The recent (apparently accidental) death of Iranian President Ebrahim Raisi in a helicopter crash, along with Iran’s prolific foreign minister Hossein Amir-Abdollahian, has prompted much speculation and discussion about what changes in Iran’s political power arrangement may occur. How will their deaths affect the nation of Iran itself? What are the prospects of the Resistance Axis against Zionism that Iran leads?

As is often the case, the discussion in both the mainstream media and even many progressive/left media traffics in clichés and superficiality, even going so far as to make Chicken Little proclamations that the Islamic Republic will imminently fall due to the death of some of its leadership. This mistakes the true pillars of power in the Islamic Republic of Iran to be individual clerics and politicians (rather than the foundational institutions these leaders stand on).

In this essay, I argue that Iran’s system has a deeply grassroots character built on mass working-class support, which makes its political system extremely difficult to dislodge, despite the best efforts of the US Pentagon and the CIA, the Zionist entity, the Gulf monarchies, and their Wahhabi/Salafi proxies. It can be argued that Iran is not only anti-imperialist but socialist; a rare model of Islamic socialism that has not existed elsewhere since Libya’s model of Islamic socialism was destroyed in 2011.

How Iran’s Unique Economy Developed

First, some historical context is necessary. In its 2,500 years of history, Iran/Persia has never had an economy that could be considered a free market. The state has always played a dominant role. From the ancient Persian Empire onwards, a powerful, centralized monarchy ran what could be considered a ‘palace economy’ whereby the great bulk of resources went to the king and his officials, who redistributed resources as they saw fit. In essence, the palace planned the economy (this system also existed in ancient Egypt, Babylonia, and China).

This system had a nobility, but they never had the same power or status that the feudal nobility possessed in medieval Europe. The Persian emperor was so vastly wealthier than all the nobles put together that they were completely subordinate to him. The emperor was also obligated to protect the serfs from the worst abuses of the nobles, and “Debt Jubilees,” in which the emperor canceled the debts of peasants to their lords, were a tradition.

Iran/Persia got its first exposure to the global capitalist system with the rise of the petroleum economy. Oil was discovered by British speculators in Abadan in 1901, and 13 years later British capitalists acquired effective control over all major oil production in Iran, a monopoly they held for 37 years via the Anglo-Iranian Oil Company. For two-thirds of a century, Iran’s oil production was dominated by foreign imperialists: first the British until the 1950s and later the US from the 1950s until the 1979 revolution.

Abadan oil fields

As bad as this exploitation was, it was largely confined to this one industry. Since petroleum was fairly disconnected from the rest of Iran’s economy, foreign exploitation of that commodity did not have the same debilitating and deforming effect on the country’s overall economic development that, for example, the British cotton industry had in Egypt and India, which meddled deeply in those countries' food production. Iran was never formally colonized, meaning it kept much of its traditional economic structure and social cohesion intact.

The Pahlavi Ancien Régime

The Shah Reza Pahlavi, Iran’s last monarch who reigned from 1941 to 1979, was a brutal US-backed autocrat. Nonetheless, some of his policies unwittingly set the stage for Iran’s revolutionary economic system today. Desiring to turn Iran into a great modern power, the Shah enacted a series of reforms between 1963 and 1978 that radically altered Iranian society, known as the “White Revolution” (white being the color of the monarchy). These included major land reforms in the countryside, where the rural estates of big landowners were broken up and redistributed as small plots to the peasantry. This completely upended the rural feudal order. The Shah did this not out of benevolence to the peasants but to break the power of the traditional landed nobility, who he compensated by granting them ownership of businesses in the major cities.

The Shah handing out land deeds during 1963 land reform

The Shah also reinvested some of Iran’s massive oil revenues into the country's manufacturing base outside the oil sector, kick-starting an industrial revolution in the country. He imposed trade barriers and tariffs to keep out foreign competitors and protect local Iranian industrial capitalists. Paved roads and railways connecting the major Iranian cities were built for the first time. Urbanization accelerated and the modern working class exploded in numbers (the urban population went from 7.2 million in 1960 to 18.2 million in 1979, which was 33% to 50% of the total population in two decades). Iran produced virtually no steel in 1960; by 1977, it was producing as much steel as Britain.

But the fruits of this modernization and development in the 1960s-70s did not reach the overwhelming majority of Iranians, and this is what doomed the monarchy. In 1973, 85% of all private industry in Iran was owned by only 45 families. The Iranian capitalist class was tiny and completely dependent on the Shah for contracts and favors. The Shah preferred it this way, as he wanted to be sure no one amongst the Iranian bourgeoisie became potential rivals. Thus, the Iranian capitalists had no political independence from the monarchy.

Iran’s middle class was somewhat larger, about 5% of the population, or around 2 million out of 40 million people total. Many were culturally liberal and adopted Western fashions and trends. But 95% of the Iranian people remained deeply exploited, impoverished, and highly religious workers, farmers, artisans, and small shopkeepers. They grew to resent the monarchy’s rampant corruption, the neglect of the urban and rural poor, the Shah’s alliance with Western imperialist powers, and disrespect for traditional religious and social norms.

The Shah, obsessed with centralizing power around himself, had systematically weakened and reduced the size of two classes which had a vested interest in defending his regime, the landed nobility and the urban bourgeoisie. He also alienated much of the middle class with his refusal to make liberal political reforms and his personalized, autocratic rule. He wound up with millions of enemies and only a handful of allies.

These tensions came to a boiling point in 1978-79, when the working-class majority, in alliance with nationalist-minded petit bourgeois and Islamic clergy, rose up in their millions against the monarchy.

Demonstration during 1978-79 revolution

Post-Revolution Economic Realignment

Thus, the revolution in Iran quite swiftly destroyed the political power of the Iranian bourgeoisie, who were expropriated or fled the country when the monarchy collapsed. In 1979, state power passed from the hands of the monarchy which ruled in the interests of a handful of capitalists and aristocrats to a vanguard of Islamic clergy whose base of mass support rested on the impoverished working-class/peasant majority. The centrally-planned economy which was already in place was redirected in service of the Iranian people and nation as a whole instead of a small elite.

While the Islamists, liberals, and Marxists who took part in the revolution against the Shah had different ideas regarding what path Iran would take following the deposing of the monarchy, there was significant cross-pollination in terms of their ideas. Shia populism, representing a dissident strand of Islam that had often been at odds with the wealthy and the powerful in the Muslim world over the centuries, had common ground with many aspects of socialist thought.

A notable example of this was the political and religious development of Mahmoud Taleghani, a leading intellectual influence on the Iranian Islamic Revolution and a lieutenant of the Ayatollah Khomeini. Taleghani was imprisoned alongside Iranian Marxists under the Shah and frequently engaged in debates and discussions with them. While rejecting Marxism on the grounds that he found historical materialism incompatible with Islamic faith, he took their arguments seriously and socialism heavily influenced his ideas. In Taleghani’s famous book “Islam and Ownership,” he argued in favor of collective ownership of natural resources in the national interest, saying this was in line with Quranic teachings. Taleghani was even called ‘the Red Mullah’ for this reason.

In the economic policies implemented by the leadership of the Islamic Revolution since 1979, conceptions of social justice, the uplifting of the poor, and an opposition to usurious financial speculation at odds with healthy national development have helped shape Iran’s economic institutions.

Read part 2 of this series, IRAN'S STATE INSTITUTIONS UNDER ISLAMIC SOCIALISM