Institutions and Nations

The editorial published on August 17 in the Tehran newspaper "Donya-e-Eqtesad," written by Dr. Mosi Ghaninejad, is titled: "Us and Modern Institutions; Where is the Problem?" The author outlines the reasons for posing this question: "It has been one hundred and ten years since the victory of the Constitutional Revolution and the establishment of modern structures and institutions in Iran, but it seems that many of these do not have their true functionality. We have a parliament, but we do not have an established party system... We have municipalities, but the logic of modern management does not govern them... We have seemingly modern administrative and bureaucratic systems, but the practical outcome of their activities has turned into obstacles and hindrances for the people instead of facilitating their work... We have banks, but there is no sign of banking logic in them... At the top of all this, the government and the administrative system serving it have quietly prioritized their main sovereign duties as secondary and have devoted most of their efforts to enterprise management." Mosi Ghaninejad asks: "Where does the problem truly stem from? Why do modern institutions lose a significant part of their main functionality when they enter our society and turn into different phenomena?" The author of the "Donya-e-Eqtesad" editorial discusses the issue of modern institutions inspired by the West and their deviation within the framework of Iran. It is evident that many countries around the world have experienced this anomaly and have faced similar calamities as those that have befallen Iranians. For example, it suffices to mention dozens of political systems that have been established under the title of "Republic" in various countries around the world since the late 19th century and even submitted to the superficial holding of elections to form legislative assemblies, yet crushed their people under the most brutal forms of government. The role of institutions in advancing political and economic development is one of the most fascinating issues in the social sciences. For about a century and a half, the question has arisen as to why the political and economic institutions that emerged in Western Europe and North America, especially those that are considered the foundation of the rule of law and free market economy, do not take root in many other societies? How is it that in Latin America, Asia, and Africa, constitutions and regulations related to civil, criminal, and economic life are borrowed from the West, but in many cases, nothing remains of this collection but a shell? In the controversial and provocative book "The Crowd Psychology," published in the late 19th century, Frenchman Gustave Le Bon fundamentally denies the belief that countries can influence their social and economic structures by borrowing modern foreign institutions. According to him, institutions are born from the history, culture, and beliefs of a society and cannot be arbitrarily and voluntarily transferred to other societies with different histories, cultures, and beliefs. From this perspective, it would be foolish for a country in Asia or Africa to want to adopt, for example, the constitutions born from England or Belgium, which arise from the characteristics of those countries. Nevertheless, institutions originating from Western Europe and North America have attracted the attention of an increasing number of countries around the world since the late 19th century. These institutions emerged from Western modernity, which encompassed rationalism, the preservation of individual freedoms, the rule of law, and free economy. Contrary to Gustave Le Bon's belief, Western modernity and the institutions that arose from it did not stagnate in their original context and successfully took root in other civilizations, from Japan to India and Chile. Gustave Le Bon even speaks of the connection between institutions and the race of each nation, going so far as to say that a nation cannot choose its institutions as it wishes, just as it cannot choose the color of its eyes or hair. With such statements, the French author gained a reputation for racism, although among his avid readers were both Mussolini and de Gaulle and Churchill. In any case, his book "The Crowd Psychology" is one of the most influential writings of the past two centuries in the field of social sciences. Gustave Le Bon's views on the close connection between institutions and the historical and cultural characteristics of a nation, and the impossibility of transferring them to other nations, seem at first glance clearer than the sun. Switzerland, England, and America have created institutions along the lines of their historical developments that cannot be exported to Iraq, Uganda, and Venezuela. Or if they are exported in the same form without the necessary prerequisites and conditions, they will naturally not become indigenous and will create absurdities that we see today. However, institutions originating from Western Europe and North America have attracted the attention of an increasing number of countries around the world since the late 19th century. These institutions emerged from Western modernity, which encompassed rationalism, the preservation of individual freedoms, the rule of law, and free economy. Contrary to Gustave Le Bon's belief, Western modernity and the institutions that arose from it did not stagnate in their original context and successfully took root in other civilizations, from Japan to India and Chile. Of course, there have also been many failures. Many constitutions have turned into scraps of paper, and how many elections have brought lifelong dictators to power? Even political systems that are strongly opposed to Western civilization have borrowed the name and tools of Western democracies to gain legitimacy for themselves. The hereditary totalitarianism of North Korea is called a democratic republic, and in Iran, the system based on the rule of the jurist and the official and institutionalized discrimination between "insiders" and "outsiders" is called a republic and relies on the constitution. The institutions and their impact on human societies are one of the most important branches of social sciences. Institutionalism is a school of thought that emerged in the early 20th century around understanding the role of institutions in shaping economic behaviors. Among the most influential figures in the birth of this movement are Thorstein Veblen, John Rogers Commons, and Wesley Clair Mitchell. In the last decades of the 20th century, a new institutionalism school led by Oliver Williamson and Douglass North emerged, focusing on examining the institutional foundations of economic life and the impact of institutions on transaction costs. The aspirations of Iranian constitutionalists who became increasingly aware of their decline since the early 19th century attempted to compensate for their backwardness through the establishment of new institutions and especially a modern legislative system. Their grand effort to establish democracy in Iran, following the consolidation of Reza Shah's authoritarian regime, unfortunately failed. This is a bitter event, but its bitterness is quite relative. In a world dominated by totalitarian fascist, Nazi, and communist regimes and the dominance of colonial powers over a large part of the world, how could Iran live under the shadow of democracy? Instead, Reza Shah's regime, by creating modern institutions, from the army and police to the judiciary and universities, by establishing security and stability, through the establishment of a modern bureaucracy and preparing new laws in various fields and creating economic infrastructures, fulfilled many of the aspirations of constitutionalists and transformed Iran's face in an irreversible way. Without these structural and institutional transformations, the colossal project of the national railway, which is the greatest epic in the political, economic, and geopolitical history of contemporary Iran, would have been impossible. Iran's experience during this short period shows that contrary to Gustave Le Bon's pessimistic beliefs about the inefficacy of institutions outside their birthplace, with political will and rational inspiration from institutions born of Western modernity, the wheel of development can be set in motion, but the continuity of this process is accompanied by suffering and setbacks and sometimes devastating failures. Japan turned to Western modernity during the Meiji era (1868 - 1912), but to become a truly modern country and a very strong pillar for democracy, science, and progress in Asia, it had to go through the hell of World War II. Chile went through very difficult periods under Salvador Allende and Augusto Pinochet to become one of the main poles of the rule of law and economic development in Latin America. However, Iran, as Dr. Ghaninejad writes, is trapped in institutions that appear modern but do not have their real functionality. Everything flows within a seemingly modern decor with actors who often clumsily repeat the latest trendy phrases from the 21st-century world. But behind this decor, everything is frozen. The senior governing bodies of the country have turned into talkative and inactive dinosaurs. The state bureaucracy, under the pressure of a multitude of employees, has become suffocated. Hundreds of thousands of hours of work are spent preparing five-year plans and policy packages, the last of which ends up gathering dust in the drawers of ministries. The very modern branches of banks are often a cover for hiding the bankruptcy of the country's banking system. What is the solution, and how can we end the paralysis of institutions? The editorial of "Donya-e-Eqtesad" holds that the ideologically driven intellectuals of Iranian society are guilty of misinterpreting the modern political system of parliamentary democracy as "popular sovereignty," whereas the main goal of this system is the establishment of the "rule of law." He writes: "It was these intellectual elites who justified an absolute government instead of a government bound by law, claiming that the government is responsible for planning all matters of the people, whether political, economic, social, or cultural." The solution, from his perspective, is to revisit concepts in various political, economic, and social fields, because, according to him, until the intellectual knots are untied, purely practical and technical remedies will not be effective. The free market, as the most important foundation of Western democracy, has always been accused of being a playground for "vampire capitalists." During the nights of the Goethe Institute in Tehran, which were held on the eve of the revolution, the cry of "freedom" was mainly voiced by a large number of intellectual elites of that time in belief of the superiority of "proletarian democracy," those who vehemently hated "bourgeois democracy" (the foundation of modern institutions). There is no doubt that from September 1941 to February 1979, during a period of nearly forty years, a very large part of Iranian intellectuals, unlike their fathers in the Constitutional Movement, turned their backs on the necessity of drawing inspiration from Western modernity and its inspired institutions under the influence of communist ideas. Even before the Islamic Revolution, the use of the concept of "liberalism" in the political culture prevailing in Iranian intellectual society was often accompanied by great disdain. The foundational concepts of Western democracy, especially the "right of individual sovereignty" against collective dominance and "the will of the masses," became diminished. In the face of the greatness of the "sea," the "drop" had to forget itself. A large part of the achievements of intellectualism during the forty years before the revolution found its way into the political culture of the founders of the new political system in Iran and was used in the establishment of new institutions. The constitution turned towards a socialist economy with Article 44 and closed the door to investment from "bloodthirsty imperialists" with Article 81. In the process of forming the new institutions of the Islamic Republic, one of the main objectives was to prevent the influence of "outsiders," just as the systems praised by a large part of the intellectuals of that time in Iran also, without any concealment, closed the door to elements dependent on "bourgeoisie" and "petty bourgeoisie." These thoughts still persist among the remnants of the left in Iran, although some of them have found new excuses to justify their loyalty to previous ideas and to continue their disgust for "bloodthirsty liberalism": isn't international capitalism destroying the environment of the Earth and its only mission is to exacerbate poverty and inequality in the world? The same thoughts are widely scattered in many of the main power centers in the Islamic Republic. It is no coincidence that in the domestic arena...