Out With Mubarak, In With Marx?

Hosni Mubarak's extreme capitalism demonstrably failed Egypt. Now social justice is on the mainstream agenda

By Austin Mackell

Egyptian protesters hold a defaced photo of former president Hosni Mubarak during his trial in Cairo, on 15 August 2011. Photograph: Andre Pain/EPA

In a recent TV discussion, Hossam el-Hamalawy, the prominent Egyptian leftist blogger, was asked: "So you're the president of Egypt. You wake up, what's the first thing you're going to do to reorient the economy?"

Hamalawy's answer was admirably concrete: raise the minimum wage to 1,200 Egyptian pounds ($198) per month, set a wage ceiling of 15,000 pounds ($2,480), renationalise the corruptly privatised factories, cut military spending and redirect those funds to health and education.

That a Marxist should suggest such steps is not surprising, but in Egypt they have now entered the mainstream. Neoliberal economic policies were thoroughly tried under the Mubarak regime, and demonstrably failed.

In 2008 the World Bank named Egypt as its "top reformer". Mubarak's adherence to the Washington Consensus strategies, however, delivered prosperity only for the already affluent elite. Meanwhile, the quality of life for the rest of the country deteriorated. This has not been lost on Egyptians.

In a recent conversation, Ahmed Attiya, a journalist for the Egyptian daily al-Shorouk – who describes his own politics as centre-right – put it to me that "even the conservative liberals nowadays support income taxes and minimum wages", adding that "social justice measures are on the agenda of every Egyptian party I have heard of".

Even the interim cabinet seems to get it. In March, as part his first TV address as interim prime minister, Essam Sharaf affirmed social justice, along with freedom and democracy, as one of the main principles of the revolution. These words have been accompanied by at least some action – one example being tentative moves to reform Egypt's regressive income tax.

The old system (typical of tax policy in the region) was basically flat, with a top rate of 20%. This put an unfair burden on society's lower ranks and allowed those at the top to accumulate massive fortunes. These fortunes in turn drove rampant inflation which, combined with a 10% sales tax, put an ever-increasing strain on the spending power of the poor. Meanwhile, the public health and education systems fell apart.

The changes made so far are small – the tax-free threshold has been lifted slightly and the top rate raised to 25% – but they are an indication that Egypt's political class know which way they are supposed to be moving.

Perhaps a more significant indicator than the small steps taken on tax is the interim cabinet's decision to turn down a new round of unpopular and potentially devastating loans from the IMF. This decision will give the new government more freedom to chart its own economic course.

Of course the fight is not won yet. Less high-profile deals with western financial institutions such as the European Bank for Reconstruction and Development are still on the cards and have similar strings attached.

There are well-off enemies of social justice within Egypt, too, and they seem to have an ally in the Supreme Council of the Armed Forces, which has banned strikes and sit-ins along with protests. Their objections, however, are generally based less on principle than issues of practicality: that businesses, for example, can't agree to new wage structures now, amid such political uncertainty.

Market fundamentalism has no traction here any more and no new government will be able to hide behind experts that advocate it. The government will have to be seen to be acting directly to ease the population's suffering and re-levelling a very slanted playing field.

From the beginning, the class-based economic elements of this revolution have been undeniable to those paying attention. The "April 6" Facebook group which triggered the uprising in January had itself been inspired by the textile workers of Mahalla whose strike had been part of an ongoing rolling wave of industrial action across the country involving more than a million workers – a story the mainstream media has studiously ignored.

On the odd occasion that the unpopularity of Mubarak's neoliberal programme is mentioned now, it is with a tone of tutting condescension. Back in February, for instance, a Reuters business commentary on Egypt and other North African countries noted the "bitter irony" that:

"Citizens of the countries in question would be financially better off if their governments don't stray too far from the economic policies they have pursued in the past. But the toppling of unpopular regimes will make it difficult for their successors to adopt the same policies."

What the article did not consider was that it might be the other way round – and that Mubarak's extreme capitalist policies could have contributed to his unpopularity.

Such an analysis implies that the Egyptian people are so blinded by their hatred of the dictator that they don't know what's good for them. It relies on the assumption that the answer to such questions has been settled in favour of the Friedmanite policies that have been ascendant in the halls of power through the last few decades. Events in Egypt – and indeed around the world – should give those still indulging in such hubris pause for thought.

-This commentary was published in The Guardian on 19/08/2011
- Austin Mackell is an Australian freelance journalist with a special interest in the Middle East and a progressive outlook. He has reported from Lebanon during the 2006 Israeli invasion, Iran during the turbulent 2009 elections and recently moved to Cairo to report on the transition to democracy