Mehrdad Vahabi

• Habilitation and PhD
• Professor (Full) at Université Sorbonne Paris Nord

This special issue reflects one of the first systematic inquiries into the effects of revolutions on institutional change, a topic previously explored only tangentially across diverse social science domains. It fosters interdisciplinary discourse on revolutionary outcomes among economists, political scientists, sociologists, and economic historians...

Cet article explore l’héritage intellectuel de Kornai en se focalisant sur deux concepts clés constamment présents dans ses travaux, à savoir le paradigme systémique et la contrainte budgétaire lâche (CBL). Ces deux concepts ont constitué les soubassements théoriques des contributions originales de Kornai à l’important sous-champ de la science écon...

On the occasion of the release of his latest book (Vahabi 2023), Mehrdad Vahabi, a University Professor and director of CEPN, reflects on several theoretical dimensions of his work during an interview. Firstly, Mehrdad Vahabi revisits his definition of predation, explaining how this concept forms the cornerstone of his theoretical framework. Predat...

The Islamic revolution is nothing but Islamic revivalism or the establishment of an Islamic state based on Sharia. In this paper, I focus on the Islamic revolution in Iran that has been exceptionally considered as a ‘social revolution’ targeting an overhaul of the economic institutions. Can the economic model of Islamic revivalism be reduced to one...

The Iranian People’s Fada’i Guerrillas have received little dedicated scholarly investigation in the shadow of the Iranian Revolution. This unique collection combines scholarly analysis of the movement, with first-hand accounts from those within the movement, in order to shed light on the experiences, organisation and history of this group during t...

In this chapter, I explore those elements of Islamic economics that enhance a confiscatory regime and are compatible with destructive coordination. The choice of Islam in this study is closely related to the emergence of a critical social order in all regions affected by the rise of political Islam since the Iranian Revolution of 1979. It will be s...

In this chapter, I critically examine the formation of Islamic political capitalism under the Islamic Republic of Iran (IRI) through Anfal’s progression and institutional complementarity since 1979 until the privatization decree in July 2006. In the interregnum between Anfal in Khomeini’s era (1979–1989) and its unprecedented extension in Khamenei’...

This chapter conceptualizes the destructive mode of coordination as a social coordination through intimidation, threat, and the use of coercive means. The key role of parallel institutions, confiscatory measures, indeterminate property rights, and res nullius will be underlined. Different examples of destructive coordination will be provided to ill...

This chapter is about social order and crisis from an economic viewpoint. An endogenous theory of social crisis warrants an understanding of the inner dynamic of social order. Two broad approaches have been distinguished in explaining this dynamic: economic and institutional. The Marxian concept of ‘modes of production’ provides an economic explana...

In this chapter, the Weberian distinction between political and market capitalism will be borrowed to underline the importance of great demarcation between property and sovereignty as a fundamental institution of market capitalism characterized by free labor, impersonal markets, and modern corporation. By contrast, political capitalism preceding hi...

In this chapter, the Islamic political capitalism will be summed up as an economic system based on three fundamental institutions: (1) Velayat faqih (the jurisconsult of the vicegerent), (2) Anfal, and (3) destructive coordination. These institutions determine (4) the typical behavioral regularity of economic agents, namely capital and labor flight...

In this chapter, I first discuss the previous privatization campaigns, their failures, and their respective shares in transferring the state assets to non-state sectors during Hashemi Rafsanjani and Khatami presidencies. Then I will focus on objectives, process, and outcome of Khamenei’s ‘privatization’ decree in light of historical world-wide expe...

In this paper, I argue that the principal message of Janos Kornai’s work was to underscore that the dysfunctional properties of socialism are endemic and systemic, and cannot be “reformed”. In a sense, Kornai’s role was similar to the French Encyclopedists in preparing the ground for France’s 1789 revolution. Kornai’s intellectual contribution was...

Janos Kornai is one of the leading economists of the twentieth century. Unfortunately, his interdisciplinary, systemic approach and the Austro-Hungarian convergence on the socialist calculation debate are not explored sufficiently by public choice scholars or by political scientists and economists more generally. The essays published herein try to...

In this paper, we question a very deep-rooted bias in the economic literature with regard to conflict and revolution. Conflict in general and revolution in particular are not necessarily “dark side of self-interest” or bad things. They may be sources of political and economic efficiency depending on their incidence on institutional change. Revoluti...

In this interview, we first scrutinise the meaning of classical liberalism and its revision by New liberalism in the twenties as social liberalism to demonstrate the conceptual confusion in using the term ‘neoliberalism' as an economic doctrine. We then discuss the emergence of American neoliberalism as developed by the economic and law departments...

This paper is a critique of Vira Ameli’s essay titled “Sanctions and Sickness,” which was published in the March/April 2020 edition of the New Left Review. In her essay, Ameli employs selective evidence and makes inaccurate claims. Her piece is not only an unreserved defense of the Islamic Republic of Iran (IRI), but a fabricated and deceitful port...

In this paper, we argue that the welfare state is an outcome of modern mass (total) warfare. The total war economy requires the participation of all citizens, erasing the differences between the military and citizens. Consequently, the war economy benefits from succoring the civilian population. The total war effect explains why a predatory state u...

This paper studies the practice of Müsadere in the Ottoman Empire. Müsadere refers to the expropriation of elites—often tax farmers or administrators—by the Sultan. This practice is interesting from both political economy and economic history perspectives as the Ottoman Empire continued to increase its reliance on it during the eighteenth century,...

Economists have adopted two broad perspectives on the state: contractual (i.e., provider of public goods and services) and predatory (coercive and extractive). By a predatory state, we mean a state that promotes the private interests of dominant groups within the state (such as politicians, the army and bureaucrats) or influential private groups wi...

This critical survey demonstrates for the first time that the underlying tenets of the resource curse/blessing are borrowed directly from “staple theory”. It also focuses uniquely on appropriability with two key issues in mind: (1) state appropriability of assets, and (2) the mobility of assets to thwart appropriation. In the previous resource curs...

This paper explores the evolution of Kornai's thought on general equilibrium theory (GET) and his position on mainstream economics. Three moments in this evolution will be highlighted, starting by his rejection of GET and advocating disequilibrium in Anti-Equilibrium (1971). While Kornai does not treat the "equilibrium paradigm" as irrelevant, he s...

We build a theoretical framework consistent with historical evidence in which empire-building is explained by price and predatory competitions on the market for protection. We explore how the assets structure possessed by the buyers of protection influences the nature of protection and in fine the size of empires. Our main contribution is to introd...

Special issue of Revue internationale des études du développment on Iran political economy

While the distinction between public and private goods is essential in developing a normative theory of non-predatory states, the focus of this article is on a positive theory of predatory states. Since the predatory relationship between the state and its subjects depends on the power of the state to grab or to appropriate coercively and the subjec...

The economics literature usually assumes order in terms of a Weberian state with monopoly over the means of violence. In this paper, we study historical situations in which such an order is absent and violent conflict namely duel of honor is an institution. Anarchy or the absence of state rules in managing violence does not imply the absence of pri...

Still in early stages of development, conflict theory presents a growing interest in understanding the economic costs and benefits of conflicts. In this book, Mehrdad Vahabi analyses one type of conflict in particular: manhunting, or predation, in which a dominant power hunts down its prey and the goal of the prey is to escape and thus survive. Thi...

This paper demonstrates that Kornai's original concept of the soft budget constraint (SBC) as a theoretical innovation in micro-theory disguises income redistributions that are essentially macroeconomic relationships. The SBC also postulates a competitive market economy as the benchmark of hard budget constraint (HBC) and efficiency. A recent forma...

Dueling is one of the best indicators of political transition from anarchy to order. This paper explores the dynamics of dueling for honor as a social institution in England, France, and Germany. It identifies major differences regarding the frequency, duration, and nature of dueling. Although dueling for honor emerged as a self-organizing and self...

Borrowing from public choice literature, while aristocratic civil wars can be regarded as anarchy, and the monopoly of violence by the state as Leviathan, duel of honor is an orderly anarchy. The sudden or gradual withering of duel of honor as an institution marks the transition to the monopoly of violence by the state in Europe. In this paper, we...

This paper begins with the paradoxical relationship that our discipline has with conflicts. Although economics is present in all conflicts, it is often absent from mainstream economics. I argue that the origins of this paradox should be sought in the field separation between 'economics' and 'politics.' After disentangling the two functions of confl...

This paper takes a stylized paradoxical fact of Iranian politics under the Islamic Republic of Iran as its starting point: the stark confusion between the position and a good portion of the opposition. Such a blurred frontier between 'position' and 'opposition' did not exist during the Shah's regime. Without the decisive support of non-Islamic orga...

Grâce au concours de l’Agence française de développement (AFD), l’ouvrage de North D., Wallis J., et Weingast B., Violence and social orders, a conceptual framework for interpreting recorded human history, New York, Cambridge University Press, 2009, a été traduit en français. La parution de la version française d’un ouvrage de plus de quatre cent p...

This paper focuses on the extension of transaction costs to appropriative activity and coercive power in the property rights approach. It has been argued that including the costs of appropriation and violent enforcement in transaction costs is based on the assumption that Coaseian bargaining can be extended to any institutional scenario, i.e., volu...

This paper explores the relevance of soft budget constraints (SBC) to development studies by examining the parastatal sector. The political ingredient of the SBC is discussed by focusing on two examples: 1) religious and military foundations in Iran; and 2) Fannie Mae and Freddie Mac. It presents two main findings. First, the SBC of the parastatal...

The concept of the soft budget constraint (SBC) was initially formulated by economist Janos Kornai in the context of socialist economies. I argue that the SBC can be regarded as the political economy of a predatory state in both the so-called socialist and capitalist economies. The hard budget constraint (HBC) is not related to an ideal competitive...

The generalisation of Coasian theorem to the power relationship amounts to depicting conflict as a bargaining process between conflictual parties that are, simultaneously, both partners and adversaries. This perspective leads to different models of ‘rational conflicts’ i.e. a threat of conflict without any real clash. An alternative approach is dev...

Three main typical or ideal modes of social organization have been identified in the literature, namely the market, the redistribution, and the reciprocity (Polanyi 1944, 1968; Lindblom 1977; and Kornai, 1984, 1992). Our purpose is to introduce another type of social organization that we name the “destructive mode of coordination.” It is social org...

Three main typical or ideal modes of social organization have been identified in the literature, namely the market, the redistribution, and the reciprocity (Polanyi 1944, 1968; Lindblom 1977; and Kornai, 1984, 1992). Our purpose is to introduce another type of social organization that we name the "destructive mode of coordination." It is social org...

Cet article fournit un survol critique de deux branches récentes de la vaste littérature économique portant sur les conflits sociaux, à savoir la théorie du conflit stratégique et les modèles d’instabilité sociopolitique. La première branche peut être retracée à Haavelmo [1954], et a été formalisée depuis par de nombreux modèles du conflit rationne...

A bstract Polanyi (1944 , [1957] 1968 ) has distinguished three “patterns of social integration,” namely, “reciprocity,”“redistribution,” and “exchange.” This triad has provided the starting point for most subsequent discussion. Our purpose is to introduce a further type of coordination, the “destructive mode of coordination.” This mode achieves co...

The paper first investigates the causes of the recent financial and liquidity crisis in the US and all over the world as a preliminary phase of the imminent recession. It then questions Paulson-Bernanke’s plan as a solution to the crisis and ponders over the differences between EU plan and the American one. Finally, it provides an overview of some...

This article explores the specific contribution of recent literature on incomplete contracts in comparison with the acontractual Walrasian general equilibrium as well as the complete optimal contracts of the Agency theory regarding the institutional identity of agents. It underlines a tension between the theoretical justification of contractual inc...

The concept of ‘mode of coordination’ captures the way economy is embedded in social relationships and influences the integration of society through an ‘instituted process.’ Three main typical or ideal modes of coordination have been identified in the literature, namely the market, the bureaucratic and the ethical (reciprocity) modes of coordinatio...

The concept of ‘mode of coordination’ captures the way economy is embedded in social relationships and influences the integration of society through an ‘instituted process.’ Three main typical or ideal modes of coordination have been identified in the literature, namely the market, the bureaucratic and the ethical (reciprocity) modes of coordinatio...

The budget constraint as a bookkeeping identity is a fundamental concept of standard microeconomics. Clower reinterpreted this concept as a rational planning postulate. The notion of soft budget constraint (SBC), formulated for the first time by Janos Kornai (1979) in the context of a socialist economy is a heresy according to standard microeconomi...

This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection a...

From its inception, Political Economy has been interested in analysing the value of creative power or the value that agents, individually or collectively, can produce or exchange at national or international level. What is at stake here is the exact opposite: how much can an agent destroy?Destructive power has two different functions. It can be use...

The soft budget constraint and economic theory The budget constraint as a bookkeeping identity is a fundamental concept for standard microeconomics. Clower reinterpreted it as a rational planning postulate. Formulated for the first time by Janos Kornai (1979) in the context of a Communist economy, the soft budget constraint (SBC) is a heresy for st...

'Mehrdad Vahabi has produced a unique and original analysis of the economic roles of violence, both its destructive and - more interestingly - its constructive role. He demonstrates successful and unsuccessful uses of violence with examples from ancient times to our time. The book is thorough, erudite, and full of surprises.' - Thomas C. Schelling,...

Part of a Symposium entitled, "Say's Law Revisited," this note is dedicated to showing that both Say's and Ricardo's concerns about unemployment were deeper than even the Kates article (in this symposium) suggests, that this concern even led Say to advocate a clear Keynesian remedy for unemployment: public works. Correspondingly, the paper shows th...

In this paper, we have distinguished three different conceptions of the budget constraint (BC). The first one, introduced by Clower, regards the BC as a universal (unconditional) rational planning postulate. This does not imply market equilibrium or optimality. The second one, advocated by Kornai, considers the BC as a conditional empirical fact re...

This is a note on a book by Mathilde Maurel regarding the European regionalism from the perspective of cliometric studies. It studies the economic efficiency of the disintegration of Austro-Hungarian empire as well as the disintegration of the COMECON (socialist) bloc.

This study endeavors to explicate the relevance of the Marshallian concept of normality in the evolution of supply curves and the price mechanism in time. This concept is based on the contradictory, or at least ambiguous, combination of an ex ante perspective of expectation formation and an ex post inertial dynamics. The author first explores the e...

The purpose of this study is to analyse the genesis and the evolution of the econom­ ics of shortage in Janos Kornai's writings from 1980 (the date of publication of Economics of Shortage) up to 1996 (the date of publication of the trench edition of The Socialist System, the Political Economy of Communism [1992/). The formation and the evolution of...

In my critical review of Arrow's theory of information, I show that despite its great achievements, this theory lacks the tacit, institutionalized, unexpected and non-rational dimensions of knowledge. The organizational or corporate culture cannot be derived from market failure or market imperfection. It is the direct outcome of internal organizati...

L'article passe tout d'abord en revue les succès des réformes économiques chinoises. L'entrée et l'expansion soutenue du secteur non étatique, comprenant les sociétés mixtes et les investissements étrangers directs, sont considérées comme les plus grands acquis de ces réformes. La contrainte budgétaire lâche et le paternalisme des entreprises d'Éta...

This article endeavours to capture certain aspects of the “Austro-Hungarian convergence” . It focuses on the genesis and evolution of Janos Komai’ s economic thought and its rapprochement to the Austrian economists (particularly von Mises and Hayek ) with regard to the relationships between property and coordination mechanism. Ruminating on Kornai...

Contractual reductionism takes market exchange as the ubiquitous form of economic organization throughout history. Transactions costs are accordingly regarded as the costs of running any economic system in general. This paper explores the nature of protection/aggression costs as specific costs of coordination through coercion which should be distin...

In this paper, we reconsider the concept of the BC in the light of an institutionalist approach. Kornai’s interpretation of the concept provides the basis of such an approach. He defines the BC as a conditional empirical fact regarding the specific behavioural regularity of agents that is determined by particular institutional setups. Different deg...

The paper first investigates the causes of the recent financial and liquidity crisis in the US and all over the world as a preliminary phase of the imminent recession. It then questions Paulson-Bernanke’s plan as a solution to the crisis and ponders over the differences between EU plan and the American one. Finally, it provides an overview of some...

The concept of ‘mode of coordination’ captures the way economy is embedded in social relationships and influences the integration of society through an ‘instituted process.’ Three main typical or ideal modes of coordination have been identified in the literature, namely the market, the bureaucratic and the ethical (reciprocity) modes of coordinatio...

Mon programme de recherche s'inscrit dans un vaste courant de la pensée économique connu sous le nom de “néo-institutionnel”. Il cosiste à contribuer à l'émergence d'une approche dynamique des modes de coordination dans laquelle les institutions jouent un rôle central. S'adossant sur la distinction forgée par L. Davis et D. North (1971, pp. 6-7) en...