Two years ago, the West thought it recognised what was happening in the Arab world: people wanted democracy, and were having revolutions to make that point. Now, recent events in Egypt have left many open-mouthed. Why should the generals be welcomed back? Why should the same crowds who gathered in Tahrir Square to protest against the old regime reconvene to cheer the deposing of their elected president? Could it be that the Arab Spring was about something else entirely?
I believe so. The Arab Spring was a massive economic protest: a demand that the poor should have the basic rights to buy, sell and make their way in the world. I have the nerve to say this because just after the death of Mohammed Bouazizi, the Tunisian fruit seller who started the Arab Spring by setting himself ablaze, my researchers spent 20 months in the region to find out more. Why would someone kill himself after he had lost a cartful of fruit and an old set of scales? We found something the newspapers missed: he was not alone. No fewer 63 men and women replicated Bouazizi’s protest within two months of his death, in one country after another.
We interviewed their families, and started to piece together their story — the true story of the Arab Spring. The picture is now complete and the facts are in. These facts have deep implications for David Cameron’s government. Our research suggests that the region’s revolution has just begun and has the potential to transform the Arab world for the better. But only if the West can see what is really going on, and offer support.
As is so often the case with political martyrs, Mohammed Bouazizi has come to mean different things to different people. To some he’s a symbol of resistance to injustice; to others an archetype of the fight against autocracy. Last year the Occupy activists enlisted him as a spiritual ally. It is hard to imagine that the real Bouazizi would have recognised himself in any of these incarnations.
When local authorities took away his fruit and scales, his livelihood was destroyed. He knew that from then on he would never have a legal right to put up a stall. He had no way to reduce the cost of the bribes that he paid regularly for his right to buy and sell. This would destroy his ability to get credit to buy the truck he dreamed of. The government has the power to crush people like Bouazizi, and it seemed to him that they would do so. He protested, in an act copied by 21 more people in Tunisia, 29 in Algeria, five in Egypt, four in Morocco, two in Syria, one in Saudi Arabia and one in Yemen.
They were all, like Bouazizi, extralegal entrepreneurs — protesting for the right to get on. The right to own and better their lives; to accumulate capital; not to have their property expropriated on a whim. They were in businesses as diverse as restaurants, computing, real estate, opticians and taxis and their decision to commit suicide in public was usually taken after the authorities confiscated their wares or their documentation. As one Tunisian survivor told us: ‘I have no problem with competition, but expropriation is an indignity. Authorities do not recognise what is ours, and that is not -tolerable.’
This is the case not just for most of the Arab world, but for most of the third world. The phrase ‘black market’ suggests, to western ears, dodgy dealing on the sidelines. But in the Arab world legality is what happens on the sidelines. Economists look only at the official statistics, and imagine, for example, that Egypt has a massive unemployment rate. If you were an out-of-work Egyptian, however, you would be dead after three or four months because you would not have enough food. Most Arabs are working, but in a way that has become invisible not only to their governments but to the West.
Outside Cairo, the poorest of the poor live in a district of old tombs called the ‘city of the dead’. But almost all of Cairo is the city of the dead — that is to say, dead capital. Assets that cannot be used to their fullest, cannot be used as collateral for loans or changed for other assets. Seeds that can never grow. These people are working, but not in ways that western governments are prepared to recognise. Given the chance, they would pull themselves, and their countries, out of poverty. But they are denied the chance, because the rule of law is a cosy club to which only the elite belong.
And the scale? In Egypt alone, the extra-legal sector accounts for 84 per cent of businesses and 92 per cent of land parcels. My organisation, the Peru-based Institute for Liberty & Democracy, estimates that some 380 million Arabs derive most of their income from the ‘shadow’ economy.
If the Arab Spring is to be compared to a revolution, then it should that of England in 1688. After the Glorious Revolution, the crown agreed to be limited by the rule of law. The English were able to have deeds for their property, a right that even a king could not take away. People could borrow against their property, no matter how humble. The eventual result was the industrial revolution. This process, which allowed the West’s incredible economic transformation, has yet to happen in the third world. And so many billions of people are stuck in poverty.
This is not some western monopolistic conspiracy. Americans, Europeans and Japanese take the wealth-creation process so completely for granted that they have forgotten that property is about more than real estate or ownership. It is about the identities, contracts, rules, credit guarantees and documented information that allow entrepreneurs to join people, things and capital into more valuable combinations. These tools, essential to escape poverty, lie out of reach for most Arab entrepreneurs. In Egypt, for example, to legally own a small business such as a bakery requires dealing with 29 different government agencies and navigating 215 sets of laws. In Arab countries, the poor entrepreneur’s right to transact derives from the goodwill of local authorities, not the law. When Bouazizi and those other entrepreneurs lost that goodwill, that right evaporated, severing access forever to the legal tools that property rights bestow. Those authorities expropriated not just their property but their futures. This is why they burned themselves alive.
Britain has been generous with international aid. But if Cameron were to match this by pointing out the obstacles facing the Arab poor, it could be transformative. He has long been a vocal proponent for property rights and the rule of law as crucial elements for economic development. What better moment than to carry that message to the Arab world? Relieving poverty need not be seen by the new Arab governments as an act of charity. On the contrary, legal reforms are already at the top of these new governments’ agendas for growth.
It was a British philosopher, Gilbert Ryle, who coined the term ‘category mistake’. If don’t get your categories right, he said, you won’t get your analysis right. If the West places Egypt and the Arab Spring into the category of ‘Islamist uprising’, it will not only misunderstand the hopes of millions but miss a remarkable opportunity. By our estimates, entrepreneurs who want a legal system with property rights like those in the West outnumber al-Qa’eda members in the region by a ratio of about 100,000 to one.
Britain is ideally placed to see the link between the 1688 Glorious Revolution, and what it did to ensure so many shared the benefits of the industrial revolution, and what is happening today in Egypt. If it did so, much of the confusion of what underpins the Arab Spring would clear up. This is not only an Arab phenomenon. It needs an eloquent western advocate, who can point the economic potential in extending the rule of law, property and businesses to the many, not the few. The West has spent decades making a category error in how it sees third world poverty and stability. It needs a new voice, with a new approach. There is no reason why that voice should not be David Cameron’s.
Hernando de Soto, is president of the Institute for Liberty & Democracy and author of The Mystery of Capital.
Subscribe to The Spectator today for a quality of argument not found in any other publication. Get more Spectator for less – just £12 for 12 issues.