An Examination of the Performance of the Second Pahlavi Government in Confronting Inflation and Rising Prices from 1973 to 1979 (A Case Study of the Agricultural Products Sector)

Abstract

Inflation and rising prices are considered among the most significant socio-economic problems, exerting wide-ranging and destructive effects on societal life, to the extent that in some analyses they have been mentioned alongside disasters such as earthquakes and war. Inflation and price increases constitute major drivers of social inequality, erosion of public trust, escalation of public dissatisfaction, and ultimately the emergence of structural crises. Within this framework, the study of the period of the Second Pahlavi era, particularly following the sharp increase in oil revenues in 1973, is of considerable importance, because during this period the country, despite attaining unprecedented oil income, faced shortages and rising prices of essential goods, especially agricultural products. Accordingly, the present article, drawing on approximately 200 primary governmental documents from the Second Pahlavi period and using valid international books and articles, examines the performance and policy measures adopted by the government within the Economic Council to confront shortages, inflation, and rising prices of agricultural products, as well as the outcomes of these measures. The findings indicate that despite substantial expenditures and government support for the agricultural sector, due to the absence of effective and coherent management, this sector was unable to align its level of production with the rapidly increasing demand generated by population growth and rising incomes, particularly in large cities and Tehran. Consequently, insufficient production combined with increased demand led to higher prices of agricultural products. Nevertheless, the government was able, relying on oil revenues and through the payment of subsidies, price controls, and extensive imports, to contain inflation to a considerable extent.