Political Economy of Political Power of the Islamic Regime in Iran

By Abghari, Siavash | Journal of Third World Studies, Spring 2007 | Go to article overview
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Political Economy of Political Power of the Islamic Regime in Iran

Abghari, Siavash, Journal of Third World Studies


Democracy as a system of government is proclaimed to be superior to dictatorship. Since the collapse of the system in the Soviet Union and Eastern European countries, people in all countries are converging on the ideal of democracy to improve economic performance of their country as well as to ameliorate the human and civil rights of the people. For more than a century, the people of Iran have struggled to establish a democratic system of government. The Constitutional Revolution of 1907 in Iran tried to replace absolute monarchial regime with constitutional monarchy and parliamentary democracy, but it had limited success and a dictatorial monarchy was imposed. In the early 1950s a conflict emerged between nationalists, led by Prime Minister Mossaddegh, and monarchists, led by the Shah himself. The conflict concerned the extent of power and control exercised by the Shah and the royal family in the state's affairs and the nationalization of oil. In 1953 Mossaddegh was removed from power and arrested in an American CIA-engineered coup. Mossaddegh's overthrow occurred in part because he had nationalized British property. Iran's long border with the Soviet Union, which had an active Communist party, was considered to be in great danger of falling to communism. (1) With harsh repressive measures, the Shah was reinstalled. Soon, the Shah, through repression, established an absolute monarchy and controlled all the affairs of the country. (2)

The popular uprising against the Shah's dictatorship in the late 1970s led to the Revolution of 1979. Although there were many political organizations and groups with different ideologies and political orientations during the revolutionary process, the Islamic clerics gained hegemony and hijacked the ideals of revolution: liberty, justice and democracy; and turned the rebellion into an Islamic Revolution. The clerics eliminated other ideologies and tendencies in the system during the early years of the revolution and imposed a more repressive Islamic government on the people and the country. The Islamic regime has resulted in great economic and human loss and suffering since the Revolution of 1979.

This paper identifies and defines the political system in Iran without going through the historical analysis of how the regime established itself. From a political economy point of view, the Supreme Leader uses the scarce economic resources to repress the opposition, buy political loyalty, and maintain political power. This paper uses a political power production function model to establish the conditions under which the Islamic regime in Iran obtains power and behavior. The paper also shows the process by which the regime can be deprived of its power and move toward establishing a democratic system of government in Iran, using property rights theory and human rights theory approaches. These theories are used to compare different political systems in terms of their capacity to allocate power as well as to promote economic growth and efficiency.


In democratic societies, power is formally delegated to governments through free elections. Governments, in turn, use this power to affect the economy by regulating industries and providing public goods. Modern property rights theory allocates capital resources in the economy and human rights theory allocates political power. Property rights theory indicates that two conditions are necessary for private bargaining to allocate resources efficiently: (3)

1. Property rights should be well defined; and

2. Property rights should be transferable at low cost.

Coase's theory implies that resources will be allocated efficiently by private bargaining. These property rights are the rights to possess, use, develop, improve, transfer, consume, deplete, destroy, sell, donate, transform, mortgage, lease, loan, etc. According to Coase, transferability of property would maximize the market value of these assets allowing the people to own the assets that are most valuable to them.

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Political Economy of Political Power of the Islamic Regime in Iran


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