Recovering the ‘global’ in the political economy of reforms
The alternative approach informing the analysis that follows in the next section of this chapter sees globalisation as a structural process that has qualitatively transformed the world economy in ways that go beyond mere increases in quantitative indicators such as trade/GDP ratios or foreign direct investment (FDI) flows (Roccu &Talani 2019).Two elements are central to this qualitative transformation. First, technological innovations, ranging from container shipping to semi-conductors, from just-in-time production to the ICT revolution, have increasingly shaped on a global scale the environment in which political and economic actors make their choices. Such an understanding is in some respect not far from the classical Marxian argument according to which developments in productive forces demand at the very least adaptations in relations of production, which in turn shape the further development of productive forces. Hence, the diffusion of globalisation as a structural transformation in how capitalism works is crucially dependent on the adoption and implementation ot economic policies that enable such transformations to reverberate across the world economy. In the context ot highly indebted countries in the periphery of the global economy, these policies have usually taken the form of structural adjustment and other associated neoliberal reforms, more often than not promoted by international financial institutions. Second, this very interaction of technological transformations and policy shifts leads to the second distinctive element ot globalisation, that is, a hitherto unseen transnationalisation ot both production and finance, best embodied, respectively, in the rise of global value chains (GVCs) and financialisation. Thus, what we see is ‘not merely the geographical extension of economic activity across national boundaries, but also — and more importantly — the functional integration ot such internationally dispersed activities’ (Dicken 1998: 5).
Two further moves are necessary to fully outline the constraints within which policymaking and state—business relations in a specific country are located. First, the rise and diffusion of transnational dynamics must be put in relation with pre-existing and persistent international processes, understood here chiefly in terms of interstate relations. In the Egyptian context, as discussed in the next section, since the 1978 Camp David Accords this has, for instance, meant integration within the US-led international political order, with all the benefits and costs deriving from this affiliation. Crucially, this means that at some times the dynamics of transnationalisation accelerate and at other times they slow down as a result of the interaction and potential conflict with the international political order. For instance, on the one hand, Egypt’s positioning in the latter might at times have meant forsaking the possibility of inward investments coming from Russian or Chinese companies. On the other hand, its central position within the US strategy for the Middle East has historically granted Egyptian governments more leeway in deterring the implementation of economic reforms included in IMF loans without losing access to the funds attached to them, although this currently appears to be changing, leading to rather unorthodox promoters of IMF-sponsored reforms, most notably in the form of Germany and the UAE. These are but two examples ot how international and transnational dynamics interact with one another, without succumbing to either a state-centric or a ‘capitalocentric’ (Gibson-Graham 2006) logic.
Second, while there may well be instances in which individual capitalists might agree (from dividing up markets to establishing a cartel), capitalists also compete for investment opportunities, for increasing their market share via more innovation or lower costs, and ultimately for profits. Here, Marx’s analog)’ that sees capitalists as ‘hostile brothers’ perfectly encapsulates the dynamics of cooperation and competition driving the capitalist world economy and provides a helpful antidote against conspiratorial views of capitalist agency: individual capitalists have a shared interest in preserving an economic order that systematically rewards them more than the actual producers, but capitalists also compete with one another, at times in ways that might even jeopardise the very economic order that benefits them, much like the hostility between siblings can lead to the disintegration of a family. Capitalists compete in many ways within sectors (i.e., different textile companies), across sectors (manufacturing vs. finance being one of the defining battlefields of our era) and along national lines (here with the international- transnational dynamics outlined above leading to some degree of alignment during the neo- liberal era, but now apparently fragmenting into blocs). Competition does not disappear within the highly hierarchical organisation ot the political economy typical of the Arab region that Achcar (2013: 54—60) calls ‘politically determined capitalism’. Here, the main difference relates to the routes through which this competition manifests itself, which are more directly concerned with proximity to political power.
As already mentioned, while technological transformations are a necessary premise for globalisation, its consolidation, extension and deepening would not have occurred as it did, especially in the Global South, without neoliberalism as its policy arm. Insofar as this is organised around a set of policies, including privatisation, deregulation, marketisation, liberalisation of trade, interest rates and foreign direct investment, and state-enforced regressive redistribution on the one hand and redefinition ot private property rights on the other hand, neoliberalism relies heavily on state power to remove barriers to market creation and capital circulation. Somewhat paradoxically, however, these policies may also weaken the state’s ability to affect macroeconomic and distributive dynamics, with major implications for state—business relations. Furthermore, it globalisation empowers capital owners, and if the largest capital owners are located across the transatlantic and in the Gulf then neoliberal policies shape the integration of the reforming economy in a way that systematically subordinates it to the imperatives ot transnational capital. This need not mean that global economic integration does not create jobs in the reforming economy, or does not provide opportunities for ascent within global wealth chains to local business owners. All of this happens, even in Egypt, but in a way that is constitutively geared towards, and subordinated to, the needs ot the globally dominant taction of transnational capital. In many ways, this is a reiteration, taking place in the age of globalisation, global value chains and financialisation, ot the dynamics of dependent development discussed in the dependency tradition (Cardoso & Faletto 1979; Evans 1979), only arguably with a heightened element ot dependency and less promising developmental prospects. Hence, economic integration does not dismantle but rather reconfigures relations of hierarchy and subordination. In the specific case of Egypt, economic integration reinforced the patterns ot political subordination outlined above in ways that may only be reconstructed with reference to empirical developments in the political economy of Egypt during the long era of neoliberal restructuring.