States, Ideologies, and Social Revolutions: A Comparative Analysis of Iran, Nicaragua, and the Philippines

By Misagh Parsa | Go to book overview

3
State intervention and contradictions

Exclusive rule and greater centralization, combined with increasing resources, enabled the three states to intervene extensively in the economy and promote development. To varying degrees, state intervention turned each government into a key economic actor and the center of capital allocation or accumulation. These governments controlled major banks, enterprises and sources of revenue in their countries. They actively affected capital allocation through their control of the banking system by means of their own revenues, foreign aid, or extensive borrowing. These states also expanded their regulation of the economy, thus affecting many aspects of the market. All three governments also deliberately pursued development strategies that favored private sector capital accumulation. These efforts often paid off as state intervention produced impressive results, most notably growth in the initial stages.

Despite impressive growth rates, the development strategies employed by the three governments laid the foundation for contradictions and Conflicts. Although these states achieved a high level of autonomy from the privileged groups and classes, state intervention largely served particular, rather than general, societal interests. In the first place, it enriched state rulers, their associates and allies who accumulated massive wealth often in a short period of time. Furthermore, government development strategies, whether in the form of import-substitution or export-led industrialization, served the interests of modern, capital-intensive sectors of the economy while working against the small, traditional sectors. In addition, state allocation and accumulation policies often favored large capitalists, protecting them against competition while providing them with favorable conditions and resources. At the same time, these policies excluded small and medium-sized enterprises, exposing them to the vagaries of the market system. State intervention also served the interests of capital against the working classes. In the end, state intervention and state development strategies increased social inequalities and narrowed the social basis of support for the state.

State development strategy in all three countries also increased

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