Working to improve mutual understanding between the Middle East and the West
Working to improve mutual understanding between the Middle East and the West
The history of Pahlavi Iran has traditionally been written as prologue to the 1979 Iranian Revolution and firmly located within a national historical context. However, the reign of the last Shah of Iran, Mohammad Reza Pahlavi (1941-1979), in fact marked the high-point of Iran’s global interconnectedness. Never before had Iranians felt the impact of global political, social, economic, and cultural forces so intimately in their national and daily lives, nor had Iranian actors played such an important global role, on battlefields, barricades, and in board rooms far beyond Iran’s borders.
Engaging with a national historical narrative, The Age of Aryamehr writes Iran into the global history of the 1960s and 1970s, so as to understand the transnational connections that in many ways formed modern Iran.
Roham Alvandi is Associate Professor of International History and Director of the IDEAS Cold War Studies Project at the London School of Economics and Political Science (LSE). He is the author of Nixon, Kissinger, and the Shah: The United States and Iran in the Cold War (2014).
Click here to read Gareth Smyth’s review of The Age of Aryamehr for LobeLog.
Review of the book in English Historical Review
Roham Alvandi – Introduction: Iran in the Age of Aryamehr
Ramin Nassehi – Domesticating Cold War Economic Ideas: The Rise of Iranian Developmentalism in the 1950s and 1960s
Maziyar Ghiabi – The Opium of the State: Local and Global Drug Prohibition in Iran, 1941–1979
Robert Steele – Pahlavi Iran on the Global Stage: The Shah’s 1971 Persepolis Celebrations
H. E. Chehabi – A Cosmopolitan Dandy: Amir Abbas Hoveyda
H. E. Chehabi – The Shiraz Festival and its Place in Iran’s Revolutionary Mythology
Samine Tabatabaei – Nation Branding: The Prospect of Collecting Modern and Contemporary Art in Pahlavi Iran
Claudia Castiglioni – ‘Anti-Imperialism of Fools’? The European Intellectual Left and The Iranian Revolution
Cyrus Schayegh – Iran’s Global Long 1970s: An Empire Project, Civilisational Developmentalism, and the Crisis of the Global North
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Domesticating Cold War Economic Ideas: The Rise of Iranian Developmentalism in the 1950s and 1960s
Ramin Nassehi
The global battle of economic ideas was one of the defining elements of the Cold War. Capitalism, communism, and Third Worldism competed for the hearts and minds of peoples throughout the global South. However, the economic history of the late Pahlavi period is often written in isolation from this global ideological battle. Arguably the main reason behind this isolation is the pre-occupation of the Iranian Studies literature with exploring the economic roots of the 1979 revolution. Fixated on explaining this unique domestic event, the literature has increasingly ‘turned inward’, searching for those unique elements of Mohammad Reza Pahlavi’s rule that perpetuated its eventual downfall. This inward looking perspective, however, misses the striking similarity that existed between the Pahlavi regime and developmentalist regimes of East Asia and Latin America in terms of economic management. The main thread connecting economic management in these regimes was the internalisation of certain global development doctrines, both by these countries’ leaders and technocrats.
The shah and his economic technocrats are often conceptualised in the literature as an elite who followed no particular economic thinking and superficially engaged with different policy fads and fashions depending on their political inter- ests or personal preferences. Moving in an opposite direction to this view, this chapter argues that from 1953 onwards Iran’s economic policies and institutional development were deeply influenced by two specific rival schools of Cold War development thinking: the modernisation theory and Latin American protection- ism. These ideas exerted their influence via the technocrats up to the shah. These technocrats would ‘pick and choose’ elements from these schools that they felt would fit Iran’s economic conditions and employed them to influence the shah’s economic decision-making. By addressing the role of these theories, this chapter links the economic history of pre-revolutionary Iran to the Cold War battle of ideas and, in doing so, offers a novel global perspective into this subject.
In this chapter, I focus on the 1950s and the 1960s, the period when Iranian technocrats first encountered different Cold War development doctrines. In this respect, I depart from the conventional focus in much of the literature on Pahlavi Iran which locate the roots of the revolution in the mismanagement of the 1973 oil boom and the economic turmoil of the late 1970s. Consequently, Iran’s economic history in the 1950s and the 1960s is often viewed as a mere prelude to the subsequent turbulence of the 1970s. This teleological reading of economic history, through the prism of the 1979 revolution, exaggerates the uniqueness of Mohammad Reza Shah’s economic rule. Distancing itself from the end point of the revolution, my study seeks to highlight the importance of a neglected factor – the economic ideology of technocrats – in driving Iran’s economic trajectory in the 1950s and 1960s. While doing so, I stress the intellectual similarities and differences that existed between the Iranian technocrats and their counterparts in developmentalist regimes in East Asia and Latin America.
The chapter is organised in the following manner: the first section identifies the gap in literature that this paper aims to fill and discusses the archival sources used; the second section offers a brief review of modernisation theory and explains how this theory first made inroads into Iran in the 1950s; section three explores how and why Iranian technocrats synthesised the economic ideas of modernisation theorists with that of Latin American protectionists; section four highlights the impact of this ideological synthesis on Iran’s economic development and foreign relations in the 1960s.
The Economic Historiography of Late Pahlavi Iran
A large body of literature in Iranian Studies is devoted to the study of economic development before the revolution. This literature can be divided into two categories. The first category is comprised of studies that examine the technical aspects of Iran’s development plans and analyse the economic impact of these plans on aggregate income, employment, inflation and income inequality.
Studies conducted by Jahangir Amouzegar, Hassanali Mehran, Masoud Karsh- enas, Hashem Pesaran and Hadi Salehi-Isfahani fall into this category.1 Almost unanimously these scholars divide the shah’s economic record into two periods of ‘before’ and ‘after’ the 1973 oil boom. The first period is characterised as a period of stability, high economic growth and rapid industrialisation, while the latter is known as the period of economic instability, volatile growth and widening income inequality. However, due to its technical nature, this literature does not deeply engage with the political economy of development planning as it mostly treats the government’s economic policies as ‘given’ and does not explore the manner in which these policies were shaped in the first place.
In contrast, there is a second category of economic studies that is concerned with the political economy of development before the revolution. The first wave of such studies, which were mainly conducted in the 1980s, analyse Iran’s political economy through the Marxist lens of Dependency Theory. Relying on the core- periphery dichotomy, this theory claims that the international capitalist system blocks the economic ‘catch-up’ of developing countries by locking them into a dependent economic relationship with rich countries.2 By applying this lens to their analyses, Fred Halliday and others argued that the Pahlavi state was a typical ‘dependent state’ that heavily relied on Western multinationals for the extraction of its oil and diversification of its economy and, as a consequence, it enjoyed little autonomy in setting its own economic policies.3 This materialist view conceptualises the Pahlavi state as a US client state that passively absorbed US development doctrines and policy prescriptions in the 1950s and 1960s and had no economic ideology of its own. More generally, the first wave of political economy literature dismissed Iran’s development model as a form of ‘dependent capitalism’, where foreign multinationals played a dominating role in the economy.
These dependency arguments, however, have been heavily criticised in sub- sequent literature for exaggerating the role and influence of foreign capital in the
economy. For example, Parvin Alizadeh outlines that direct foreign investment only accounted for 10% of fixed capital formation in the industrial sector in 1969.4 This percentage later dropped to 1.5% by 1975 as the state became increasingly involved in industrialisation.5 In addition to these economic critiques, a recent wave of revisionist historiography reveals that the Pahlavi state managed to incrementally enhance its autonomy from foreign powers, especially the United States, during the 1960s and increasingly operate as an active agent in the international economic and political order rather than a passive ‘peripheral’ actor.6
Alternatively, some scholars, most notably Homa Katouzian, have conceptualised the Pahlavi state as a rentier state that enjoyed a high degree of autonomy from foreign powers and domestic social classes due to having access to oil wind- falls.7 At the same time, this structure of power enabled the shah to centralise all the power in his own hands and rule indiscriminately. This arbitrary rule manifested itself also in economic policymaking: all the critical policies of the government had to be approved personally by the shah in the meetings of High Economic Council, where all key economic decisions were taken. The anecdotal evidence suggests that his economic decision-making was ad hoc and susceptible to policy fads and fashions. Correspondingly, it is regularly claimed that the shah followed no specific economic ideology and, more generally, showed no respect for economics as a discipline as he often mocked economists for their pessimism and lack of vision. In short, this argument puts the spotlight on the arbitrary nature of shah’s rule to explain the economic choices of Pahlavi state in the 1960s and 1970s.8
This chapter dose not challenge the fact that the shah played an important role in economic policymaking, but it argues that reducing Iran’s economic choices in the 1960s or even the 1970s to the agency of the shah is misleading. A comparison between Iran and other developing countries reveals that Pahlavi Iran’s overall development model in the 1960s shared many similarities with the fastest growing economies in the Third World such as Brazil, Mexico, Taiwan and South Korea.9 Like Iran, these countries followed a state-led industrialisation strategy that was based on protectionism. Even the economic mistakes that Iran made after the quadrupling of oil prices in 1973 were similarly made by other rapidly growing oil-rich countries of that period such as Mexico and Brazil.10 These countries similarly decided to inject almost all of their windfall petrodollars into their domestic economies and embark on a series of massive development projects. Although they possessed no oil, South Korea and Taiwan made likewise policy mistakes following the 1973 oil boom; relying on the surplus petrodollars generated by this boom, they massively increased their foreign borrowing and started an overtly ambitious industrial drive at home.11 The high degree of policy similarity between Iran and other rapidly growing developing countries of the 1960s and 1970s indicates the presence of a strong ideological affinity among the elite policymakers in these countries. Arguably, this ideological affinity exerted a much stronger and deeper influence on Iran’s economic policymaking than the shah’s arbitrary rule. This suggests that rather than just focusing on the role of shah, we should open the ‘black box’ of the Pahlavi state and carefully investigate the motivations and ideological commitments of top-level policymakers in order to gain a better understanding of the political economy of pre-revolutionary Iran.
There have been studies conducted on the individual technocrats who played a decisive role in the shah’s regime. For instance, Frances Bostock and Geoffrey Jones focus on Abol Hassan Ebtehaj – the competent banker who almost singlehandedly built the foundations of modern economic planning in Iran.12 Similarly, Vali Nasr explores the role played by Ali-Naqi Alikhani, the minister of economy from 1963 to 1969, in managing Iran’s industrial take-off in that period.13 Abbas Milani has also documented the rise and fall of Ebtehaj, Alikhani
and other top-level economic policymakers of the Pahlavi regime.14 However, the main shortcoming of such studies is that they do not investigate the ideological affinities of these individuals. This is while economic ideology constitutes the most powerful weapon of technocrats in policy battles; employing various ideas, they interpret how the economy works and, more importantly, how it should work. Therefore ideas are crucial persuasion tools for technocrats. Consequently, to fully understand the role and influence of Iranian technocrats within the Pahlavi state, it is necessary to study their economic ideology and the manner in which they used theories to influence key policy decisions. This study aims to fill that crucial gap in the Iranian Studies literature.
This chapter also contributes to the global history of modernisation theory and seeks to explore the manner in which this theory was applied to the Third World, especially in the rapidly developing economies of the 1960s and 1970s.15 A new literature has emerged on the application of this theory in Iran, thanks to the studies conducted by Cyrus Schayegh, Roland Popp, Christopher Fisher and Victor Nemchenok.16 Generally, these scholars show that, far from being articulated in Washington, the vision of modernisation in Iran was contested and negotiated by various national and external actors in almost every field, including infrastructure building, rural development, family planning and art and culture. This literature has not yet explored, however, the intellectual impact of modernisation theory on Iranian development planners who held senior policymaking positions. As mentioned earlier, there has been no comprehensive study conducted
on the intellectual affinities of Iran’s policymaking elite. This is in stark contrast to the historiography on economic planning in similar rapidly growing economies of that era such as South Korea and Brazil.17 Drawing on an array of archival material, I aim to trace the intellectual evolution of Iranian technocrats and, in so doing, map out the impact of modernisation theory and other Cold War development doctrines on their economic thinking.
In terms of archival sources, this chapter draws on American and British documents as well as records from the World Bank, the International Monetary Fund, and the Central Bank of Iran. Moreover, it makes use of oral history interviews with key Iranian economic decision-makers conducted by Harvard University and the Foundation for Iranian Studies, as well as interviews conducted by the author with eight Iranian technocrats of the era, namely:
1 Amouzegar, J., Managing the Oil Wealth: OPEC’s Windfalls and Pitfalls, New york 2001; Karshenas, M., Oil, State and Industrialisation in Iran, Cambridge 1990; Mehran, H., The Goals and Policies of the Central Bank of Iran 1960–1978, Washington 2013; Esfahani, H. and Pesaran H., ‘The Iranian Economy in the Twentieth Century: A Global Perspective’, in Iranian Studies, vol. 42, no. 2, 2009, pp. 177–211.
2 Cardoso, F. H., and Faletto, E. Dependency and Development in Latin America, Berkeley 1979; Wallerstein, I. Historical Capitalism: With Capitalist Civilization, London 2011.
3 Halliday, F., Iran: Dictatorship and Development, New york 1979; Imam-Jomeh, I., Petroleum-Based Accumulation and the State Form in Iran, PhD thesis, Los Angeles 1985; Rahnema, S., ‘Multinationals and Iranian Industry: 1957–1979’, in The Journal of Developing Areas, vol. 24, no. 3, 1990, pp. 293–310.
4 Alizadeh, P., The Process of Import-Substitution Industrialisation in Iran (1960–1978) with Particular Reference to the Case of the Motor Vehicle Industry, Sussex 1984, p. 216. Here fixed capital formation refers to plant, machinery and equipment purchases as well as construction of commercial and industrial buildings.
5 Alizadeh, P., The Process of Import-Substitution, p. 216
6 Alvandi, R., Nixon, Kissinger and the Shah: The United States and Iran in the Cold War, New York 2014, pp. 172–181; Offiler, B., US Foreign Policy and the Modernization of Iran: Kennedy, Johnson, Nixon and the Shah, New york 2015, pp. 154–165; Afkhami, G., The life and times of the Shah, Los Angeles 2009, pp. 263–285; Milani, A., The Shah, New york 2011, pp. 355–405.
7 Katouzian, H., ‘The Pahlavi regime in Iran’, in Chehabi, H. E. and Linz, J. J. (eds.), Sultanistic Regimes, Baltimore 1998, pp. 182–206; Katouzian, H., The Political Economy of Modern Iran: Despotism and Pseudo-Modernism, 1926–1979, London 1981, pp. 234–255.
8 Razavi, H. and Vakil, F., The Political Environment of Economic Planning in Iran, 1971–1983: From Monarchy to Islamic Republic, Boulder 1984, pp. 61–97.
9 Alizadeh, P., The Process of Import-Substitution, pp. 143–198.
10 Karl, T. L., The Paradox of Plenty: Oil Booms and Petro-States, Los Angeles 1997, pp. 189–222.
11 Sachs, J. D., and Williamson, J., ‘External Debt and Macroeconomic Performance in Latin America and East Asia’, in Brookings Papers on Economic Activity, vol. 1985, no. 2, 1985, p. 533.
12 Bostock, F. and Jones, G., Planning and Power in Iran: Ebtehaj and Economic Development under the Shah, London 1989.
13 Nasr, V., ‘Politics within the Late-Pahlavi State: The Ministry of Economy and Industrial Policy, 1963–69’, in International Journal of Middle East Studies, vol. 32, no. 1, 2000, pp. 97–122.
14 Milani, A., Eminent Persians: The Men and Women Who Made Modern Iran, 1941–1979, London 2008.
15 Engerman, D. C., Gilman, N., Haefele M. H., and. Latham M. L., Staging Growth: Modernization, Development and the Global Cold War, Amherst 2003; Gilman, N., Mandarins of the Future: Modernization Theory in Cold War America, Baltimore 2007. Latham, M. L., Modernisation as Ideology: American Social Science and ‘Nation Building’ in the Kennedy Era, Chapel Hill, NC 2000; Latham, M. L., The Right Kind of Revolution: Modernisation, Development and U.S. Foreign Policy from the Cold War to the Present, New york 2011.
16 Schayegh, C., ‘Iran’s Karaj Dam Affair: Emerging Mass Consumerism, the Politics of Promise, and the Cold War in the Third World’, in Comparative Studies in Society and History, vol. 54, no. 3, 2012, p. 642; Popp, R., ‘An Application of Modernization Theory during the Cold War? The Case of Pahlavi Iran’, in The International History Review, vol. 30, no. 1, 2008, pp. 97–98; Fisher, C. T., ‘“Moral Purpose is the Important Thing”: David Lilienthal, Iran, and the Meaning of Development in the US, 1956–63’, in The International History Review, vol. 33, No.3, 2011, p. 431; Nemchenok, V. V., ‘“That So Fair a Thing Should Be So Frail”: The Ford Foundation and the Failure of Rural Development in Iran, 1953– 1964’, in Middle East Journal, vol. 63, no. 2, 2009, p. 284.
17 Haggard, S., Pathways from the Periphery: The Politics of Growth in the Newly Industrialising Countries, New york 1990, pp. 23–51.
‘Roham Alvandi’s edited volume brings together valuable studies on Mohammad Reza Shah Pahlavi’s reign in a transnational context. What makes this compendium of essays even more significant is [the fact that] the contributors to this volume re-examine the development of Iranian culture and politics without being swayed by the final episode, the revolution’
— Professor Touraj Atabaki, Senior Research Fellow at the International Institute of Social History, Amsterdam
‘This impressive collection of essays offers a detailed study of the last three decades of Mohammad Reza Shah’s rule in Iran, and it is as interesting as it is useful. It should be used in both undergraduate and graduate courses on the history of twentieth-century Iran’
— Dr Homa Katouzian, Iran Heritage Foundation Research Fellow, St Antony’s College, and Member, Faculty of Oriental Studies, University of Oxford
‘This volume brings together a diverse range of innovative and insightful surveys of Iran’s developmental state together with its achievements and errors, and also its transnational connections, during the late Pahlavi period’
— Dr Ali Gheissari, Professor of History, University of San Diego, and Editor-in-Chief of Iranian Studies
‘This outstanding collection of articles brings together key aspects of the late shah’s rule, aptly and ironically titled The Age of Aryamehr. The articles offer fresh perspectives on Iranian history in an age of monarchic grandiosity and domestic turmoil, an era whose cultural and social significance has received less attention than its political dimensions. Written by some of the leading historians in the field, this compilation will be a very useful and welcome guide for scholars and students of Iranian society and culture’
— Professor Firoozeh Kashani–Sabet, Walter H. Annenberg Professor of History, University of Pennsylvania
“Alvandi issues a call for scholars ‘to escape the boundaries of national history and examine the international and transnational threads that connected Iran to the world.’ The Age of Aryamehr succeeds in contributing to the ‘globalisation of the historiography of modern Iran’ and reveals the emerging interpretive schisms in that historiography.”
— Matthew Shannon, Journal of Iranian Studies
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