By Salmon Shelter

The June 2025 Twelve-Day War against Iran, an imperialist attack by the United States via its loyal ally Israel, was accompanied by various speculations about the nature and depth of alliance amongst the anti-imperialist front in the anti-imperialist left sphere. This topic is of a particular interest for any left force that sees the situation as an escalation of war by the imperial bloc against the countries of global south that struggle to break free from the unipolar world structure.

Some on the left wonder why the level of collaboration between Iran and other countries in the global south, specifically China, does not match the urgency demanded by the current geopolitical affairs. Some even attempt to encourage such a collaboration by categorising the Iranian economy as a kind of “Islamic socialism”. This article is an attempt to address the above-mentioned question by providing a brief review and a historical materialist analysis of the Iranian state’s economic and political nature and geopolitical interests.

The short answer is that Iran’s role in the global economy, since before the 1979 revolution, has shaped the country’s domestic economy such that the merchant bourgeoisie is the strongest class, and states usually represent the interests of this class. At the same time, the geopolitical reality of the region necessitates an anti-imperialist stance for any independent state. This creates a contradiction between Iran’s economic structure under the Islamic Republic and its geopolitical stance.

The article points at the reality that unlike the imperialist bloc, the forming anti-imperialist bloc is not economically homogenous. And this limits the extension of strategic collaboration amongst them.

A historical materialist analysis

It is well known that the economic structure of some nation states are so powerful that they shape the economic structure of other states (usually referred to as uneven and combined development). Moreover, the economic structure is not the only material element in forming the superstructure, geopolitics is another.

However, the changes in the economic structure and geopolitics take time to be translated into the cultural and political contexts which are usually referred to as the superstructure of a society in general. In other words, there is a lag between changes in the economic base and the superstructural aspects of a society, such as religion.

Therefore, in analysing events of a certain period of time, we might need to assume a level of autonomy for the superstructure. This may lead to what Althusser called over-determination, the idea that social phenomena are influenced by multiple, interconnected factors rather than a single cause, emphasizing the complexity of social relations and the interplay of various forces in shaping reality.

The important point to note here is that in some cases these principles make sense only when they are applied globally or over a full cycle of events.  For large and advanced economies, perhaps the local conditions outweigh the global ones. But for a country with a smaller and less advanced economy, it’s more likely that its base and superstructure will be influenced by global factors. With these theoretical points in mind, understanding what’s happening in Iran will be easier and should make more sense.

A Brief History of Iran’s Economic and Political Structure

The most important feature of recent Iranian history is the overthrow of the reactionary Pahlavi dynasty by the massive struggle of millions of people in 1979. However, this revolutionary victory was one that changed the constitutional political structure while leaving the economic structure largely untouched and intact. There is enough evidence to suggest that Iran’s current economic structure is a type of neoliberalism than any other ‘ism’.

Before the 1979 revolution

Since the discovery of oil more than 100 years ago, Iran’s primary source of income has been the sale of its raw materials, and this has mainly shaped the economic structure of the country and defined its role in the global economy.

Although Iran’s economic structure has not been determined entirely by the global economy, it has mainly formed under its influence. It has not been formed entirely by the global economy because, unlike India, Iran has never been colonized by the imperialist countries and, as a result, imperialist states weren’t in absolute liberty to form the country’s economy. Also, the Iranian working class has not been directly exploited by the foreign capital (at least after 1953 and nationalisation of the oil industry).

But, despite these facts, selling natural resources has remained Iran’s main source of income until today and that justifies the claim that the Iranian economic structure is mainly formed by the role it plays in global economy.

The level of autonomy the Iranian state has had has allowed it to develop some level of economic complexity. For instance, there have been investments in petrochemicals, the automotive industry, and, recently, key military industries. Adding the size of population into this picture, both in terms of size and complexity, the Iranian economy should be seen as at medium level globally, at best. Moreover, the countries engagement in the global unequal exchange has been limited to selling its resources and buying advanced and some semi-advanced goods. This situation is different from that of the countries in which the working class is directly exploited by the western capital.

Unsurprisingly, the result of the above-mentioned economic situation is that the merchant capitalists become more powerful than their industrial capitalists’ counterparts. It is so because selling the valuable raw material brings easy profits and makes the creation of value via production unnecessary or at least secondary for the state’s revenue. In Iran’s case this modern economic structure not only failed to challenge the old political superstructure (centralized monarchy), but also reinforced it, as the state did not rely heavily on taxation as the primary source of income.

The combination of centralized political superstructure and petro-dollar income in the Pahlavi era, led to a particular kind of centralized economic development that brought with it urban development and a moderate industrialization. This centralized urbanization and industrialization was also accompanied by a state-led cultural modernization.

One of the consequences of this urbanization and industrialization was the development of universities and increase in the number of educated population and the formation of a small but influential middle-class. Part of this educated middle class were influenced by Marxist ideas mainly due to the intellectual influence of the Tudeh Party (a classic Leninist party connected to the Communist Party of the Soviet Union).

After the 1953 US-UK backed coup d’etat, the left movement within the universities and big cities started to deviate from both the nationalist Jebhe-y-Melli (the united front led by Mohammed Mosaddegh formed for the nationalization of the oil industry) and the USSR-backed Tudeh Party. Influenced by the Chinese and Cuban revolutions, a young generation of the leftists adopted the ‘small engine moves the big engine’ strategy for a political revolution and organized underground armed struggle against the Pahlavi regime. Their movement was also supported, theorized, and justified by a majority of the intellectuals. Among the leftist groups there were some attempting to provide a leftist revolutionary reading of Islam. The main group following this line was Mojahedin-e-Khalq (MEK). Their rationale was that since the majority of the Iranian population are Muslim, it is best to interpret Marxist ideas within the religious context which is familiar and valued by the ordinary people. The main intellectual figure of this line of thought was Ali Shariati and its main clerical figure was Ayatollah Taleghani.

The politically active, young, leftist, underground militant organisations, the older generation cadres of the classic Communist party (later renamed to the Tudeh Party), and the National Front (the majority of whom being technocrats and liberals) weren’t the only ones unhappy with the status quo under the Pahlavi regime. Part of the traditional clerical apparatus were also unhappy. They believed that to enact Sharia laws the state needed to be controlled by them. The existing class analysis literature on the clergy system argues that the Mullahs’ class interests aligned with that of the traditional merchant bourgeoisie and the traditional local aristocracy (landed-class). And that Shah’s so-called White Revolution in 1963 harmed the interests of these groups.

The White Revolution (WR) is the name of reforms that the Shah started partly in order to facilitate modernization and industrialization the country. The reforms included land reform (buying lands from the aristocrats and selling them cheaply to peasants, encouraging the former to invest in industrial production), developing road, rail and air networks etc. The conflict can be seen as a class rivalry between the emerging comprador bourgeoisie and the landed and merchant capitalists. In this reading, WR was an effort to consolidate the power of the former, represented by the Pahlavi, at the expense of the latter, not merely an innocent attempt to industrialise and modernise. It was also a populist appeal to the peasantry to counter the communist ideology without truly disturbing the class structure in favour of the peasantry or the proletariat.

What supports this analysis is that Khomaini (the first supreme leader of the Islamic Republic of Iran) started to publicly criticize the Shah over some of the WR reforms such as women’s right to vote. Following that public criticism, Khomaini was arrested and that arrest led to the 15 Khordad uprising in Tehran and Qom in 1963 which is usually considered as the birth date of the conflict between the Pahlavi regime and the politically-minded segment of the clerical apparatus (later, Khomaini was sent to exile in Iraq until 1978 when he moved to Paris).

Between 1963 and 1976, there is little record of any protest initiated by this group of Shah’s opponents.  The assassination of prime minister Hasan Ali Mansur, in 1964 by the religious fundamentalist group, Fadaian-e-Eslam, is the main reported political action carried out by them. Instead, almost the entire political space was occupied by the activities of the leftist underground groups, both Muslim and secular. These actions were mainly student protests, limited armed conflicts with the Shah’s police, and assassinations of some U.S. military consultants and the Shah’s generals. The court trial and execution of these activists became an important part of the urban public memory in that era.  In 1976, the publication of an article against Khomaini in Etela’at, one of the most popular newspapers in Iran, triggered a new series of public protests that eventually led to the 1979 revolution.

In this picture, the underlying class conflict in Iran under the Pahlavi regime was between the traditional merchant bourgeoisie allied with aristocrats on the one hand, and newly formed industrial capitalists on the other. The main political manifestation of this conflict is the 15 Khordad uprising. Another, superstructural manifestation of this class conflict was the conflict between tradition and modernism in culture and women’s rights.

The anti-imperialist and anti-Shah activities of the underground left groups also contributed to turning the big engine on. But once the big engine was on the society as a whole would not necessarily move in the direction that the small engine intended (socialism). Instead, the combination of forces created by all class interests defined the destination of the society. And probably the more powerful class (the merchant bourgeoisie) managed to impose their interests more than the other classes through the course of the revolutionary transition.

This analysis is by no means complete and there are caveats within it. For one thing, feudalism certainly disappeared as a class structure through the WR reforms but the clergy continued to sustain their cultural hegemony in the society. As a matter of fact, the clergy’s interests were partly aligned with that of the Pahlavi regime and in fact, part of the religious apparatus was loyal to the regime – there is a gap in both data availability and analysis when it comes to identifying the clergy’s class interests.

However, the key events and developments before (as we saw) and after the 1979 revolution (as we shall see) support this reading of the Iranian history. After the revolution, for a variety of reasons that we shall see briefly, Iran never managed to advance towards industrialization at the pace it did in the Pahlavi era. The underlying economic structure more or less remained untouched and, with obvious changes in constitutional arrangements and personnel, so did the political superstructure.

After the 1979 revolution

It took the Islamists about three years, thousands of lives lost, and tens of thousands of political prisoners to defeat the other political forces present or participant in the 1979 revolution and consolidate their grip on power. The first ten years of the revolution was one of the bloodiest episodes in the history of modern Iran.

In summary, almost all of the leftist groups that used to be clandestine before the revolution and surfaced afterwards, were dragged into an armed struggle with the emerging state. They consequently had to retreat either to the fringe provinces of the country or go into exile altogether and lose their connection to the Iranian society (bear in mind that telecommunications were not as developed as today). Liberal and nationalist groups that played a role in the first years of the revolution, as well as the Tudeh Party, were made illegal. This was despite the fact that the Tudeh Party leaders officially endorsed the Islamic Republic (IR) leadership’s anti-imperialist policies until at least 1982.

The IR’s anti-imperialist position, which was first manifested in the occupation of the U.S. embassy in 1979 by a group of Islamist university students, had two main objectives: seizing the anti-imperialist discourse from the Iranian left and winning over the Muslim population in West Asia, thus establishing the IR as the new leader of the Islamic world. By consolidating their power domestically after a few years, the first objective was met. It could be argued that Iran’s maintaining of an anti-imperialist stance up until today is due to the pursuit of the second objective: claiming the leadership of the Muslim population in the Muslim world through leading the anti-Israel movement.

Two years after the 1979 revolution, Iraq launched a somewhat provoked assault on Iran. Khomaini, who had spent 16 years in exile in Iraq, encouraged Iraqi Muslims to rebel against Saddam. During this period, Iran’s economy was centrally controlled to ensure distribution of limited resources while handling military expenditure. After the war, the IR started a series of economic reforms which have continued up until today. The main orientation of these reforms is reducing the state’s public liabilities.

However, implementing this policy has not taken place at a consistent pace. Parallel to this policy, the IR started to develop its own capitalist class. It is true that they had merchant and bourgeoisie allies, but they promoted only some of them into a class of influential capitalists. For example, they did not allow any of the forming groups of the Nationalist Front (groups such as Nehzat-e-Azadi or Melli-Mazhabi ) to be part of any political or economic decision making despite the fact that they were representing parts of the bourgeoisie. Instead, they attempted to create a new bourgeoisie class. One policy adopted by IR after the war was to encourage Revolutionary Guard (Sepah-e-Pasdaran, IRGC) officials to take part in economic activities (during Rafsanjani’s era as president). The IRGC is the main military body of the Iran consisting of civil militia (Basij) and professional combat forces (Sepah). The IRGC is separated from Iran’s official army (Artesh) and receives much more funding than the latter. The justification for the IRGC taking on commercial activities was that the IRGC was rebuilding Iran after defending it in the war.

In the years after the war, the government followed the privatization policy by selling public and government owned companies to buyers they trusted. This was besides the IRGC winning almost all of the large-scale government project tenders. It is also important to note that a large, but unknown segment of the Iranian economy is run by Bonyads, the Persian word for charitable foundations run by clerics. These tax-exempt enterprises are run directly under the supervision of the supreme leader and the government has no control over them. In practice, the IR apparatus has two governments, one of which is run by an elected president (albeit in much engineered elections) and a shadow state run by the supreme leader. The former’s expenditures are recorded officially and publicly, while little is known of just how much capital passes through the hands of the actual power of the land.

Before talking about the economic outcome of this governance structure, we must first explain why this is a version of neoliberalism. Liberals usually argue that since the majority of Iran’s economic activities happen under the state-related organizations or individuals, this is a centrally-controlled economic system. This would be the case if all of these organizations and individuals were following a certain economic plan, even loosely. But in Iran, this is not the case. There has never been such a plan and the IR has never had any intention to create such a plan. Although there are official documents stating some vague economical goals (Sanad-e-Chashmandaz-e-Tose’e or 5-year plans), these goals have always been set within the standard market economy. That is via providing incentives to attract profit-seeking investment. The only sector which has received non-profit-seeking investment is the military sector. And that is the only sector in Iran with real improvement under the IR.

Therefore, despite the overthrow of the Shah, the political superstructure did not change, but was reinforced. To make this abstract point more concrete, the IR state never even intended to pursue economic planning and non-profit-seeking investment for the sake of industrializing Iran, with the exception of the automotive and missile industry. This was so even when they were under severe U.S. sanctions that would put them in a very weak position when negotiating terms of trade with the rest of the world. Instead, they relied heavily on importing goods, arguing that importing is cheaper than producing them internally. Production is expensive mainly because the Iranian industrial structures and inputs are heavily dependent on the EU, therefore sanctions increase the cost of production significantly. However, there is no evidence of the IR attempting to establish connections similar to what they had with the EU with any country of the global south. Moreover, rather than directly investing in industry they seek foreign private investment, which has not been successful mainly due to U.S. sanctions. This pattern of behaviour is completely aligned with the class roots and origins of the IR rulers, namely the merchant bourgeoisie.

The economic outcome of the above-mentioned governance apparatus has been continuous widening of the gap between the rich and the poor and near elimination of the middle class. The IR’s reaction to U.S. sanctions has always been to implement more neoliberal policies to restore profitability in the ailing economy. As one example, removing fuel subsidies in November 2019 caused one of the biggest uprisings in regional towns of Iran, which was brutally suppressed by killing hundreds of protestors. To sum up, although not much is known about the activities of the shadow government, the final outcome of its activities combined by those of the official government, which has continuously implemented neo-liberal policies since after the Iran-Iraq war, has resulted in nothing more than neo-liberal outcomes. This process has been amplified by the imperialist sanctions imposed upon the country.

Iran’s geopolitical situation

As much as the economic structure of Iran remained intact, its geopolitical situation changed significantly after the 1979 revolution. The 1979 revolution happened in the cold war era, in a region wounded by imperialism, and in a country which was politically under U.S. influence. Therefore, any political group that aimed at gaining hegemony needed to have strong anti-imperialist standing, at least rhetorically. On the other hand, the economic structure of Iran was formed based on the alliance with imperialist bloc. Indeed, this situation created the main contradiction for the regime. The one that it needs to resolve in order to survive. Whether they are capable of doing so remains to be seen.

In short, IR opposition to U.S.-led imperialism, unlike that of the USSR and the communist bloc, has a purely geopolitical logic (if we want to stick to material reasons in explaining ideological justifications given by states for their actions). This opposition does not stem from an alternative way of organising economic activities in the society. The emphasis on Islamic traditions and values serves only as an ideological instrument to differentiate from the imperialist west and reject assimilation and absorption in it. It also provides the IR with a regional area of influence that it hopes will protect them against attempts at regime change and potentially gives them some leverage against other regional players.

As explained in the historical review, the same forces that created IR in a three-year period after the revolution also occupied the U.S. embassy in 1980. This basically marked the end of the U.S.-Iran alliance which was the source of Iranian influence in the region. Shah was the police for the U.S. in the region. To save its geopolitical influence, the new rulers of Iran had different ambitions. They wanted to lead the ‘Shea Umah’ and possibly the Islamic Umah. Appeal to religious identity in face of imperial aggression has a history as long as the imperial aggression in west of Asia. This tendency was also fuelled by the establishment of Israel as a Jewish state and imperialism’s main agent in the region.

As soon as the first days of the 1979 revolution, Khomaini encouraged Iraqi Shia population to revolt against the Baath Party. This was used by Saddam as an excuse to attack Iran. However, there’s a tendency to overstate the role of Khomaini’s provocation in starting the war, which lasted for eight years. Iran emphasises that it was a defensive war on their behalf while after liberation of Khorramshahr in 1982, Iran had freed up all its territory and had started launching attacks to occupy parts of Iraq. In doing so, IR infamously did not withstand its anti-imperialist and anti-Zionist rhetoric, having secretly paid for military assistance from both the U.S. and Israel. IR’s dream of forming Shia Crescent did not become actualised till after the US 2003 attack on Iraq.

After the end of Iraq-Iran war, Hashemi Rafsanjani, the most influential figure of the IR at the time, became the president of Iran (1989-1997). Rafsanjani represented the moderate technocrat tendency within the Islamic republic. For the eight years after the war, IR attempted to rebuild Iran’s infrastructure and international relations with both its neighbours and the EU. This process was continued for another eight years by Mohammad Khatami who was elected as Iran’s president in one of the most attended elections in the history of the Islamic republic. His rhetoric was to repair IR’s relation with the Iranian people and the west, which should be understood as a return to the messaging of the comprador bourgeoise of the Pahlavi era. Iran experienced its highest economic growth after the 1979 revolution in this period. During his second term, the U.S. started its illegal war against Afghanistan and Iraq, which IR cooperated with to a certain extent. At the same time, IR learnt a lesson from these attacks. The lesson was that the U.S. will not tolerate anything less than full obedience, or “total surrender”.

The geopolitical scene in front of the Iranian state at the end of Khatami’s term (2005) was on the one hand the fact that the U.S. will not accept anything less than a totally tamed state in the western Asian region. On the other hand, the fact that collapse of Ba’ath state in Iraq had created the opportunity for them to actualize their plans to mobilise the Shia population in there and make a corridor all the way to Lebanon and Syria and reach to Israeli borders. In other words, the geopolitical situation was calling for creating a defence system against foreseeable imperialist aggression by expanding towards Israel, the only U.S. ally in the region whose security the U.S. valued.

The apparent geopolitical reality gave an upper hand to the tendency inside IR that saw hostility with the west as irreconcilable and put the pro-west moderate tendency in a difficult situation. Consequently, the geopolitical agenda of the former tendency was adopted. Emphasis on the Shia identity was one of the main requirements of implementing the new geopolitical plan. And as a result, Iranian rulers invested so heavily on this geopolitical plan that agreement with it became the sole deciding factor in electoral politics. In 2009, engineering the presidential election led to one of the biggest middle-class revolts against the IR in large cities. The event that alienated some of the main figures of IR such as Hashemi Rafsanjani and Mir Hossain Mousavi (two of the main figures of the moderate technocrat tendency).

This alienation did not stay limited to only some of IR’s political elites, as the years passed, IR’s relation with the Iranian society became tenser and tenser. From 2011, U.S. sanctions against Iran the crippled country’s economy and zeroed GDP growth. As a response, IR governments implemented more and more neo-liberal policies in an attempt to down-size the state’s financial commitments, leading into civil uprisings.

Reliance on the Shia identity was such that in the period 2017 to 2022, it was a wide-spread belief that IR used Shia militia groups from the other nations to suppress internal protests. These were wide-spread protests, specifically in smaller cities on the far regions of Iran, against rising prices and cutting fuel subsidies (known as Deymah 96 and Abanmah 98 protests among Iranians), as well as uprisings against brutal measures to enforce Hijab on women which led to the death of Zhina Amini in police custody, AKA Zan Zendegi Azadi. Regardless of the legitimacy of this belief, the mere fact that it was believed by the public shows the depth of this Shia-centric identity.

What’s next?

To sum up, the geopolitical realities of the region led the Islamic republic to adopt a survival strategy that relies heavily on Shia identity. This has alienated the growing secular population of Iran, as well as the Sunni population mainly living at the Iranian borders in western and south-eastern provinces. And on the economic front, the class nature of the state (the merchant bourgeoisie) combined with the devastating effect of sanctions has played the main role in upsetting the Iranian population in a way that many of them are open to surrendering to U.S. pressure. This contradictory situation can be resolved in two ways; either accepting what the geopolitical situation dictates and changing the economic policies accordingly, or following the economic nature and changing the geopolitical stance.

To follow the first path, the IR needs to take two steps; first reconcile with the Iranian people at least through simple gestures such as releasing political prisoners and easing off their stance on Hijab. And then attempt to revive the country’s economy via non-profit seeking government investment, at least in critical sectors. The first step is vital for deterring the existential threat imposed by the U.S. and Israel in short term and the second step is crucial for surviving as an independent state, in the middle to long-term. Both of the above-mentioned decisions are difficult for IR to make; specifically, the second one due to the dominance of merchant capitalist tendency within the state. This mindset has been the main hinderance for the development of Iranian economy towards a production-oriented economy which naturally leads to south-south economic and technological cooperation given the geopolitical scene in front of Iran. If the Iranian state manages to move towards this direction, then the contradiction between its economic structure and its geopolitical stance will be resolved with a progressive synthesis. This salvages the 1979 revolution and proves that it was a very slow step in the right direction after the Mashrooteh revolution and the nationalisation of the Iranian oil.

The second scenario most likely happens if the IR fails to follow the first path. This will be fatal for the state that established itself after the 1979 revolution and most likely puts a pause on the goals and dreams of the revolution. Although moving towards the second direction might not lead to an immediate collapse of the IR, eventual regime change seems inevitable. The main reason for this speculation is that the U.S. will not normalize relations with an independent state in the west of Asia.

Therefore, in order to be part of the global chain of exploitation, Iran needs to ‘totally surrender’ to U.S.-led imperialism. The sign of following this path will be the return of the Pahlavi family or some other U.S. designated politician-activists who formed their political identity via anti-IR activities. Even the MEK will not be accepted despite their collaboration with the U.S. after the collapse of Baath state in Iraq due to their past anti-imperialist identity. The most probable scenario will be a collaboration between some parts of the IR whose economic interests are aligned with the ‘total surrender’ and the U.S. designated activists both inside and outside of Iran.