The dominant Western narrative of Iran’s modern history remains a morality play. A democratic springtime crushed by a foreign-backed autocrat, followed by a descent into feudal theocracy.
This story is emotionally satisfying. It assigns blame neatly and renders contemporary sanctions and covert destabilisation as belated acts of moral hygiene. But it is analytically false. The Islamic Republic was not born from religious archaism but from the implosion of a twentieth-century developmental state whose economic and political contradictions were detonated by imperialism, class struggle, and elite revolt. Iran’s tragedy is not that it escaped the Shah. It is that it never escaped the political economy he constructed.
The Shah of Iran
Any serious account of Iran’s modern crisis must pass through the Pahlavi state. The Shah was installed and protected by Anglo-American power after the 1953 overthrow of Mohammad Mossadegh, and his regime maintained itself through repression. SAVAK, the secret police and intelligence service of Iran during the Shah’s reign, monitored, imprisoned, and tortured political opponents. Elections were rigged, intellectual and religious dissidence was curtailed, and journalists were silenced.
Yet it is equally true that the Pahlavi state was not simply an appendage of the West. It was a developmental system attempting to force a semi-peripheral economy into industrial modernity through centralised planning, oil rents, and state-directed capital formation.
The Pahlavi economy was not neoliberal by any meaningful metric. Rather it was a state-directed developmental regime organised around industrialisation and the mobilisation of oil rents. It was characterised by import substitution, industrial policy, public ownership of strategic sectors, capital controls, and massive investment in infrastructure, education, and heavy industry.
Steel, petrochemicals, automobile manufacturing, transport networks, and universities were built at a speed unprecedented in Iranian history. Urbanisation and literacy surged. By the late 1970s, Iranian industrial workers enjoyed higher real wages and greater social mobility than they would at any point in the subsequent half-century.
Economic and structural crisis
Indeed, developmentalism has always been structurally indebted to Marxism, even when ideologically hostile to it. From Meiji Japan to Nasser’s Egypt to Park Chung-hee’s South Korea, modernising states learned that the mythological free market cannot build an industrial base. Planning, discipline over finance, and state coordination of investment were essential. All developmentalist leaders, even the most viciously anti-communist, had some proximity or technical appreciation for Marxism. Pahlavi Iran was no exception.
The crisis of the Shah’s regime was therefore not simply moral or political. It was economic and structural. The Fifth Development Plan in the mid-1970s produced overheating, housing inflation, and social dislocation. In response, the state imposed artificial recession to curb inflation. That policy hit workers hard, provoking strikes and unrest.
But the initial revolt did not come from the industrial proletariat. It came from the middle classes, bazaar capital, clerical networks, and segments of the intelligentsia who had never been reconciled to the social and cultural upheavals of rapid industrialisation. Only once the downturn bit did the working class enter the struggle in force.
The Islamic Revolution
The Islamic Revolution was thus not a proletarian uprising against capitalism. It was a cross-class rebellion against developmental modernity itself. And this fact explains much about what followed.
Khomeini’s movement is often retrospectively clothed in the language of nationalisation and anti-imperial socialism. However, ownership on paper means little when control, rents, and capital flows are privately captured.
Even today, sectors constitutionally designated as public, including mines and heavy industry, are leased to private operators who function as de facto owners. Profits are siphoned abroad to Canada, the United Arab Emirates, Turkey, and the United Kingdom of capital flight that now defines Iran’s economy.
Iran’s post-revolutionary economy is dominated by three blocs: oligarchs aligned with the Executives of Construction Party, the Islamic Revolutionary Guard Corps (IRGC), and the bonyads, the vast religious foundations that operate as opaque corporate empires. Almost every major firm in Iran, even those formally designated as public, has shares held by the IRGC or a ministry. This is not socialised ownership. It is a rentier system of elite capture.
The economy is organised around raw-material exports, banking, and speculation. Industrial policy has atrophied. Investment has collapsed. The rial has been effectively dollarised. What emerged was a permanent regime of shock therapy and “primitive accumulation“, enforced not by the IMF but by sanctions, oligarchic hoarding, and capital flight.
Iran’s decline
Real wages today are lower than in 1978. From a Marxist standpoint, this represents a regression. Under the Shah, however repressive the political system, there existed a developmental bargain. Workers had rising incomes and a stake, however constrained, in national economic expansion. Under the Islamic Republic, that bargain has vanished. Surplus is extracted and exported by a clerical-military bourgeoisie that offers the population little beyond inflation, precarity, and moral policing.
The 1979 revolution fused Shi’a political theology with the idiom of Third Worldist anti-imperialism. This produced a form of revolutionary consciousness that understood the state primarily as an instrument of civilisational defence. This synthesis was given much of its rhetorical force by left-wing intellectuals such as Ali Shariati.
Defending the revolution
Initially, this extremity was directed outward, toward the US, Israel, and the imperial order that had subordinated Iran since 1953. But once power was secured, the same logic was necessarily turned inward. A state constituted through permanent siege cannot tolerate internal ambiguity.
Dissent, labour militancy, women’s autonomy, or cultural deviation could only be interpreted as vectors of foreign penetration, as extensions of the same hostile forces against which the revolution had defined itself. Repression thus ceased to be episodic and became structural to the new regime. As Marx wrote in The Eighteenth Brumaire of Louis Bonaparte, “first as a tragedy, then as a farce.”
It was at this point that revolutionary institutions assumed their decisive role. The IRGC, the Basij militias, and the Revolutionary Courts did not merely defend the revolution. They encoded paranoia into the architecture of the state.
They transformed a moment of existential defence into a permanent mode of governance, in which surveillance, ideological discipline, and coercion became the mechanisms through which sovereignty was reproduced into the fibres of the regime.
What had begun as a revolutionary response to Western imperialism hardened into a domestic order organised around suspicion, moral regulation, and pre-emptive repression.
Not classic Islam
This form of rule bears no continuity with pre-modern Islamic political life. Classical Islamic governance, including under the Abbasids and Ottomans, was characterised by pluralism of authority, juridical autonomy, and significant communal self-regulation.
The fusion of clerical sovereignty with total state power is not a return to tradition but a distinctly modern invention, shaped by the same logics of bureaucratic centralisation and security that define secular authoritarianism.
Iran’s theocracy is therefore not an atavism but a hyper-modern apparatus of control, forged in the crucible of external threat and internal class antagonism.
This condition of siege has not been imagined or invented by the Iranian state. It has been continuously reproduced by a history of coups, war, sanctions, assassinations, and covert destabilisation that has made external threat a permanent feature of Iran’s political life. A state formed under such conditions reorganises itself around survival.
The problem with the current protests in Iran
And it is precisely for this reason that earnest anti-imperialists must oppose the recent Western-backed protest movements in Iran. Not because the Islamic Republic is progressive. It is not. The unrest reflects real hardship, but it is being refracted through a geopolitical terrain organised around regime change. But regime change under conditions of imperial siege does not produce emancipation. It produces Libya, Syria, Iraq.
Iranian women deserve freedom. Iranian workers deserve dignity. But they will not receive either from Washington, London, or Tel Aviv, nor from NGO-managed “civil society” pipelines wired into the foreign-policy apparatus of the Atlantic powers. They will receive them only through an internal transformation that is not weaponised by empire.
The bitter irony is that in attempting to resist imperial domination, the Islamic Republic has reproduced its economic logic in a more parasitic form. Where the Pahlavi regime channelled oil rents into industry, infrastructure, and the material expansion of social life, the Islamic Republic has presided over their conversion into private wealth, offshore accounts, and a security apparatus designed to police the consequences of economic decay.
Development was replaced not by popular sovereignty but by a permanent regime of accumulation through dispossession, in which stagnation is stabilised by repression and decline is managed through ideology. The result is a society that is simultaneously hyper-mobilised and economically hollowed out, compelled to perform loyalty to a state that no longer offers a credible horizon of collective advancement.
Iran is therefore trapped in a vicious circle. External hostility produces internal securitisation. Internal repression produces resistance. Resistance invites further external pressure. And the economy continues to bleed outward.
The tragedy of Iran is not that it overthrew the Shah. It is that it overthrew development.
Featured image via the Canary
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