Neoliberalism and the Architecture of Disaster, by Iman Ganji

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Lead: With hundreds of protesters killed within days in Iran, amid a blackout imposed by a state that blocks any flow of information, parts of the international Left have rushed to pronounce judgments in a mode of immediacy that ignores history and misreads the situation. This article addresses one such claim: that Iran “is not capitalist,” has not undergone neoliberalization, and that sanctions alone explain its economic crisis—a statement that would bewilder any Iranian worker, but circulates unhindered among leftists in the imperial core. This text does not address two other determinants of the conjuncture: the reactionary political hegemony over the uprising and the role of imperialist intervention—both targets of other uninformed assessments in recent days. Denying massacres and neoliberal austerity does not serve the cause of anti-imperialism in the long term, even if realpolitik and geopolitical considerations push some toward immediate discursive interventions in the current situation. Statism is not internationalist solidarity. Nor does the immediate embrace of the situation as “revolutionary,” coupled with the dismissal of imperialism and fascism, serve the cause of revolution.

Iran, Angola, Ecuador, Bolivia in 2025. Angola in 2023. Kazakhstan and Jordan in 2022. Iran, Lebanon, Ecuador, and Zimbabwe in 2019. France, India, and South Africa in 2018. Mexico in 2017. Sudan in 2013. Nigeria in 2012. Bolivia in 2010. The United Kingdom, Germany, France, the Netherlands, Spain, and Russia in 2008. Iran in 2007. Yemen in 2005.

This is an incomplete list of countries where, over the past two decades, fuel price hikes and the removal of state subsidies have been among the triggers of subsequent protests and uprisings. Raising fuel prices is one of the recurring markers of neoliberal structural adjustment, and almost everywhere governments have taken this step, they have encountered popular resistance.

One country appears three times on that list: Iran. Do not listen to so-called regime experts who present gasoline price hikes under Mahmoud Ahmadinejad as a success story and count on our historical amnesia. On the night increases to the price of fuel were announced, people set fire to 12 gas stations in Tehran and chanted slogans against the president. Hence, the question naturally arises: given that historical experience, and in the midst of a suspended wartime situation with Israel, by virtue of what criteria and on what basis does the Iranian state decide to raise gasoline prices once more?

An increase in the price of gasoline was not even the sole element in the government’s structural adjustment policy: Currency devaluation and the removal of the preferential exchange rate for essential goods are two other key factors that have intensified the mass impoverishment of the population in Iran and have fed into the ongoing uprising in the streets of cities across the country.

Other, equally prominent, determining factors are at play in the situation in Iran. [1] None of this, however, negates the simple fact that the neoliberal policies implemented by Masoud Pezeshkian’s government — as with all previous governments since the end of the war with Iraq — with the cooperation of the rest of the state apparatus has provided both the primary social cause and the genetic grounds for the affective contagiousness of the ongoing uprising. Just as they have repeatedly done in the past, populations resist these policies, and do so with varying degrees of intensity. And the fact that state-repression successfully truncated previous waves of resistance does not mean that they will not resist again.

Poverty and misery, even when widespread, do not by themselves lead to uprising; and those who think that “sanctions” alone succeeded in driving the poor into the streets cannot explain the counterexamples. It is true that international sanctions have further worsened the economic situation on multiple fronts, though not in the reductionist way the received accounts portray. The decline in government revenues has produced a structural budget deficit, while efforts to bypass sanctions have generated rents that have transformed Iran’s political-economic order into an oligarchic system. Shock therapy, however, by deliberately producing a crisis of social reproduction (independently of sanctions, but especially under sanctions), leads to resistance and revolt — this is the first law of social thermodynamics. And do not imagine that the so-called economic experts who design these policies are unaware of this law. On the contrary: many policymakers and technocrats influenced by neoliberal economics and the Chicago tradition — including the current minister of economy, a graduate of the University of Chicago — are fully aware that anti-welfare reforms and shock therapy generate social resistance and political crises. Historical experience shows that in such models, reliance on police and security power is not accidental but a structural component of how these policies are implemented. The core idea is simple: the crisis produced by these reforms is not meant to be prevented; it is meant to be managed.

Yet the central question remains: how — in a wartime situation, and after rhetorically praising “popular unity” in the face of Israeli attacks — does the Iranian state decide to raise gasoline prices and abolish the preferential exchange rate? How does a government at war with an external power choose to wage economic war against its own populations rather than purchasing domestic peace through social welfare policies?

Pezeshkian has argued that he will carry out any policy with socio-political consequences; any “hard decision” that leads to “public dissatisfaction;” because he is only supposed to serve a single presidential term. This, however, is not merely a case of strapping a grenade to oneself and blowing up as an individual; it is a structural sign of what the author has previously analyzed, in terms of political economy, as a “suicidal state.”

The answer to this central question should be pursued in two parts. First — this article — we examine the recent genealogy of the current political economy and the policies of the past several years. This should be read while we keep in mind that There is a long trajectory behind Iran’s neoliberalization policies. Since the start of the revolution, para-statal military and religious foundations absorbed the assets of the previous regime, forming a parallel economic body. This body operates outside the legislative and administrative authority of the government, including the central bank, and is directly supervised by the Office of the Supreme Leader.

The parasitic relationship such foundations initially formed with the government reversed somewhere along the way, such that today it is the government itself that parasitizes these foundations, now transfigured into giant holdings, together controlling over 55% of the total GDP. [2] The turn towards privatization of the entire economy was implemented just as the eight year war with Iraq came to a close, and over the course of the next six presidencies, it came to exhibit all the hallmarks of neoliberalization – welfare retrenchment, the erosion of public infrastructure, and labor flexibilization. Crucially, structural adjustment was designed in such a way that the very foundations already dominating the largest shares of public property were able to consolidate and expand their control through opaque auction mechanisms in collusion with each successive government. This is the picture in which mechanisms of immiseration, impoverishment, and the accelerating class divide in contemporary Iran must be understood, lest we stay with broad unhelpful abstractions.

From Currency Policy to Structural Adjustment: Madani-Zadeh’s Suicidal Prescription for a “Sick Economy”

In this first section, we must turn to Seyed Ali Madani-Zadeh, a professor at Sharif University of Technology and a central figure for understanding the political economy that has led to both the current uprising and that of Aban 1398 (November 2019). Included among Madani-Zadeh’s achievements are the drafting and formulation of the ‘Framework for Structural Reform of the Budget with an Approach to Cutting the Budget’s Direct Dependence on Oil,‘ issued by the Plan and Budget Organization in Khordad 1398 (June 2019). This is a, high-level, policy document whose proposals began being implemented under Hassan Rouhani’s government, continued under Ebrahim Raisi, and is currently being carried out at full speed under Masoud Pezeshkian’s administration. 

Among those responsible for Iran’s economic disaster, Madani-Zadeh has, in recent years, been its chief architect. For this reason, what follows will focus on this latest contemporary heir to the Chicago boys, in order to arrive at one part of an answer to our central question.

Structural Reforms

The Plan and Budget Organization’s document, “Framework for Structural Budget Reforms,” presents itself as a technical and unavoidable response to the state’s fiscal crisis compounded by economic sanctions. Its dominant language is one of necessity, discipline, and technocratic rationality — as if economic policy were not a terrain of conflicting social interests but merely a matter of calculation and management. Yet behind this neutral language lies a project that, both theoretically and in terms of policy design, clearly continues the model of IMF-style structural adjustment and the assumptions of neoliberal economics—especially in the Chicago tradition—albeit wrapped in localized terminology and the rhetoric of a “resistance economy.”

In fact, it is enough to compare Madani-Zadeh’s document with the IMF’s most recent Iran’s Article IV consultation report (2018) to see how, without ever citing the IMF, it structurally reproduces the same policy logic, priorities, and sequencing of interventions. The core of these recommendations rests on fiscal discipline, cuts to public spending, the primacy of austerity over growth, the weakening of universal social policy, and the transformation of social justice into a technical, targeted issue. The Plan and Budget Organization’s framework proceeds on precisely these assumptions. The main difference lies not in substance but in political context: what in Europe and Latin America was imposed through pressure from supranational institutions and financial markets is, in Iran, implemented within an authoritarian setting and through reliance on the state’s administrative and security capacities. From this perspective, we are facing a kind of “Article IV economics without the IMF”: the same structural adjustment logic, but without the IMF label and without the need for social consensus. Iran has followed IMF prescriptions before as well, and Mahmoud Ahmadinejad was once praised by that notorious international institution for cutting subsidies and raising energy prices.

Let us now look more closely at the substance of the structural reform document. Its point of departure is the identification of a “core problem” — or, in Madani-Zadeh’s terms, the diagnosis of the Iranian economy’s main disease: the structural budget deficit. Inflation, economic instability, declining welfare, and even threats to people’s livelihoods are all reduced to this single variable, to this supposed “root evil.” This reductionism is not accidental. Within this framework, inflation is not understood as the product of distributive conflicts, power structures, sanctions, rent-seeking, or modes of accumulation, but as the mechanical outcome of the state’s fiscal indiscipline. And that, first and foremost, means removing politics from the analysis and reducing the economy to a technical domain.

From this diagnosis follows the prescribed cure: the establishment of a binding “fiscal rule” that pre-sets ceilings on government spending, deficits, and debt for several years in advance. This instrument, presented in neoliberal discourse as a guarantor of “credibility” and “stability,” in practice means tying the hands of future policymaking. Budgetary decisions — which should by their nature be political, distributive, and contested — are turned into quasi-constitutional rules that operate beyond social interests. Greece’s experience after the 2010 debt crisis clearly showed how such rules, even in formally “democratic” systems, can strip society of economic sovereignty and hand it over to technocratic and supranational institutions.

Subsidy reform and the “realignment of prices” constitute another pillar of this framework. Subsidies for energy and basic goods, along with non-cash forms of support, are all treated as “distortions” — distortions that must be eliminated so that prices can send the “right” signals. To contain the social fallout of this removal, targeted cash transfers are proposed — the very approach Pezeshkian’s government has pursued in the midst of protests. But this logic is exactly the same model implemented across Latin America since the 1980s, from Mexico and Argentina to Brazil: price liberalization, cuts to universal support, and minimal compensation for the poor, not as a social right but as a tool for managing discontent.

Within this framework, social justice is reduced to an administrative problem. The issue is no longer structural inequality, but “inclusion and exclusion errors;” not the concentration of wealth and power, but databse deficiencies. Social policy is downgraded from a redistributive project to a mechanism for managing the effects of austerity. Egypt’s experience after 2016 — combining currency liberalization, the removal of energy subsidies, and the expansion of cash-transfer programs — offers a clear example of how this combined set of policies can produce fiscal stability at the cost of rising poverty, food insecurity, and social dependency.

The institutional section of the document — performance-based budgeting, a treasury single account, a medium-term expenditure framework, asset sales through exchange-traded funds (ETFs), and the expansion of the debt market — aligns almost entirely with the IMF’s public financial management reform agenda. These reforms render the state more “legible” — thus, easier to monitor and discipline — at the cost of reducing politics to performance management and indicators. Hence, ministries become cost centers, programs become measurable outputs, and the budget turns into a managerial document. What is lost in the process is the conflict of social interests and the most fundamental question of social justice: who pays the price for these structural reforms and who repeats their benefits?

What is absent from the Plan and Budget Organization’s document is as telling as what it contains. Madani-Zadeh offers no serious analysis of the labor market, wage suppression, capital–labor relations, or the role of monetary and exchange-rate policy in wealth redistribution. In his framework, society appears not as a political actor but as a source of social risk that must be managed through “transparency” and “persuasion.” Sanctions, meanwhile, are treated merely as an “external shock,” rather than as a mechanism that reshapes accumulation patterns and rent extraction. Put more plainly, the document as a whole is a class project aimed at stabilizing the dominant class.

This framework implicitly relies on an authoritarian setting. In the absence of mechanisms for social bargaining, independent unions, and democratic accountability, austerity reforms do not proceed through social agreement but through administrative capacity and coercive power. The document’s repeated emphasis on “policy consensus” makes clear that the consensus that matters is not between state and society, but within the ruling elite — what, in the regime’s newer vocabulary is called vafaq (“unity” or “accord”). The reason is not hard to grasp: every historical experience, from Greece to Latin America to Egypt, shows that the costs of structural adjustment are systematically shifted onto the most immiserated segments of society.

In light of all this, the Plan and Budget Organization’s document—contrary to the neoliberal rhetoric of its advocates about “economic surgery”—does not mean a smaller state. Rather, as Michel Foucault showed in The Birth of Biopolitics with regard to the neoliberal state, it represents a reconfiguration of the state: a large, interventionist, yet disciplined, state; one that retreats from redistributive intervention while strengthening its instruments of control and surveillance. This model can be called “authoritarian austerity:” a model in which the global doctrines of structural adjustment are implemented in a non-democratic context, and social discontent is treated as a predictable cost. In other words, the structural budget reform framework normalizes crisis and turns austerity into permanent policy. Poverty, inequality, and livelihood pressure are not policy failures; on the contrary, they are manageable side effects of “good governance” — the very logic underlying Pezeshkian’s proclaimed “self-sacrifice” and his promise of a single-term presidency.

Exchange-Rate Policy

Like many economists who share his outlook, Madani-Zadeh identifies the budget deficit and the inflation it generates as the core disease, but treats price controls as the underlying cause of that disease. This view extends from basic goods and services all the way to the exchange rate. In one of his final interviews before taking office as minister of economy, he explained the Islamic Republic’s exchange-rate problem in precisely these terms: just as all prices should be left to the market, the price of foreign currency should not be set through mechanisms such as the NIMA exchange system or the preferential exchange rate. And if high inflation is the main problem, then it will necessarily be reflected in the exchange rate as well. In other words, for him and his allies, foreign currency is a commodity like any other — a claim fundamentally at odds with the realities of Iran’s political economy.

This discrepancy is not lost on Madani-Zadeh. In one study published under his supervision — where he appears as second author — this very inconsistency is, in fact, emphasized. The study, published in 2015, reaches conclusions that run directly counter to the policies he now advocates, and to those currently pursued by Iran’s economic system more broadly. In “Exchange Rate Pass-Through and Its Determinants in Iran,” Sajad Ebrahimi and Seyed Ali Madani-Zadeh examine the impact of rising exchange rates on producer and consumer prices — that is, the exchange-rate pass-through. In this research, they set aside the effect of the budget deficit — the same “supreme evil” said to drive inflation — and defend a multiple exchange-rate system under Iran’s specific conditions, precisely because it keeps pass-through low and avoids costly socio-political consequences:

In a multiple exchange-rate system, some imported goods and services enter through the official exchange-rate channel. As a result, changes in the unofficial exchange rate have little effect on the domestic prices of goods imported via the official channel. This implies a low exchange-rate pass-through.

They identify exchange-rate volatility as a key driver of higher pass-through, noting that “importers of goods and services respond more strongly to exchange-rate changes in order to hedge against the risk and uncertainty generated by exchange-rate movements, which leads to higher exchange-rate pass-through.” Another finding of the study is that, whether inflation is high or low, it has “no significant effect on exchange-rate pass-through.”

In short, maintaining access to foreign currency for importing essential goods and striving for exchange-rate stability — minimizing volatility — are crucial for limiting the impact of exchange-rate increases on consumer and producer prices, regardless of whether inflation at a given moment is high or low.

These findings stand in stark contradiction to all of Madani-Zadeh’s recent policies and recommendations. Eliminating preferential currency for importing essential goods will raise exchange-rate pass-through and lead to sharp increases in the prices of basic commodities — effects that will become visible within one or two quarters.

Moreover, Madani-Zadeh now argues that if an external shock hits the exchange rate, the price of foreign currency should be allowed to rise to its peak, after which the central bank should bring it down through a Dutch auction of dollars. He also insists that the exchange rate should be allowed to fluctuate, so that no one has an incentive to buy foreign currency — all policies that, according to his own 2015 research, will increase the impact of exchange-rate changes on domestic prices in Iran. Finally, his central focus on the budget deficit and high inflation has no bearing whatsoever on this pass-through effect.

These policies, however, have other consequences as well. The government claims that eliminating the preferential exchange rate will harm rent-seekers, who will no longer be able to profit from the gap between the subsidized dollar and the free-market rate. On paper, this claim is correct. What officials do not tell you is the policy’s real effect. After years of rent allocation, the import and export of many goods has already become highly concentrated and quasi-monopolistic. As the dollar price rises, this concentration intensifies, because a more expensive dollar pushes smaller players out of the market and leaves only large actors — capitalists with deep pockets — standing. They are the only ones able to afford the higher prices. Those who once operated at the level of hundreds of thousands of dollars in trade are forced out in favor of those dealing in millions. Moreover, as imported goods become more expensive, the profits these large players extract from selling them compensate for, if not exceed, the rents lost from the exchange-rate gap.

The policy of Dutch auctions in the currency market has similar effects. In these auctions, where the price starts high and sales occur where demand finally materializes, large players enjoy a clear advantage. Actors with deeper pockets, by they institutions or private capital, can tolerate more risk and make faster decisions, leading to further concentration of ownership in the hands of a few. The result is nothing but greater state dependence on a narrow financial network and the reproduction of rent. Dutch auctions are a crisis-management tool for financial markets, not a sustainable policy framework.

So Why?

The policies being implemented are not a response to the profound crisis of social reproduction as experienced by Iran’s proletarian and surplus populations, and at a moment when food inflation has exceeded 70 percent while prices for basic goods have risen by as much as 110 percent. Instead, these policies  constitute a class-based project aimed at reproducing the state under crisis conditions.

The Iranian state has repeatedly gambled on shock. The subsidy-targeting plan under Ahmadinejad was on the agenda as early as 2008, but it was likely the burning of twelve gas stations that delayed its full implementation until 2010, during the Green Movement protests. The assumption was that society was already in shock, and that this was therefore a good moment to push through the reforms. During the 2022 protests, the exchange rate hit a historic high in Mehr of that year. This time, following Israel’s attack and amid a suspended wartime situation, the state placed yet another bet: assuming a state of shock, it moved to liberalize gasoline prices and raise the dollar, and amid the protests, eliminated the preferential exchange rate.

The current protests are not merely “economic.” Political economy gives shape to their political, social, and class dimensions. The suicidal state is not irrational; its rationality is simply limited to reproducing the state itself and its class relations, at the cost of producing death for the populations it is meant to manage. Till now, security forces have reportedly killed hundreds of protestors in the ensuing uprising. 

Footnotes

[1] Including: the competitions among oligarchies; imperialist influence; and so on. In any case, the political hegemony of the protests currently lies in the hands of reactionary right-wing forces, and it does not yet appear that other forces will be able, in the very near future, to exercise counter-hegemonic agency and overcome the right. But these factors influencing the uprising’s outcome do not erase the class struggle that defines this revolt.

[2]  Vahabi, Mehrdad. Destructive Coordination, Anfal and Islamic Political Capitalism. Cham: Springer International Publishing (Palgrave Macmillan), 2023, p. 300