In this article, we first provide a definition of the concept of statism and clarify its distinction from the idea of liberalism, which is based on respect for private property rights, in the way it confronts problems existing in societies. We then focus on a two-century-old problem in underdeveloped societies: the gap in the standard of living between these societies and developed societies. We explain that the decline of liberalism from the second half of the nineteenth century onward in developed Western countries and its gradual replacement with statism affected the fate of underdeveloped societies that, during the twentieth century, intended to fill the gap between themselves and developed Western societies. There is a direct connection between the widespread turn to statism in underdeveloped countries during the twentieth century and the incorrect explanation by the Western clerisy of the roots of development in their own societies. We focus on contemporary Iranian history as a case study, in particular the development program during Mohammad Reza Shah Pahlavi’s period, and examine its relationship with modernization theory, as well as the relationship between modernization theory and statism. Using the teachings of Austrian economics regarding credit expansion, the price mechanism, the role of the entrepreneur in the production structure, and the failure of interventionist projects, we critically evaluate this development program.
Mehrpouya Ala (Tue,) studied this question.