The implications of the rentier state theory regarding the major oil-producing states of the Middle East

Essay, 2017

18 Pages, Grade: 67



The rentier state theory has informed much scholarly research on the Middle East and North Africa (MENA) region. A main theorist of the rentier state theories argues that "in a rentier state, the government is the principal recipient of the external rent in the economy. This is a fact of paramount importance, cutting across the whole of the social fabric of the economy affecting the role of the state in the society" (Beblawi, 1990, p.88).

With several countries in the Middle East and North Africa (MENA) region ranking among the rentier states, it is important to consider the term, which has influenced political thinking of the past and the present. This argumentation raises the question of adequacy concerning the notion of the rentier state in analysing political processes in the major oil- producing states of the Middle East. In order to answer this question, this essay is divided into two main parts. In a first section, it will consider the main features that the rentier state theorists have set out and the implications that this theory brings about. In a second step, the main limitations of this theory will be elaborated, as well as some of its benefits will be considered.

Close reading of the theories by Hossein Mahdavy (1970), Giacomo Luciani (1987), and Hazem Beblawi (1990), the consideration of critical essays on theories of the rentier state, as well as a glance at countries ranking among rentier states by definition leads to the conclusion that the rentier state theory judges, generalises, and oversimplifies the respective states that rank among the definition of the rentier states. The theory focuses on the economy of a state and how a regime manages this economy, and excludes many elements that are essential to the analysis of the mentioned political processes and is therefore very problematic for this purpose. The following section will introduce the theories at hand, in order to take a critical look at their content and fundamental assumptions in a second step.

The Rentier State

Emerging notion of the rentier state: rentier capitalism

When looking at the topic at hand, one should firstly consider the category of rent in itself. Income of rent can include several elements of a given political economy, i.e. factors of production, such as land, for which the owner receives profit without significant input. As opposed to the category of rent, the notion of the rentier state makes a claim about the recipient of the rent. A first appearance of the terminology and the notion of the rentier state emerged with Marxist writing on the capitalist market in the context of class relations and societal conflict. Here, the monopolisation of the access to and ownership of a certain good gives one part of society the opportunity to accumulate wealth without contributing to the society. This form of rentier capitalism introduces the notion of one part of society living off the labour of others while excluding them from their exclusive ownership of private property (Pollin, 2007; Tripp, 2017). This notion brings about a demeaning assumption of a social group being "unproductive, almost anti-social, sharing effortlessly in the produce, without [...] contributing to it" (Beblawi, 1990, p. 86). One underlying assumption of this idea is that the economic system as the foundation for society and state forms the main influence for societal relations and the set-up of a state.

On an international scale, the place of the rent-seeking class emphasising its right to the ownership is taken by the state. With the globalisation of the world economy, the state emerged as the main actor in this equation. A first glance at European imperialism suggests a similar pattern: the claim of exclusive ownership to a good fits the description. With regards to the MENA region, the nationalisation of the oil companies in the 1960s and 1970s led to the state, not a class, emerging as the rent-seeking owner of the resource oil.

With regard to the topic at hand, it is important to distinguish between the category of rent as introduced above, and a set of rentier state theories, which have been brought about by

The Implications of the Rentier State Theory 4 a number of theorists and are of main concern to this paper. The following section will provide a brief overview of the theory of the rentier state, with regard to its definition by Hossein Mahdavy, Hazem Beblawi, and Giacomo Luciani, to elaborate the main argument to the research question in a second step.

Defining the rentier state theory

Several authors have contributed to the definition of the rentier state theory, which is used to analyse the political processes in several countries to this day. A first categorisation of rentier states was introduced by Hossein Mahdavy in 1970 looking at “The Patterns and Problems of Economic Development in Rentier States” regarding the Iranian case and the concept of external rent. Hazem Beblawi, too, recognises that rent generally is a reward for the mere ownership of any given natural resource, and therefore exists in all economies (Beblawi, 1987). However, his categorisation goes beyond this, as he distinguishes between "earned" and "accrued" (p. 86) rent, the latter being an effortless income. Beblawi acknowledges that the rentier in its social function is incorporated mainly before the emergence of the oil states in the 1970s. With this emergence, the notion of rentier economies came about, which, according to him, in turn impacted the role of the state in the Middle East profoundly. Beblawi introduced a rentier state theory using three key characteristics. Firstly, in a rentier state, rent is the predominant income. Secondly, a substantial amount of that rent is gained externally, i.e. sustaining an economy in the absence of "a strong productive domestic sector" (p. 87). Thirdly, this external rent is earned by "only few", or only "a small fraction of the society", introducing the idea of the few versus the many. In other words, if the wealth generation process involves the majority of a given society, the rentier state theory by Beblawi does not apply. Here, the majority of the society should be "involved in the distribution or utilisation" (p. 87) of that wealth only. Lastly, in a rentier state, the government takes on the role of "the few" and therefore largely receives the mentioned external rent. Hence, according to Beblawi, in a The Implications of the Rentier State Theory 5 rentier state, the government receives its main income as external rent. It is this last point that brings relevance to the analysis of political processes in countries, as in a system with the mentioned features, according to Beblawi, political power lies in the hands of those enjoying economic power, i.e. the few. In this described state system, economic activity is undertaken mainly by the government, and the resulting economic wealth is then redistributed to the population, which lets "citizenship become [...] a source of economic benefit" (p. 89). Here, a hierarchy develops, and results in a relationship between state and society that is based on the distribution of favours and benefits. According to this logic, when taxation etc. are not utilised for the purpose of state provision, citizens demand less in response to the government’s benevolence. Consequently, the involved citizens do not earn money as a result of work, but, under certain circumstances, get it awarded by their government, affecting the "ethics of work" (Beblawi, 1987).

In Luciani’s writings on the rentier state, the distinction between allocation and production plays a major role. This distinction between allocation states and production states is utilised in order to firstly categorise by origin of a state’s income instead of the natures of that income, and secondly, the consequent function that the respective state takes in the given context. The allocation state’s income is earned from abroad, while the production state’s income is based on their domestic production and the taxation. The states’ functions are mirrored in their respective terms, with the allocation state mainly reallocating the accrued income, and the production state mainly taking on the function of producing for the generation of income. As in Beblawi’s distinction, this leads to a clear distinctive feature in the allocation states’ setup. According to Luciani, under the circumstances of a state earning more than 40 percent of their revenues from abroad, and "whose expenditure is a substantial share of GDP" (Luciani, 1990, p. 70), a very different state-society relationship is developed.


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The implications of the rentier state theory regarding the major oil-producing states of the Middle East
School of Oriental and African Studies, University of London
State and Transformation in the Middle East
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rentier state theory, MENA, oil
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Rebekka Schliep (Author), 2017, The implications of the rentier state theory regarding the major oil-producing states of the Middle East, Munich, GRIN Verlag,


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