullaev, op. cit., page 117.

90. Curzon, Lord George, Volume 2, page 525.
91. Sobotsenskii, L. A., Persiya: Statistiko-

ekonomicheskii ocherk, (St. Petersburg, 1913), cited in
Issawi, C., page 289.

 

92. Marx, K., Capital,.VOlume 1, page 757.
93. Ibid., page 716.
94. Issawi, C., page 136.

95. Marx, K., and Engles, F., The First Indian War
of Independencey71857-1859, page 30.

 

 

96. Kazemzudeh, Firuz, Russia and Britain in Persia,
page 173.

97. Issawi, C., page 191.

98. Upton, J. M., The History of Modern Iran: An
Interpretation, page 5.

99. Kazemzudeh, F., Russia and Britain in Persia,
page 189.

100. Elwell, Sutton, L. P., Persian Oil: A Study
in Power Politics, page 55.

 

 

178

101. Issawi, C., page 339.

102. Upton, J. M., page 5.

103. Abdullaev,.cited in Issawi, page 47.

104. Cottman, R., Nationalism in Iran, page 14.

105. Jazani, 8., An Introduction to the Contemporary
History of Iran, page 18.

106. Marx, K., Capital, Volume III, page 334.
107. Jazani, B., An Introduction, page 16.
108. Issawi, C., page 192.

109. Ivanov, M., The Transformation of Iran to a
Semi-Colony, page 66.

110. Ibid., page 57.

111. Paine, C., and Schoenberger, E., "Iranian Nation-
alism and the Great Powers: 1872-1954," MERIP Reports,
NO. 37, page 7.

112. Gotham, R., page 118.

113. Upton, J. M., page 40.

114. Jazani, 8., An Introduction, page 25.
115. Mark, K., German Ideology, page 78.
116. Jazani, B., An Introduction, page 27.

117. Halliday, F., Iran: Dictatorship and Deve10p-
ment, page 114.

118. Paine, C., and Schoenberger, E., page 11.
119. Thompson, W. J., Iran: 1939-1944, page 248.

120. Edwards, A. C., "Iran (Persia) To-Day,"
International Affairs, page 240.

121. Ibid-, page 246.

122. Marlowe, J., Iran, A Short Political Guide, page
61. .

123. Lambton, A. K. 5., "Some Problems Facing Persia,"
International Affairs, page 259.

179

124. Issawi, C., page 376.

125. Bharier, J., Economic Development in Iran:
1900-1970, page 197.

 

126. Ibid., page 107.

127. Ibid., page 111.

128. Edwards, A. C., page 245.

129. Halliday, F., page 66.

130., Bharier, J., page 203.

131. Ibid., page 234.

132. Ibid., page 87.

133. Upton, J. M., page 98.

134. Paine, C., and Schoenberger, E., page 13.
135. Issawi, C., page 377, Bharier, J., page 237.
136. Bharier, J., page 86.

137. Millspaugh, A. Americans in Persia, page 30.
138. Bharier, J., page 177-8.

139. Issawi, C., page 375.

140. Iranian National Bank Bulletin, NO. 81, 1946,
page 37.

141. Edwards, A. C-, page 254.

142. Ala'i, H., "How Not to Develop a Backward
Country," Fortune, page 77.

143. Bharier, J., page 172.
144. Millspaugh, A., page 34.

145. Naamoni, I.T., "Iran and Her Problems," Middle
Eastern Affairs, page 209.

 

146. Edwards, A. C., page 255.
147. Geographical Handbook Series, Persia, page 484.

148. Jazani, An Introduction to the Contemporary
History of Iran, page 30.

180

149. Edwards, A. C., page 258.
150. Naamani, 1., page 211.
151. Bharier, J., page 87.
152. Marlowe, J., Page 68.
153. Millspaugh, A., page 35.

154. Jazani, B. An Introduction to the Contemporary
History of Iran, page 25.

 

155. Ibid., pages 35-40.

156. "Persia's Economic Development," Board of Trade
Journal, page 1032.

157. Jazani, B., An Introduction, page 42.

 

158. Bharier, J., page 108, Jazani, An Introduction,
page 42.

 

159. Nirumand, 8., Iran: The New Imperialism in
Action, page 44.

160. Paine, C., and Schoenberger, E., pages 22-24.
161. Nirumand, 8., page 55.

162. Lenczowski, G., "Iran's Deepening Crisis,"
Current History, page 232.

 

163. Daine, C., and Schoenberger, E., page 25.

164. Bharier, J., page 112.

165. Ibid., page 184.

166. Nirumand, 8., pages 109—110.

167. Cottman, R., page 271.

168. Nirumand, 8., pages 127-128.

169. Lenczowski, G., page 234.

170. Nirumand, 8., page 100.

171. Amuzegar, J., and Fekrat, M. A., Iran: Economic

Development Under Dualistic Conditions, Page 34; Bharier,
pages 118—120.

181

172. Nirumand, 8., page 140.
173. Halliday, F., page 153.

174. Richards, H., "America's Shah, Shehnshah's
Iran," MERIP Reports, #40, page 10.

 

175. Ibid., page 11.

176. Bharier, J., page 186.
177. Ibid., page 175.

178. Ibid., page 183.

179. Bharier, J., page 188.
180. Nirumand, P., page 111.

181. Behrooz, J. (ed), 1962 Iran Almanac and Book
of Factsi p. 180.

 

182. Ibid., pages 222-224.

183. Bharier, J., page 141.

184. Richards, H., page 6.

185. Jazani, 8., Iran,..., page 7.

186. Halliday, F., pages 44-45.

187. Ibid., page 26.

188. Jazani, 8., An Introduction, pages 87—88.

189. Organization of Iranian Peoples' Fedayee
Guerillas, Land Reform and its Direct Effects in Iran,
page 17.

190. Ibid., page 17.

191. Ibid., page 22.

192. Ibid-, page 22.

193., Ibid., page 17.

194., Marx, K., The 18th Brummaire of Louis Bonaparte,
page 126.

195. Halliday, F., page 111.

196. Marx, K., The 18th Brummaire, page 126-7.

197.
198.
199.
200.
201.
202.
203.

204.

182

Halliday, F., page 111.
Ibid., page 111-12.
Ibid., page 112.
Richards, H., page lO-12.
Ibid., page 12.

Ibid., page 13.

Iran Almanac 1971, page 282.

 

Jazani, 8., The Socio-Economic Analysis,

 

page 15.

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