Class Transformation under the Mandate

Author(s): Talal Asad

Source: MERIP Reports, No. 53 (Dec., 1976), pp. 3-8+23
Published by: Middle East Research and Information Project
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 The class composition of the Palestinian people has undergone a radical transformation in the last century. While this is true of
the Middle East and the Third World in general, the Palestinian situation contains some unique factors. A number of studies have
been made on the effect of the Zionist occupation of Palestine in terms of land expropriation, national oppression and violation
of civil rights. [See MR nos. 41, 47] But little research has been done on the impact of the introduction of capitalism?particu?
larly in the context of the Israeli settler colonial state?on the class structure of Palestine. The Proletarianization of Palestinian
Women in Israel, by Amal Samed, [MR no. 50] offers a theoretical approach to one aspect of this important body of research.
The two articles which follow trace the economic, social and class transformation in Palestine from the Ottoman Empire through
the British Mandate and the Zionist occupation. Talal Asad focuses on the Mandate period, and Jamil Hilal concentrates on the
West Bank and Gaza since 1967. A thorough analysis is also needed of the class composition of the Palestinian refugees, for it is
these people?under Israeli occupation and in exile?who will continue to determine the political character and future of the
Palestinian struggle for national self-determination.

Class Transformation

Under the Mandate

by Talal Asad

distance trade, marked agricultural specialization from one

The class situation of Arab villagers developed within a
specific historical social formation, to be explained by analyz?
ing the articulation of a capitalist with a non-capitalist mode
of production which defines that social formation. In this con?
text it is essential to recognize that' southern Syria was not
composed of economically self-contained units in the Ottoman
period. The rural population in what was later to become Man?
date Palestine produced not only for themselves but also for
the ruling classes: although most cultivators in general con?
sumed what they themselves produced, much of what the cul?
tivators produced was not consumed by them. This surplus
was. appropriated directly by the Ottoman state, through tax
farmers, and later by landowners on whom the direct liability
for tax rested. From at least the beginning of the nineteenth
century the involvement of the Ottoman empire (and in parti?
cular of geographical Syria) with the market forces of Euro?
pean industrial capitalism increased the need for surplus ex?
tracted from the peasant population, and served eventually to
change the legal expression of the production relations which
facilitated that flow.
For centuries before this transformation, the region's
economy had been characterized by urban manufacture, long-
area to another, local markets in agricultural goods and handi?
crafts. But the peasant producer was only indirectly (or if
directly only marginally) linked to the system of regional and
transcontinental commodity circulation.
Typically village land was held jointly by the villagers (the
'hamula') but worked by component families whose heads
were linked to one another by agnatic* ties which defined mu?
tual obligations and customary shares to the land from one
generation to the next (the musha'a system). The families con?
stituted units of production and consumption in association
with each other.1 The inequalities in holding between clan
members which might arise over time purely from within this
system of property distribution do not, however, define the
class situation of the village-cultivators. For this one must turn
to the forces and relations of the indigenous non-capitalist
mode of production linked to the expanding European capital?
ist mode. The forces are those that generate surplus, and the
relations are those that define the pattern of appropriating and
*Agnaticmeansrelatedthroughmales or on the father'sside.
1 Cf. D. Warriner,"Land Tenure ProblemsIn the FertileCrescent"In
C. Issawi (ed.) The Economic Historyof the Middle East: 1800-1914,
Chicago, 1966, d. 75
controlling the surplus generated. In this sense the forces and
relations of production necessarily take one beyond the village
community.
In Ottoman Palestine, the more fertile areas (coastal
plains, Esdraelon) were the most heavily taxed, but despite
this fact, also the more densely populated. Unlike other areas
subject to irregular rainfall and damaging desert winds, here
the extreme variability of harvests was not a problem for the
peasant. Hence the relative assurance of a good return for his
labor was a condition of the peasant's subjection to his ex?
ploiters?for the exploiters' ability to extract a greater surplus
here rested on the higher yield of the land to which more
intensive labor could also be applied.
The attempt by the Ottoman state to register titles in land
for tax purposes (begun in 1858), facilitated a pattern of
change to the detriment of the cultivators. The intention was
to grant the title directly to the cultivators, eliminating any
intermediary between the Government and the small indivi?
dual owner, so that the state could appropriate the maximum
tax itself. But in many cases "The villagers fearing that the
registration was a preliminary to a call for military service, or
for taxation purposes, falsified the returns, registering the
property either in the name of the head of the tribe (clan?) or
in the name of a member of the family who would not be
liable for military service. In practice they disregarded the
titles granted (the sanad tapu) and continued to farm on the
musha'a system, recognizing the customary quota-holders as
the real owners."2
The class significance of the legal changes can only be
understood when it is recognized that the Land Code of 1858
was a moment in the intensification of surplus generation from
peasant producers. Its superstructural, accidental character is
merely illusory. In the more productive areas, especially in the
more fertile densely-populated plains, the Land Code imme?
diately institutionalized and re-enforced pre-existing relations
of dependence between indebted cultivators and debt-owning
usurers (whether traders or urban notables). The registration
of land titles thus became an instrument for stepping-up the
appropriation of the cultivator's product by his exploiters and
not merely the occasion for legal misunderstanding and decep?
tion.
The decline of rural handicrafts and urban manufactories
(notably textiles) in the face of European competition
throughout the nineteenth century,3 increased peasant depen?
dence on land and hence tended to depress their competitive
position in relation to the richer, more fertile land (the very
areas where large estates were most common). The capacity of
cultivators to yield up greater amounts of surplus, however re?
luctantly, began to converge with the rising demand of unpro?
ductive urban classes for the consumption of the agricultural
product?partly directly, but also in exchange for imports
from capitalist Europe.
In general, this movement continues throughout the first
half of the twentieth century, only becoming more intensified
and more complex after the First World War, with the steady
expansion of capitalist production within Palestine, primarily
rooted in the growing community of European (Jewish) set?
tlers in a newly-created European (British) colony.
2 D. Warriner, op. cit., p. 76
3 Cf. I. M. Smilianskaya"The Disintegrationof Feudal Relations In
"
Syria and Lebanon in the Middle of the NineteenthCentury in C. Is?
sawi (ed.), The Economic History of the Middle East: 1800-1914,
Chicago,1966
There
The establishment of European (British) rule over Man?
date Palestine set the preconditions for the implantation of a
European (Jewish) capitalist sector.4 The steady growth of
this sector, initially maintained by European settlers and Eur?
opean capital, represents a colony in the old sense (N. Amer?
ica, etc.)?in the sense, that is, of a relatively autonomous ex?
tension of Europe-centered capitalism as a production system
and a power structure. Measured in terms of population the
European (Jewish) sector was always smaller than the Pales?
tinian (Arab) sector?although due to immigration it grew
from about 10 per cent to 33 per cent of the total population
during the Mandate period.5 But the intrinsic character of the
European (British) colonial state ensured the long-term
economic growth of the capitalist mode of production at the
expense of the non-capitalist mode, although it prevented the
latter's complete elimination. This fundamental process is dis?
guised by the political subordination of the Jewish communi?
ty, equally with the Arab community, to the British Adminis?
tration. That is to say, the concept of a form of political conti?
nuity in Palestinian history before and after 1918 ("the two
communities were firstruled by the Ottomans and then by the
British?i.e., always by an alien ethnic group") covers up a real
structural break represented by the Mandate. For the old indi?
genous Jewish community6 was an integral part of a non-
capitalist social formation, and the local Ottoman administra?
tion the organ of a non-capitalist state.
4 "6 Palestinewas mainlyan agriculturalcountrybeforethe
War,and
those industrieswhich existed were of an agriculturalcharacter.The
manufactureof soap in a primitiveway and wine were the only in?
dustriesestablishedon a largescale. A large numberof traditionalin?
dustries in which hand or animal power was used in the process of
manufacturewere also in existence, and these include oil pressing,
weavingof carpets,mats,Arab cloth and headgear,textile dyeing,and
glass making.
"7 Afterthe (FirstWorld)WarwhenJewishimmigrants broughtinto
the countrytheirindustrialexperienceand capital, a numberof small
factoriesproducinga varietyof articlesand a few largefactoriesforthe
manufactureof cement,vegetableoils, flour,and stockings,were estab?
lished.
"8 In 1927 the policy of protectinglocal industrywas initiatedand
the familiarphrase 'infantindustries'became partof the fiscallanguage
of Palestine. Machinery and certain raw and semi-manufactured
materialsimportedforuse in productionwere freedfromduty,while in
certaincases the chargeson the finishedarticlewere increased.Whereit
is not possibleto exemptfromimportduty importedcommoditiesused
in local productionand the local industryis producingfor export,a
systemof drawbacks permitsin approved cases a refundon exporta?
tion, representing a substantialpartof the importdutycollected on the
importedcommodities used in the locallly produced article.The wide
manufacturing filed now covers extractionof mineralsalts from the
Dead Sea, food products,drinks,cigarettes,tobacco, buildingmaterials,
metal-work,furniture, textiles,leathergoods, artificialteeth, matches,
wearingapparel, and chemical and allied products.. ." PalestineRoyal
CommissionReport(HMSO), London, 1937, pp. 208-9.
5 Some of these immmigrants settledon the land, but the vast majority
swelled the urbanpopulation^ Palestine."The ruralpopulationhas in?
creased, but its proportionof the total has decreased,from65 percent
in 1922 to 51 per cent in 1944. (. . .) The majorityof the ruralpopu?
lationare Moslem,whilethe Jewishpopulationare predominantly town
dwellersand account forhalfthe populationof the towns," D. Warriner
Land and Povertyin the Middle East, London, 1948, p. 55. According
to A. Granott,writingat about thistime, "Althoughdecades have pass?
ed since the divisionof joint propertystarted,about halfthe villagesin
Palestinestill hold theirlands,at least officially,in mesha'a." The Land
System in Palestine,London, 1952, p. 178. Most of the Arab popula?
tion worked on the land, and apart fromsome wage-laborers(especially
on citrus farms),the majorityhad directcontrol of theirland?In the
variousformsof propertyrightthen prevailing.
6 Structurally,as well as culturally,the urban-basedOttoman Jews
were quite distinctfromthe new European colonists. Many of them
were state officialsand tax-farmers, togetherwith local Ottoman Mus?
lims and Christians.For example, "The (Jewish)bankerfamilyof Far-
hifwhose membershad considerableinfluenceon the economical and
political life of the provincesof Damascus and Acre in the firsthalfof
the nineteenth century, held many villages (in Palestine as tax-
farmers)."A. N. Poliak, Feudalism in Egypt,Syria, Palestineand the
Lebanon 1250-1900, London, 1939, p. 52, n. 5. Whetherthrough
trade,bankingor government,the roots of the old Jewishcommunity
lay in a non-capitalistmode of production.
 Most writers on Palestine have tended to represent the
Mandate period in terms of the political confrontation of two
national communities in which each excluded the other and
maintained its own economy7?a political contest whose first
phase ended with with the collapse of the Mandate and the
establishment of a national state by one of the two autono?
mous, competing communities. But in order to grasp the
changing organization of Arab villagers it is necessary to begin
with a different set of concepts: the articulation of a capitalist
with a non-capitalist mode of production mediated by the
British colonial state. It is only in terms of these concepts that
apparent continuities (e.g., the state's registration of title to
agricultural land, begun by the Ottomans and continued by
the British) can reveal their contradictory movements. For it
was the British Mandate state, not the Ottoman, which consti?
tuted the pre-condition for the relative and absolute growth of
the capitalist sector8 (including commercial agriculture and in?
dustry) at the expense of the non-capitalist (mainly peasant)
sector in Palestine.
The Mandate Administration maintained a fiscal structure
which facilitated the extraction of surplus from the non-
capitalist sector, and its partial transfer to the expanding capi?
talist sector.
Rural property tax, although not a major category of
Government revenue, was paid by and constituted a substan?
tial burden on the peasant producers.9 The rationalized system
of agricultural taxation evolved by the British Administra?
tion1 ? seems to have contributed to increasing peasant indebt?
edness.11 Over the years much of this debt was transferred
from money-lenders to the Administration.12 It is worth not?
ing, incidentally, that since this tax was levied as a fixed per-
7 Thus S. N. Eisenstadt,IsraeliSociety, London, 1967, discussesthe
developmentof the Jewishcommunityduringthe Mandateperiodwith
virtuallyno referenceto PalestinianArabs. In the Introductionto The
Arab Labour Force in Israel, Jerusalem,1966, Y. Ben-Porathwrites,
"In the mandatoryperiod the Jewishand Arab sectorsconstitutedvir?
tually separate economic units." (Page 1). Not entirelyinconsistent
with this view is the suggestionby other writersthat the development
of Jewishimmigrationproduced a spill-overeffectwhichbenefitedthe
more backwardArab economy?see, for example, D. Horowitz,"Arab
Economy in Palestine" in J. B. Hobman (ed.) Palestine's Economic
Future,London, 1946.
8 Duringthe Mandateperiodthe growthof Palestine'scapitalistsector
is broadlycorrelatedwiththe inflowof Jewishcapital fromEurope (N.
Halevi and R. Klinov-Malul,The Economic Developmentof Israel,New
York, 1968, pp. 21-2), virtuallyall of which remainedwithinthe Jew?
ishsector(E. Asfour,"The Economic Frameworkof the PalestineProb?
lem" in W. R. Polk, D. M. Stamlerand E. Asfour,Backdropto Tragedy,
Boston, 1957, pp. 333-6). "The most significantchanges in the In?
dustrialoriginof nationalincome is the risein the shareof manufactur?
ingfrom26 per cent in 1936 to 41 per cent in 1945, mainlyat the ex?
pense of construction,trade and finance. Since the corresponding
figuresforthe non-Jewishsector show thatthe shareof manufacturing
fell from13.6 per cent to about 10.8 per cent, it is clear that thishap?
pened only in the Jewishsector." N. Halevi and Klinov-Malul,op. cit.,
p. 26
9 In bad years,which were by no means rare,many cultivatorswere
unable to pay taxes, and even had to be helped by the governmentwith
loans for the purchase of seed grain. Nearly every one of the annual
Colonial Office Reportson the Administrationof Palestineand Trans-
Jordancontainsentrieson the remissionof some ruraltaxationdue to
poor harvestsin particulardistricts.
10 For detailsof the Britishsystemof land revenuesee M. F. Abcarius,
"The Fiscal System" in S. B. Himadeh (ed.) The Economic Organisa?
tion of Palestine,Beirut,1938.
11 "Before the (First World) War ruralindebtednessexisted but to a
much smallerextent than that which has accumulatedsince the War,"
G. Hakimand M. Y. El-Hussayni,"Monetaryand BankingSystem." in
S. B. Himadeh(ed.), op. cit., p. 497
12 Apart from moneylendersand the Government,the two major
sourcesof short-term creditto Arab cultivatorswere creditcooperatives
in Arab villages(whose fundswere borrowedfromBarclaysBank at 6
per cent and lent to membersat 9 per cent) and BarclaysBank through
its local branches(lendingat 9 per cent). "The total seasonal creditis?
sued by BarclaysBank in 1935-36 was LP 230,000, the loans to be re?
paid in instalmentsfallingdue betweenthe middle of Septemberand
the end of December." See G. Hakim and M. Y. Hussayni,op. cit., pp.
There
centage on net productivity of the soil (i.e., minus cost of pro?
duction) capital-intensive Jewish agricultural enterprises paid
proportionally less tax in relation to gross product, or even
none at all, because of comparatively high labor costs'.13 In
other words the lower subsistence level of the Arab peasant
producer became, indirectly, a reason for the State's subsidiz?
ing the higher standard of living of the European immigrant
worker in Jewish agriculture.
Indirect taxation was by far the most important source of
Government revenue. But most of this, being levied on neces?
sities, was regressive and tended to fall most heavily on the
poorer (i.e., rural Arab) population.14 (See Table I) Further?
more, the large Arab landowners, together with other non?
productive Arab urban classes, were themselves disbursing sur?
pluses accumulated largely through the exploitation of Arab
rural producers?and hence the indirect taxes paid by them on
imported commodities were also, in part, a form of indirect
taxation on Arab rural labor.
In the industrial sector the Government gradually shifted
the weight of taxation in favor of large-scale enterprises which
were mainly Jewish.15 This, incidentally, hastened the demise
of Arab craft manufacture which had helped to supplement
the domestic peasant economy.16 And here, again as in the
agricultural sector, the fiscal structure served to support the
differential wage-rates between Jewish (immigrant) and Arab
(native) labor obtaining in the industrial sector.17
It has been said that the Government of Palestine had an
extremely conservative fiscal policy.18 However that may be,
its two main objects of expenditure were: a)"developmental
and economic services" (i.e., the improvement of transport,
communications, harbors, etc., which imparted relatively
greater value to capitalist production than to non-capitalist);
and b) "defense" (i.e., the maintenance of a repressive state
apparatus, continuously and primarily directed against the
Arab producing masses).19 (See Table II)
498-500, (lt should be noted that the Ottoman AgriculturalBank has
been criticizedfor contributingto peasant insecurityin the pre-Man-
date era by lendingat an interestof 6 per cent. See A. Granott,op. cit.,
p. 60). In contrastto thisfamiliarpatternof peasant indebtedness,debt
in the Jewishagriculturalsector largelyrepresentedproductiveinvest?
ment.(See G. Hakimand M. Y. Hussayni,op. cit., pp. 502-4).
13 "They (Jewishagriculturalsettlements)carrya labour force,which,
with this amount of machinery,must be greatlyin excess of labour re?
quirements.(. . .) No detailed analysisof the financialsheets are avai?
lable for 17 settlementsin the Haifa district,which were submittedto
the Governmentduringthe war to justifycontinuationof the govern?
ment subsidies. (. . .) They show . . . thatthe majorityof the farmsdid
not even cover capital expenditureor rent,and none were freefrom
debt." D. Warriner, op. cit., pp. 69-70
14 lt should also be noted that (a) professional,serviceand trading
classes?always more heavilyrepresentedamongthe Jewishcommunity
than the Arab?paid no directtaxes at all (M. F. Abcarius,op. cit., p.
566); (b) export manufacturing Jewish-owned?were
industries?largely
entitledto refundson taxes as describedabove in footnote4; (c) new?
ly-constructedhouses and industrialbuildings?i.e. mainlythose built
by the Jewishimmigrantcommunity?wereexempt fromthe payment
of the Urban PropertyTax for a periodof threeyearsimmediatelyfol?
lowingcompletion(M. F. Abcarius,op. cit., p. 529).
15 See B. Himadeh,"industry"in S. B. Himadeh(ed.) op. cit., p. 225.
16 4iAgreattransformation has taken place in the structureof enter?
prises,methodsof production,and characterof production.Home in?
dustriesproducingarticlesfor trade have almost disappeared.What re?
mains of these industriesis limited praticallyto needleworkin all its
forms.The relativenumberof independentcraftsmenhas decreasedand
the relativenumberof artisansemployed in workshopsor factorieshas
increased.Traditionalmethodsof productionare givingway to machine
production."Himadeh,op. cit., pp. 223-4.
17 Some Idea of wage differencesmaintainedby Jewishunions(all of
which vigorouslyexcluded native/Arab/members) may be gained from
the table taken fromStatisticalAbstractof Palestine,1937-1938, and
reproduced in S. B. Himadeh,op. cit., p. 284.
18 By, e.g. R. R. Nathan,O. Grass,D. Creamer,Palestine:Problemand
Promise,Washington,1946, pp. 314-16.
19 Between 1933 and 1937 the expenditureon 'defence' rose steeply
by an additional LP1,451,828, which constituted43.1 per cent of the
 Table 1

Fiscal Importance of Indirect Taxes

1933-34 1934-35 1935-36 1936-37 1937-38

Amount %of Amount % of Amount % of Amount % of Amount % of

in total in total in total in total in total
Tax LP receipts LP receipts LP receipts LP receipts LP receipts

CustomDuties 1,868,598 48.90 2,600,370 49.10 2.751,246 49.03 2,019,479 44.93 1,999,697 42.2

Excise duty
-on matches 17,740 0.47 23,817 0.46 30.933 0.55 28,136 0.63 28,552 0.6

-on salt 12,950 0.34 14,450 0.27 16,400 0.30 13,250 0.29 15,655 0.3

-on tobacco 237.812 6.23 274,055 5.18 257,694 4.60 223,585 4.97 237,551 5.0

-on wines 50,057 1.32 58,139 1.10 67,723 1.21 79,109 1.76 72,338 1.5
or spirits

Stamp Duties 70,160 1.84 105,254 1.99 124,477 2.21 88,939 1.98 98,347 2.1

Total 2,257,317 59.10 3,076,085 58.10 3,248,473 57.90 2,452,498 54.56 2,451,140 51.7

(Source: M. F. Abcarlus,"The Fiscal System" in S. B. Himadeh (ed.), The Economic Organization

of Palestine,Beirut,1938, p. 530).

Table II

Relative Importance of Expenditure on the Various Government Services, 1933-34 to 1937-38 (Actual expenditure)

1933-34 1934-35 1935-36 1936-37 1937-38

Amount % of Amount % of Amount % of Amount % of Amount % of

in total in total in total in total in total
LP expend. LP expend. LP expend. LP expend. LP expend.

I Defence 769,048 28.4 815,996 25.3 843,942 20.0 2,220,876 36.6 1,906,895 26.1

II Administration 597,602 22.1 948,043 23.2 959,064 22.7 1,258,426 20.7 1,235,545 16.9

III Legal Services 99,985 3.7 101,839 3.1 105,151 2.4 114,893 1.9 128,680 1.8

IV Social Services 323,832 12.0 385,006 11.9 434,059 10.2 471,513 7.8 538,340 7.4

V Developmentand 914,388 33.8 1,179,126 36.5 1,893,985 44.7 2,007,794 33.0 3,488,228 47.8
economic services

Total 2,704,855 100.0 3,230,010 100.0 4,236,201 100.0 6,073,502 100.0 7,297,688 100.0

(Source: M. F. Abcarius,"The Fiscal System" in S. B. Himadeh (ed.), The Economic Organization

of Palestine,Beirut,1938, p. 546).

6
 The basic pattern of income and expenditure of the non?
productive Arab classes had largely the same general effect as
that of the Mandate Government on the Arab peasant pro?
ducers?namely, it subjected them to a progressively greater
extraction of surplus, part of which was transferred to the
Jewish capitalist sector.
The growth of European immigration and?despite some
fluctuations?of the European (Jewish) capitalist sector, con?
tributed to increases in cost which affected Arab labor adverse?
ly.20 Unemployment was always far higher in the Arab sector
than in the Jewish21 because despite massive immigration of
European Jews, Jewish capitalist enterprises expanded fast
enough to absorb them, while the small segment of capitalist
industry in the Arab sector did not grow sufficiently to take
up the increasing numbers of unemployed coming from the
depressed rural areas. (Urban workers maintained close links
with their native villages.) For a brief period, during the
Second World War, an abnormal rise in the price of local pro?
duce caused by large military expenditure benefited landlords
and owner-cultivators (as well as other classes in both sectors).
But even during the war-time boom, the poorest strata fared
badly because of inflation.22 And in general, rising costs due
in great measure to the expansion of a tariff-assistedcapitalist
sector pressed heavily on the Arab working classes. (See Table
III) Since rent was generally paid in kind,23 as a share of the
total produce, a rise in the total cost of local commodity
prices meant a rise in the value of rent paid by tenant to land?
lord.24 Indebted owner-cultivators who pledged their harvests
to trader-usurers25 lost in the transaction for comparable
reasons.
Zionist colonization must be seen primarily as the steady
expansion of a capitalist mode of production.26 The primary
total Increase on all items. (See Table ll). This remarkablerise was
necessitatedby the Arab peasants' and workers'revoltof the 'thirties.
(See also Barbara Kalkas, "The Revoltof 1936: A Chronicleof Events"
in I. Abu-Lughod (ed.), The Transformationof Palestine, Evanston,
1971).
20 "Accordingly,real wages of Arab labour, in September 1937, fell
by 10 per cent as compared withwages in 1931, whilewages of Jewish
labour Increasedby 10 per cent . . . Actual earningsin 1936 and 1937
decreased more than is shown by the index numbersof the daily wage
rates,because of periods of unemploymentand reducedhoursof work
. . . The number of Arab unemployed in seven selected towns, on
December 31, 1937, was estimatedat 21,000 and of Jewishlabourers
(combiningwhole and part-timeworkers)at 12,000." S. B. Himadeh,
op. cit., pp. 286-7.
21 One immediatecause of risingArab unemploymentwas at the same
time the cause of fallingJewishunemployment.Thus in March 1939,
The JewishFrontiernoted with satisfaction:"unemploymentamong
Jewsat the end of 1938 was much reducedowingto the replacementof
Arab labour in plantations,increased security measures and public
works . . . This year for the firsttimeonly Jewishworkersare employ?
ed in Jewishowned orange groves.There are 25,000 of them, 10,000
morethan usual." Quoted in E. Asfour,op. cit., p. 333
22 See A. M. Hyamson,PalestineUnder the Mandate, London, 1950,
p. 179.
23 "Cash rentsare practicallyunknownin the countryand the normal
practicein the case of lands undergroundcrops is forlandlordsto take
a proportionof the grossyield varyingbetween one thirdand two-fif?
ths.VM. F. Abcarius,op. cit., p. 524.
24 "lt seems probable thatthe cost of tenancyrenthas gone up in the
country."A. Granott,op. cit., p. 294
25 The mostimportantcategorywas the money-lending merchantwho
acted as the main assemblingagency of local cereals,and grantedshort
and medium-term creditsto the peasantsat exorbitantratesof interest.
The peasants were usually compelled to pay their debts immediately
after harvest when prices were low. (See B. Veicmanas, "Internal
Trade," in S. B. Himadeh,(ed.), op. cit., pp. 363-4). Some money-lend?
ing merchantswho dealt with Arab peasants were Jewish,but whether
they formeda significantproportionoverall is not clear. (See D. Duff,
Sword for Hire, London, 1934, p. 258 fora referenceto Arab peasants
around Hebronin debt to Jewishmerchants).
26 This generalizationis intendedto Include the agriculturalcooper?
ive (moshav) and collective (kibbutz) which,althoughcharacterizedin
varyingdegreeby non-capitalistrelationsof workand consumption,are
consequence of this process for the internal organization of
Arab villages lies not in the immediate eviction of native cul?
tivators from land acquired for exclusive European settlement,
or in the expulsion of native labor from European enterprise,
although both these processes did occur, but in the way in
which the capitalist mode dominated the non-capitalist mode.
This domination was expressed in (a) the systematic flow of
surplus from the Arab peasantry to the expanding European
community, mediated primarily by the Mandate state appara?
tus and the non-productive Arab classes, and (b) the political
tension within the alliance of Arab classes based on a subor?
dinate non-capitalist mode, and the conflict between the Arab
alliance on the one hand, and the Zionists and the Mandate
government (representing the capitalist mode) on the other.27
The crucial determinant of the class position of Arab villagers
was therefore the contradiction between the forces and rela?
tions of production within a particular social formation?a
decline in the relative capacity of cultivators to generate sur?
plus in conditions of mounting pressure from above (through
tax, interest and rent) combined with non-market labor rela?
tions on the land.
The increasing extraction of surplus, determined in the
final analysis by the increasing dominance of the capitalist
mode, produced the increasing disparities in the countryside
which are noted by so many observers in Mandate Palestine.
The rapid population growth which various writers cite as a
'natural' cause of deterioration in the economic condition of
Arab villagers may be seen, here as elsewhere in the Third
World,28 as the individual peasant family's response to the
problem of its individual poverty.2 9 However that may be, the
trend of overall growth of the Arab agricultural population in
relation to slightly declining area of land, and virtual lack of al?
ternative sources of gainful employment, became, under the
Mandate, a force for the intensification of surplus generation.
Mounting indebtedness to the trader, and the rise in commod?
ity prices, were moments in this intensification.
The analysis so far does not assume that the accumulation
of capital in the Jewish sector in Palestine is to be explained
entirely, or even mainly, by the flow of surplus extracted from
the Arab sector. It merely concludes that the developing class
governedneverthelessby capitalistrelationsand forcesof production.
Thus in 1948 D. Warrinerobserved: "Much is made of the distinction
between these two types of organisation,but in fact there is littlereal
differencebetween them,except in so faras the older generation,with
some inclination to farming,prefersthe small-holdingcooperative,
whilethe youngergenerationprefersthe communalsettlement.The set?
tlerson the co-operativefarmsare consideredto hold theirfarmson 49-
year leases fromthe JewishAgency,whereasthe membersof the collec?
tive farmsappear to be workersonly. But since the farmerson the co?
operativesettlementsare not freeto cultivate" or investor sell except as
dictated fromabove, they are also in the position of workersin^very
importantrespect. Minor details of the farm operationsare decided by a
comittee of the settlers,but every major decision as to production,
technical methodsof cultivation,and financeis taken by the expertsof
the JewishAgency." (Op. cit., p. 68). But more significantin the con?
text of Palestineis the fact that such settlementshave,fromthe begin?
ning, been essentiallyengaged in the productionof exchange-values
(which has drivenmany of them over the years to expand Into manu?
facture?see D. Warriner,op. cit., pp. 70-1), and that the reproduction
of their means of production has always been determinedby capital.
27 N. Weinstock,"The Impact of Zionist Colonisationon Palestinian
Arab Society before1948" (in Journalof PalestineStudies,Vol. Il, No.
2, 1973) writes interestinglyon the nature of class contradictions
among PalestinianArabs duringthe Mandate, but does not deal with
the problem of surplus transfer.Yet it is only in the context of this
problemthatthe historicaldeterminants of class alliance and struggleIn
Mandate Palestinecan be grasped.
28 See, for example, M. Mamdami,The Mythof Population Control,
New York, 1972.
29 This suggestionis tentative,but it may be worth notingthat the
demographicincreasewas always greaterin ruralas againsturbanareas
in Palestine.See E. Hagopian and A.B. Zahlan, "Palestine'sArab Popu?
lation" in Journalof PalestineStudies, Vol. lil, No. 4, 1974.
structure of the latter (and so the class position of the Arab
peasants) cannot be understood unless it is related to the pro?
cess of surplus extraction from the peasantry that necessarily
follows from the articulation of the capitalist with the non-
capitalist modes of production within a single social forma?
tion. At its most abstract the conclusion may be summarized
as follows. In the non-capitalist mode of production the
productive process is unmediated (the production of values for
immediate consumption) or mediated by simple circulation
(production for the market in order to obtain other values for
consumption). In the capitalist mode of production the
productive process is mediated by compound circulation (pro?
duction for the market in order to obtain values to exchange
for labor-power and the means of production in the market in
order to produce more values for the market, etc.). But the
capitalist productive process is also mediated by the negotiated
'exchange' of profit tax for state-provided values. In Mandate
Palestine these values (externalities) were provided largely out
of surplus extracted from a sector in which production was
primarily non-capitalist?i.e., capable of generating surplus but
not of accumulating it. Such accumulation as did occur in the
Arab sector remained largely in the sphere of circulation, and
was therefore unproductive. Growth in the capitalist mode of
production inevitably meant increasing, though indirect, pres?
sure on the non-capitalist mode?both at the point of circula?
tion (non-productive Arab urban classes) and that of produc?
tion (Arab cultivators and craftsmen). But as soon as the Brit?
ish Mandate, which mediated the articulation of the two
modes of production, gave place to the political dominance of
the (Jewish) capitalist sector, and to the unmediated unity of
the social formation, the complete destruction of the non-
capitalist mode of production was inevitable. There is here
again another structural rupture.
In the Mandate period the Jewish sector did not seek
Arab labor but Arab land. Because of its political subordina?
tion to the British Administration such land could only be ac?
quired through market exchange?a slow and politically unsat?
isfactory process.30 By 1947 total Jewish holdings comprised
only about 9-12 per cent of all cultivable soil.31
During the 1948-49 war, there occurred the massive sep?
aration of Arab labor from their directly controlled means of
production. "The (UN) Conciliation Commission for Palestine
estimated (in 1949-50) that more than 80 per cent of the terri?
tory ruled by Israel represented land owned or otherwise held
by Arab refugees, of which somewhat more than 4,574,000
dunums were cultivable."32 The political and economic cost
of this landlessness was transferred by military means to the
neighboring Arab countries and the UN.
From 194849 onwards, the Jewish sector (based on the
capitalist mode of production) become directly and politically
dominant within the social formation. Jewish enterprises no
longer exclude Arab labor that remains behind~t>n the con?
trary. This new opportunity for the direct exploitation of
Arab labor is only possible by the systematic depression of
30 see W. Lehn, "The JewishNational Fund" (in Journalof Palestine
Studies,Vol III, No. 4,1974) for'detailson land acquisitions.The Zion?
ists were evidentlynot unawarethat one of the obstaclesin the way of
land purchase was the patternof communal land tenureamong Arab
peasants.See forexample PalestineRoyal CommissionReport,1937, p.
268
31 J. Ruedy, "Dynamics of Land Alienation,"in I. Abu-Lughod(ed.),
op. cit., p. 134
32 J. Ruedy,op. cit., p. 135
33 S.N. Eisenstadt,IsraeliSociety, London, 1967, pp. 140-1
8
Arab agriculture in Israel. There are thus two major moments
in the radical transformation of the class position of Arab
villagers in Israel:
1. The mass expropriation of Arab land (1948-49). This is
the 'booty capitalist' phase in the development of the Jewish
sector in which the indigenous non-capitalist mode of produc?
tion is destroyed. The remaining Arab villagers constituting a
source of cheap 'surplus' labor are forcibly sealed off in mili?
tary reserves in the early years, and subsequently controlled
by the military-administered work permit system.
2. The depression of Israeli Arab agriculture. With the estab?
lishment of Israel, the pattern of agricultural production
changes in the major (Jewish) sector?from intensive mixed
farming to the large-scale production of industrial crops.33 A
discriminatory price structure for Arab agricultural products,
fewer loans, less assistance to Arab farmers and legal expropri?
ation of land belonging to Israeli Arabs34 further discourages
the residual sector of traditional Arab agriculture. Relative
rises in the cost of agricultural commodity production, to?
gether with a proportionate drop in access to money capital by
Israeli Arabs pushes them further into a dependence on the
labor market. The Israeli economy is not massively based on
cheap native labor as South Africa's is,35 but it makes effec?
tive use of the convenient reservoir of Arab labor. Arab work?
ers suffer from higher unemployment,36 receive lower rates
of pay than comparable Jewish workers.37 But the existence
of an?albeit depressed?subsistence agricultural sector in the
Arab villages prevents the development of an otherwise greater
disparity between the living standards of Jews and Arabs in
Israel. In other words, it serves to subsidize the low wage-rates
of Arab labor, so it cannot be allowed to disappear totally.
Inflationary tendencies have been present in the Israeli
economy from 1949, despite the fact that, at least from 1955
to 1965, the share of the total wages bill has declined.38 It is
the effect of such pressure that drives women and children in
the Arab villages to seek wage employment. Many Arab villag?
ers live at a higher standard than they did in the 1930s. But
their new inability to control their means of social reproduc?
tion is expressed in the fact that for many their labor power
can only be productively applied to their own land after it has
first passed through an exchange relationship which is an inte?
gral feature not of Arab village organization but of the capital?
ist mode of production which sustains the entire Israeli
society. Thus, for example, a third of the best category land in
one village was leased to a Jewish agricultural company by a
large number of petty owners (land to which machinery, irriga?
tion, etc., were then applied) and this company employed up
to 100 villagers, many of whom were "the children of the very
owners of the land on which they worked."39 In this way the
villagers' own land becomes an instrument in the hands of the
capitalist for realizing their labor-power-natfa rate of exploita?
tion far greater than was possible when they were peasant
owner-producers.
34 "More than 80 per cent of all farmingland and over 90 per cent of
the areas now cultivatedby Jewsare administeredby the (Israel Land
Authority)company . . . The Israel Land Authoritychargesthe farmers
rentswhich are far less than the averageeconomic rent." S. N. Eisen-
stadt, op. cit., p. 79. The ILA leases land to Jewsonly. On the discrimi?
natory price structure,availabilityof governmentloans, etc., see the
figuresfrom Israel GovernmentYear Book reproducedin S. Jiryls,The
Arabs in Israel, Beirut,1969, pp. 156-163. On the expropriationof Is?
raeli Arab land, see D. Peretz, Israel and the PalestineArabs, Washing?
ton, 1958, especiallyChapterIX.
35 See H. Wolpe, "Capitalism and Cheap Labour-power in South
Africa" in Economy and Society,Vol. I, No. 4, 1972.
continuedon p. 23.
cw
POPULAR OPPOSITION TO SADAT'S
ECONOMIC POLICY
Three years after the October War and President Sadat's policy
of an "opening" (al-Infitah) towards the West, the Egyptian
economy is still in trouble. The sought-after investment by
Western corporations and countries has hardly gone beyond
projects in petroleum, tourism and banking. Even Arab capital
is reluctant to enter Egypt at the level Sadat wants. Finally the
political payoff to Sadat for the enormous economic dispari?
ties his plans include have begun to materialize in the form he
fears most?strikes.
Sadat's plans counted on a massive influx of capital to an
economy retrieved from the "socialism" of the Nasser years.
But political insecurity, a weak infrastructure and bureaucratic
red-tape have scared off many potential Western investors. The
Arab oil states are also investing much less than Sadat thinks
they should. (Sadat claims that since Egypt's victories in Octo?
ber 1973 permitted the oil price hikes, therefore the oil-pro?
ducing states owe lots of money to Egypt!) Sadat expected
$12 billion over five years from the Gulf Authority for Devel?
opment in Egypt, but when it was set up this summer it was
underwritten for only $2 billion. Its sponsors, Saudi Arabia,
Kuwait, the UAE and Qatar have also imposed political condi?
tions irksome to Sadat: the Authority has legal international
status; its loans and bonds are not subject to expropriation,
sequestration or seizure; its capital, loans and dividends are ex?
empt from taxes and local fees; its shares are exempt from cur?
rency control regulations, etc.
Recalling the nineteenth century, when the debts of the
profligate Egyptian regime were administered by creditors;
Sadat and the entrepreneurs who support him are making
changes in the Egyptian economy to satisfy the United States,
the International Monetary Fund and the World Bank, as well
as Arab investors. As Sadat stressed in an interview in August,
"I want to say that David and Nelson Rockefeller are my
friends. They are my personal friends. . . Incidentally, Mc?
Namara is also my friend." David Rockefeller's Chase Manhat?
tan Bank provided a $250 million loan to Egypt in October.
One of the changes being pushed by international bankers
is for a reduction of subsidies for food and other basic com?
modities, to "free up" more capital for investment. Such a
policy strikes deeply at the majority of Egypt's population al?
ready hard hit by inflation. On the other hand, altering the ex?
change rate on the Egyptian pound benefits only the wealthy
Egyptians and foreign investors.
The World Bank has recently set up an "Advisory Group
for Egypt" composed of representatives from the US, Western
European countries and Arab oil states. The Group meets for
the first time in January: its formal task is to plan financing
for Egyptian development projects, and to review Egypt's $4.5
billion balance of payments deficit. Unofficially, however, its
task is to lay down to Egypt the conditions for future invest?
ment. In a new and more sophisticated form such advisory
groups replace the crude interventions of the nineteenth cen-
tury, and presently function as one of international capital?
ism's most effective tools in economic subjugation of Third
World countries. Normally, such "groups" are made up of
public organizations such as the World Bank or the Inter?
national Monetary Fund, but recently, as in Peru, private
bankers have become more deeply involved.
One of the points the Advisory Group is sure to stress is
"production," one of President Sadat's favorite themes. "Pro?
duction" as a "patriotic task" is one of the sticks Sadat holds
over the heads of dissatisfied workers.
Reports are scarce, but there has been an increase of
strikes in Egypt directed against the regime. In August, for in?
stance, tobacco workers stopped work to protest government
intervention in union elections. Faced with repression, the
workers' demands escalated to include a demand for Sadat's
resignation.
A larger and more important strike, perhaps the largest
strike in the last 20 years, took place in Cairo in mid-Septem?
ber. Bus drivers went on strike to demand a pay increase, and
after they were threatened by the Prime Minister they occu?
pied one of Cairo's main bus stations. The army was sent in,
and according to reports at least one worker was killed and
many injured. Among the workers' demands was dissolution of
the government-sponsored union.
Strikes are illegal in Egypt. As President Sadat pointed out
in an address to the Arab Socialist Union and the People's As?
sembly in September, a few days after the bus drivers' strike,
"it is a crime to disrupt production. . . The right to strike?or
the strike itself?stops production." Sadat was referringto the
left's call for legalization of the right to strike. Although
strikes will not be made legal in Egypt, economic conditions
are bound to lead to more of them in the future.
Sources: Foreign Broadcast Information Service, May 4, Aug
23, 26, 27, Sept 20, 29, Oct 6 1976; Middle East Economic
Digest, July 23, Aug 27, Sept 10, 17, Oct 15, 22 1976; New
York Times, May 3, Aug 5, Sept 21.
continuedfromp. 8.
36 See A. Hovne, The Labour Force in Israel,Jerusalem,. 1961, p. 13
(SummaryTable) for Jews,and p. 30 (Table 9) for Arabs. For greater
detail,see Y. Ben-Porath,op. cit., Chapter5.
37 The JewishwriterAharonCohen noted that "The wages paid to Ar?
ab workersneverequalled those paid to Jews,even ifthe Arab was do?
ing the same work." Israel and the Arab World,1964, p. 530. Abner
Cohen, in a curiously worded sentence, writesthat "On the whole,
their (i.e. Arab) wages are not lower than the officialrates,but they
work harder,and sometimes,they work for longer hours." (p. 27).
38N. Halevi and R. Klinov-Malul, op. cit., p. 275 (Table 83)
39Abner Cohen, Arab Border Villages in Israel, Manchester,1965,
p. 31.
During the recent US visit of a representative of the
POLISARIO Front, discussions were held on the formation
of a Saharan Peoples Support Committee. For more infor?
mation on this committee, write to MERIP.