Egyptian Labor Uprising Against Rubinites

By Matt Stoller
Naked Capitalism

Via Wikileaks, we learned that the son of the former President of Egypt, Gamal Mubarak, had an interesting conversation in 2009 with Senator Joe Lieberman on the banking crisis. Gamal is a key figure in the forces buffeting Egypt, global forces of labor arbitrage, torture, and financial corruption. Gamal believed that the bailouts of the banks weren’t big enough – “you need to inject even more money into the system than you have”. Gamal, a former investment banker trained at Bank of America, helped craft Egypt’s industrial policy earlier in the decade.

“Our purpose is to improve Egyptians’ living standards. We have a three-pronged plan to achieve this: favoring Egypt’s insertion into the global economy, reducing the state’s role in the economy, and giving the private sector greater freedom.”

Deregulation, globalization, and privatization. This should be a familiar American recipe, commonly associated with former Treasury Secretary and Goldman Sachs chief Bob Rubin. That Rubinite rhetoric has been adopted by the children of strongmen shows the influence of Davos, the global annual conference of power brokers. Gamal, far more polished than his father, understood that the profit and power for his family lay in cooperating with foreign investors to squeeze labor as hard as possible.

This strategy was targeted at the global labor arbitrage going on since the 1970s, with Egypt’s role as one cheap labor in-sourcer. It’s no surprise that the Mubarak family has $40-70B stashed away in the global tax safe havens coddling the superrich. This wealth was extracted from the youth and women in Egypt’s new factories making low-cost goods for export. This is why the revolution was spearheaded by youth and women, and why the nationalist business elite, with its deep ties to the military, sided with the protesters. Mubarak’s inner circle aligned themselves with international investors and set themselves against domestic business and military interests.

In other words, this is a revolt against Rubinite economic policy. Even the rhetoric Gamal used in pushing his policies echoes that of Rubinites. This Orwellian model of discourse frames corrupt decision-making to confiscate wealth from ordinary people as “tough-minded” because it’s “unpopular.” Here’s Gamal:

“Bringing change is always a harsh task. You must sometimes accept unpopularity. But if you are really convinced that you are making the right decision, you must stick to it. Modernization is worth this price. If not, we will have to be honest both with ourselves and public opinion and acknowledge that we failed. I am perfectly aware of what the consequences of such a failure could be, and I am doing my best. I know that our action will later be examined scrupulously. This is what we call a ‘result-oriented culture’.”

You can smell the McKinsey presentation. Here’s Obama’s budget director, ex-Citigroup executive Jacob Lew who made millions on the housing bubble, justifying his cuts to the social safety net (such as low income heating assistance, which means some poor people will freeze to death):

“These three examples alone, of course, represent only a small fraction of the scores of cuts the president had to choose, but they reflect the tough calls he had to make.”

And here’s George W. Bush, justifying his decision to invade Iraq:

“And so what I’m telling you is that sometimes in this world you make unpopular decision because you think they’re right.”

The political architecture of the Mubarak regime was directly pulled from the neoliberal shadow government model, right down to the political rhetoric of toughness as a mask for theft. Paul Amar has by far the most persuasive account of the Egyptian revolution. Amar goes beyond the absurdist Facebook revolution narrative, and points out that what is going on is in effect a youth-driven labor uprising, combined with fights between Mubarak-centric Rubinite elites and the domestic nationalist business community tied to the military. Mubarak had made tight alliances with the Islamic right, while slashing the social safety net and bringing in international investors to open low wage manufacturing (this is part of Mubarak’s son’s Bank of America training, more on that below).

This uprising is just the culmination of strikes that began a few years ago in response.

“This revolt began gradually at the convergence of two parallel forces: the movement for workers’ rights in the newly revived factory towns and micro-sweatshops of Egypt especially during the last two years, and the movement against police brutality and torture that mobilized every community in the country for the last three years. Both movements feature the leadership and mass participation of women (of all ages) and youth (of both genders). There are structural reasons for this.

“First, the passion of workers that began this uprising does not stem from their marginalization and poverty; rather, it stems from their centrality to new development processes and dynamics. In the very recent past, Egypt has reemerged as a manufacturing country, although under the most stressful and dynamic of conditions. Egypt’s workers are mobilized because new factories are being built, in the context of a flurry of contentious global investment. Several Russian free-trade zones and manufacturing settlements have opened up, and China has invested in all parts of the Egyptian economy. Brazil, Turkey, the Central Asian Republics and the Gulf Emirates are diversifying their investments. They are moving out of the oil sector and real estate and into manufacturing, piece-goods, informatics, infrastructure, etc. Factories all over Egypt have been dusted off and reopened, or newly built. And all those shopping malls, gated cities, highways and resorts have to be built and staffed by someone. In the Persian Gulf, developers use Bangladeshi, Philippine and other expatriate labor. But Egypt usually uses its own workers. And many of the workers in Egypt’s revived textile industries and piece-work shops are women. If you stroll up the staircases into the large working-class apartment buildings in the margins of Cairo or the cement-block constructions of the villages, you’ll see workshops full of women, making purses and shoes, and putting together toys and computer circuitboards for sale in Europe, the Middle East and the Gulf. These shop workers joined with factory workers to found the 6 April movement in 2008.”

The torture and repression had a specific cause, as did the reaction against it.

“In the place of food subsidies and jobs they have offered debt. Micro-credit loans were given, with the IMF and World Bank’s enthusiastic blessing, to stimulate entrepreneurship and self-reliance. These loans were often specifically targeted toward women and youth. Since economically disadvantaged applicants have no collateral to guarantee these loans, payback is enforced by criminal law rather than civil law. This means that your body is your collateral. The police extract pain and humiliation if you do not pay your bill. Thus the micro-enterprise system has become a massive set of police rackets and ‘loan shark’ operations. Police sexualized brutalization of youth and women became central to the ‘regulation’ of the massive small-business economy.

“In this context, the micro-business economy is a tough place to operate, but it does shape women and youth into tough survivors who see themselves as an organized force opposed to the police-state. No one waxes on about the blessings of the market’s invisible hand. Thus the economic interests of this mass class of micro-entrepreneurs are the basis for the huge and passionate anti-police brutality movement.

“It is no coincidence that the movement became a national force two years ago with the brutal police murder of a youth, Khalid Saeed, who was typing away in a small internet café that he partially owned. Police demanded ID and a bribe from him; he refused, and the police beat him to death, crushing his skull to pieces while the whole community watched in horror.”

What is going in Egypt represents a remarkable new political coalition striking deep at the heart of the Washington consensus. Social media mattered, in that it was the language by which the youth expressed themselves and their hatred of the torture inflicted upon them to extract maximal profit. This alliances, of a domestic business-military community, women’s groups, and a youth-driven labor movement, has parallels in the 1930s New Deal coalition and the 1850s anti-slavery coalition. It is also interesting that the pre-Facebook blogosphere of 2004-2005 played an important role in unmasking torture and delegitimizing the authority of the state, including the justice system and the media.

Seen in this context, Egypt is part of a global conflict of financial oligarchs fighting with leftist human rights activists, unions, and domestic industries. Egypt’s going to need the money stashed away and stolen by the Mubarak family; getting to that money requires an international crackdown on superrich tax havens. Furthermore, the links between Mubarak corruption and various Rubinites are probably as extensive as the torture trade between the CIA and Egypt. The extent of the cover-up of the Mubarak regime’s behavior will be the way to judge what happens going forward. Obama’s mild-mannered and largely irrelevant statecraft simply reflects the paralysis of the foreign policy establishment as the extent of its complicity in the overall economic and political strategy of this repressive regime is revealed.

Of course, it’s quite possible that the Mubarak-style repressive franchise isn’t done. Already, the Egyptian military is trying to ban the labor and professional organizing at the heart of the uprising. Like Obama’s promises of hope and change in 2008, Egypt in 2011 is full of promise, with ambiguous tidings.

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