The Moorish Wanderer

The inflationist food for thought

Posted in Dismal Economics, Moroccan Politics & Economics by Zouhair ABH on June 26, 2010

According to the latest (to date) IMF working paper concerning Morocco, everything is going fine in Morocco; Indeed,

Moroccan banks are stable, profitable, adequately capitalized, and resilient to shocks, but the financial system as a whole will need to adapt to the inherent risks of changing macroeconomic policies and conditions. Major reforms have been achieved since the 2002 FSAP within a policy of actively promoting economic and financial sector opening”.

So in essence, the banking and financial system is stable. It is however, quite fragile, or rather, should develop some more resilient mechanisms. The IMF namely states that:

BAM and other supervisory bodies require the necessary operational independence and resources, supported by accountability structures, to conduct an autonomous monetary policy and effective supervision. The authorities have taken welcome steps in this context, and promulgated the new articles of incorporation of BAM confirming its autonomy, a new banking law, a new anti-money laundering law, and a large number of secondary regulations.

The Moroccan economy is doing well, admittedly because of the sound macroeconomic policy successive governments followed since the late 1990’s. These policies included low inflation-oriented policies, conservative fiscal policy, and shy attempts in implementing a policy rate by conceding more autonomy to the Central Bank. This set of policies is considered to be the standard and sound macroeconomic policy every responsible government should follow.

Let us first tackle the inflation policy. Bank Al Maghrib made an announcement of the ‘target inflationfor 2010, and set it to 1.2%, a rate of historical low of course. It is, however, a figure quite difficult to match, because of the other economic parameters party in ‘shaping’ the inflation rate.

According to the Bank’s own monthly monetary report (Dec.2009), inflation rate set at 1.4% in September 2009, a figure in line with the global inflation (due mainly to the effects of a global recession).

Going back to the inflation policies, the national/total consumption is considered to be of sizable influence on inflation rate (I will come back on that later on). Basically, the report points out:

La consommation finale nationale devrait croître de 7,3% en 2009, rythme moins rapide que celui des trois dernières années mais qui demeure supérieur à la moyenne de la décennie. Concernant plus particulièrement la consommation finale des ménages, elle devrait augmenter de 7,1% après une progression moyenne de 10,9% durant la période 2006-2008.

Globalement, les principaux indicateurs disponibles à fin octobre laissent présager la poursuite de la bonne orientation de la consommation des ménages durant les prochains trimestres.’

(a trend confirmed in the June issue : ‘Au total, la consommation finale nationale devrait croître en 2010 à un rythme situé entre 6 et 7% en termes réels.’)


Now, Olivier Blancard, with other economist colleagues, produced an interesting piece (rather a working paper, really) a couple of months ago for the IMF. Rethinking Macroeconomic Policy; and there was a bit about inflation policy:

Stable and low inflation was presented as the primary, if not exclusive, mandate of central banks. This was the result of a coincidence between the reputational need of central bankers to focus on inflation rather than activity (and their desire, at the start of the period, to decrease inflation from the high levels of the 1970s) and the intellectual support for inflation targeting provided by the New Keynesian model. In the benchmark version of that model, constant inflation is indeed the optimal policy, delivering a zero output gap (defined as the distance from the level of output that would prevail in the absence of nominal rigidities), which turns out to be the best possible outcome for activity given the imperfections present in the economy

What about our own policies on that matter? First off, let us have a look to the Bank’s views on inflation; the latest issue of the Revue de la Conjoncture Monétaire et Financière (May, 2010); They produced a couple of interesting graphs that speak for themselves:

Monthly versus Year-to-Date Inflation (Source: BAM)

The good news is, core inflation is pretty stable. Economists tend to use the core inflation rather than CPI (Consumer Price Index) fluctuations because they need to capture the relevant data, and oust any volatile random error term (mainly in econometrical techniques)

However, the graph below somewhat confirms a thesis I held to be true: our inflation is heavily correlated to current consumption goods (say, food like edible oil, sugar, wheat, etc…) as shown on the following graph:

 

 

Inflation component breakdown

 

 

 

 

While it is true inflation is gradually beaten down (which, ceteris paribus, is a good thing for the consumer), the Central Bank, as well as the Finance ministry, seem to have failed to address its volatility. In essence, the finance ministry implemented stabilizing inflation policies, succeeded in doing so, but only with the core inflation, and not on the CPI, which is quite critical, for it has a definite impact on the Moroccan consumers’ purchase power.

Blanchard then goes on: There was an increasing consensus that inflation should not only be stable, but very low (most central banks chose a target around 2 percent). […] In a world of small shocks, 2 percent inflation seemed to provide a sufficient cushion to make the zero lower bound unimportant. Thus, the focus was on the importance of commitment and the ability of central banks to affect inflation expectations.

Leaving the neo-Keynesian theoretical background aside, the kind of inflation the Moroccan economy experiences is of the highest interest to me: I believe every sound government and every sensible Central Bank should make inflation control policy on of their top priorities (beside economic growth and addressing inequalities, for the ministry that is).

However, it is quite odd that, while it undeniably preserves purchase power and good public finances, a certain ‘acceptable’ level of inflation is needed to boost businesses and, to some extent, help retail investors as well. In layman’s terms, the ‘good level’ of inflation alleviates the real debt burden a bit on businesses (for they actually pay lower real interest) and allow for retail investors to build up their portfolio on financial markets and exchange. However, the kind of inflation we are discussing here does not benefit to businesses neither household in Morocco.

We have seen earlier on that while core inflation is remarkably stable, the CPI components are much more volatile. And it is recognized to be so : Impactée principalement par des chocs ponctuels, l’inflation demeure modérée au cours des derniers mois. En effet, après s’être établie à 0,1% en février, l’inflation annuelle est passée à 0,9% en mars. L’analyse détaillée des différentes composantes de l’IPC laisse indiquer que cette évolution traduit exclusivement le renchérissement des prix des produits alimentaires volatils, l’inflation sous-jacente n’ayant que légèrement progressé, pour se situer à 0,2% au lieu de 0,1% un mois auparavant.

We are through the looking glasses here: the CPI is definitely what makes the inflation rate goes up, and there are several ways to explain it so:

CPI underlying commodity prices went up on the period from Q4 2009 to Q2 2010. It is quite possible, for a constant domestic demand, to take on inflation because of a rise in commodity prices. The first idea is to look at future commodities indices. According to the Bloomberg figures, futures prices were quite volatile from October 2009 to May 2010, but were they

Various composite commodities index (Bloomberg)

Let us take an even more systematic approach. The following graphs depict Exchange Traded Commodities tracking benchmark indices, all of which give a fair idea of how likely the commodities’ prices behaved during the past 6 months. The selected commodities benchmark are Oil Brent for Oil (ETF Securities Brent Oil Index), then the UBS CMCI Wheat Index for Crop/Wheat and finally UBS CMCI Sugar Index for Sugar. (All of which are listed on the London Stock Exchange, and for anyone interested in discussing the technicalities of index rebalancing as well as the relevant choices, I would with vivid alacrity)

CPI inflation in Morocco looks quite decorrelated with respect to commodities fluctuations

The result is quite puzzling: there seems to be no noticeable relation (lagging or dynamic) between inflation fluctuations, and the selected commodities, though these are most important in the Moroccan consumption basket. The commodities’ prices are, therefore, not the main explaining factor for the CPI inflation.

Domestic demand went up on the same period:

‘La consommation finale nationale devrait croître de 7,3% en 2009, rythme moins rapide que celui des trois dernières années mais qui demeure supérieur à la moyenne de la décennie. Concernant plus particulièrement la consommation finale des ménages, elle devrait augmenter de 7,1% après une progression moyenne de 10,9% durant la période 2006-2008’.
Basically, in a moody conjecture, the main variable that pulled our economic growth was the domestic consumption.
My two cents are up. I shall write very soon on the topic of inflation and conumption relation. However, It must be pointed out that the Central Bank and the FInance Ministry, while achieving a relative success in dealing with inflation, the two bodies failed in addressing volatility inflation, and thus, the main objective every policymaker should make theirs: stable long term growth.

S&P is Moody, Fitch is grading the rate

Theres little to be discussed seriously on the home front. Perhaps the Amar/Gazhaoui matter; No, too banal I am afraid, and we are in the process in making it so indeed.

There was something I wanted to discuss a couple of months ago but I lacked time but then again, and with the benefit of hindsight, the issue would be clearer and therefore easier to deal with.

For those of you with interest in economics and finance, you heard about the grading improvement on the Moroccan sovereign debt. In a nutshell, according to the grading agencies (like Standards and Poors, Moodys, or Fitch), Morocco is now safer to invest in (the assets bear less risk and are more liquid than before). Presumably, this is good news for the economy, especially with regard to the tightening global economic conditions. The business cycles likely trends are still on the downward slope (with little glimpses of recovery here and there, but not enough to reverse the tendency), so actual money is tight, therefore making credit opportunities rarer.

screen capture of the S&P announcement


Indeed, goods news because from now on, Morocco is Investment-Grade approved. Namely, bonds with grades ranging from AAA (the strongest and highest rate) to BBB. And we are now in a chance: since March 23th, 2010, the main grading agencies changed their ratings favourably on the various levels of debts the Moroccan government services to foreign holders.

The fact Moroccan sovereign debt went Investment-Grade allows for a new batch of investors to put their money in our economy. Indeed, the UCTIS III regulations provide for a particular kind of financial instruments all related to Money market. A new surge of money with which the government can put into practise the policies that would enable growth and wealth for the Moroccan economy. A fresh influx of money could also mean a renewal of our debt structure, a specific aspect that shouldnt be overlooked.

I believe this piece of good news is not really one. Yes indeed, the economic outlook seems stable, but on the other hand, Morocco is gasping for fresh foreign currency. It may seem a surprise, but the foreign exchange terms are absolutely not in our favour, as indeed the commercial balance deficit is worsening, and we desperately need, one way or the other, to finance it. Either by engaging the reserve currency or by calling up money on the international markets (the latter is now even more possible with the rating improvement)

The reserve currency has always been a nightmare for the Moroccan economists (and to the economic journalists as well); they were already alarmed in 2009 about it then, and have every reason to be alarmed now (as you may notice, the announcement effect takes time to be felt…)

Let us first list some facts and figures on our economic resilience in terms of currency holdings;

According to the quarterly statistics digest (N°123, March 2010), the Central Bank claims 187.392billion MAD on currency holdings. The holdings are mainly convertibles (96%), a liquid holding that enables BKAM to intervene whenever needed to in order to balance the books, i.e. hold he dirham value or finance indirectly imports.

Net Foreign currency holdings 2010 Q1

The 2008 Annual report rightly points out that this level enables for 7 months worth of imports, compared to 9 months the year before. It mainly goes back to the terms of trade; basically, our exports in terms of value do not match our imports. Though it is more of a structural nature, the exports did worse with respect to the past years. Without too much detail, the exports in the late 1990s used to match ¾ of the imports, but since 2005, only half of it was met (between 48 and 50% worth) which means a drain in reserve holdings. A current account deficit can be addressed in the course of the following actions:

* improve our exports monetary value is the most straightforward yet difficult policy

* choke the imports is virtually impossible (where one can get the oil and hardware from?)

* find the money to finance the deficit with foreign direct investment (FDI) which is now more possible with the ratings change.


Treasury Debt structure Domestic/Foreign

Like many countries that when through the painful process of structural adjustment in the 1980s, Morocco learned its lessons on foreign debt. In facts, it looks as though the top brass are trying to do anything but to borrow some money on international markets. Now the grading changed, they might go for it, which would not be a good idea now (yield curve 10+ indices).

The feat then-finance minister F. Oulalaou accomplishednamely, halving foreign debt by half in 7 yearscame to the price of local debt.

(Bloomberg, Finance Ministry)

As shown on the graph, Treasury rate of return outperformed stock exchange volume and cap (which has an effect on required return) It is quite unique in finance theory of course, but the Casablanca stock exchange is known for its over-capitalization, as well as the relative non-liquidity due to a high concentration of assets (the ONA-SNI theory holds firm even after the merger)

There was indeed a liquidity excess on the markets that enabled the government to issue T-bonds and T-bills at low premium (and thus, at low cost) and achieve a two-fold policy: keep inflation low (by taking away the liquidity instead of letting it flow through) as well as get their hands on cheap and harmless borrowings to carry out their policies.

Nonetheless, this state of grace ended with the flow of liquidities. The effect of structural balance deficit was emboldened by the decrease in expatriates (MRE) transfers. The Q1 2008 saw therefore a noticeable tightening in liquidity, which prompted the central bank to lower their main rates in order to get the show on the road.

On the other hand, public debt no longer was attractive (the stock exchange returns exceeded the public debt returns), and now that some of the middle and long-term arrived at maturity, a small yet distinguishable dip in the ratio domestic debt/GDP. This, combined with the worsening of commercial balance, put a heavy strain on the government to call up some fresh, foreign money.

They have to. Let us take a look at this simple but always true equation:

GDP = C+In+G+(X-Im)

Where GDP is the gross domestic product C consumption, In investment, X exports and Im imports.

On the other hand, Investment and total income are tied. In facts, the following equation depicts the relation between savings (the non-consumed income) and investment (earmarked to replace or expand means of productions):

CA = S-I

(Where CA is the current account, S savings and I the domestic investments)

The late equation can be computed into the first one, and thus:

GDP = C+G+(X-Im)+(S-CA)

Government spending is assumed to be exogenous to foreign trade. Consumption, on the other hand, can be function of imports (we do after all consume Turkish, US or Egyptian goods, dont we?) Furthermore, we can assume now the savings are indiscriminate between domestic or foreign;

GDP = C(Im)+G+(X-Im)+( S-CA)

(for anyone interesting in a more detailed and rigorous approach, this San Francisco Fed reserve working paper is a real bliss)

Now, (X-Im) and (TS-CA) need to be balanced: the first term needs to be financed by means of the second. It so happens that the commercial balance worsened the last few years, which means a negative value for (X-Im). In order to finance the deficit, we need to increase by the same proportions (or higher) the deficit itself, namely, by calling up foreign savings (i.e., FDI). Why foreign? Why cant we use the domestic savings? Two main reasons: either because we dont have much or it does not satisfy itself with the present returns.

For a fact, we know that R=C+S (where R is the total income) we also know that imports are a parameter in consumption behaviour, so R = C(Im)+S. However, we do know imports have risen quite substantially over the last 3 years, much more than the total income, indeed, R < C(Im), which makes Savings smaller in relative terms.

Bottom line is, sooner or later (and I believe it would be sooner rather than later) we will have to turn to the international markets.

Because of the present situation, the bonds issued are going to be expensive for Morocco (i.e with high premium rates, in order to attract investors) and thats were the danger lies.

Short or Long money do not cost the same, and its own use will affect its efficiency as well. Let us assume the brass goes for short money because its cheaper, short-term rates the US Fed, or the ECB or Bank Of England took up are at their historical lowest; Morocco needs to put the money into high-return short positions; They cannot sanely put the money into a long-term public investment, of course. In facts, its just a temporary patch-up plan with little help on the whole situation. Long-term borrowings are just too expensive, and the required rate of return is too high for the initial borrowing to be of interest. [Edit: they did, as my predictions turned wrong]

Whats to do then? The decision to borrow a larger amount of foreign money is inevitable, and in itself, is not that harmful.

The core question is two-fold: what kind of money do we need to borrow, and what sort of expenditure should we pay for? The first term is directly linked to the second. But because we have no idea what is the public policy on that matter, we can only speculate. And this is typical of an opaque governmental institution. When politicians are not pressed for electoral results, when they are not accountable to their constituents, and indeed, when the pursued policies are not in the interest of the many but to that of the few, the decisions usually lead to under-optima solutions.

Makhzen, Bureaucracy and the People

There’s something any liberal/radical political force will have to take into account whenever it has the opportunity to take over ‘real power’ in Morocco (through peaceful and democratic process, I do hope), the whole range of actors party of government (or any governmental-related sector). These actors are not necessarily of hostile intentions, perhaps with different motivations, and ultimately, agendas.

The civil service. It’s quite strange to discuss a piece on our own one. The fact it, Morocco followed an incomplete -and somewhere perhaps, purposely- copy/paste policy of the French civil service scheme(s). And we ended up with all the drawbacks of it, and none -or very little- of their advantages. Yet one way or another, the civil service, even without a policy of their own, that is, with no purpose but to serve the political power in place, can be a powerful tool or a stubborn roadblock for any democratically elected and motivated government. The fact is, all government with radical/ambitious polices -left or right alike- in many parts of the world (say, the U.K under Thatcher , France under Mitterand, Clinton or Obama, etc…) usually face cautious, if not deliberately hostile behaviour from the civil service, that very body designed, paid, trained for one thing and one thing only: to carry out the policies of their political masters. The satirical show ‘Yes (Prime) Minister’ just outlines -in a comical way, though full of hidden meaningful allusions- that when the senior civil servants (and in facts, even the lowly officials) do not agree with the pace of change or with any change at all, they can feature, as Sir Humphrey Appleby calls it : ‘creative inertia’. This is not our main subject, but it is related to how a government should proceed (among a set of designated public policies) to get through their polices and get along with their agenda. They do, after all, represent the will of the people, right?

There’s something that needs to be pointed out regarding the Moroccan context: the Makhzen (as a state of mind as well as an institutional cluster) has a solid grip on civil service. whether you believe or not Makhzen still exists or not (and that’s institution for you) some behaviours or specific procedures survived and are still in effect. It is actually so perverse that some actors, the very ones longing and claiming for change (say, some trade-unionists, or journalists, or politicians) could easily block and repel any change that wouldn’t serve their interest, or endanger their rent-position. Rules of the game it seems.

The civil service reform -a reform that has to be part of any real radically democratic political agenda- has to bear it in their computations.
1/ the left-wing parties: UNFP/USFP and the Radical Left surprisingly agree on the principle of ‘strong’ governmental bureaucracy. Strong in the sense of centralized and rationalized, just as Wallerstein describes it. In facts, the left-wing side takes for granted Morocco cannot be ruled without a strong bureaucracy, for one thing: with no obedient and devoted bureaucracy, no progressive political power can do away with the reactionary, feudal lobbies. The UNFP/USFP vision was perhaps more ‘operational’ (and in facts, with a glimpse of experience in 1958, and in a more limited pattern, in 1998)
The civil service of the immediate following years of 1956 was quite pro-Istiqlal, and later, in some levels, pro-Union Nationale des Forces Populaires. The embryonic service was therefore full of sympathy for the left-wing party (a sympathy ranging from neutral to actively biased) especially in services with daily in touch with the people: education, post office/telegraphs, police (many former ALM soldiers joined the police after 1955 and 1958) and finally, local administration. Until 1969, these sympathies were quite important, and even though they were not put into practise, they would have been of great help for a genuinely powerful UNFP government. The 1970’s saw the Rabat-wing take off and turn Union Socialiste des Forces Populaires, and with it, the Ittihadi influence (formalized through their own trade union CDT)
In facts, this Ittihadi ‘natural hegemony’ (not only in the USFP, but even in its successive spin-offs, such as the Parti d’Avant-garde Démocratique Socialiste, Congrès National Ittihadi, Parti Socialiste and soon to be merged-with Parti Travailliste) justifies itself with the historical heritage the UNFP represents (and that every Ittihad party, symbolically or voluntarily, claims as theirs). In any case, Benbarka did state the theoretical background of it in the founding text, ‘Option Révolutionnaire‘: “l’importance, pour l’avenir de notre pays, de ce 2° congrès de l’UNFP, qui va donner à notre mouvement la possibilité de sortir avec une organisation renouvelée et des perspectives nettement définies et lui permettre ainsi d’être à la hauteur de ses tâches historiques”. Or when discussing the party’s role in economic development: “il faut expliquer que toutes les options économiques du parti révolutionnaire qui sont les points de son programme, ne sont pas par el1es-mêmes le socialisme, mais que simplement elles lui préparent le terrain. La planification par exemple est un moyen rationnel de choisir les points d’impact des investissements, les nationalisations dans les domaines agricole, industriel, commercial et bancaire – quand elles sont possibles et favorables – servent à augmenter les possibilités nationales d’investissement.” That assumes party workers and technicians to supervise the whole planning process.
Then, Bebarka sketches a very intersting plan for the Option Révolutionnaire as a party, as an organization fit for power:”Tout d’abord. il nous faut veiller sur l’instrument seul capable de traduire nos résolutions dans la réalité: c’est notre parti l’UNFP. Nous avons bien dit,. au moment de sa création, qu’il ne s’agissait pas d’un parti comme les autres. Et c’est à juste titre que notre organisation n’a cessé de susciter les espérances populaires dont nous sommes porteurs.(…) Pour ce qui est de la participation de la base, il s’agit de l’inscription dans les statuts d’une disposition qui assure une participation effective de tous les militants à l’élaboration de la ligne de conduite de l’UNFP, ainsi que le contrôle des différents organes centraux et régionaux par la base.(…)” (the whole range of p28-30 is devoted to a thorough description of how the revolutionary party, i.e. UNFP, should be)
In essence, the UNFP-USFP bureaucracy is very much in the spirit of another of Benbarka’s ideas, namely, the ‘militant citizen‘. The bureaucracy is dual: the civil servants, citizens as well, are there to support the party’s project; either by enlisting as party workers (a touch of Leninist theory there) or by providing enthusiastic support for it.

The student breakaway of the early 1970’s that led to ’23 Mars’ movement was even more ‘conceptual’ about it. These young militants, alongside their Ilal-Amam’s opposite number shared a deep understanding of Leninist theory of ‘Party-State’ and Maoïst experience. The radical left went even further in their public-policy strategy: Whatever has been said or speculated upon, Ben Barka remained true to the idea of a constitutional monarchy: a symbolic and purely honorific King, while the party political is dealt with by politicians, presumably elected and therefore of diverse political opinions, but that is quite blur in Ben Barka’s writings. The radical left adopted the Leninist theory of Party-state as theirs. Lenin did write in 1905: “…First of all, we are discussing party literature and its subordination to party control. Everyone is free to write and say whatever he likes, without any restrictions. But every voluntary association (including the party) is also free to expel members who use the name of the party to advocate anti-party views. Freedom of speech and the press must be complete. But then freedom of association must be complete too. I am bound to accord you, in the name of free speech, the full right to shout, lie and write to your heart’s content. But you are bound to grant me, in the name of freedom of association, the right to enter into, or withdraw from, association with people advocating this or that view. The party is a voluntary association, which would inevitably break up, first ideologically and then physically, if it did not cleanse itself of people advocating anti-party views.” and that was just about party literature; Lenin had this incredible insight for detail organization (which made him such a great leader, or horrible butcher, depending on your political views) and produced a tremendous sum on that matter; In “What Is To Be Done” (much more classier in French: “Que Faire?“), the paragraph 4 essentially: “The workers’ organisations for the economic struggle should be trade union organisations. (…) It is certainly not in our interest to demand that only Social-Democrats should be eligible for membership in the “trade” unions, since that would only narrow the scope of our influence upon the masses. Let every worker who understands the need to unite for the struggle against the employers and the government join the trade unions. The very aim of the trade unions would be impossible of achievement, if they did not unite all who have attained at least this elementary degree of understanding, if they were not very broad organisations. The broader these organisations, the broader will be our influence over them — an influence due, not only to the “spontaneous” development of the economic struggle, but to the direct and conscious effort of the socialist trade union members to influence their comrades. But a broad organisation cannot apply methods of strict secrecy (since this demands far greater training than is required for the economic struggle). How is the contradiction between the need for a large membership and the need for strictly secret methods to be reconciled? How are we to make the trade unions as public as possible? Generally speaking, there can be only two ways to this end: either the trade unions become legalised (in some countries this preceded the legalisation of the socialist and political unions), or the organisation is kept secret, but so “free” (…) that the need for secret methods becomes almost negligible as far as the bulk of the members is concerned (…) I could go on analysing the Rules, but I think that what has been said will suffice. A small, compact core of the most reliable, experienced, and hardened workers, with responsible representatives in the principal districts and connected by all the rules of strict secrecy with the organisation of revolutionaries, can, with the widest support of the masses and without any formal organisation, perform all the functions of a trade union organisation”. And that was tried to be applied. The radicals being students or high-school pupils, the students’ union (UNEM) was the perfect trade-union’ organization-like for the party-state to flourish. The party-state, after the revolution, takes over political government (as the organized tool of proletariat dictatorship as it were) and carries out the socialist period until the communist state is achieve, thus leading to the dissolution of both the party, the dictatorship and the classes. As on can see, there’s little difference in the left-leaning political side but in details of implementation.

2/the Makhzen bureaucracy: There must be at least someone in the inner circle that would have enough education to realize how powerful the Makhzen is now, compared to 1956, and even more powerful compared to the pre-1912 Morocco. It must be pointed out that Laroui considered the Makhzen as the first attempt to create a modern bureaucracy in Morocco. Theoretically at least, all the essential symbols of civil service were there: taxes and armed forces. Very rustic, very primitive of course, but with an intrinsic logic and set of functions that did prompt Laroui to consider it as ‘Modern’. The Makhzen bureaucracy had but one crucial weakness: rationalization, or rather, institutionalization. Even though Makhzen apparatus had centuries of existence, tribes always tried either to take advantage of it, or to free themselves from it. Moroccan political administration was a constant reaffirmation of central power (and failed in achieving it completely). In facts, Makhzen power was function of the sultan’s personnality: Sultan Rashid, being ruthless and very active, managed to tame the tribes and maintain a centralized, Makhzen-obedient Morocco. Sultan Abdelaziz, being weak and under his Vizir’s influence, had little grip on power and therefore ruled a rebellious Morocco with ‘Blad Makhzen’ going as far as Fes and major imperial cities, with the rural areas living in Siba, or autonomous home rule (and especially not anarchist state, as the Makhzenian hagiographers tend to write)

Theoretically, Makhzen governement is very structured: there was a top-level civil service with official titles (Grand Vizir, Grand âalaff, Khlifas or deputies in regions, etc…) the hierarchy is well established and rigidly codified (not a very good thing of course, but it just shows Makhzen bureaucracy got at least the drawbacks of modern civil service) Laroui, in his ‘Origines culturelles et sociales du Nationalisme Marocain‘ relates how this bureaucracy meddles even in choosing the sultan: “(…)Nous voyons que le sultan est bien choisi par une minorité qui représente le Palais au sens large, c’est-à-dire la famille sultanienne, les serviteurs et les grands commis; Toutefois, cette minorité même ne jouit pas d’une liberté illimitée; son choix est souvent circonscrit à deux frères, et même dans ce cas, les préférences marquées par le sultan défunt (…)” (p81)
Then Laroui proceeds in enumerating the various departments the official Makhzen consists of, all of which are part of the semi-modern the pre-1912 bureaucracy Morocco had:
– the Army: according to J. Erckmann, the Army couldn’t field more than a standard regular division (10.000 troops that is) called ‘guish‘ الجيش. However, and because the outfit is not enough to set up expeditions or face exterior threats, the Makhzen also draft irregulars from the tribes: Guish of course, but also Cheraga, Oulad Jamîi, and Udaya (which were deported and forced into Imperial service). While in western countries the military cast was shun from political involvement (even the Prussian court privileged professional, apolitical officers, save for Bismarck, that is) the tribal army was waist deep in political intrigues and court plots. In facts, the guish, mainly slaves descendent of the Bukhara army, maintained a tight political control over high offices (the well-known example of Grand Vizir Ba Hmad for instance.)
The main feature of Makhzenian army is that of its purpose; It is not fit for war against foreign powers (as Isly Battle will tragically point out) but to collect taxes and suppress dissent whenever it grows too important and too popular. “En réalité (…) il s’agit d’un service militaire permanent qui dépend des besoins et de la situation du Trésor” (footnote 39, p82)
– the Civil Service: unlike the army, the civil srvice changed overtime; For instance, about the Amin (deputy representative of a specific corporation, i.e. Artisans, Butchers, Blacksmiths, Grocers,… )”...il n’en reste pas pas moins vrai (qu’ils) ont intrduit une certaine rationalisation dans l’administration fiscale, l’intendance des palais sultaniens, l’exploitation des azibs (domaines fonciers), l’organisation de la douane, des droits des portes et marchés, de la poste chérifienne, etc…; Les livres de comptes qui remplissent les archives du temps de Mohamed IV ou Hassan Ier leur sont dus (…)” (p84) The odd thing is, Laroui didn’t mention justice (left to the Cadi, which is not technically speaking a civil service, for his reward and payroll comes from the ‘gifts’/bribes he gets on the cases before him.) or local administration. In facts, Makhzen civil service is above all, and perhaps, solely, about money. It’s purpose is to pump money out of the Moroccans to pay for the army and the sultan’s expanses.
The Makhzen scheme, while proved working for a couple of centuries, lacks the essential feature a good bureaucracy should have, namely efficiency.

3/ the Islamist scheme: a return to the golden age
The odd thing about what is now the popular ideology among Moroccans (and the MENA region I should think), Islamism, is its total lack of bureaucratic vision. Which is even odd, regarding the huge sympathy it draws from social categories such as engineers, doctors, lawyers and so on. Speaking for Al-Adl, their paper on political reforms, while being as radical as Annahj’s stand, doesn’t say much on the bureaucratic front: how civil servants should be trained, how they should act on behalf of their government, all in all, how to run a country.
Besides their heavy reliance on Shariaa and Hadith corpus, the Islamists (the most able ones of course, the PJD is out of course) position is, with all due respect, shallow. Their ideological articles, while very structured and quite bright, do not deviate from the classic scheme of the Islamic Umma. an activist writes on that matter: “لا يفوت المطالع لأي من كتابات الأستاذ المرشد عبد السلام ياسين، بناءها على أساس اليقين بوعد الله تعالى، فيحدّث عن الخلافة الثانية ودولة القرآن كأنه يراها رأي العين، هذا اليقين العظيم الذي أوصى بتعلمه رسول الله صلى الله عليه وسلم، مصدره ما سماه الأستاذ المرشد حفظه الله “الشهادة التاريخية” “المتمثلة في السيرة النبوية وفي الخلافة الرشيدة، ثم بعد في ومضات تاريخية هنا وهناك، بأن القرآن قابل للتطبيق، وبأن دولة القرآن ليست مثالا حالما تمخضت عنه الفلسفة الأرضية كما تمخضت عن المذاهب الفكر“. The classical islamic institutions (khilafa, bayt al mal, etc…) are deemed to be still effective (a surprisingly ignorance of the modern world complexity makes me wonder about one particular subject: how are Adl militants-civil servants are going to monitor banks on the sensitive issue of interest rates? Or is Bayt Al Mal director will deal with it all right in religious zeal as well?)

In facts, the Islamist civil service project is very simplistic. It bears the same features as the Makhzen circa 1912, with a stronger ideological content of course but no real interest in actual local and central government. Faith does not lead a country into prosperity, neither moral values enforcement. One doesn’t live on pray and religious observance of rites…

What’s a good bureaucracy then? Max Weber provided the theoretical background to it; “ Weber sets out an ‘ideal type’ (see last lecture) for bureaucracy, characterised by an elaborate hierarchical division of labour directed by explicit rules impersonally applied, staffed by full-time, life-time, professionals, who do not in any sense own the ‘means of administration’, or their jobs, or the sources of their funds, and live off a salary, not from income derived directly from the performance of their job. These are all features found in the public service, in the offices of private firms, in universities, and so on.

The modern bureaucrat is a full-time, life-time professional; this requires a sufficient salary and job security, because otherwise people will not stay in the job full time for life. Unless they do, the organization will not be efficient. It takes time and experience to learn the job, not so much because it is difficult to perform the particular task, but because it all has to be coordinated. An elaborate division of labour requires stability of staff. Because of the nature of bureaucratic work, and also perhaps because of the importance of training and coordination in the job, the bureaucracy wants educated recruits. Their education will be attested by some certificate (partly just to prove they have been educated, but also perhaps because a bureaucracy likes to work with clear impersonal criteria). Weber speaks of ‘credentialism’, the preoccupation evident in modern societies with formal educational qualifications. All these things – credentials, fixed salary, tenure, stability of staffing, Weber incorporates into his ideal type. They are all required, he believes, for the efficient functioning of an administrative machine.”

Even though Weber recognized his ideal type will not fit the real bureaucracy, his predicament of the bureaucratic model as a universal standard came true. Now, bearing in mind those features, what could a genuine democratic government do? Not much of course, as setting up an entirely new civil service takes time (and in facts, a lot of time)

Perhaps we’ve been looking the other way round; Perhaps the civil service is not that essential after all. I am not stating a government can run a country without civil services, but the citizens can, by means of regular check, make sure the civil service doesn’t run the country by itself. The idea of citizen committees at local levels (I’d say, at borough level, 500 or so household would hold the local administration accountable), a bottom-up sort of political legitimization process. I did discuss in an earlier post some proposals for regionalization (or a Federal Moroccan monarchy that is). It could be a very good idea: by means of local and federal administration, the civil service loses its ‘political’ grip on home affairs; Civil servants tend to be more efficient when their are under credible and dissuasive control (on corruption as well as on productivity). It could be so that no political body gets involved in the process: the citizens at local levels could inquire on both their elected members as well as on their administrative staff. Of course, this cannot be achieved if citizens are not interested in politics or public management. However, there should be a way in linking their zeal over control, and their own personal interests: everyone knows how difficult it is to get an administrative paper at the local office; For the sake of argument, regardless of civic pre-conditions, how could an household agent get the incentive to devote some of their time to control and check what the state agent is doing?

I am through. There’s a lot to be discussed about how good a civil service should be in running a contry while being transaprent and accountable to the people’s will. I do however have some ideas I could toss in; perhaps for another article: strict transparency for budget allowance (in opposition of a sacred principle within the civil service, ‘principe de non affectation‘) civic control over tax breakdown, ‘civic pay’ for occasional checks…