The Theoretical Idea
Modernization, as expounded by Max Weber, is 'rationalisation' (Weber 1905). The institutionalization of rationality in socio-politico-economic spheres of modern societies has played a significant role in institutionalizing liberal values in the West. Modernization indicates political development through rationalization of government apparatus, and the concentration of power through institutional expansion. The modernization approach aims to establish a correlation between cultural and economic structures with the political structures of modern societies.
Seymour Martin Lipset's article in 1959 has been recognised as one of the foundational texts of modernization theory. Lipset argues that all the various aspects of economic development (i.e. industrialization, urbanization, wealth and education) are so 'closely interrelated as to form one major factor which has the political correlate of democracy' (Lipset 1963: 41). That is to say, certain economic and social structures are necessary for the emergence of democratic political institutions, where they do not exist, and for their maintenance, where they do. Economic development brings about changes in the social structures that tend to, or are more likely to, produce democratic political institutions (Lipset 1959).
There is a connection between the idea of the spread of democracy linked to economic development as manifested in a free market economy. Modernization in this regard highlights the importance of the western model of political institutions and economic industrialization. Economic liberalization and political democratisation pre-supposes the acceptance of the former as a pre-condition for the latter. Three general characteristics underpin modernization theory: economic (free market), cultural (liberal values) and political (democratic institutions).33
General Patterns: Previous Empirical Studies
A fundamental question is whether societies become liberal if they become industrialized, and whether states become democratic if they reach an advanced level of development. On the one hand, democracies are more likely to emerge as countries develop economically (e.g. Hayek 1944; Lipset 1959; Freidman 1961; Riker and Weimer 1993; Przeworski and Limongi 1993). On the other, democracies, it is suggested, can be established independently of economic development and there is no absolute relationship between democracy and economic development (e.g. Pye 1966; McKinlay and Cohan 1975; Kohli 1986; Marsh 1988).34
Optimism is apparent in the early expressions of the economic form of modernization as a catalyst to the formation of political democracy (Lipset 1959). Such optimism,
33 Section 2.1 discusses the economic pattern, and sections 2.4 and 2.7 will discuss the political and cultural patterns of modernization theory respectively.
34 There is also another proposition that maintains democracy hinders economic growth in less developed countries (e.g Feng 1977; Cohen 1994).
however, has been criticised on the premise that it was wrong to assume changes caused by economic development would necessarily be favourable to democracy. Instead, it has been argued that democracy is likely to emerge with the presence of political institutions capable of channelling and responding to socio-economic changes (Huntington 1968). Although such critics shifted the focus from the economy to political institutions, they agreed with modernization theory's core assumption that economic development leads to profound social changes. In early 1990, for instance, propositions were made that the International Monetary Fund (IMF) and the World Bank ought to make political democratization and economic liberalization the preconditions for economic assistance (Huntington 1991: 17).
In the 1970s there was growing scepticism towards modernization, in particular from those who focused on the economic aspects. Various studies, in the case of Latin America (e.g. Frank 1970; Cardoso and Enzo 1979), found that the international economy had caused countries to be 'dependent' and remain underdeveloped. This phenomenon is known as dependency theory, the core idea of which is that underdeveloped countries have their own unique characteristics and are not a primordial version of developed countries. The theory did not accept a concept of an inevitable, assumed, universal path of development, be it economic or otherwise. In a similar vein, with a focus on the political aspect, other studies showed that development forced on many underdeveloped countries resulted not in democracy but 'bureaucratic authoritarianism' (O'Donnell 1973).
A study of statistical analysis for seventeen Latin American countries with a robust empirical test of the ‘economic development thesis’ has shown that the positive relationship between economic development and democracy was not upheld - infirming the main claims of modernization theory (e.g. Landman 1999). A more recent study to demonstrate the relationship between economic development and democracy by quantitative empirical evidence, confirms that economic development has positive effects on democratic performance; nevertheless, these effects vary across diverse aspects of performance and also across regions (see, Foweraker and Landman 2004).
It has also been argued that early modernization theory failed to differentiate between democracy's sustainability (i.e. consolidation) and the establishment of democracy (i.e. democratisation) (Przeworski 1997). This critique showed that economic development played a significant role in supporting the former but not in promoting the latter. That also implied that if democracy were to enter an economically better off country it would be maintained, or conversely, if a rich country became democratic it was less likely to revert to non-democratic systems. Recent retests of modernization hypotheses with new data suggests that modernization assumptions have stood up well (Inglehart and Welzel 2005; Epstein et al. 2006).
Positively correlating with democracy's survival, it has been argued that Gross Domestic Product (GDP) is the single most important factor to be considered. This probability increases, to the point that no democracy has ever been replaced in a country with a GDP of more than $6,055 (Przeworski 1997; 2004). Nevertheless, all the studies that suggest economic development sustains democracy (e.g. Lipset: 1959; Prezworski 2004; Inglehart and Welzel 2005; Epstein et al. 2006; Peerenboom 2008) are based on countries where citizens are involved in the generation of national wealth. They are representative of other wealthy autocratic countries, where oil is the prime source for the generation of national wealth. That is to say, oil is an intervening variable that could make the emergence of democracy less likely in oil dependent countries where national wealth does not positively correlate to democracy, such as in the petro states in the Persian Gulf.
The Specific Case of Iraq: Previous Empirical Studies
Extensive studies have examined Iraq’s oil wealth in relation to sustaining its political system. The literature covers the disputes over oil and finance in relation to democracy building and their impact on Iraq’s transition (e.g. Birdsall and Subramanian 2004; Mahdi 2007a; 2007b; Weede 2007; Billon 2008; Ryan 2010; Muttitt 2012; Al-Basri and Al-Shebahi 2013). Those studies suggest that Iraq’s oil has not undermined but rather sustained Iraq’s economy and politics. Furthermore, looking into the future, forecasts for political and economic conditions in Iraq for 2013-2017 suggest that oil reserves could lead to an expansion of oil firms and could help gross domestic supply increase by an average of 9 percent (Iles 2012).
In Iraq, oil is a political commodity and has direct impact on the political system. A majority of those who argue against Iraq’s democracy refer to Iraq’s poor economic conditions or the resource curse narrative. One of the arguments against the likelihood of democracy in Iraq, as far as modernization theory is concerned, is that Iraq is an oil- dependent country. The core of the argument is that to rely heavily on oil to generate wealth as the primary source of GDP is not favourable to democracy (Rosser 2006; Ross 2001); among the 23 countries that derive their income chiefly from oil and gas sales, none are a democracy (Diamond 2010). One of the greatest concerns for post- war Iraq is the possibility of becoming a ‘petro state’ (Lawson 2003), in which oil revenues go directly to a national government which typically has high levels of corruption.
Iraq is an oil dependent rentier state. The theory of 'rentier state' implies, in an oil- dependent country, that the state does not need to tax its citizen as it has an external flow of income (Mahdavy 1970; Beblawi and Luciani 1987). The distinguishing mark of a rentier is that the rent comes from outside and goes directly to the state (Luciani 2013: 91). Therefore, oil-rent could alleviate the need for political representation and political accountability as those who are in power sell oil and buy legitimacy, as in the case of the Gulf states.
Iraq being an oil rich country has, to some extent, managed to build its infrastructure successfully. Daily oil exports rose from 1.8 million barrels per day (bpd) in 2005 to a record 3.08 million bpd in April 2015. Since 2005, Iraq has entered into a different phase of economic development. Although the economy of Iraq has been oil dependent, from 2004 to 2011 the contribution of oil to the total GDP was reduced from 70 percent to 43 percent. Oil has been a major contributor to the rebuilding of other aspects of the economic infrastructure.
The GDP in Iraq was worth 168.61 billion US dollars in 2015. Despite its fragile security, Iraq's economy has been booming. Foreign investment, real estate projects, finance and, in some parts of the country, agriculture have expanded This has all resulted in a rise in GDP per capita from 3856.3 US Dollars in 2005, to 4963.10 US
dollars in 2015. Subsequently, poverty has shrunk from 54 percent to 19 percent using the World Bank’s measure of the ratio of the population that lives on less than one dollar per day (Al-Basri and Al-Sebahi 2013). Iraq’s wealth has grown, the country has witnessed some improved levels of economic development but as section 1.3 demonstrated, Iraq is neither a free country, nor does its political system meet the minimum threshold for democracy. Growth in wealth and the emergence of democracy do not, so far, correlate positively in Iraq.
Conclusion
If it is accepted that national wealth is the most significant factor for ensuring regime stability, and it is the case of a rentier state that oil is the most valuable resource in generating national wealth, then it follows that oil is the most significant factor in regime survival, be it democratic or otherwise. This conclusion is applicable to both democratic and non-democratic regimes. Wealth derived from oil has sustained the oil rich autocracies of the Gulf States. Therefore, if a county is not democratic, oil revenues could hinder democratic transition since the wealth generated strengthens the apparatus of state and maintains the political system of a rentier state.
The three consecutive rounds of Iraqi national elections have not alleviated the concern that Iraqi leaders would buy legitimacy through the sale of oil. This could be the case particularly in intra group representation.35
Iraq’s oil, so far, has not reduced the need for political representation, but it has not helped transition either. Wealth does play a fundamental role, and in Iraq it favours the sustainability of its political system which at present is an anocracy (see Section 1.3).
Therefore, modernization theory does not hold true in the case of Iraq. The country is rich but it has not democratised, in direct contradiction of the modernization hypothesis. In addition, Iraq is dependent on oil which appears to make it even harder for such a process to manifest. Economic development could lead to a form of democracy in Iraq, and in one sense that looks promising given the existence of elections, a multi-party
35 That is to say, those groups who have direct access to oil revenues (the Kurds and the Shia) could lead electoral campaigns more effectively compared to the other groups (Sunnis).
assembly and federalism, but there is, at the same time, the crucial variable of oil that makes it unlikely.