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Muslim Economics Professor Claims European Colonialism Increased Middle East Wealth

May 4, 2011

The coming of European power to the Middle East led to a period of rising Arab wealth, according to Duke University professor Timur Kuran. In The Long Divergence, Kuran writes, “The Middle East’s colonial period brought fundamental transformation, not stagnation; rising literacy and education, not spreading ignorance; and enrichment at unprecedented rates, not misery.”[1]

Timur Kuran then tries to persuade his readers to rethink the accepted, but dubious, criticism of the European colonial era, which was said to worsen the economy of the Arabs. The accepted version claims that “traditional Muslim institutions performed ideally until inferior European institutions took their place.” This logic leaves unexplained, of course, “why the Middle East ‘fell under European occupation’ when it did; why ‘colonial masters’ promoted institutional reform that not even Islamists themselves want to undo; and why peoples of the region allowed, even welcomed foreign initiatives.”[2]

Professor Kuran indicates that the introduction of economic traditions by European colonial powers stimulated the growth of wealth in Middle East countries. He further points that some of those European influences are maintained today, after independence has been granted to the Islamic nations.

The Qur’an has many positive references to commerce; Mohammad married into the caravan business and traveled and traded for several years. It was reported that Mohammad said, “The trustworthy merchant will sit in the shade of Allah’s throne.” Even today trade is the one reliable family business in the Middle East. But business deals, now as then, are made between individual Muslim men; by contrast, the advantage of a corporation is that the government recognizes a corporation as an artificial person that lives beyond the death of its founder; moreover, a corporation can borrow and invest based on the power of the corporation’s total wealth. Islamic law does not recognize corporations, so when man dies, his business dies too, or his sons inherit it. But such kin-based businesses had, Timur Kuran said, “glaring limitations; [because] access to capital is bounded by the wealth of a single family.” Kuran then asked,

Did the institutions of early Islam carry the seeds of institutions suited to the complexity and volume of trade today? There are reasons for doubting that they did. Suffice it to note here that modern economic institutions were transplanted to Arabia centuries after their emergence elsewhere.[3]

Free enterprise rose in Western Europe because rulers there were willing for their citizens to organize corporations to create wealth, and where law protected that wealth from being acquired by the rulers. I think that the pro-democracy demonstrators rocking the Arab governments today are asking for the right to free enterprise. But instead of granting the right to make corporations, the rulers in Bahrain, at least, have announced they will employ 20,000 more citizens in government office jobs. Does anyone think that is what the demonstrators are asking for?

Kuran, Timur. The Long Divergence: How Islamic Law Held Back the Middle East. Princeton: Princeton University Press, 2011.

[1] Timur Kuran, The Long Divergence: How Islamic Law Held Back the Middle East (Princeton: Princeton University Press, 2011). 37

[2] Ibid. 37

[3] Ibid. 40

One Comment leave one →
  1. Jason permalink
    June 5, 2011 1:12 pm

    Interesting, helpful thoughts here. I’ve been thinking a lot about these issues since moving here. In regard to the protesters, after spending much time with many of them the question of employment is kind of a mixed bag. My impression has been that a minority of them are ambitious in regard to free enterprise/trade, and entrepreneurial in general. However, I think a majority are still perfectly fine with being handed artificially created jobs from the government. There’s a few reasons for this, some of which you can find highlighted in the following article:

    To briefly summarize, this article points out that the Bahraini work ethic is by and large poor, and initiative in regard to work and higher education as well is not a priority.

    Another good resource for digging into this issue deeper is an independent report from an American-based company, Ipsos Marketing Research, of Bahraini employers or companies working in Bahrain:

    Particularly on page 12 of this report you can see that by far the largest complaint (or area for growth, to put it positively) is in the work ethic of Bahraini employees. Also, more pointedly in some of their other reports, they indicate that Bahrainis have an expectation of employment without any real merit or qualification for it.

    All that to say that, forgiving other faults, I believe the government was in some ways giving the protestors exactly what they wanted. I can recall literally dozens of conversations where they would explain how the government was refusing to create jobs for them. The concept of the “nanny state” is alive and well.

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