2 - The Developmentalist State and the Market Economy

Summary

Chapter two presents an overview of the evolution of Egypt’s political economy under Nasser and Sadat. Central to this history are the struggles over property rights. Under Nasser, nationalist attempts to modernize the economy eventually gave way to an experiment in Arab socialism within the geopolitical context of the Cold War. During this period, an ‘authoritarian bargain’ was established in which broadly redistributive social and economic policies sought to provide welfare for, and redistribute land to, the popular classes in return for their political subordination. In the 1970s, Sadat began to dismantle Arab socialism and establish a more liberal political economy through his infitah policy. In doing so, Sadat presided over the beginning of the disintegration of the authoritarian bargain. To contain social conflict, Sadat emboldened the right-wing forces of political Islam in the hope that they would combat the left and provide an Islamic alternative to the social protection offered by the Nasserists.