Abstract
Before the 1990s, political economy theories typically presumed the security of property rights. The significance of property rights as an underlying factor in economic growth and development was first recognized by new institutional economists and has since gained further attention. The current research examined Marxist and methodological individualism approaches within political economy that have been used by several scholars to explain the main causes of underdevelopment in Iran, with a particular focus on property rights. A common weakness of these approaches is their neglect of Iran’s unique historical context and their failure to present an independent theory addressing the inefficiency of property rights in Iran’s history. The present study suggested that the new institutional approach, which incorporates historical analysis and the study of societal institutions, could offer a more comprehensive understanding of the role of property rights in underdevelopment. Rather than simply analyzing a series of historical events and geographical features, the proposed approach emphasizes several specific aspects of Iran that must be considered. These include the country’s unique climatic conditions, particularly the scarcity of water, which has led to significant tensions. Additionally, the impact of these climate conditions on political and economic systems (the theory of government) has shaped nomadic and tribal lifestyles and contributed to the formation of tribal governments. This, in turn, has influenced the underdevelopment of property rights (the theory of property rights) in Iran.
1. Introduction
Before the 1990s, political economy theories typically presumed the security of property rights. The significance of property rights as an underlying factor in economic growth and development was first recognized by new institutional economists and has since gained further attention. The current research examined Marxist and methodological individualism approaches within political economy that have been used by several scholars to explain the main causes of underdevelopment in Iran, with a particular focus on property rights.
2.Materials and Methods
 
Drawing on the institutional political economy framework, the present study employed a descriptive–qualitative method and library research to examine the theoretical models of Marxist political economy and the ideas grounded in methodological individualism. The former is represented through Iranian feudalism and the Asian mode of production, while the latter is expressed through the concept of unsuccessful libertarianism. These models have been used by several scholars to analyze the causes of Iran’s underdevelopment, with a particular focus on property rights.
3. Results and Discussion
The analysis focused not only on the theoretical inconsistencies of the models, but also on their contradictions with the historical records of Iran’s economy, as outlined in the following table:
 
 
Table 1. Characteristics of Political Economy Approaches Used to Explain Iran’s Underdevelopment




Political economy approach


Theory


Thinker


Most important features


Position of property rights in theory


Criticisms




Marxism


Feudalism


Petrushevsky
Nomani
Vali


The emergence of the autocratic government as the biggest owner
The existence of the lord-serf system


At the disposal of the royal family, nobles and dependents


The absence of slavery in the history of Iran
The existence of small ownership in the history of Iran
The disproportion between the ownership of the state over the means of production and the ownership of the feudal lords over it
The absence of stable legal relationship between different classes and the government in Iran
The absence of aristocracy in Iran and the complete dependence of property on the monarchy




The Asian mode of production


Ashraf
Katouzian
Seif


Emphasis on water scarcity and the unique role of the government to provide the needed resources
Subjected ownership to the will of the autocratic government
Lack of formation /independence of social classes
Lack of market exchanges
The slow growth rate of productive forces


At the disposal of the king


Failure to pay attention to the complexities and special conditions of each society
Incompatibility of the hypothesis of self-sufficient villages with autocratic government
The existence of other forms of ownership (private and endowment) in the history of Iran
No historical record of government investment in water projects in Iran




Methodological individualism


Unsuccessful libertarianism


Tabibian, Ghaninejad, Abbasi


Emphasis on individual freedoms as the basis of property rights and intellectuals’ historical lack of attention to it
Repeated emergence of tribal and patriarchal tyranny as the dominant model of all the events of contemporary Iranian history
Harmony between individual desires or interests
The emergence of interventionist state due to the continuity of traditional tribal values and its affinity with socialist collectivist ideals


Intellectuals’ lack of attention to the importance of the issue and repression by the interventionist government


Neglect of the role of history and institutions on the decision-making of agents
Limited rationality, incomplete information and uncertainty about the future
Existence of transaction costs
Failure to establish the assumption of a neutral contractual government and the history of the tribal government in form and content until the early Qajar period (the plundering government)
The lack of application of neoclassical models in non-competitive conditions that form the major part of economic history




Source: Research results
Based on the theoretical models reviewed in the table above, several key theoretical flaws in were identified in the theories. First, given the existence of private ownership and endowment, state ownership has not been dominant throughout Iran’s history. Second, the models failed to consider the impact of Iran’s dry, water-scarce climate, which played a crucial role in shaping tribal life, collective agricultural cooperation, and the subsequent underdevelopment of private property. Third, these models overlooked the persistently tribal nature of government in Iran, which has influenced the political and economic landscape. Another significant flaw is the predatory nature of the government in Iran, which has historically focused on maximizing rents and self-preservation rather than investing in productive inputs. Finally, the models failed to address the lack of a stable and consistent relationship between different social classes and the government, as well as the absence of secure property rights for all classes.
Table 2. A Comparison of Political Economy Theories Concerning Iran’s Underdevelopment




Theory


Water scarcity and the dispersion of villages


Supremacy of collective/state ownership


The use of lands for rent distribution


The existence of private property and endowment


Tyranny and irregular relations between the government and social strata


Failure to secure property rights


Shareholding system in agriculture


Tribal structure of the political power




Feudalism


 


 


*


 


 


 


*


 




The Asian mode of production


*


*


 


 


*


*


 


 




Unsuccessful libertarianism


 


*


 


 


*


*


 


*




Source: Research results
4. Conclusion
A key weakness of these approaches is their failure to account for Iran’s unique historical context and their inability to present an independent theory explaining the inefficiency of property rights in Iran’s history. To address this gap, the new institutional approach, which emphasizes historical analysis and the study of societal institutions, can provide a more comprehensive understanding of the role of property rights in underdevelopment by going beyond simply examining a series of historical events and geographical features. The present analysis suggests focusing on specific aspects of Iran, such as its unique climatic conditions, particularly the scarcity of water, which has been a major source of tension. Additionally, the impact of these climatic conditions on the political and economic systems (the theory of government) has shaped nomadic and tribal lifestyles, as well as tribal governments. Finally, the influence of these political and economic structures on the underdevelopment of property rights (the theory of property rights) should also be considered.