Good and Bad Capitalism
If you are trying to figure out the economics of the Middle East, I recommend starting with Good Capitalism, Bad Capitalism. One of the book’s 4 different kinds of capitalism, oligarchic capitalism, provides a good “slot” for grouping most Arab nations. (You can actually download the whole book here. It is excellent.)
Oligarchic capitalism is characterized by government policies that perpetuate the wealth and power of a few. As you probably guessed, the authors say that most nations in the Arabic Middle East practice oligarchic capitalism. The results? Inequality, corruption, sluggish growth, little concern about economic growth. The World Bank’s ease of “Doing Business” index confirms the complexity of starting and expanding businesses in most economies with oligarchic capitalism. Interesting–Saudi Arabia appears to be an exception.
Thinking about oligarchic capitalism, it is much easier to understand the facts that John Cassidy presents in his New Yorker article, “Prophet Motive.” After looking at the economic impact of a Muslim past, the article concludes that even with new leadership, the institutions necessary for a vibrant economy, one that we might call entrepreneurial capitalism, could take years to develop.
The Economic Lesson
In Good Capitalism, Bad Capitalism, capitalism is defined as recognizing private ownership of property. Then, though, the authors point out that so broad a definition necessitates dividing capitalistic countries into 4 categories: 1) state-guided, 2) oligarchic, 3) big-firm, 4) entrepreneurial or 5) a blend. From there, they tell us that entrepreneurial capitalism is the premier growth engine.