This chapter studies the political economy of attempts to implement the new social contract in the period between the mid-1980s – the end of the oil-boom – and the January 2011 Uprising. It questions why a seeming political consensus on the need to replace the old/effendi and broken social contract, and detailed planning for how to do so, barely materialised into a new social contract for Egypt. The old social contract, despite its many deficiencies and constant calls for change, turned out to be highly stable because the socio-economic and political costs of rewriting it proved too high for both the state and the newly established (post-oil-boom) middle-class society. State and citizens either had little incentive to strive for overarching change or distrusted the other side's willingness to follow through. It is in this context that grand ideas for economic transformation, human development and democratisation often failed to live up to their promise. Instead of a change from an old to a new social contract, elements of both were increasingly layered side by side.

The chapter first studies the public discourse on the decline of the middle class. Lamented since the 1970s, the socio-economic standing of the effendi middle class had over time eroded but not degraded completely, and a new middle class that would have benefited from and supported the reforms and that constituted an alternative political constituency had barely emerged. The chapter later highlights how the contours of an existing effendi social contract shaped both the partial implementation of the economic reform and structural adjustment (ERSA) programme and the partial political reform, or democratisation, in Egypt for over twenty years. Both represented different but intertwined aspects of the new social contract. The chapter also studies how informal economic and political practices subverted most of these reforms; such informal economic and political practices invariably supported a betwixt and between status quo in which the effendi social contract eroded but did not disappear, while the new social contract was partially implemented alongside the old.

‘Farewell to the middle class’

References to the ‘middle class’ in Egyptian academic research and public discourse – the two are closely intertwined – first appeared when this social group was seemingly on the brink of its demise.