Can an Oil State Be a Welfare State?

I will consider it a great advantage when we have 700,000 small pensioners drawing their annuities from the State, especially if they belong to those classes who otherwise do not have much to lose by an upheaval and erroneously believe they can actually gain much by it.

— Otto von Bismarck, in a speech to the Reichstag, 1889

Citizens do not give up making demands for representation or for better government simply because they are not taxed.

— Dirk Vandewalle

The Iranian journalist Abbas Abdi once half-joked that if he had religious authority, he would issue a fatwa declaring oil as harmful as alcohol. Abdi expressed a view held well beyond Iranian intellectuals. A large literature in social science focuses on the negative effects of oil extraction for democratization and development. In this view, oil states are not supposed to be welfare states.

Part of the argument lies in the definition of a "welfare" state as contrasted with "rentier" states. Modern welfare states provide social protection through redistributing a portion of the resources procured by taxing the activities of the domestic economy. Conversely, states with external rent revenues, such as the extraction and sale of oil, distribute windfall resources rather than taxes. According to this perspective, people who live in a rentier economy view these distributed resources as gifts or handouts from a ruling elite, rather than a tax on their own labor and production. Individuals perceive social benefits as a capricious reward from their leaders, not a social right linked to citizenship. This has consequences, in turn, for state-society relations. Individuals and groups expend effort struggling over the distribution of rent-derived resources, instead of independently engaging in productive economic activities. This dependence on the state limits the formation of social classes with autonomous power, whether capitalist or working classes. States that accrue sufficient revenue through nontax sources do not need to elicit consent or engage in bargaining with subject-citizens for the purpose of additional revenue extraction. Instead of taxpayers giving up material resources from below in exchange for collective public goods, including social-welfare policy, rentier states allocate material resources from above in exchange for patrimonial allegiance. The absence of taxation results in the absence of a social compact, and a perverse and stabilizing "authoritarian bargain" is installed, whereby social policy acts as a bribe for political obedience. The long-term effects of rentier income thus distort the political economy of a country away from the path of democratization and capitalist development experienced in wealthy regions of the world economy.

This conception of welfare policy is quite common in Iran, not just among journalists but also in decades of scholarship. Welfare policy tends to be presented as a hegemonic project of ideological exhortation coupled with a crass political machine wherein social policy is narrowly targeted at poorer strata to secure support or, at least, compliance. Afsaneh Najmabadi explicitly contrasted the welfare benefits of the Pahlavi monarchy in the 1970s with postwar European welfare states. In Europe, taxation of citizens provided the "supply" while pressure from working-class organizations furnished the "demand" for state-provided social welfare. In Iran, conversely, welfare benefits derived from oil extraction were handed out by a state under little pressure from organized labor. Accordingly, state welfare in Iran was charity, not social contract — more like the poor laws of seventeenth- and eighteenth-century Europe or the court largesse of premodern empires. For the Islamic Republic, the sociologist Ali Reza Alavi-Tabar argued that the "pathological" characteristics of the state are derived from its "rentier-based" nature. One can hardly open a newspaper in Iran without a mention of rentier-state theory. A 2007 headline in the newspaper Mardom-Salari (Democracy), for instance, proclaimed "The Rentier-Based Government Is the Reason for Poverty and Inflation." Without much empirical evidence, assessments of contemporary Iran assume that oil rents are the "supply" and the requirements of authoritarian control are the "demand" that produces state-welfare policy. The social and political determinants of these policies and their consequences are either ignored or subsumed under theoretical formulations associated with the rentier state. This argument would make sense if all states formed in similar ways and proceeded along similar paths of development. It would also make sense if the origins of European welfare states were as uniform as the rentier paradigm portrays them. In reality, state formation has varied quite widely over time and place, including the formation of welfare states. As a result, we can use theories of welfare-state formation to reframe state-society relations in a way that more thoroughly accounts for postrevolutionary social change in Iran.

MIXING OIL AND ISLAM

If the 1979 revolution in Iran had one effect on the study of revolutions, it was the reintroduction of the role of ideas in shaping large-scale social change. The manifestation of mass politics mixed with religious symbolism convinced some scholars that revolutions could indeed be "made," as opposed to the prevailing structuralist interpretation of revolutions in the late 1970s. Indeed, the Islamic Republic's leaders claimed their ideals embodied a theoretical and practical rejection of political categories derived from Western history. As a result, the ideological content of Shi'i political Islam is often added on to the rentier-state thesis to explain political and social characteristics of post-revolutionary Iran.

With ideas from political Islam supercharged via revenue from oil rents, some scholars have portrayed state-society relations in Iran as totalitarian. In this view, the state can afford to implement an ideologically coherent program of social engineering to create a revolutionary social order. Totalitarian arguments are highly voluntarist explanations of social change, since they assume that a state can remake society through the will to imagine a new world and whatever means it takes to achieve it. The concept of totalitarianism itself, whether used to explain varieties of fascism or communism, has been repeatedly challenged by historians and social scientists as problematic. As Charles King noted, "the totalitarian model of communist politics was never really much of a model at all. It did not explain (nor, to be fair, did its adherents claim to...