Iran: Political Economy of an 
Islamic State 

b 
Tahir Amin * 
Spring 1984 

INTRODUCTION 
Political and economic developments in the post revolutionary Iran 

present a special dilemma to outside observers in general and to social 
scientists in particular as many developments do not seem to fit theusual 
political and economic categories with which the social scientists are 
normally familiar. As a result, most analysts of contemporary Iran, 
approaching the reality from the rigidly preconceived conceptual lenses, 
tend to grossly distort the actual picture. The contemporary situation in 
Iran is usually portrayed as one of utter chaos and turmoil with little or 
no hope for any progress in the future.’ It is seen as ruled by “empty- 
headkid”, “conservative”, “brutal,” and “incompetent” mullahs who are 
bent upon destroying any signs of progress and civilization. Even 
the moderate analysts who seem to be less preoccupied with their biases 
and more cognizant of the new realities, appear to dismiss any long-term 
consequences of the current changes taking place in contemporary Iran.2 
My major objective in the following pages is to develop an alternative 
image of the same reality. I argue here that slowly and gradually, a new 
political and economic order is emerging in Iran, whose broad objectives 
and outlines are clear. A major distinguishing characteristic of this 

T a h i r  Amin is a lecturer in the International Relations Department at the Qaid-i-Azam 
University, Islamabad ( P a k i i )  and is currently completing his Ph.D. at the Deparhnent cif 
Political Science at M.I.T. in Cambridge, Mass. He is the author of Z”mhk&l Deelara- 
tion (1980) and qfghanistan Crisis (1982). 
‘A commonly accepted image typically reads as follows: “Iran’s emnomy is a shambles, its 
political system still wracked by divisiveness and violence. Civil war, territorial 
disintegration and Soviet penetration are constant possibilities.” See Marvin Zonis, “Iran: 
A Theory of Revolution from Accounts of the Revolution.” Wortd Politics. p. 588. Also see 
Terence Smith, “Iran: Five Years of Fanaticism.” The New York Tiwm Magazine, 
February 12,1984; and Shaul Bakhash, “Iran, Five Years Later, Divided and in Conflict.” 
The New York Times Magazine, February 12,1984. 
Theda Skocpol, “Rentier State and Sh’ia Islam in the Iranian Revolution.” Theoly and 
Society 11, #3 (May 1982). 

41 



order is its public welfarist orientation with special attention to the 
lower-middle and lower classes. And this order has the potential of so 
fundamentally transforming the political scene in Iran in the long run 
where the old issues and the old actors are most likely to be irrelevant to 
the new type of politics. Once successful, the political implications of this 
order will have a much wider effect on the Muslim world than commonly 
assumed. 

This paper has four sections. The first section deals with the ideology of 
the Islamic republic. Examining the ideas of the leading revolutionary 
thinkers, we shall try to establish a criteria against which the regime’s 
political and economic performance is to be assessed. The second section 
of the paper describes the nature of key political and economic 
institutions established in the aftermath of the revolution and their mode 
of functioning. The third part of the paper is concerned with the 
economic performance of the regime over the past five years. We shall 
assess its performance in two ways: (a) in light of the criteria established 
in the first part of the paper and (b) a brief comparison of the Islamic 
Republic’s five year performance with the prerevolutionary Iran’s last 
five-year plan (1973-1978). The final section of the paper summarizes the 
major conclusions of this study and also attempts to project a likely 
future scenario. 

IDEOLOGY 
Briefly surveying the thoughts of Imam Khomeini, Ayatullah 

Mahmood Taleqani, Imam Sadr, and Bani Sadr, we shall elucidate the 
criteria for assessing the performance of an Islamic Republic. 
Khomeini 

Imam Khomeini, in his book Islamic Government, provides a vision of 
an Islamic society. In his view, Islam is a complete code of life and “there 
is not a single topic in human life for which Islam has not provided 
instruction and established a norm”3 Islamic government may therefore, 
be defined as the “rule of divine law over men”. Recognizing tfie 
ambiguity of the principle of Vilayeti-faqih (Governance of 
Jurisprudence) as is generally understood, he thinks that rule by the 
religious scholars is logically self-evident from the nature of detailed 
instructions given by Islam and the practice of the holy prophet, 
Muhammad (Peace be upon him). He asserts:4 

. . . the true rulers are thefuqaha themselves, and rulership 
ought officially to be theirs, to apply to them, not.to those who 
are obliged to follow the guidance of the fuqaha on account of 
their own ignorance of the law. 

3Ayatullah Khomeini, Islamic Government. Translated by Hamid Algar. 
Y b i d ,  p. 34. 

42