Chapter Two - Notes on the History of Iran
Between the 11th and the 19th centuries, approximately 15 dynasties ruled Iran. Nearly all were of nomadic Central Asian origin and, with the exception of the Safavid dynasty (1501-1722), none was long-lived. This series of nomadic dynasties recurred almost cyclically. Historians and anthropologists have argued that, in the context of pre-capitalist methods of warfare, nomads generally possess superior military power compared with settled people and are consequently able to conquer them. Once nomads become the ruling power, however, they in turn undergo a process of sedentarisation, and their military superiority disintegrates. Historically, nomads have used military force to supplement their means of livelihood by plundering the wealth accumulated by settled civilisations. Each invading tribe viewed both the land and its revenue as objects of plunder. The treatment of land as an object of plunder, together with the need to reward the functionaries of a new dynasty, meant that each conquest was accompanied by a massive confiscation and redistribution in favour of a new ruling elite. Each change of dynasty was equally accompanied by plunder and redistribution. The cyclic recurrence of nomadic dynasties thus arrested the development of private ownership of land.
The relatively longer period of stability under the Safavid dynasty, however, had lasting effects on property relations, moving away from the arbitrariness of the cycle of nomadic rule and dynastic changes. The development of the productive forces received a new impetus at the beginning of the 19th century. As in the case of tsarist Russia, and later Japan, the source of this impetus was competition and pressure from without. The more developed capitalist nations of the West embarked on a phase of colonialist expansion in the East. Russia was confronted with the growing power of Sweden, and later with France and Germany. Trotsky wrote that: "It was not the Tartars who compelled old Russia to introduce firearms and create the standing regiments of streltsi, it was not the Tartars who later on forced her to form knightly cavalry and infantry forces, but the pressure of Lithuania, Poland and Sweden."
However, despite its backwardness in comparison with the countries of Western Europe, Russian tsarism was more developed than Iran. In its military conflicts with its northern neighbour, the Qajar dynasty suffered two major defeats at the hands of the relatively modern Russian army, resulting in heavy territorial losses. From this date, the combined effects of the growing penetration of foreign influence in Iran and the attempts by the Iranian rulers to build a modern army caused the disintegration of the old tribal dynasties. Iran was compelled to enter the road of capitalist development. But from the very beginning Iranian capitalism had a belated, weak and sickly character. The 19th century was accompanied by a slow but steady growth of the productive forces. Throughout the century the population nearly doubled, urbanisation grew and agriculture expanded. Handicrafts and exports increased. In the second half of the century, however, the imports of manufactured goods from the imperialist countries undermined the production of local handicrafts.
The modern era in Iran can be divided into three sub-periods. In the first period which opens with the 19th century, Iran can be described as a semi-colony with relatively little participation in the world market. This period culminates in the constitutional revolution of 1906 (under the impact of the Russian revolution of 1905) and ends with the beginning of the extensive production of oil in 1908. The second period (1908-53) is marked by the growing integration of Iran (although still a semi-colony) in the world market. This period is accompanied by growing oil production and industrialisation, and the growth and increasing concentration of the working class. The dispute over oil sovereignty and Iran’s share of the revenue are characteristic features of this period. These conflicts reached a climax during the social uprising (1941-53) that followed the abdication of Reza Shah (1926-41). The period ended with the rise and fall of the nationalist movement of Mossaddiq (1951-53). The third period (1953-79) is marked by the growing participation of Iran in the world market as a sovereign state, with considerable control over its oil resources, rapidly rising oil revenues and very rapid economic growth.
However, Iran’s feverish economic expansion did not signify a reduction of internal contradictions. On the contrary. The increase in oil prices did not significantly benefit the masses who were hit by mounting inflation. The gap between obscene wealth, accompanied by "western" ostentation, and grinding poverty became unbearable. The growing social tensions could not be held down by the extreme brutality of the Shah’s Savak, with its combination of 20th century American technology and medieval oriental savagery. By trying to control the situation by repression, the Shah was creating something analogous to a pressure cooker with the safety valve clamped shut. The superficial appearance of tranquillity and order inevitably gave way at a critical point to the most violent explosion.
The period after 1979 was marked by the nationalisation of certain industries, banks and financial institutions and the confiscation of the wealth of the Shah. On the other hand, there was the eight years’ war with Iraq, splits in the IRP, the victory of Khatami, and the return to a process of privatisation and "open-market liberalism". The fourth period will be discussed in the last chapter, which outlines the perspectives for Iran.
The law of combined and uneven development in Iran
The first period which runs approximately from 1800-1908 was marked by the weak development of capitalist productive relations. The majority of the population living in the countryside depended upon agriculture and the pre-feudal mode of production and partly upon nomadic means of livelihood. Less than ten percent of the population lived in the towns, and worked mainly as traders and bazaaris. (The term bazaaris signifies the class of traditional petty-bourgeois small shopkeepers and street traders.) In this period Iran’s most important products were silk and textiles, both of which were ruined by cheap products from Britain. Later on high demand in the West for Persian carpets enabled a certain development of small industries in that sector. A class of traders and small carpet industries emerged and was strengthened.
By the end of the 19th century and the beginning of the 20th century, foreign investment continued to flow into Iran, with the participation of local shareholders in the most modern sectors like road construction, the fishing industries of the Caspian Sea, and the telegraph. The majority of manufactured goods were produced by artisans in a host of tiny workshops, but there were also small factories involved in the carpet-weaving and leather industries and also a number of mines and print-shops. According to one study of the period the largest carpet factory was in Tabriz and employed 1500 workers.
In 1908, oil was discovered in the South West of Khuzistan, and in the same period the establishment of the railways led to a growing integration of the economy. This, together with the concentration of the working class, heralded the final victory of capitalist relations in Iran. In the second period, British imperialism ruthlessly exploited the Iranian oil industry and made fabulous profits from it. Between 1912 and 1933 alone, the Anglo-Persian Oil Company (APOC) made profits of �200 million, of which only �16 million was paid to the Iranian Government in direct royalties. Between 1945 and 1950, APOC paid only �90 million in royalties to the Iranian government, and earned net profits of more than �250 million.
The scale of Iranian industrial production was such that by 1920, it was employing 20,000 workers, and by 1940, 31,500 workers, one of the largest concentrations in the Middle East. By end of 1925 the Shah had adopted a programme intended to protect local industries and to provide state incentives for private entrepreneurs. The state based itself on the revenues from oil and taxes, rather than on foreign loans. In contrast to the dynasty that preceded it, a large part of the oil revenues were utilised for defence and to modernise the state and army. In his 20 years in power, the Shah spent more than �260 million on industry. After 1930 new groups of large industries were established. Hundreds of small plants, mainly in textiles, foodstuffs and construction materials emerged. The size of the working class radically increased, often concentrated in large factories. In this respect, Iran resembled tsarist Russia in the early period of its industrial development.
Most workers were still employed in small workshops but after the development of the textile mills in Isfahan, Kerman, Yazd and Teheran, the number of workers increased steadily. The law of combined and uneven economic and social development was in progress. Due to the domination of the world market by imperialism, Iran’s industrialisation process could not take place in a classical way. Because Iran was an important energy source, the exploitation of its oil resources by British imperialism led to a very limited and one-sided form of development. The British capitalists were only interested in securing their own interests. Thus, the growth of industry produced an extremely uneven pattern of development, in which the establishment of advanced industries was limited to the major cities—Teheran, Tabriz, Isfahan, Kerman and some other centres. The requirements of the oil industry led to the establishment of advanced industries in Khuzistan—an area which had not changed in centuries—yet most of the country remained backward. Industrial capital was still the exception, not the rule. Commercial capital still played the predominant role.
These distortions meant that only a combined and uneven pattern of development was possible. The most advanced social and economic forms were found alongside the most primitive ones. Alongside the bright lights of modern petrochemical plants, there was dim lamp-light in villages without electricity. In front of industries utilising the most up-to-date technology, the small artisan continued to use methods which had not changed in centuries, if not millennia. Modern houses complete with American kitchens stood beside slums where meals were cooked over smoky charcoal and wood stoves.
The third period was again characterised by a dramatic increase in oil revenues. By 1965, the latter amounted to $522 million and by 1969, $938 million. Huge sums were spent on the state apparatus. $10 billion was invested to expand the infrastructure and manufacturing Industries. Ninety foreign companies invested in Iran in 1969, half of them based in the USA. But the state was still the main source of industrial growth, and was responsible for 40-50 percent of all investment. Economic growth was drastically increased thanks to the rise of oil prices in 1973. By December 1973, prices had been pushed up to $11.65 a barrel as compared to a price of $1.79 in 1971. Iran’s revenues rose accordingly from $938 million in 1969 to $22 billion in 1974.
The five year plan was launched with a $69 billion development programme. Skilled workers’ wages rose rapidly, increasing the influx of people from the countryside to the towns. Between 1956 and 1971, millions of peasants moved to the cities. By the mid 1970s, an average of 380,000 were migrating each year. This produced a negative impact on agriculture, where production fell and food prices increased. In just two years rents rose by up to 300 percent in Teheran. A few made fortunes from property speculation and commission dealings. But acute inflation hit the workers, peasants and petty bourgeoisie hard.
Increasing numbers of shanty towns sprang up, lacking the most basic human amenities. Terrible poverty loomed over the masses. In this situation, the Shah—that supposedly wise and "progressive" ruler—halted the development programme. The outcome was a sharp fall in exports, intensifying the already existing mess. The working class replied by stepping up trade union activates in the factories, where they carried on the dangerous work of organisation and agitation under the watchful eye of the Savak agents. The insecure position of the state in the industrial plants frequently forced the authorities to get their agents elected as leaders of the so-called legal trade union organisations set up by the state, called "Syndicates". Syndicate members were the main element of state control within the working class. These stooges played an essential part in undermining the workers’ movement and mobilising forces for pro-regime rallies and demonstrations.
The second method of policing was through the direct presence of secret police agents, under the guise of such factory Institutions as Hefazat and Entezamat (Security Bureau). These were the de facto branches of the Savak inside the factories. Each plant had a few direct informers. Entezamat and Hefazat were run almost totally by army colonels and officers who were directly linked to Savak. The presence of army colonels in the factories and the hierarchical structure of management turned the factories into barrack-like places of terror. Yet all this strict control over the workers did not prevent strikes. Some estimates mention 20-30 strikes per year after 1973. Leaving the figures aside, the failure of the state’s strategies to secure the regime and to de-activate the working class by it is quite plain. The secret police were compelled to resort to the use of military force to counter collective labour action. There are numerous examples of troops surrounding striking plants—for example, the Tabriz tool making plant, the Sazi tractor company in Tabriz, the Pars metal factory and Renault are some examples from the 1970s.
Capitalist development of Iran after the First World War and especially after the Second World War had profoundly changed the country. Capital had penetrated Iran and left its marks on every section of society. The countryside had undergone some changes since the land reforms of the 1960s. But the fundamental structure of rural society had not changed. Rapid economic development was accompanied with the concentration of capital in a few hands. Forty-five families controlled 85 percent of the largest companies in 1974. Capitalist development had also created a mighty working class in Iran, and thereby completely transformed the class balance of forces. This fact was strikingly shown in 1979 when the proletariat played the decisive role in the revolution.
1. Ibn Khaldum, pp. 257-395.
2. Ibid., pp. 249-294.
3. Leon Trotsky, Results and Prospects (Peculiarities of Russia Historical Development), p. 39.
4. Abrahamain, pp. 52-3.
5. N. Keddie Page, The Roots of Revolution, pp. 40-62.
6. W. Floor, Industrialisation in Iran, p.7.
7. J. Bhahrier, Economics of Development in Iran, p. 171.
8. Ibid., p. 186.
9. Assef Bayot, Workers and Revolution in Iran, p. 65.