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sectors,™™ and mentioning the right of the state to con¬scate certain
properties. The most relevant article is Article 44; it reads:
The economy of the Islamic Republic of Iran consists of three sectors: state,
cooperative, and private, and is to be based on systematic and sound planning.
The state sector is to include all large-scale and mother industries, foreign
trade, major mines, banking, insurance, power generation, dams, and
large-scale irrigation networks, radio and television, post, telegraph and tele-
phone services, aviation, shipping, roads, railroads and the like; all these will be
publicly owned and at the disposal of the state. The cooperative sector is to
include cooperative companies and institutions involved in production and
distribution that are established in urban and rural areas in accordance with
62
H. E. Chehabi, Iranian Politics and Religious Modernism: The Liberation Movement of Iran
under the Shah and Khomeini (Ithaca, NY: Cornell University Press, 1990), pp. 95“7.
63
In April 1979, Beheshti met with members of the private sector to stress that Islamic
economics was compatible with their interests. Nameh-ye Hafteh:Otaq-e Bazargani va
Sanaye˜ va Ma˜aden-e Iran 1 (19 Khordad 1368 [ June 9, 1989]), 5“6.
64
On the debates among the new elite over economic policies see Bahman Ahmadi-
Amuii, Eqtesad-e Siyasi-ye Jomhuri-e Eslami (Tehran: Gam-e Naw, 1383 [2004]),
especially the interview with ˜Ezzatollah Sahabi (pp. 9“59).
65
Daniel Brumberg, Reinventing Khomeini: The Struggle for Reform in Iran (Chicago:
University of Chicago Press, 2001).
150 Bazaar and State in Iran

Islamic precepts. The private sector consists of agriculture, animal husbandry,
industry, trade, and services that supplement the economic activities of the
state and cooperative sectors. Ownership in these three sectors will be pro-
tected by the Islamic Republic as long as they conform to the other articles in
this chapter, do not go beyond the bounds of Islamic law, contribute to the
economic growth and development of the country™s economy, and do not
harm society.66
The bazaaris with whom I spoke readily recalled their shock at the passing
of Article 44 and other such provisions67 that promised wholesale natio-
nalization of the economy. In short, in the early moments of state building,
the fate of the Bazaar and private capital in the postrevolutionary political
economy was under a shadow.
This duality was arbitrated by the second ingredient of the Islamic
Republic™s transformative agenda “ populism. Khomeini™s Islamic model
was strongly propelled by mass politics and infused with postcolonial
populism in¬‚uenced by ideologies advocated by secular and religious
leftists. Within this discourse, ˜˜world exploiters™™ (read the United States,
Britain, and the USSR) were in cahoots with the ˜˜Pahlavi lackeys™™ who
had surrendered Iran™s assets, impoverishing the nation culturally and
economically.68 Careful not to use the terminology of the left, Khomeini
relied on the Koranic terms the ˜˜oppressors™™ (mostakberin) and the
˜˜oppressed™™ (mostaz˜a¬n) to describe the Manichean battle that he
believed resulted in the latter™s rightful revolutionary triumph. This dis-
cursive maneuver allowed the clerical Islamists to interpret away objective
class distinctions as the basis for social con¬‚ict, replacing them with
notions of virtue and justice. Beyond being the ideological conviction or
political proclivity of some members of the revolutionary coalition, in the
context of a multiclass revolutionary movement, populism was a strategy
that could rally wide support for the new regime.69 Abrahamian, a leading
proponent of this interpretation of the Islamic Republic, argues that
˜˜Khomeinism™™ should not be described as ˜˜fundamentalism™™; rather
its guiding principle is most succinctly, and with greater comparative

66
Author™s translation.
67
Also see Article 45, which outlines a rather liberal and arbitrary de¬nition of public
wealth, and Article 49, which stipulates the grounds for con¬scation of property.
68
Hamid Dabashi, Theology of Discontent: The Ideological Foundations of the Islamic
Revolution (New York: New York University Press, 1993).
69
Bayat stresses the strategic nature of populism when he argues that the post-
revolutionary government used pro-poor rhetoric ˜˜because the lower classes were seen
as a solid basis for the new regime; second, because lower-class radicalism in the
postrevolution forced the clergy to adopt a radical language; and third, because the
clergy™s emphasis on the oppressed could disarm the left™s proletarian discourse after
the revolution.™™ Asef Bayat, Street Politics: Poor People™s Movements in Iran (New York:
Columbia University Press, 1997), p. 43.
Networks in the context of transformative agendas 151

leverage, captured by ˜˜populism.™™ He writes, ˜˜Khomeinism, like Latin
American populism, was mainly a middle class movement that mobilized
the masses with radical sounding rhetoric against the external powers and
entrenched power-holding classes, including comprador bourgeoisie. In
attacking the establishment, however, it was careful to respect private
property and avoid concrete proposals that would undermine the petty
bourgeoisie.™™70 This populist social contract, therefore, is a compact
between the state and the masses, rather than individual citizens, speci¬c
factors of production, or social groups as corporate entities.
Khomeini™s Islamic populist agenda was to empower the state with
the mission to revitalize ˜˜the authentic™™ Islam that would create a self-
suf¬cient, independent society that would answer the woes of the devout
and disinherited masses.71 Wealth and oil earnings were abundant,
argued Khomeini, but were not distributed evenly under the Shah™s
regime, and it was the revolutionary regime™s duty to take an active role
in abolishing inequality by redirecting expenditures. Nevertheless, the
proposal and mode of addressing issues of social justice were not as
radical as they may seem; no serious attempt was made to permanently
transform property relations in industry or agriculture. Instead, the state
took it upon itself to make outlays via charity and patronage. Yet it is
doubtful that this development agenda has actually improved the lot of
˜˜the oppressed,™™ since ˜˜the transfer of wealth was not so much a
transfer from the rich to the poor as from the private to the public
sector.™™72 Both cornerstones of the postrevolutionary economy “ the
control of vast sums of revenue by the state and the goal of redistributing
income to lower echelons of society “ have resulted in the state™s direct
involvement in the production and distribution of goods and services.
Finally, the contingencies of war should not escape our attention. The
postrevolutionary fervor for state intervention was stoked by the
necessities of the Iran“Iraq war that began in 1980 when Iraq invaded
Iran. The bloody eight-year war of attrition required the state to
mobilize resources and divert oil earnings for procurement of spare parts
and essential consumer goods. An enlarged public apparatus developed
as a basis for a war economy and to absorb the increasing numbers of
unemployed who had lost their jobs as private investment contracted
and people were dislocated from the war zones. ˜Ezzatollah Sahabi, who

70
Ervand Abrahamian, Khomeinism: Essays on the Islamic Republic (London: I.B. Tauris &
Co., 1993), pp. 37“8.
71
Ruhollah Khomeini, Mataleb, Mawzu˜at, va Rahnamudha-ye Eqtesadi dar Bayanat-e
Hazrat-e Emam Khomeini, 4 vols. (Tehran, Moasseseh-ye Motale˜at va Pazhuheshha-ye
Bazargani, 1371 [1992]).
72
Bakhash, The Reign of the Ayatollahs, p. 290.
152 Bazaar and State in Iran

was a member of the Islamic Revolutionary Council immediately after
the Revolution, mentions that the regime engaged in in¬‚ationary
spending because they feared that the war and the ensuing shortage of
goods would lead to disenchantment with the regime and the Revolu-
tion.73 One of the leading economic policymakers of the Islamic
Republic, who in the 1990s was a voice for less stringent state interven-
tion, has recently defended the decision for state distribution of goods
given the special circumstances of the war.74 In a detailed study of the
impact of the Iran“Iraq war on postrevolutionary state “ building, Nazemi
concludes, ˜˜The various leading ¬gures of the IRP, while disagreeing on a
number of issues, nevertheless were unanimous on the necessity of a
strengthened state and managed economy during a time of war and state
building.™™75 The concatenation of Islamic populism and war set the
context for the formation of a public-sector-focused economy.


Patronage: the solution to the Islamic Republic™s Bazaar dilemma
This transformative program presented the regime with a predicament.
How was it to situate the bazaari community within this new develop-
mental trajectory that called for statist economic policies? On the one
hand, the populist platform of redistribution and championing the
popular classes framed the regime™s revolutionary agenda, especially
amongst the more radical elements of the Islamic Republic. (Re)dis-
tribution of oil wealth via state control of the economy was also an
expedient method of consolidating the regime™s position by limiting
independent sources of revenue that could be used by opposition
groups. On the other hand, as early as the 1960s Khomeini had iden-
ti¬ed ˜˜the Islamic and traditional™™ bazaaris as a ˜˜devout™™ and ˜˜com-
mitted™™ group, which he described in typical populist fashion as a
supporter of the ˜˜deprived™™ or by coupling them with ˜˜shanty dwellers™™
and subsuming them within the category of the ˜˜oppressed.™™76 In
the 1960s and 1970s Khomeini was critical of Iran™s dependency on
western economies that were ˜˜bankrupting the bazaar™™ and converting
it into a place for foreign consumer goods.77 The bazaaris™ prominent

73
Ahmadi-Amuii, Eqtesad-e Siyasi-e Jomhuri-e Islami, p. 40.
74
Ibid., p. 67.
75
Nader Nazemi, ˜˜War and State Making in Revolutionary Iran,™™ Ph.D. dissertation,
University of Washington (1993), pp. 162“3.
76
For examples see Khomeini, vol. 1, pp. 161“2. ˜˜Committed™™ (mote˜ahhed) and
˜˜devout™™ (motedayyen) are the two favored elements of the discourses used by pro-
bazaari elements in the Islamic Republic.
77
Ibid., vol. 1.
Networks in the context of transformative agendas 153

position, moreover, was ampli¬ed by their ties to the clergy and the well-
organized Islamist organizations (i.e. the Islamic Coalition Association
[ICA]) that were supported by small circles of bazaaris. Thus, it was
politically expedient for the Islamic Republic to seek an alliance with the
bazaaris.
These dual objectives, however, embodied a tension. In the former
case, the state was to monopolize the economy. In the latter, it was to
ally itself with the private sector “ in fact a class that required unfettered
access to domestic and international markets and identi¬ed itself as the
˜˜free sector™™ mobilizing against both the Qajar and the Pahlavi mon-
archies in defense of its right to engage in free enterprise. The Islamic
Republic negotiated this dilemma by integrating a select few members of
the Bazaar into the power structure in order to appease and develop ties
with ideological allies, while developing the bureaucratic means and
organizations (many of which were headed by ex-bazaaris) required to
dominate the economy and subordinate the Bazaar in the name of
redistribution.78
Let me illustrate this dual-track approach. As the Islamic Republic
abolished the secular opposition groups, quelled regional independence
movements, and began institutionalizing its rule, elite divisions between
those favoring state control over the economy and supporters of private
property and enterprise repeatedly came to the fore in several policy
areas (e.g. land reform, labor reform, and the Islamicizing of banking).
These two factions were locked in a rather entrenched stalemate. With
the statists controlling the parliament and the free marketers controlling
the Guardian Council, these battles were not fully resolved as legislative
gridlock and political stonewalling generally resulted in only incremental
gains for either side.
Then, in the summer of 1984, a debate over the nationalization of
international trade came to the forefront. On the one side were sup-
porters of free-market policies within the Islamic Republican Party,
members of industry and commerce, and political actors seeking to
undermine the radical and statist coalition headed by Prime Minister
Mir-Hosayn Musavi. Meanwhile, the proponents of nationalizing
international trade were based in the parliament and rallied around the
prime minister. They drafted a parliamentary bill that sought to oper-
ationalize Article 44 of the Constitution by placing all international
trade under public management. To resolve this political deadlock, the
78
Of course, this simpli¬es a highly uneven and politically charged battle between various
camps. Bakhash, The Reign of the Ayatollahs; Bahman Baktiari, Parliamentary Politics in
Revolutionary Iran: The Institutionalization of Factional Politics (Gainesville: University
Press of Florida, 1996).
154 Bazaar and State in Iran

issue was taken to Khomeini, who pragmatically and judiciously wove
together the populist message with his interest in maintaining the sup-
port of his followers in the bazaars. ˜˜[I]t was the people who established
this government and this republic,™™ Ayatollah Khomeini reminded the
president, prime minister and cabinet:
[But] not all the people, only the barefooted (pa-berahneh, i.e. oppressed)
masses. The burden has been on the shoulders of the bazaaris, the middle class
and the oppressed. That is, the deprived (mahrumin) have shouldered the bur-
den of the revolution. If you remember the demonstrations of the people pouring
into streets in the era of the former regime and shortly afterwards in the early
days of the revolution, . . . it was the oppressed who participated in the marches.
Therefore, your government is a government of the deprived and it should work
for the deprived.79
But, in his typical didactic manner, Khomeini paused to underscore
bazaaris™ special place in the economic system:
You should not discard the bazaar. That is, if the bazaar is incapable of doing
something, then the government should do that job. But if the bazaar is quite
capable of doing something, do not stop it; this is not legally accepted by Islamic
Law. The people should not be deprived of their freedom. The government
should supervise (nezarat). Take for example importing goods from abroad. The
people should be left free to import as far as possible. Such goods should be
imported by both the people and by the government. But the government should
supervise and make sure that goods which are against the interests of the Islamic
Republic and Islamic Law are not imported. This is called supervision, meaning
that you should not leave them free to saturate the bazaar with luxuries and other
such goods which were common in the past. But, if you were to refuse to allow
the people to share with you in trade, industry and similar things, you would not
succeed.
These statements, which helped impede the rush to nationalize trade,
have been interpreted as an example of the Islamic Republic™s pro-
bazaar or pro-capital position.80 Although signaling a retreat from the
full implementation of Article 44 and surrendering a space for private
involvement in international and domestic trade, Khomeini made a
subtle and overlooked, yet important, modi¬cation. ˜˜Obviously, there
are some corrupt individuals in the bazaar; there are some self-seeking
individuals there. . . . However, there are many correct, religious and
skilled people in the bazaar, too.™™81 As in many other cases, Khomeini

79
Khomeini, vol. 4, p. 17.
80
See inter alia Asghar Schirazi, The Constitution of Iran: Politics and the State in the Islamic
Republic, trans. John O™Kane (London: I. B. Tauris, 1998), p. 67; and Ehteshami, After
Khomeini, p. 8.
81
Khomeini, vol. 4, p. 19.
Networks in the context of transformative agendas 155

was emphasizing that policymakers should not treat the bazaars as a

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