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The Road to Serfdom and the Arab Revolt
The dictators who came to power in the 1950s and '60s were economic
levelers who impoverished their countries. Today's unrest is the
result.

By FOUAD AJAMI

The late great Austrian economist F.A. Hayek would have seen the Arab
Spring for the economic revolt it was right from the start. For
generations the Arab populations had bartered away their political
freedom for economic protection. They rose in rebellion when it dawned
on them that the bargain had not worked, that the system of subsidies,
and the promise of equality held out by the autocrats, had proven a
colossal failure.

What Hayek would call the Arab world's "road to serfdom" began when
the old order of merchants and landholders was upended in the 1950s
and '60s by a political and military class that assumed supreme power.
The officers and ideologues who came to rule Egypt, Syria, Iraq,
Libya, Algeria and Yemen were men contemptuous of the marketplace and
of economic freedom. As a rule, they hailed from the underclass and
had no regard for the sanctity of wealth and property. They had come
to level the economic order, and they put the merchant classes, and
those who were the mainstay of the free market, to flight.

It was in the 1950s that the foreign minorities who had figured
prominently in the economic life of Egypt after the cotton boom of the
1860s, and who had drawn that country into the web of the world
economy, would be sent packing. The Jews and the Greeks and the
Italians would take with them their skills and habits. The military
class, and the Fabian socialists around them, distrusted free trade
and the marketplace and were determined to rule over them or without
them.

The Egyptian way would help tilt the balance against the private
sector in other Arab lands as well. In Iraq, the Jews of the country,
on its soil for well over two millennia, were dispossessed and
banished in 1950-51. They had mastered the retail trade and were the
most active community in the commerce of Baghdad. Some Shiite
merchants stepped into their role, but this was short-lived. Military
officers and ideologues of the Baath Party from the "Sunni
triangle"—men with little going for them save their lust for wealth
and power—came into possession of the country and its oil wealth.
They, like their counterparts in Egypt, were believers in central
planning and "social equality." By the 1980s, Saddam Hussein, a Sunni
thug born from crushing poverty, would come to think of the wealth of
the country as his own.

In Libya, a deranged Moammar Gadhafi did Saddam one better. After his
1969 military coup, he demolished the private sector in 1973 and
established what he called "Islamic Socialism." Gadhafi's so-called
popular democracy basically nationalized the entire economy, rendering
the Libyan people superfluous by denying them the skills and the
social capital necessary for a viable life.

In his 1944 masterpiece, "The Road to Serfdom," Hayek wrote that in
freedom-crushing totalitarian societies "the worst get on top." In
words that described the Europe of his time but also capture the
contemporary Arab condition, he wrote: "To be a useful assistant in
the running of a totalitarian state, it is not enough that a man
should be prepared to accept specious justification of vile deeds; he
must himself be prepared actively to break every moral rule he has
ever known if this seems necessary to achieve the end set for him.
Since it is the supreme leader who alone determines the ends, his
instruments must have no moral convictions of their own."

This well describes the decades-long brutal dictatorship of Syria's
Hafez al-Assad, and now his son Bashar's rule. It is said that Hafez
began his dynasty with little more than a modest officer's salary. His
dominion would beget a family of enormous wealth: The Makhloufs, the
in-laws of the House of Assad, came to control crucial sectors of the
Syrian economy.

The Alawites, the religious sect to which the Assad clan belongs, had
been poor peasants and sharecroppers, but political and military power
raised them to new heights. The merchants of Damascus and Aleppo, and
the landholders in Homs and Hama, were forced to submit to the new
order. They could make their peace with the economy of extortion, cut
Alawite officers into long-established businesses, or be swept aside.

But a decade or so ago this ruling bargain—subsidies and economic
redistribution in return for popular quiescence—began to unravel. The
populations in Arab lands had swelled and it had become virtually
impossible to guarantee jobs for the young and poorly educated.
Economic nationalism, and the war on the marketplace, had betrayed the
Arabs. They had the highest unemployment levels among developing
nations, the highest jobless rate among the young, and the lowest
rates of economic participation among women. The Arab political order
was living on borrowed time, and on fear of official terror.

Attempts at "reform" were made. But in the arc of the Arab economies,
the public sector of one regime became the private sector of the next.
Sons, sons-in-law and nephews of the rulers made a seamless transition
into the rigged marketplace when "privatization" was forced onto
stagnant enterprises. Of course, this bore no resemblance to
market-driven economics in a transparent system. This was crony
capitalism of the worst kind, and it was recognized as such by Arab
populations. Indeed, this economic plunder was what finally severed
the bond between Hosni Mubarak and an Egyptian population known for
its timeless patience and stoicism.

The sad truth of Arab social and economic development is that the
free-market reforms and economic liberalization that remade East Asia
and Latin America bypassed the Arab world. This is the great challenge
of the Arab Spring and of the forces that brought it about. The
marketplace has had few, if any, Arab defenders. If the tremendous
upheaval at play in Arab lands is driven by a desire to capture state
power—and the economic prerogatives that come with political power—the
revolution will reproduce the failures of the past.

In Yemen, a schoolteacher named Amani Ali, worn out by the poverty and
anarchy of that poorest of Arab states, recently gave voice to a
sentiment that has been the autocrats' prop: "We don't want change,"
he said. "We don't want freedom. We want food and safety." True
wisdom, and an end to their road to serfdom, will only come when the
Arab people make the connection between economic and political
liberty.

Mr. Ajami, a senior fellow at Stanford University's Hoover
Institution, is co-chairman of Hoover's Working Group on Islamism and
the International Order

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