The Egyptian Revolution - Part 3

Up to the beginning of the 19th Century, Egypt was part of the Ottoman Empire. The brief invasion of Egypt by Napoleon, in 1798, provided Britain, as part of the Napoleonic Wars, opportunity to stake its claim in the country. Britain alongside Ottomans, and Mamluks drove out the French, and in the subsequent chaos, Muhammad Ali, the commander of an Albanian regiment, nominally in the service of the Ottomans, seized power.

At the beginning of the 19th Century, not even Britain was yet industrialised. The dominant forms of foreign rule were those established on the back of Landlordism and Merchant Capital. The landlords established vast estates and plantations, either employing their own agricultural workers, or else simply extracting rent from domestic peasant farmers, whilst the merchants bought cheap materials and foodstuffs in these markets to sell back in Europe, whilst selling the increasing number of manufactured goods from Britain and other European countries into these markets. By its nature, Commercial Capital makes profits from buying low and selling high, rather than by actually creating surplus value by productive activity. As a consequence on its own, it tends to be destructive of development, because it undermines the actual producers. The political regimes established in these countries, therefore, tended to mimic the feudal regimes of the colonial power, with local landlords, and rulers being drawn into a system of domination over the mass of the population.

As a result, at this time, prior to the industrialisation of Britain and other European powers, and the military power which went with that, and which allowed them to exert direct colonial power, towards the end of the 19th Century, many countries like Egypt, or indeed those in Latin America, such as Venezuela, which had experienced a degree of economic development, were able to break free from the clutches of colonialism, usually under the auspices of some local military strongman.

Indeed, Simon Bolivar, is the classic example of that. Yet, the fact that these countries were able to free themselves from direct political control by some colonial power, and which set them apart from places such as India, did not mean that they were completely free.

In the 19th Century, many of these economies had a model of development to follow. It was that, being adopted in France and Germany, where under Louis Napoleon, and Bismarck, the State was driving capitalist development from the top down.

Indeed, in the US, something similar was happening. Having consolidated power in the hands of a centralised Federal State as a result of the Civil War, that state set about furthering the development of the dominant industrial capitalism of the North, in whose interests the Civil War had been fought. The State cleared the Native Americans from the land, in order to enable the establishment of the transcontinental railway, and settling of the plains for agriculture, it established a high tariff wall to prevent imports, particularly from Britain, in order to protect the infant US industry and so on. Meanwhile, the Monroe Doctrine, at the same time as opposing any extension of European colonialism in the Americas, also facilitated access to those markets for the US and the UK, which now as the "Workshop Of the World” sought to end Mercantilism, and gain access to global markets for its products, a strategy adopted by the US in opposing colonialism after WWII, on a global scale.

But, the extent of Egypt's relative freedom in the 19th Century can be assessed by the fact that under Ali, it waged expansionist drives, taking over Northern Sudan, Syria, and parts of Arabia and Anatolia, though European powers, concerned that Egypt might actually threaten the Ottoman Empire, and the political and strategic implications that would have for Europe's Southern flank, forced him to hand most of them back to the Ottoman's. The main consequence of this was actually to strengthen Ali's position to formalise his title as hereditary, thereby establishing the dynastic rule that was to last until 1952. It also meant that he could concentrate on the economic development of Egypt, which during the 19th Century became a capitalist economy.

In Europe, various methods were used to move peasants from the land, and to create a rootless working-class, forced to work in the developing towns and factories. In Britain, the process of the landlords stealing peasant land, that had been in progress since the 15th Century, continued under the name of “Enclosure”. In 1801, it was speeded up massively with the passing of the General Enclosure Act.

In France, the Revolution had dismantled the large estates, and introduced land reform. But, the peasants, as Marx describes, then found that they had to take out large loans and mortgages, which turned them into debt slaves. The Emancipation of the Serfs in Russia had a similar effect. In Egypt, the introduction of cash crop farming, particularly in relation to cotton, which assumed the form of a monoculture, had the same effect.

In Britain, and much of Europe, the gradual extension of trade led to the replacement of payment of rent in kind and the Corvee with Money Rent. The consequence was that peasants had to produce at least a portion of their output for sale i.e. as commodities. That was the only way of obtaining money to pay the rent and taxes. This undermined the self-sufficiency of the peasant, and opened up the need for increasing specialisation, as well as providing an opening for the development of the merchant class.

In Egypt, the development of cotton on the basis of cash crop farming achieved the same result. Cotton farmers, had to buy their other goods, which they would previously have produced themselves, from the market. It provides the basis for the development of a domestic market, and domestic capitalist production. But, of course, by developing cotton as a monoculture, there is insufficient domestic demand to absorb it, and so alongside the concentration of farms, in order to produce more efficiently for the market, comes the inward investment of foreign capital into those farms, and a concentration on meeting the needs of foreign markets for cotton, i.e. initially Britain.

But, Egypt faced the same problem that many economies face in bringing about economic growth – a shortage of capital. The UK had amassed huge amounts of money wealth by the 18th Century, from piracy, and from the slave trade. That wealth was held by large well established firms of banks and merchants. It provided the basis for the investment in productive capacity that occurred during the 19th Century. Other old colonial powers had similar stores of money that could be transformed into capital. In the US, capital was brought in by Europeans emigrating there, and the Northern industrialists were able, after the Civil War, to treat the South as an internal colony.

Lenin speaks of Russia treating Siberia in a similar manner under Tsarism. But, without such “Primary Accumulation”, any economy seeking to industrialise – be it capitalist or “socialist” - has to amass the resources to fund the development from somewhere. It can squeeze the peasantry, by unequal exchange between town and country, or it can do what most countries in that situation have been forced to do – it can borrow from foreigners.

One of the lessons that economists have learned, however, is that the effectiveness of this borrowing, depends on exactly what it is going to finance. If it simply goes to finance consumption, then it can only have a negative effect, ensuring that the country falls further into debt. But, even if it is going to finance, investment, the kind of investment is also important.

In his, “Economics Of The Transition Period”, Bukharin explained this problem in relation to the USSR. In part, it relates to Marx's analysis of the role of the Rate of Turnover.

In short, what this means is that if capital is invested in things such as large, heavy industry where it takes a long time for the commodities to be produced, and sold – i.e. for the capital involved in their production to be turned over, converted into money that can be re-invested – the annual rate of profit will be lower than where that capital is invested in commodities that are quickly produced and sold, precisely because less capital has to be advanced at any one time. In fact, Bukharin argued that if too much of societies' resources was diverted to such big heavy industries, it could actually result in a reduction in the amount of social surplus that could be created. Many of the successful newly industrialised economies of the 1980's onwards, have been those that first concentrated on the production of consumer goods, with a high rate of turnover, and which then having accumulated capital on the back of that were able to divert an increasing amount of resources towards heavy industry.

In this relation, Egypt made the opposite mistake. First under Said, and then under Ismail, Egypt underwent some considerable development, but at the expense of racking up huge foreign debt.

The latter stated in 1879,

"My country (Egypt) is no longer in Africa; we are now part of Europe. It is therefore natural for us to abandon our former ways and to adopt a new system adapted to our social conditions.",

and having been educated in Paris it was no wonder that he maintained a close relation with France, including the joint venture for the establishment of the Suez Canal. The extent of modernisation that was undertaken can be summarised by the fact that under the latter the railways in Egypt, and Sudan, which had remained in Egypt's control, increased from virtually none to, “the most railways per habitable kilometer of any nation in the world.” (Wikipedia) And demonstrating that the world is far more complex than the idea that it can simply be divided into imperialist and non-imperialist camps, under Ismail, Egypt itself resumed its own expansionist and colonialist ambitions by expanding its control into Dharfur, and attempts to colonise Ethiopia. Indeed, it was these imperialist ambitions in Ethiopia that, as much as the extensive plans for economic and social modernisation, left Egypt with massive debts.

“A national debt of over one hundred million pounds sterling (as opposed to three millions when he became viceroy) had been incurred by the khedive, whose fundamental idea of liquidating his borrowings was to borrow at increased interest. The bond-holders became restive. Judgments were given against the Khedive in the international tribunals. When he could raise no more loans, he sold his Suez Canal shares (in 1875) to the British Government for only £ 3,976,582; this was immediately followed by the beginning of foreign intervention.” (ibid)

In other words, and this was true of many of the Latin American economies, the condition they found themselves in stemmed, initially, not from any colonial power invading them, or indeed from the imposition of grinding unequal terms of trade. In large part, the economic problems of these economies arose due to the economic incompetence of their rulers. But, having put themselves in that position, they did find themselves being dictated to by powerful financial powers. In the absence of any body equivalent to the IMF, at that time, Britain and France sent its own representatives directly to Egypt to oversee its affairs. At the time Engels felt that this was all part of a manoeuvre, and that Britain had little real interest in Egypt.

In a letter to Kautsky he wrote,

“The Egyptian business is a Russian diplomatic manoeuvre. Gladstone is to take Egypt (which he does not have and if he had it, would not keep for long), so that Russia can take Armenia; which of course, according to Gladstone, would again be the liberation of a Christian country from the Mohammedan yoke. Everything else in the case is pretence, humbug, subterfuge. Whether this little plan will succeeds will soon be seen.”

Engels To Kautsky

In 1879, the extent of British control was extended, and eventually formalised by the official recognition of Egypt as a British Protectorate in 1914. However, Egyptian nationalists after WWI, won a majority in the Egyptian Parliament. When Britain, exiled the leader of the Wafd Party to Malta, a widespread revolt broke out, which resulted in Britain issuing the Unilateral Declaration Of Egyptian Independence in 1922. However, it was not full independence, and Britain retained control over major areas of Egyptian politics such as

(a) The security of the communications of the British Empire in Egypt; 

(b) The defence of Egypt against all foreign aggression or interference, direct or indirect; 

(c) The protection of foreign interests in Egypt and the protection of minorities;

(d) The Sudan.

Full independence came closer with The Anglo-Egyptian Treaty of 1936, but it maintained the right of Britain to retain troops to guard the Suez Canal. It was only after WWII, and the military coup led by Nasser in 1952, which led to the eventual withdrawal of British troops that full independence was restored.

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