The Roll-Back of the State and the Rise of Crony Capitalism

A fiscal sociology of the state offers a useful lens for tracing the evolution of social contracts and the underlying political settlements2 that sustain them (Campbell 1993; Goldscheid 1958). In the Middle East, fiscal policy has gone through dramatic changes over the past 50 years, with state expenditures first growing to extraordinary levels, and then shrinking enormously. The nature and sheer size of the rise and the fall of public spending both reflected and in turn shaped the economic and political history of the region. From small post-independence states, in the rising nationalist states, republics and kingdoms alike, state expenditures rose to reach 50 to 60% of GDP in most of the region during the 1960s and 1970s. These spending levels were in line with the high level of state activism and ambition of the time. In the late 1990s however, the size of the state had shrunk, on average to 25 to 30% of GDP. These dramatic changes reflect important shifts in the composition and degree of inclusiveness of the social coalitions underlying the distinct forms of authoritarian rule in the region.