Could Anti-Free Market Policies Be The Root Of The Arab Revolt?

See 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. Excerpts:

"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.

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."

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.