Class Analysis of the Iranian Revolution of 1979

by Satya J. Gabriel

(The final version of the paper below appears in Re/presenting Class, edited by Gibson-Graham, Resnick, and Wolff, 2001, Duke University Press)

Other online works:

Globalization (web essay)

Dreaming in Malaysia (web novel)

Crossing the Boundary (web novel)

Ambiguous Capital: The Success of China's New Capitalists in the Township and Village Enterprises and Their Impact on the State Sector (part of the China essay series)

Fiscal & Monetary Policy in 1998 China: Riding the Crisis Tiger (part of the China essay series)

WTO:  A Tool for Growing Capitalism in China  (part of the China essay series)

For more web essays Online Papers.

Alternative Views on the Iranian Revolution by Other Authors:

The Iranian Revolution by Ted Grant

The Iranian Revolution by Richard Hooker

The Iranian Revolution:  Past, Present, and Future (an online text) by Dr. Zayar

General Information on Iran:

U.S. Library of Congress Iran Country Study


The Iranian Revolution of 1979 has been described as one of the epochal events of the twentieth century, inaugurating a period of Islamic revivalism and struggles against "modernization" in many nations where Islam is the predominant religion. In discussions of the 1979 Revolution, the significance of Islamic fundamentalism, the use of political repression by the regime of Mohammed Reza Shah (heretofore referred to as the monarchist regime), particularly the violence perpetrated by SAVAK (the secret police), widespread corruption by individual public officials and members of the oligarchic economic elite, as well as official favoritism, rising income inequality, and the impact of "Western" imperialism have all played causal roles. However, there has been a marked paucity of discussions of the way the 1979 Revolution was shaped by struggles over class processes, defined as the particular forms in which surplus labor was produced and distributed. In particular, discussions of the 1979 Revolution have failed to recognize i) the role of internecine conflict within the ranks of capitalist appropriators, and ii) the importance of ancient (or self-exploiting) direct producers and their allied agents in the collapse of the monarchist regime. It is the argument of this chapter that struggles over class processes were a significant factor in shaping the crises that culminated in the 1979 Revolution and of subsequent struggles over the specific form of economic and non-economic relationships in the post-revolutionary Islamic republic.

The primary thesis of this chapter is that the efforts of the monarchist regime to create a particular form of capitalism, herein described as oligarchic capitalism, that would serve as catalyst for Iran's rapid economic growth created a range of social crises that threatened the survival of ancientism (or self-exploitation) and non-oligarchic capitalism. The policies of the monarchist regime, sometimes referred to as the modernization programme, had a definite impact upon class processes in Iran, created and then deepened the social crises that threatened pre-existing configurations of surplus appropriation, particularly the prevalence of self-exploitation in the rural villages and urban bazaars, resulting in complex forms of resistance. Among those with a self-interest in opposing the modernization programme were a wide range of social agents who desired an end to these crises, including non-oligarchic capitalist appropriators, ancient direct producers, and social agents allied to one or the other or both of these groups of appropriators, including the Shi'a Islamic clergy. In so far as the monarchist regime's modernization programme was designed to displace self-exploitation, which was arguably the most widespread form of surplus appropriation in terms of numbers of direct producers involved, with oligarchic capitalist exploitation, the 1979 Revolution might better be described as a counter-revolution, i.e. a change in the political relationships constituting the state designed to avert a gradually progressing economic revolution. On the other hand, capitalist exploitation was clearly dominant in terms of the total value of produced commodities in Iran. In this sense, capitalist exploitation was prevalent and the adjective capitalist seems most appropriate when referring to Iran as a social formation. In so far as Iran was a capitalist social formation, with a significant presence of self-exploitation, under the monarchist regime, it remained such a social formation after the 1979 Revolution, although the trajectory of change may have been altered. This point will be discussed in the concluding section of this chapter.

In the next section, the crisis within the ancient class process is examined as one of the conditions for the 1979 Revolution.

Land Reforms and the Ancient Crisis To the extent the monarchist regime created positive conditions for oligarchic capitalism, it also created crises for non-capitalist appropriators and their allied agents, particularly ancient producers, landlords, merchants, and moneylenders. In rural Iran, in particular, ancient producers comprised approximately 65 per cent of the direct producers in agriculture. These direct producers are described as ancient because there is sufficient evidence that they were self-exploiting, rather than subject to the direct surplus appropriation of others. Nevertheless, these ancient producers were subject to a wide range of claims upon their self-appropriated surplus products, including claims by ancient landlords, moneylenders, and merchants.

The ancient producers in the Iranian villages had a long tradition of partnership in the use of village resources, including the supply and distribution of water. They often consulted with one another about a wide range of production issues, including decisions about land-use and crop rotation. In many ways, many Iranian villages were governed by what might be described as ancient democracy, i.e. the collective political authority of the ancient producers as a whole. The economic effect of this cooperation was to lower the risks and the production costs of ancient producers, facilitating their ability to appropriate an ancient surplus.

The ancient producer's ability to self-appropriate surplus labor is crucial to a wide range of non-producers. Most of the ancient producers toiled on land they did not own. They were required to pay rent on this land. The rent payments came out of the ancient surplus. Historically, this rent was paid primarily in-kind, rather than in money form. Ancient producers would often pay taxes, the principal and interest on borrowed funds, rent on equipment, tithes to the clergy, and distributions to kin in the same manner. Thus, the ancient producers were able to insulate themselves, to a large extent, from the cash economy.

The relationship of the ancient producers to the cash economy is critical to understanding the impact of the monarchist regime's land reforms upon the nature and extent of self-exploitation. Many features of the land reforms, which lasted from 1962 through 1978, resulted in greater dependency of the rural producers upon the cash economy, compelled them to redirect their efforts towards the production of cash commodities, and dramatically altered the form in which ancient landlords were willing to accept payment.

The land reforms were designed to i) free up surplus labor in agriculture to expand the capitalist wage labor markets, ii) increase agricultural productivity and lower the cost of agricultural commodities, iii) transfer surplus from the agricultural sector to the industrial sector through higher land taxes and higher prices for manufactured inputs, iv) encourage the development of capitalist agricultural enterprises, including large-scale agribusiness firms, and, v) gain the support of the rural population for the monarchist regime or, at least, make it more difficult for the rural direct producers to organize into a cohesive opposition. Indeed, the Shah had already attempted, in 1950, to win over the rural population by distributing some of the royal lands to ancient farmers.

Nevertheless, policies designed to change land tenure were not easy to adopt in Iran. The ancient landlords, free from many of the traditional obligations that kept feudal lords busy, had gained considerable political clout within the towns and cities of Iran. It is estimated that these landlords controlled about 60 per cent of the seats in the Iranian legislature prior to 1962. They used this political clout to block early attempts at land reform.

The Shah, his ministers, and advisers remained committed to land reform, partly because the 1949 Chinese revolution remained a potent symbol during the 1960s and the monarchist regime was convinced that the so-called peasantry must be pacified. Thus, the landlord dominated legislature was dissolved and the 1962 Land Reform Act was adopted. This act began the process by which some ancient farmers were gifted with a land redistribution by which the absentee landlords would lose most of their property in exchange for governmental compensation. A subset of the lands confiscated by the government were sold to farmers, primarily ancient direct producers. These farmers signed contracts with the state to pay for the acquired land in fifteen cash installments.

This process was, perhaps, more clear headed and class conscious than one might expect. The monarchist regime wanted to encourage capitalist exploitation in agriculture. It wanted to weaken the traditional and informal partnerships of ancient producers in the villages. These partnerships, based upon principles of equality of status, provided a set of relationships by which rural direct producers could organize for common objectives. It was feared that one of these objectives might, at some point, be to end monarchist rule. If some of these ancient direct producers could be encouraged to engage in capitalist exploitation, the ancient partnerships would be undermined. In addition, the land reforms would weaken the political clout of the ancient landlords, who were also viewed as an impediment to the Shah's modernization programme. Two birds with one stone, as it were.

How would selling land to some ancient producers create the conditions for an erosion in the ancient rural economy and the development of the capitalist one? Firstly, the land reforms were designed to increase the cash needs of ancient direct producers, forcing them to increase their production of cash commodities. It was necessary for those ancient producers who purchased confiscated land to generate sufficient revenues to make their installment cash payments to the monarchist regime. Secondly, those ancient producers who had become their own landlords gained social status vis-à-vis those ancient producers who continued to rent their land. Thirdly, the monarchist regime's sales of confiscated lands helped to establish the principle of alienating rural lands from traditional owners by the process of buying and selling. Thus, the principle by which the more well-to-do direct producers might acquire the land of the less well-to-do was established. This would prove important, as some of the ancient producers who purchased land would fail to generate sufficient revenues to keep their land. More successful producers might expand their holdings by acquiring the land and, perhaps, equipment and other materials, of these unsuccessful producers. Ancient producers with more land and other means of production would likely evolve, if they had not already done so, into full-time or, at least, part-time capitalists, perhaps even hiring some of the less fortunate direct producers who had lost their land. The monarchist regime encouraged this, since it considered the development of new capitalists from among the ranks of ancient producers to serve a positive social purpose. This drift towards capitalism in agriculture was a direct threat to the ancient way of life in rural Iran.

Ancient Crisis in the Urban Bazaars The monarchist regime's assault upon ancientism was not restricted to the countryside. Urban areas in Iran were epitomized by the presence of special zones, spatially demarcated from the rest of the town or city, where scores of small storefront enterprises operated. These storefront enterprises, collectively referred to as the bazaar, were comprised of a wide range of ancient artisans, merchants, moneylenders, and restaurateurs. Most of the entrepreneurs operating within the bazaars, referred to as bazaaries, were either engaged in self-exploitation or dependent upon the receipt of shares of ancient surplus.

The bazaaries had their own political organizations and relations of power, vocabularies and discourses of normality, and maintained close ties to the Shi'a Islamic clergy. The bazaar represented not simply a production and commercial space, therefore, but was a realm shaped by particular notions of acceptable social relationships, strongly influenced by a particular interpretation of divine Islamic law, and organized collectively to reproduce the existing political, economic and cultural relationships upon which the bazaar's survival depended.

Indeed, the bazaaries were organized into well-financed and politically powerful guilds. These ancient guilds united the bazaaries, ancient producers and their allied agents, and served as social sites for promoting the philosophy of self-exploitation, teaching associated ideas of ancient democratic organization, such as the resolution of internecine disputes by consensus, and mobilizing financial resources to satisfy common objectives. The primary coordinating body of the asnaf organizations was The High Council of the Asnaf which, in cooperation with the Shi'a Islamic clergy, wielded considerable influence over the social and political life of Iran's towns and cities. As one of the oldest political machines in Iran, it presented a problem for a monarchist regime bent on revolutionary changes in the configuration of class processes in the nation.

Just as the monarchist regime attempted to neutralize the political power of the ancient landlords, It pursued a similar policy with regards to the asnaf organizations. The regime simultaneously pursued economic and political policies that undermined the viability of the bazaars, while infiltrating the High Council of the Asnaf with agents of SAVAK. The monarchist regime also bribed some members of the High Council to gain their political acquiescence. In the meanwhile, the aforementioned economic and political policies provided the framework for the expansion of oligarchic enterprises into areas that directly threatened the survival of the bazaaries. The regime adopted regulations and economic policies that promoted the growth of large scale capitalist enterprises that competed directly with ancient artisans, such as tailors, furniture makers, potters, etc., and the development of large scale merchanting enterprises, such as department stores, shopping centers, and supermarkets, that competed with ancient merchants in the bazaars. The expansion of state banks eroded the share of loanable funds markets controlled by the ancient moneylenders in the bazaars and the creation of public health clinics and pharmacies cut into the market for ancient herbalists, mid-wives, and other self-exploiting health care providers. Thus, while the regime continually attempted to gain control over the political leadership of the bazaaries, it pursued a policy aimed at destroying self-exploitation and related social relationships.

This strategy was, in hindsight, clearly unsuccessful. The bazaaries were more democratic than the monarchist regime had anticipated. As ancient producers and allied agents, these individuals were accustomed to thinking of their self-interest. This is, perhaps, a side effect of self-exploitation. Efforts by the regime to "buy off" the top leadership of the High Council of the Asnaf did not lead to blind obedience by ordinary bazaaries to the monarchist regime's policies. If anything, the bazaaries became more militant in their opposition to the monarchist regime and recognized the regime's efforts to corrupt their guild leadership.

In the end, the bazaaries were among the most vocal opponents of the monarchist regime and provided many of the foot soldiers in the revolutionary organizations that were instrumental in the 1979 Revolution.

Ancient Crisis and the Shi'a Islamic Clergy The erosion in the ancient way of life and the growth of capitalism in both rural and urban Iran spawned a wide range of reactions. One of the less obvious reactions was the opposition of the Shi'a Islamic clergy to the land reforms and the urban "modernizations." The reasons for the clergy's opposition are, no doubt, complex.

The Shi'a Islamic clergy played an important role in providing ideological justification, by their interpretation of divine Islamic law, for the social relationships of the ancient villages, including the rights of ancients to engage in self-exploitation, the role of the absentee landlords, and the social relationships of the bazaars. The clergy were often among the staunchest defenders of the ancient way of life in Iranian villages, towns and cities.

Why did the Shi'a Islamic clergy support self-exploitation? Was this simply a manifestation of conservatism, a desire to maintain traditional ways of life, or were the clergy more directly impacted by the monarchist regime's assault upon ancientism?

Firstly, the clergy had a close relationship with ancient producers in the villages and the bazaars. The clergy received a share, a tithe, if you will, often in-kind, of the surplus each ancient producer self-appropriated. The generosity of the ancient farmers and artisans was, to some extent, compromised by the growth in capitalism. However, this economic impact could have easily been compensated for if the capitalist appropriators were willing to contribute to the clergy.

Secondly, the erosion in ancient appropriation reduced not only the share of social surplus generated by self-exploitation vis-à-vis capitalist exploitation, but also negatively impacted the incomes of those social agents, such as the aforementioned ancient landlords, merchants, moneylenders, and political leaders who depended upon received shares of ancient surplus. It has already been indicated that the clergy played an important role in justifying the social position of the ancient landlords. What did these landlords provide the clergy in return for this spiritual support? Certainly, one of the traditional ways in which the ancient landlords demonstrated their appreciation for the role of the clergy was in the form of substantial contributions of cash and in-kind wealth. Other ancient allied agents were also noted for their largesse towards the clergy. The material needs of the clergy are not, after all, unimportant. In any event, it seems safe to say that the land reform and urban modernization resulted in lower incomes for ancient landlords and other allied agents. If this is correct, then it is likely that the contributions of landlords and these other allied agents to the clergy may have also been reduced. However, it is still possible for capitalist appropriators and their allied agents to have made up for this lost revenue by increased contributions to the clergy.

Thirdly, the clergy were the direct beneficiaries of rent from charitable land endowments, which were made available to ancient producers (nasaq-holders) who had a heritable right to work these lands in exchange for rent. Thus, the clergy were themselves, as a group, ancient landlords, entitled to a share of ancient surplus labor in the form of rent. The land reforms compelled the clergy to enter into long-term (99-year) contracts with those ancient producers who had traditionally worked these lands at rents below the historical norm. This act represented a direct attack upon a traditional relationship of the clergy to ancientism. This assault upon the economic status of the clergy, combined with the changes in the clergy's relationship to a variety of ancient economic agents, might have been perceived as the beginning of the end of a set of social relationships that defined the uniqueness of the Shi'a Islamic clergy.

This erosion in the economic conditions of existence of the Shi'a Islamic clergy might constitute one of the motivating factors for the clergy's opposition to the land reforms and the urban modernization campaign. Thus, the ideological support provided by the clergy for the social organization of the ancient villages and bazaars was not only directed to justifying self-exploitation, the role of the absentee ancient landlords, the status of the bazaaries and their guilds but was also directed to justifying their own role as ancient landlords and, more generally, as beneficiaries of social relationships of ancientism.

As has already been indicated, the changes in social relationships initiated by the land reforms and urban modernization undermined the traditional relationships of the villages, towns and cities. Even if the capitalists had made up for the revenue effects upon the clergy of these changes, there would be no guarantee that the overall status of the clergy could be reproduced in such an environment. The very process by which ancient Iran was threatened called into question the sacredness of the traditional social status and role of the clergy. It was in this context that many members of the clergy proclaimed the changes inconsistent with divine Islamic law. And this defiance of the monarchist regime by the clergy, often considered among the most conservative elements of Iranian society, was certainly an important step in the direction of 1979 Revolution.

Conflict Within Capitalist Iran The monarchist regime further weakened its position by not only neglecting but acting against the interests of small-scale capitalists. This "petty" capitalist segment of the population might have been more supportive of the monarchist regime if the regime's economic and political policies had simply been designed to encourage the growth of capitalism, in general, rather than the advance of oligarchic capitalism, in particular. As it was, the monarchist regime's policies benefited a relatively small elite of oligarchic capitalists and non-Iranian transnational corporations. These favored firms received public support for their development and domination of wage labor markets, markets for loanable funds, and markets for the sale of finished capitalist commodities. The modernization programme of the regime was quite deliberate in providing this support. It was the belief of the regime that oligarchic capitalism was the highest form of capitalism. Indeed, the Shah and his ministers wanted to replicate the Japanese, German, and Korean forms of highly concentrated capitalism, to create an Iranian version of the transnational corporations that epitomized "Western imperialism" for many Iranian citizens, including many of the petty capitalists.
  Conclusion While feudal social formations, including Japan, Russia, and Korea, have often provided the base for the development of oligarchic forms of capitalism, social formations wherein large portions of the population are self-exploiting have not tended to be amenable to such transformations. Ancient producers and their allied agents typically resist any obvious attempt by large-scale capitalist firms to conquer their territory.

In reality, Iran was, to a significant extent, a social formation comprised of two separate and unequal class communities: one capitalist and the other ancient. The capitalist Iran, with its internecine conflict between oligarchic capitalism and petty capitalism, was growing more and more powerful, but this power was highly concentrated in the relatively small oligarchy. Most of the Iranian people lived in a very different Iran, ancient Iran, where self-exploitation, devotion to traditional religious ideals, and political processes founded upon consensus building were the norm. The clergy were of the latter. The regime was narrowly focused on the former. So long as the boundaries of these two Irans did not intersect, there was probably not sufficient tension in the society to generate a revolutionary crisis. However, the monarchist regime not only created internecine strife within capitalist Iran by encouraging the growth of oligarchic capitalism, but it continually pushed the boundaries of capitalist Iran into ancient Iran, threatening the survival of ancientism. This was a critical catalyst in the 1979 Revolution. In the end, struggles over class processes were an important condition for the widespread discontent with the monarchist regime and the ability of the opponents of that regime to mobilize such large numbers of people. The monarchist regime's failure to fully consider the class effects of its actions proved fatal.



EC 321: Comparative Economic Systems

Copyright © 1998, Satya Gabriel, Economics Department, Mount Holyoke College.