Powers dissertation 2020

PRODUCING CRISIS/SURVIVING CRISIS: POWER, CAPITAL, AND THE SOCIAL STRUCTURE OF ACCUMULATION IN THE HASHEMITE KINGDOM OF JORDAN by Colin Powers A dissertation submitted to Johns Hopkins University in conformity with the requirements for the degree of Doctor of Philosophy Baltimore, Maryland April 2020 © 2020 Colin Powers All rights reserved Abstract This monograph will attempt to resolve a two-part problematique: (1) why is it that Jordanian capitalism continuously engenders developmental and social failures and (2) how is it that this capitalism endures in spite of engendering such failures. In answering the first of these questions, I will emphasize structural properties endowed by both history and Jordan’s global peripherality/external dependency before unwinding the more immediate causal and constitutive effects introduced by contemporary economic governance, the profit seeking behavior of an elite fraction of the capitalist class, and processes related to authoritarian renewal. I will attribute the endurance of this capitalism, meanwhile, to a constellation of integrated institutional bulwarks that I will refer to as Jordan’s social structure of accumulation. Consolidating an elite-dominated form of accumulation and control, I will show how the stability realized through these institutional bulwarks both requires and implies long- term underdevelopment and high levels of social tension.

Having demonstrated how this Janus- faced phenomenon functions to generate crisis conditions without ultimately precipitating either the collapse or evolution of the wider political economy, it is my hope that the paradox of Jordanian capitalism—a formation at once resilient and ontologically bound for failure—will be at least partially resolved. In this monograph’s conclusion, I will use the thick description at the heart of this case study in conjunction with abductive reasoning so to derive generalizable theoretical knowledge as regards actually existing neoliberalism along the global periphery. ii For Leila, my parents, and Bobby iii Contents Chapter One: An introduction to (Jordanian) capitalism in the 21st century………………………………………………….1-45 Chapter Two: Social structure of accumulation theory and the road head…………………………………………………….46-68 Section One Chapter Three: A preamble: Jordan before the Mandate, Jordan during the Mandate…………………….70-96 Chapter Four: Independent Jordan’s first social structure of accumulation: 1946-1973………………………………pp.97-133 Chapter Five: Oil, induced state rentierism, and Jordan’s social structure of accumulation: 1973-1986…….134-169 Section Two Chapter Six: Politics, policy making, and the institutionalization of neoliberal capitalism.171-204 Chapter Seven: The making and management of the market: The state/palace in the economy…………………pp.205-255 Chapter Eight: Institutionalizing oligarchy: The Jordanian form of market competition……………………………pp.256-293 Chapter Nine: Social control under Abdullah………………………………………………………………………………………….294-318 Chapter Ten: Peripherality, dependency and the external articulation of Jordanian capitalism…………………pp.319-370 Chapter Eleven: Legitimating neoliberalism: inward/outward facing ideology and the Jordanian SSA……….371-398 Chapter Twelve: Conclusions………………………………………………………………………………………………………………….420-432 iv List of Tables Gross Fixed Capital Formation by Kind of Economic Activity (2008-2016): 4 Job Creation (Sector and Activity): 14 Registered Expatriate Workers by Economic Activity: 17 Median and Mean Real Wages in Jordan (2010 and 2016): 30 Central Government Budgets (1924-1944): 86 Sources of Domestic Revenues (1953-1966): 113 Allocation of State Expenditures (1953-1966): 113 Structure of Jordanian Imports and Exports (1967-1973): 125 Sources of Government Revenues (1953-1966): 126 Jordan’s Foreign Patrons (1964-1973): 127 Sources of Domestic Revenues (1974-1989): 142 Structure of Jordanian Imports and Exports (1974-1989): 156-157 Sectoral Share of National GDP (1974-1989): 162 Applicants and Appointees to the Jordanian Civil Service (1990-2017): 212 KADDB Joint Ventures (2008): 249 Foreign Population Residing in Jordan by Country of Nationality (2004, 2015): 314 Sources of Jordanian ODA (2015-2016): 334 Jordan’s Arrangements with the IMF (1989-2016): 338 Allocations of Bilateral Official Development Assistance (2015-2016): 339 External Trade by Commodity Groups (2018): 352-354 Top 10 Foreign Companies Investing in Jordan (2003-2015): 355 Foreign Direct Investment Flows by Country (2005-2017): 356 Foreign Ownership of Amman Stock Exchange (2017-2019): 358 Investors Owning More than 1% Equity in Jordan’s Publicly Listed Firms (2019): 360-364 v List of Figures Gross Fixed Capital Formation (% of GDP): 5 National Savings (% of GDP): 5 Total Factor Productivity (Constant National Prices): 6 Output per Workers (2011 USD): 6 Growth of Labor Productivity per Person Employed: 7 Jordan Trade Performance (1985-2017): 8 Jordan’s Current Account and Trade Balance under King Abdullah: 8 Terms of Trade (1997-2017): 9 Ranking of Jordanian Export Complexity (1964-2017): 9 Manufacturing Value Added Per Capita (1990-2016): 10 Share of Medium and High-Tech Products in Manufactured Exports (1990-2016): 10 Jordan v. Comparator Countries, Share of Medium and High-Tech Products in Manufactured Exports (1990-2016): 11 Resident Patent Applications: 11 Distribution of Work Permits by Sector, Sex, and Nationality: 16 National Unemployment Rate: 19 Education Levels of New Market Entrants (1960-2010): 21 The Unemployment by Education Levels (2000-2010): 21 The Jordanian Employed (2013-2017): 22 Labor Force Participation Rates (1990-2018): 26 Employment to Population Ratio (2000-2018): 26 Employment Structure in Private-Wage Employment by Firm Size (2010): 32 British Subsidy to Mandate Transjordan (1921-1944): 89 Jordan Trade Performance (1954-1966): 125 Domestic and International Borrowing (1974-1989): 143 State Expenditures (1974-1989): 144 Foreign Trade (1974-1989): 158 Sources of Government Receipts (1974-1989): 158 Asset of Licensed Commercial Banks (1976-1990): 161 GDP Per Capita Growth (1982-1991): 165 Share of Public Sector in Total Employment under King Abdullah (2000-2016): 209 Public Sector Jobs Created (2007-2017): 209 Average Annual Household Expenditures on Health Services (2008-2017): 218 Tax Revenues (2005-2017): 219 Treasury Bills and Bond Issues to GDP Ratio (2001-2016): 223 Overall FDI Restrictiveness Index: 235 QIZ Exports (2000-2011): 239 QIZ vs.

FTA, Exports (2010-2011): 239 QIZ Job Creation and Export Sophistication: 244 Total Assets of Licensed Commercial Banks (2000-2018): 272 Aggregate Sectoral Income (2017): 273 Share of Aggregate Sector Market Capitalization and Sector Annual Income (2017, 2019): 277-290 Work Permit Holders by Nationalities (2004-2014): 314 Jordan’s Official Development Assistance (1990-2009): 333 Jordan’s Annual Official Development Assistance (2010-2017): 336 US Aid Budget Allocations (2019): 340 Jordanian Trade Performance (1985-2017): 340 Jordan’s Current Account and Trade Balance under King Abdullah (2000-2017): 341 Terms of Trade (1997-2017): 345 Jordan’s Economic Complexity (1964-2017): 346 Jordan’s Export Basket (2017): 346 vi Jordan’s Export Basket, Product Composition (2017): 347 Value-Add of Domestic Manufactures (1990-2016): 348 ICT Exports as Percentage of Total Exports (Jordan v. Comparator Countries, 2000-2017): 349 Jordan’s Export Complexity Index Score and Rank (1964-2014): 352 Foreign Ownership of Amman Stock Exchange (2017-2019): 359 Education Levels of the Jordanian Workforce: Home v. the Diaspora (2010): 368 Workers’ Remittances under King Abdullah (2000-2017): 370 vii CHAPTER ONE An introduction to (Jordanian) capitalism in the 21st century If not sui generis, Jordanian capitalism is undoubtedly peculiar, as is most obviously and saliently evinced through its relationship with crisis. On the one hand, it can be shown that crisis, broadly defined, constitutes both a necessary input and an inevitable output of capital accumulation in Jordan, an odd phenomenon in and of itself.

Despite this being so and despite the economy’s loitering in a state of terminal distress, moreover, it can also be shown that this formation somehow demonstrates both resilience and immutability as well. An impossibility of sorts, then, Jordanian capitalism seems to endogenously generate then stubbornly persist within the very conditions meant to trigger either its demise or its evolution.1 One could be forgiven for finding this all a bit disorienting. This is the country of a plucky, reformist King, after all, of a monarch who confidently traverses western capitals incanting tales of a rising Silicon Wadi. And yet, the slightest scrutiny would be sufficient to reveal King 1 It is indisputable, of course, that the vagaries of Jordan’s external environment intensify this capitalism’s many failures, as the effects of the Syrian refugee influx well attests.

Nevertheless, as it can and will be demonstrated that exogenous shocks only extenuate and compound tendencies internal to the economic formation—as failure and underdevelopment are therefore structural, endogenous, and even ontological properties of the Jordanian economy itself—, my conceptualization is meant to articulate that market failures are of this capitalism’s own making in both the first and final instance. 1 Abdullah’s stories of a post-modern prosperity2 just beyond the horizon as little more than delusion and marketing-speak. A survey of critical national aggregates, for instance, evidences an economy marred by declining rates of savings, investment and gross fixed capital formation (GFCF). If GDP growth figures initially suggest a slightly rosier outlook, a quick peak under that hood establishes that these yields are borne almost exclusively of demographic shifts, the contingent inflows of Iraqi capital, and petrodollar recycling (bound for speculation in the built environment).

To the extent, then, that economic expansion is now wholly disarticulated from labor productivity and total factor productivity—each of which have stagnated or receded across the past twenty years3—, one ought take little solace from what gains are, on occasion, reflected in metrics like the gross domestic product. What is more, though the opening of the Jordanian economy was sold through constant reference to the teleologies of comparative advantage theory—to promises of export-led development, technological transfers, knowledge upgrades, efficiency gains, and healthy specialization—, its realities have revealed this as something of a long con. Tragically predictable though such an outcome may be, it nevertheless bears repeating and detailing that twenty years 2 I say “post-modern” as the King et al have promised a prosperity without industrialization or any of the traditional engines of economic catch-up. Emphasizing tech and the service economy, they articulate something resembling the Dubai model (though without the abundant capital).

3 Jordan Strategy Forum, “On the importance of labor productivity in Jordan: where is the challenge?”, Report (2018), p. This decline occurred despite Abdullah’s tenure having coincided with the introduction of a number of game- changing general purpose technologies, of which digital communications represents but the most obvious example. To offer some sense of the gravity of these productivity declines, Jordan ranked 116th in the world in labor productivity between 2010 and 2018. 2 of trade liberalization have, in actuality, produced an import basket growing in size and value and an export basket increasingly concentrated in low value garment manufactures and highly volatile, low-priced commodities such as potash and phosphates.

Indicative of the wider industrial decay precipitated by the confluence of trade4, investment, and industrial policy, the value added through Jordan’s domestic manufactures (MVA) is falling ever further behind relevant comparators with each passing year, and high and medium-technology exports now constitute a smaller percentage of GDP (and of total exports) than they did in 1990. Lest one assume these are but temporary hiccups within an otherwise promising evolution, gross expenditures into research and development (R&D) suggest that industrial regression is likely to only accelerate as we move forward. Compounded by deficient outlays on education, the distance between Jordan and the global technological frontier can therefore be expected to widen with time, deepening the malaise hitherto described.5 In view of everything from the country’s declining terms of trade and substandard rates of innovation to the many issues begotten of its premature deindustrialization, Jordan’s age of perdition in the lower middle income trap most certainly seems upon us. 4 It is worth noting that the imposition of invasive intellectual property regulations—an imposition that is part and parcel of these trade policies—have also undercut those few technologically-intensive, forward-looking industries that had demonstrated potential prior to Abdullah’s ascension (such as pharmaceuticals).

These regulations were introduced first following Jordan’s accession to the WTO, and more extensively following Jordan’s signing of free-trade agreements (FTAs) with the United States and the European Union. 5 Per UNESCO, Jordan’s gross expenditure into R&D (as a percentage of GDP) sits at. As a point of comparison, South Korea, the global leader on this metric, spends 4.3% of GDP on R&D. Economies that Jordan surpassed or equaled in terms of development as of the 1980s (such as Ireland, Estonia, Hungary, and Malaysia) all spend in the area of 1.

As for expenditures on education, World Bank estimates put Jordan at 3.59% GDP as of 2017. By way of comparison, the average expenditure percentage for lower middle income countries is approximately 4.5% GDP as of the time of writing; OECD members averaged 5. 3 Gross Fixed Capital Formation by Kind of Economic Activity (Current Prices) (Units: Million JD) 2008 2009 2010 2011 2012 2013 2014 2015 2016 Agr.