The Pahlavi state has variously been described as despotic, developmentalist, and rentierist. In this paper, I argue that these characterizations marshal the same arguments domestic technocrats and foreign advisors made from the 1950s on to explain Iran's outsized reliance on oil: i.e., that the state was not overzealous, but zealous in the wrong ways. The Pahlavi state, according to the liberal model of development its postwar advisors prescribed, was correct to build the infrastructure (roads, dams, and irrigation canals) needed to attract private investment, but erred in delaying its withdrawal from the economy, which was needed to produce positive outcomes (i.e., the predomination of normal market relations). Rather than argue that the state refused to withdraw from the economy, which the above definitions variously do, this paper attempts to ask after the conditions that made state withdrawal difficult.
Taking Khuzestan’s encounter with the fossil fuel industry at the turn of the twentieth century and the midcentury development of its hydroelectric and agrarian potentials as my point of departure, I argue that the emergence of Iran's oil industry and foreign oversight of it necessitated an elaborate system of regulations regarding land and money, while climbing oil revenues generated the possibility of agrarian reform and industrial modernization. Reading midcentury investment reports by international financial institutions like the World Bank alongside American, British, and Iranian diplomatic records, I argue that while Pahlavi officials and their advisors imagined that after the construction of infrastructure and land reform, a capitalist market would replace state development, the political economy of oil extraction and development exacerbated inequality and enlarged the role of the state. The state, for instance, needed to do more than legislate land reform; it needed to construct the canals and dams that would irrigate land and create the credit lending arrangements that would allow the benefits of agrobusiness to flow down. The fossil fuel industry thus not only informed the possibilities imagined for Iran’s future but also provided precedent for thinking about and legislating the relationship between people, land, and the state, which underwrote both land reform and agrarian industrialization in the 1960s.
The modernist ideal of the ameliorist, rationalizing, technocratic state that intervenes to address social and economic ills, I conclude, was less a prescriptive piece of Cold War ideology and more an outcome of the legal frameworks and developmental imaginations oil generated.