The founding generation of Arab economists, whose most significant scholarly output appeared from the 1960s to the 1990s, was very meticulous about terminology and concepts.
As a researcher in the early 1990s, I had the good fortune to work with the eminent Arab economist Yusif Sayigh on a project on the future of the Palestinian economy after the 1991 Madrid Conference. Not content with scrutinising information sources and reviewing analytical methods, he — like many of his generation — was passionate about language: he never used a foreign term without first Arabising it and clarifying its meaning.
As I was formulating the title of this article, I recalled my conversations with Sayigh, as well as the elegant essays by the encyclopaedic Egyptian scholar Ismail Sabri Abdallah, later collected in a series titled Words and Meanings.
By “market economy”, I refer to the system governing production, the allocation of resources, consumption, and the use of surplus (if achieved) based on organised market mechanisms of supply and demand. “Economics” denotes a scientific methodology grounded in theories, models, applications, and practical experience. As for “bad”, I mean this in its fullest sense: all the harm that afflicts people and their circumstances due to the distortion, deficiency, and corruption arising from flawed ideas and bad practices.
A market becomes “bad” in the true sense of the word when regulatory rules and effective oversight are lacking, monopolistic practices prevail, the virtues of fair competition recede, and the state’s overbearing bureaucratic machinery takes over the running of an economy whose characteristics and operations are beyond its grasp.
The great Arab scholar Ibn Khaldun warned of this as early as the 14th century. In his famous book the Muqaddimah (Prolegomena) he dedicated an entire chapter to “How Commerce Conducted by the Ruler Harms His Subjects and Undermines Taxation”. Government intervention in the economy deprives producers of competitive opportunities due to the multiple ills of bureaucracy, he said. Bureaucratic administrations are notoriously cumbersome, unable to keep pace with innovation and development in production, loath to take risks, slow to take decisions, and slower to correct course even when the signs of failure become glaring.
If the government chooses to crowd out professionals, craftsmen, and producers in their own fields, it will suffer losses on three fronts. First, it will waste profitable prospects for economic actors, thereby reducing tax revenues from profits and incomes. Second, it will turn activities that would have been profitable without the government engaging in them into losses borne by the state budget. Third, by taking on the role of a market player, it will inevitably neglect its role as a market arbiter and fail to level the playing field.
Once it becomes involved in buying and selling and takes over functions in which the private sector excels, the state will let its role as protector of the public’s rights slide and neglect its duty to collect revenues.
Unfortunately, bad economic ideas continue to spread. Some have been resurrected from their graves, even after proving that they have failed. The arguments in favour of resuscitating them are flimsy — the sort that claims that the theory was sound, but the implementation was poor, or the circumstances were not right.
We still hear proposals from time to time that blend myth with falsehood, dismiss science, and replace it with mantras like “thinking outside the box.” This often entails methods akin to reinventing the wheel. Not only do these ideas ignore previous failures, but they also disregard the successes that ultimately gave us the wheel with its universally recognised circular shape and that resulted in successive improvements and countless innovations.
Nonsense tends to proliferate in times of crisis. Instead of addressing crises through science, resolve, the available resources, and the knowledge gained from the experiences of predecessors, someone will present an idea that “no one had ever thought of before” – perhaps for good reason. How many wretched ideas have been born of imaginative flights without aim or purpose, as the 20th-century Egyptian poet Hafez Ibrahim once lamented.
I have previously used this space to cite some misleading ideas that have transformed the idea of the market economy into a field for the study of bad economics and its harmful effects on society and the broader public.
Here, I will reiterate some examples of such bad ideas, warned against by the Growth Commission led by the Canadian-American economist Mike Spence, a Nobel laureate in economics, in which I had the honour of being a member.
They include reducing the budget deficit and paying off debt by sacrificing public investment in education, health, and infrastructure; solving unemployment through unnecessary hiring to the state’s bureaucracy; using price controls to reduce inflation; banning imports and exports of certain goods to control prices; and skimping on urban and rural development.
They also include disregarding the environmental impacts of projects; opting for exchange-rate targeting over inflation targeting, even if the targeted rate does not align with the currency’s fair value; restraining the financial sector and exercising poor oversight over it; ignoring the qualitative dimension of educational and health outcomes; wasting subsidies by not directing them to the designated beneficiaries rather than to commodities with no guarantee that these will reach those in need at subsidised prices; and ignoring cost-benefit considerations in public spending and forgetting about fiscal sustainability rules when having to deal with urgent crises.
A final bad idea is the government penchant for financing projects through loans, only to find an unreceptive market for such enterprises when the time comes to sell them.
Relying on such bad ideas and even getting used to them makes them familiar over time and lends them a false immunity, making them seem sacrosanct. Economic problems then build up as a result. When the solutions to these come too late, the problems then turn into crises, which, when mismanaged, can escalate into disasters.
These are all hallmarks of bad economics, not of the market economy.
This article also appears in Arabic in Wednesday’s edition of Asharq Al-Awsat.
* A version of this article appears in print in the 8 January, 2026 edition of Al-Ahram Weekly
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