ILPC 2026

This paper comes out of a broader research on understanding Saudi capitalism. We presented the theoretical framework with some initial empirical findings at last year’s ILPC in Sheffield, 2017. This paper presents detailed empirical findings from one of the case studies. The research situates itself in recent scholarship that links the disciplines of political economy and labour process (e.g. Hauptmeier and Vidal; Newsome, Taylor, Bair and Rainnie, 2015; Smith, 2016). 

Broadly, the research questions the ability of a post-Varieties of Capitalism (VoC) framework, namely ‘patrimonial capitalism’ (Schlumberger, 2008) or more recently ‘patrimonial market economy’ (Buhr & Frankenberger, 2014) to comprehend the reality of capitalism in Saudi Arabia. Proponents of this model mainly draw on two theories, the rentier state (Mahdavy, 1970) and neo-patrimonialism (Eisenstadt, 1973). They argue that the patrimonial regime survives, and in some cases such as Saudi Arabia, succeeds in maintaining high growth rate, through operating a two highly informal coordination mechanisms: Coercion and Co-optation. While the incumbent regime represses any rivals through the threat of using force and conducting military actions as a last resort, it heavily relies on buying the loyalties of various actors through exclusive patronage to the elites and inclusive benefits to citizens; mainly through public employment, and relief from taxation. 

We argue that while this post-VoC framework is relevant to understanding societal dimensions, institutional structures and state-capital relations to an extent, it falls into the same trap as the original VoC model of prioritising one actor in the political economy; in this case, the state rather than the firm. It focuses on the coherent patrimonial relations between social actors with limited space for contradictions of capitalism. A focus on the mechanisms of coercion and co-optation overlooks the global dimension, the role of migrant labour and workplace dynamics of control and resistance that shape and structure state-capital-labour relations and Saudi capitalism.

Through a detailed case study of a state-owned Joint Venture (JV) firm (22 interviews with workers, supervisors and HR managers and through socialising with workers in 2016-17), the paper shows the contradictions of ‘Saudisation’ as a co-optation mechanism at the workplace and the tensions that exist in the notorious sponsorship system known by ‘Kafala’. The state as an owner avoids its policy of Saudisation introduced to solve unemployment among its citizens, which currently stands at 12.8% (Saudi Arabia. General Authority for Statistics, 2017). The Saudisation quota policy is avoided by hiring contractors to provide temporary migrant labour who are absent from its official payroll. This outsourcing method does not only enable the firm to show compliance with the Saudisation requirement but also ensures the supply of cheaper disposable workforce. A closer examination of the functioning of Kafala and Saudisation hints at dissatisfaction of Saudis and migrant manual workers at the workplace. Both avoid following regulations and share the workload informally to reduce effort. Resistance at its extreme is witnessed in the form of suicides of some migrant workers at the workplace.

In conclusion, the state does not and cannot follow its policies of Saudization in its own firm contradicting the patrimonial model of the supposed smooth functioning of processes of co-optation or coercion. The reliance on global labour questions a primary focus on societal dimensions of patrimonialism to the exclusion of global pressures. The picture at the Saudi workplace is not coherent, rather it is full of tensions and driven by capitalist logic.