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January 29, 2006
Historical Economics, Modern Islam
An item I intend to return to, when more in a right mind:
Why the Middle East is Economically Underdeveloped: Historical Mechanisms of Institutional Stagnation
Timur Kuran
Journal of Economic Perspectives
Volume 18, Number 3, Summer 2004
Pages 71–90
Also in conjunction with that article, this interesting essay is worth returning to (okay actually it is typical superficial Poli Sci tripe):
Liberalism in the Middle East: Prospects and Mechanisms of Change
Christopher J. Coyne
Department of Economics, Hampden-Sydney College
Hampden-Sydney, VA 23943
Research Fellow, Mercatus Center
Arlington, VA 22201
ccoyne@hsc.edu
www.ccoyne.com
Posted by The Lounsbury at January 29, 2006 09:47 AM
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Comments
Skimmed only the latter. Red flags go up when I see Daniel Pipes quoted favorably. But that is no basis for final evaluation.
Posted by: matthew hogan at January 29, 2006 04:09 PM
Right, sadly reading the thing in full in a clearer state of mind is less interesting.
Posted by: The Lounsbury at January 29, 2006 07:14 PM
However the quoted section on Pipes is gold (but only as far as illustrating what a stupid bigotted git Pipes is).
Posted by: The Lounsbury at January 29, 2006 07:16 PM
Am I the only believer in geographic determinism?
Can mideast falling behind have far more to do with the fact that the Westerners figured out how to sail around the Middle East and also discover a new world first. Thereby, killing the trade advantage while a single empire (Ottoman) survived more on plunder than production, like latter day Rome.
The below may have some points, but I note the absence of concern in it on the absence of interest-lending which seems to me the most serious legitimate concern on the point of religion and law and economic growth. Still, legal structures are only part of the story, the greater part is having one's trade-based economy gutted or surpassed at the time a single state was prevailing that was uninterested in wealth production because it lived on conquest.
And one can work around absence of corporations (the Ottomans did have corporations I think anyway, the Suez Canal Company was one, (though in practice French), and inheritance doesnt necessarily impede capital accumulation if one simply wants to set up cooperative arrangements. And what's wrong with religion-run charities?
This sounds like the economic equivalent of the MENA feminist fallacy of law being decisive.
" Abstract:
Although a millennium ago the Middle East was not an economic laggard, by the 18th century it exhibited clear signs of economic backwardness. The reason for this transformation is that certain components of the region's legal infrastructure stagnated as their Western counterparts gave way to the modern economy. Among the institutions that generated evolutionary bottlenecks are the Islamic law of inheritance, which inhibited capital accumulation; the absence in Islamic law of the concept of a corporation and the consequent weaknesses of civil society; and the waqf, which locked vast resources into unproductive organizations for the delivery of social services. All of these obstacles to economic development were largely overcome through radical reforms initiated in the nineteenth century. Nevertheless, traditional Islamic law remains a factor in the Middle East's ongoing economic disappointments. The weakness of the region's private economic sectors and its human capital deficiency stand among the lasting consequences of traditional Islamic law."
Posted by: matthew hogan at January 29, 2006 09:48 PM
Am I the only believer in geographic determinism?
Depends on how strong you want the determinism to be.
I certainly believe that the geography and climate are serious constraints, real serious constraints.
Can mideast falling behind have far more to do with the fact that the Westerners figured out how to sail around the Middle East and also discover a new world first. Thereby, killing the trade advantage while a single empire (Ottoman) survived more on plunder than production, like latter day Rome.
Certainly, however at the same time the issue of institutions and ability to respond are important.
Of course, the process happened so slowly, slowly.
The below may have some points, but I note the absence of concern in it on the absence of interest-lending which seems to me the most serious legitimate concern on the point of religion and law and economic growth. Still, legal structures are only part of the story, the greater part is having one's trade-based economy gutted or surpassed at the time a single state was prevailing that was uninterested in wealth production because it lived on conquest.
Well, the same could be said for the Western European states, in grosso modo, until well into say the 19th century.
The issue of course is the accidental ability to respond. Rather like evolution, the accidental mutation that when the right moment comes along is helpful.
That seems to me to be the story of the European versus Ottoman evolution; the core Islamic state, the Ottoman state, had gotten itself in a blind alley (perhaps a temporary one - who knows?).
A combined story of geographic, climactic and institutional bad luck (relative).
I wouldn't think it permanent.
And one can work around absence of corporations (the Ottomans did have corporations I think anyway, the Suez Canal Company was one, (though in practice French), and inheritance doesnt necessarily impede capital accumulation if one simply wants to set up cooperative arrangements. And what's wrong with religion-run charities?
The Suez Corp was set up by Europeans, but there were quasi corporations.
I do think the inheritance argument is overdone in the TK article. I believe the Waqf critique was not that it was bad per se, rather they were an interesting model that got trapped in a dead end (again maybe temporary).
Re the awqaf (or Waqfs) I do think that argument is correct. A lot of productive capacity was getting locked up in Awqaf, and the way the Ulema had boxed that institution in, it wasn't going anywhere.
However, no need to think it was permanent.
This sounds like the economic equivalent of the MENA feminist fallacy of law being decisive.
Eh?
Not sure I get that.
Regardless, it seems to me that the core argument that at some point the core Islamic world got itself going down an institutional blind alley, relative to outside competition is a sustainable one. Not the sole explanation, and easily overdone, but a real one.
Posted by: The Lounsbury at January 29, 2006 10:23 PM
dear all,
just a short one:
i rather liked the hodgson-ian model that saw northwestern europe's development since about the late 15th century as the "odd one out" and everyone else - incl. the so-called "islamic world" - as maintaining a "normal" course.
east asia, south asia, etc. pp. where as much caught "in a blind alley" as the ottoman and safavid states.
oh, did i mention that i'm a "world-system" person?
it IS, of course, very interesting to investigate why china and, these days, south asia could overcome a situation of "lagging behind", or why the 5 tigers could prosper so quickly, and why MENA hasn't done so.
institutions ... change. around the turn of the 20th century, the ottoman empire was not any more "behind" than, say, spain or brazil or bri'ish india or china or russia. also see: the development of turkey. pre-1918 anatolia had the same institutional framework as arabistan ...
cheers,
--raf*
Posted by: raf* at January 29, 2006 11:41 PM
"This sounds like the economic equivalent of the MENA feminist fallacy of law being decisive.
Eh?
Not sure I get that."
I merely mean that just as Arab feminists and liberals overplay the role of law as solutions to the diminution of women and the individual in general, so the argument appeared to me, in the arbstract provided, to overrely on legal frameworks as the prime driver -- or perhaps retarder, is a better word -- of economic development.
Perhaps so, as you allege, and have greater knowledge, but I think the presumption should be that geographic and trade factors should be looked at first, as well as government screwing of incentives where empire trumps trade -- and borrowing from Raf on NW Europe -- it is perhaps the case that Europe is/was uniquely ahead while the others were behind as a result of natural eb and flow of human progress.
Posted by: matthew hogan at January 30, 2006 01:05 AM
Or it could be that Pipes was right and MENA wasnt listening to enough Bach-through-Beethoven, which, is almost assuredly the result of Islamic law.
Posted by: matthew hogan at January 30, 2006 01:07 AM
Well, a couple of thoughts here.
First, Raf Bey, I think "normal" or odd one one or whatever is less of an issue here than simple comparatives.
Europe for a variety of reasons managed a 'break-out' some time in the 16-18th centuries that makes an interesting comparison with the Ottomans and others.
The question of how is fundamentally interesting, and to cover the other comments, I think one has to look at it in a properly evolutionary context - without indulging in vulgar Victorianesque social Darwinian thought of course, but rather real evolutionary insights (as in entirely accidental mutations entirely accidentally opening up a path of development a good way down the line).
Re Mathew's note:
I agree. I think this is a bit of a historians problem and something Bernard Lewis really runs into. The best sources (in terms of quantity and quality) are those in law, so one gets a source bias to viewing things through an institutional / legal lens that might or might not be a very good descriptor of reality. I have long felt Lewis takes legal fictions as reality too often.
Returning to the core question, it strikes me that the key change of course was Europe stumbling into the New World and the like due to the navel technology - a partial accident of geography, both in terms of location and in terms of the impetus to develop, and in terms of the fragmented geopolitics pushing competition.
But one has to allow that an accidental development in institutions probably enabled Europe to "take that to the next level." Or some countries in Europe, the Iberian peninsula certainly was brilliant in remaining not that different than the Ottomans, and got itself into a cul-de-sac.
Accidents.
Re Turkey moving ahead in the 20th century and the Arab world pissing away opportunities, I'd say Turkey was able to build better on a nationalist framework, whereas the Arabs got sidetracked with romantic idiocies in Arab nationalism, and generally the Turks had ended up with a better governmental framework - they were after all the administrators. One also has to allow for colonial rule, which in my opinion was largely negative for building real capacity.
Posted by: The Lounsbury at January 30, 2006 05:20 AM

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