Joseph W.H. Lough
Andrew O’Hehir offers a valuable overview of United States involvement in and support of the increasingly corrupt government of Egypt over the past half decade. And for those unfamiliar with this history and confused by the tragedy currently unfolding before our eyes, I strongly recommend you take a look at his article in the latest Salon on-line titled “Is Egypt’s Blood on America’s Hands.” Mr. O’Hehir knows more of this history and more profoundly understands its relevance than most commentators, certainly more than me.
And, yet, like most commentators, Mr. O’Hehir is reluctant to name the mechanism underlying this tragedy; no, not the Arab-Israeli conflict, which is still only a symptom, but the tension between economic development and robust public institutions. The irony is that when America bankrolled the Camp David Accords, which on so many registers epitomized illegitimate rule, not only in Egypt and Israel, but also in the United States, it did so in the hope that economic development and robust public institutions could and would function together harmoniously. They do not. And that is the problem.
In the fictional world imagined by Camp David, massive infusions of US dollars into Israel and Egypt would promote the kind of economic development without which investors refuse to part with their capital, depriving a budding consumer-investor class of the stake in economic, legal and political institutions. According to this utopian vision, once potential radicals have an economic stake in society, they will also defend the legal and political institutions that defend private capital. Support for legal and political institutions will, in turn, create an economic climate that will promote economic growth, employment, and consumption. Economic growth and consumerism will, in turn, promote peace and stability.
So, why hasn’t it worked out that way? Why hasn’t peace followed naturally from massive infusions of US dollars? Part of the problem here is that while investors like stability, they do not necessarily like democracy. That is to say, there are many paths to an economic environment conducive for investment. Money might just as easily purchase military-enforced compliance – and stability – as economic development and robust public institutions. Indeed, it is a well-known axiom
of political and economic theory that while every entrepreneur wants his competitors to abide by the law, every entrepreneur is also eager to identify every possible legal and economic loophole to leverage his own private self-interest. In theory,every entrepreneur promotes legality. In fact, absent a strong state, every entrepreneur eagerly pursues illegality.
But the problem runs deeper than this acknowledged tension between legality and illegality suggests. For the very robust public institutions upon which the enforcement of law depends is the sworn enemy of private enterprise. And it is for this reason both that profit margins are highest under conditions that walk closest to illegality and that overall economic prosperity is greatest where public institutions are more powerful than the private economic institutions they are tasked to regulate.
This is also be why the huge sums of money US taxpayers doled out to Israel and Egypt may have had precisely the opposite effect from the one hoped for and desired. In the right, public, hands this sum could have strengthened the very public institutions tasked with both ensuring legality and economic growth. In the wrong, private, hands, by contrast, such huge sums merely serve as the pay-off that might ensure privately-enforced public compliance with authority. (Late Imperial Rome may be the leading illustration of this mode of public regulation.)
And here finally we can finally see the faint outlines of the fiction upon which American policy in Egypt has been based. We want the promotion of private capital in the absence of robust public institutions to serve as the miraculous elixir, creating both economic growth and political vitality. In fact, in the absence of robust public institutions, private capital performs precisely as we have always known it to: it promotes its own private self-interest.
The tragedy playing out on the streets of Cairo and among all too many other former American allies throughout the Middle East is powerful testimony to our fundamental misunderstanding of the complex relationship between money and public institutions. Thus does capital ever seek to undermine and weaken the very institutions that might guarantee its growth and survival. And the US, by favoring the concentration of wealth in the wrong, private, hands, cannot help but promote the very forces that militate against the legality it wishes to support.
Here also we can see the intimate relationship between the fiction tearing Egypt apart and the parallel fiction that is eating away at America’s political institutions and public life. American political leaders hypnotized by the fairy tale of private enterprise understandably promote a foreign policy that actually undermines the freedom they think they are supporting, when in fact they are weaving a fictional web of death. So, yes, Andrew O’Hehir is correct to blame the US for digging Egypt’s grave. But, he fails to accurately identify the private market mechanism that, in the absence of robust public institutions, have underwritten this tragedy.
Of course, we ignore this mechanism at our own peril, not only because Egypt, as an erstwhile US client, can drag America (and Americans) into the ever deepening crisis in the Middle East, but also because the growing dominance of private capital throughout the globe promises to create an ever broadening circle of Egypt-like conflicts between a neglected or suppressed public sphere and the private interests that are seeking ever more handsome investment opportunities. Thus, while Egypt’s story seems and is, in fact, in many ways unique, because of the market mechanism that lies at its foundation, Egypt’s story is also a story that can be told of every community where private capital has outstripped the means of public institutions to mediate and regulate growth and development.
Not only for Egypt’s sake, but for our own, therefore, we need to find ways for public institutions to regain control over the private interests that threaten to engulf the entire world in a vast sea of violence. But we should not be naive. Capital will not help restore the integrity of public institutions willingly. It will not give up its dominance without a fight. Which is why now more than ever the world needs to devote its accumulated resources not only to developing, securing and defending robust public institutions, but also to cultivating political mechanisms and institutions sufficiently empowered to withstand the assault upon their integrity.
America was both naive and ill-advised to believe that it could buy peace in the Middle East. We now need to appreciate how and why we must target our international aid for the formation of robust public institutions, first, and only then focus our aid on the formation of free markets.