I just finished The Long Divergence, by Timur Kuran, which tries to explain the Middle East’s economic backwardness. It’s a path-dependence argument: mistakes were made, and one thing led to another.
His thesis is that particular features of local culture and Islamic law inhibited modernization. He argues that these factors inhibited the development of complex sub-state organizations, in particular the modern business corporation. He blames factors that tended to disperse wealth: the egalitarian Islamic inheritance system and polygyny. Today they wouldn’t matter to a corporation, but in the past they interfered with concentration of assets that would have been useful in establishing larger-scale concerns. He thinks that the Quranic ban on interest was mostly an irritant, routinely evaded, but it didn’t help.
He talks about the mysterious trend in which non-Muslim minorities became ever wealthier and more influential over the past couple of centuries, even though they were supposed to be second-class citizens. Trade was dominated by religious minorities (Greeks, Armenians, and sometimes Jews), as well as new sectors of the economy like insurance and finance. Also in new industries: “In major cities, water,gas, electricity, telephone, tram, and subway services were founded mostly through foreign capital, and the managerial staff was overwhelmingly non-Muslim.”
Around the same time commercial treaties with Western nations were becoming more and more disadvantageous to Moslem countries. Relatively so: Westernization itself had many benefits, and the Moslem world in this period certainly didn’t show any sign of internally generated progress. Any more than it does today.
To recap, Kuran thinks that features of Islamic culture led to organizational stagnation, while Europe was developing advanced economic institutions. On the other hand, even Saudi Arabia has banks nowadays, but the Saudis don’t show any particular entrepreneurial flair, to put it mildly. The institutions and customs Kuran blames have been superseded (mostly), but backwardness persists. Kuran wonders: ” Might this book have overlooked certain deeper causes of backwardness?” Good question.
Do I find his thesis convincing? No. The Middle East fell behind in everything, not just organizational complexity. I don’t think it’s all because they failed to create their own Fuggers or East India Company. Look at this timeline of science and engineering in the Islamic world: everything stops several hundred years ago.
Kuran’s book does a decent job of describing Islamic stagnation – part of it, anyhow – but it doesn’t explain it.
I guess it’s up to me. One more to add to the list.