Communist Youth Organization

The Youth Branch of The Workers’ Communist Party of Iran

Chia Barsen: Why is Egypt building a new capital city?

Egypt is planning to build a new capital city costing 30 billion pounds in the desert. The new city which remains nameless will have 660 hospitals, nearly three thousand churches and mosques, and a theme park four times the size of Disneyland. This project is set to be built in seven years. The question remains as to why Egypt, in its current economic situation, has made the decision to build such a city?

Currently the unemployment rate in Egypt remains at 13%, one of the highest in the world, with 25% of Egypt’s nearly 90 million population living in abject poverty. With these figures, and two heads of state already rejected by the Egyptian society, president El-Sisi can feel the incipient revolutionary discontent in the Egyptian people. His plans for building this new city is precisely to mitigate this situation and consolidate his place as the head of state.

By building a new city with a superfluity of money borrowed from the Arab states, president El-Sisi is using the Keynesian economic model for restarting the Egyptian economy. Keynesian economics that began in the 1930’s and dominated world’s economic thinking in the 1960’s, pre-neoliberalism, is all about demand management. Demand management and Keynesian economics was an attempt at alleviating one of the most central internal contradictions within capital. Without state management of the economy it is in the interest of capital to reduce the worker’s wages (variable capital), and increase the rate of exploitation (through the use of more productive technology) in order to increase surplus and profit through the natural circulation of capital. However, the workers (the producers) as one of the main consumers of the commodities produced, create a large portion of the demand necessary for the circulation of capital to take place. The crux of this issue is that without the necessary demand in the economy via the worker’s wages, the system will be saturated with excess surplus capital and surplus labour (excessive unemployment): a crisis. The Keynesian economic model was a way to dampen the economic crisis cycles by controlling the demand in the economy via high taxation of the capitalists, state ownership of main industries, allowing for strong unions, higher wages, job security and benefits. Where today workers are being paid pittance in the market, in the 1960’s the division between the rich and the poor war far less prominent.

The El-Sisi government in Egypt is by no means the only country to rewind the clock to employ a watered down Keynesian economic model. China used urbanization to pull itself out of the last global economic crisis by using half of the world’s steel and cement supplies to build new cities: employing 27 million people in this way. The El-Sisi government as well as China and countries such as Russia (the spectacle of Sochi Olympics) that are using and have used urbanization to “solve” unemployment have not in essence solved the problem of enormous inequality at all. The new jobs created in building the new city will adhere to the neoliberalism low standard for working-class wages and benefits, and will not in any way reduce the level of inequality in Egypt, but will buy El-Sisi more time in office by temporarily reducing unemployment.

Just as neoliberalism forces the borrowing state to liquidate and sell nationalized (state owned) industry to pay for its loans, in Egypt it will be the case that the glittering new city financed by Arab states, will come at a high price to the Egyptian people who will eventually swallow the cost through an even lower standard of living.

Capitalism will always find a way to solve its own crisis, either by urbanization or by using draconian methods of wealth extraction from the working poor, through accumulation and dispossession via austerity, and privatization of basic social services. President El-Sisi treading a murky path of generating employment through a watered down Keynesian approach, is another of capitalism’s methods for mitigating and ameliorating its own internal contradictions. It is not a working class solution, and in this way it will only serve the interests of the capitalist class and is not remedial to the deep crisis-generating inequality inherent in the system. Only a working class organizational form that acknowledges the internal contradictions within capitalism and its latent forms (such as the urbanization “solution” in Egypt) can militate against it. As long as capitalism is left to find its own solutions to its own self-generated crisis, it will leave ruinous effects on every aspect of humanity. Now that the Egyptian society is seething for change, it is at this precipice that the Egyptian working class organizational form must debase capitalism’s solutions to its own contradictions and carve its own path out of capitalism towards a society economically built to be inoculated against economic inequality and wage slavery as the basic foundation of human society.

Chia Barsen
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