Report on the First Conference on Iran's Economy

This was a most promising gathering of economists and doctoral students interested in Iran's economy hosted by University of Illinois at Urbana-Champaign (UIUC). Some of the eminent names in Iranian studies and economic research attended the conference, among them (in alphabetical order) Professors Firouz Gahvari, Hassan Hakimian, Guity Nashat, Vahid Nowshirvani, Hashem Pesaran, Djavad Salehi-Isfahani and Hadi Salehi Esfahani. The younger generation included several doctoral students from UIUC, Virginia Tech, USC, UT-Austin, Berkley, Cambridge (UK) and Goethe University (Germany). Nobel laureate Gary Becker from University of Chicago offered commentary on research on Iran’s economy. Professor Hashem Pesaran from Cambridge was the keynote speaker. The meetings were held in Illini Union.

The conference was conspicuous for several reasons. The articles presented stand apart from the mainstream research in their insight, analysis and implications. A few works even went as far as implementing new information theory methodologies to study economic issues in Iran.

The works of doctoral students were impressive both in their efforts to utilize advance theories and analytical tools and in their struggle with original data from the field. Each and every paper was welcome by several comments from well informed audience and the following discussion usually brought up new questions for further research. This was a world apart from usual gatherings where people have little idea about the realities of daily economic life in Iran and thus they are content by what they hear.

The conference also was a significant organizational success. All in academia know that organizing such events is no easy task. Special thanks go to Professor Hadi Salehi Esfahani for initiating the idea of such gatherings and coordinating the efforts and resources needed for organizing this conference and to his colleagues; Professor Firouz Gahvari and Dr. Ali Toossi Ardakani and to Iranian graduate students in economics department at UIUC, who assisted in all phases of the conference and were generously hospitable. UIUC[1] has been among the first campuses to admit Iranian graduate students to the doctoral program in economics directly from Iran and its sponsorship of this conference was a new peak in this institution’s support for research on Iran’s economy.

This certainly is but a beginning. The second conference at USC in September 2009 is expected to be attended by a larger number of researchers and doctoral students. The idea is to have annual meetings that bring together all economists who are interested in Iran’s economy with academicians from Iran; unfortunately visa problems prevented Iranian economists from attending the first conference despite organizers’ efforts and wishes. The challenges ahead are many particularly for the young researchers who have to seek employment and to qualify for tenure. They ought to balance their interests in Iran's economy and the necessities of their career paths.

The signs are promising; Iran is a taboo or deal breaker topic in academic circles no more. The growing number of doctoral students in economics from this country guarantees a continuous access to the observations from field and a dynamic link with Iranian academic centers. The road ahead is long, but there is hope that great things can be accomplished. The first Conference on Iran's Economy has confirmed and reinforced hopes for dynamic, productive and ground breaking research on Iran's economy.

[1] Another school was Virginia Tech, whose students collaborated with a few research papers offered in this conference.

Bail Out Ejects the Free Market in Iran

The history of economic thoughts and economics in Iran reads like ancient Greek tragedies. In a country where all ideas have a political role to play, even if they do not want to, free market and neoclassical economic theories have found themselves at odds with politicians more than once.
In Pahlavi era they were not welcome while a centralist government reigned over economy with a tight grip, and while most of Iranian intelligentsia was inclined toward Socialist and Marxist notions. A free market was equivalent of heresy.
In the post revolution era ideologists and politicians vacillated between absolute control of economy and privatization.
Ironically the first major nationalization program was designed and proposed by Mr. Sahabi a member of the provisional government and Mr. Bazargan’s liberal moderate cabinet. The revolutionaries might have their disagreements over many concepts such as democracy and freedom of speech however they all opposed economic freedom and free market resolutely.
Only recently during Presidents Rafsanjani and Khatami politicians reconsidered their stands and welcome some notions of private ownerships. Development plans called for extensive privatization of industries and a new interpretation of article 44 of constitution was introduced that ended the government’s monopoly in economic activities. It even seemed the most ardent critiques of free market have accepted the necessity of private free market at last.
However the new crisis in American financial markets has fueled the arguments of those who advocate an unlimited role for the government in the economy and distrust free market and free market ideas. President Ahmadinejad went as far as saying that assuming free market regulates the economy is “a great lie that benefits thieves.” There is no doubt that promoting a free economy in Iran has become more difficult.
Such statements are nourished by the fact that many Iranians, intellectuals and politicians alike, are ignorant of economics as a science and believe their experience of economy can substitute analytical tools and methodological studies of the economy. They often confuse the science with the phenomenon and instead of believing in price and inflation as signals believe in them as control instruments of the economy.
For time being many from all parts of political spectrum in Iran refer to the ongoing crisis as the greatest defeat of capitalism, however one wonders what would happen if this crisis forces down the price of oil. Would then a private free market become a good idea again?

Do Iranians Believe in Maximizing Utility?

One of the fundamental assumptions in microeconomics is that any individual is maximizing his or her utility. This means that individuals seek “satisfaction” in their behavior by choosing between their available options. All options are not available due to limited resources, means or income. This constrain is usually referred to as “budget line”. There is no doubt in my mind, and any other microeconomist for that matter, that any individual indeed acts accordingly.

My question however is of a different nature. Given the cultural values in Iran do Iranians consider maximizing satisfaction a legitimate goal? By this I mean do we, Iranians, believe in each other’s right to have a fulfilled life, to act according to our desires and to maximize our satisfaction?

Growing up in Iran during a time of war your correspondent witnessed a culture of “self-sacrifice.” mother for her children, father for his family and an individual for the welfare of country and its defense should forsake their desires. Thus assuming or accepting that an individual should, could or would do something for “pleasure” and “satisfaction” was not advocated. Today I wonder if that has resulted in an illusion where any analysis based on maximizing utility could be rejected. I just wonder if my compatriots believe or accept this fundamental assumption.