Tuesday, March 08, 2011

Timur Kuran on the Retarding Consequences of Islamic Law

Timur Kuran
(Image from Wikipedia)

Nicholas D. Kristof, who writes a regular op-ed column for the New York Times, has a recent one titled, rather provocatively, "Is Islam the Problem?" (March 5, 2011). I say 'provocatively,' but that's only due to political correctness since the question is probably not provoking many readers to thoughts that they've not already, if silently, entertained. Kristof himself admits that the stagnation in many Muslim countries raises "a politically incorrect question: Could the reason for the Middle East's backwardness be Islam?"

Anybody can pose this question, of course, but Kristof's article is significant because it draws attention to a recently published book by Timur Kuran, a Duke University economic historian: The Long Divergence: How Islamic Law Held Back the Middle East. According to Kristof:
Professor Kuran's book offers the best explanation yet for why the Middle East has lagged. After poring over ancient business records, Professor Kuran persuasively argues that what held the Middle East back wasn't Islam as such . . . but rather various secondary Islamic legal practices that are no longer relevant today.

It's a sophisticated argument that a column can't do justice to, but for example, one impediment was inheritance law. Western systems most commonly passed all property intact to the eldest son, thus preserving large estates. In contrast, Islamic law stipulated a much fairer division of assets (including some to daughters), but this meant that large estates fragmented. One upshot was that private capital accumulation faltered and couldn't support major investments to usher in an industrial revolution.

Professor Kuran also focuses on the Islamic partnership, which tended to be the vehicle for businesses. Islamic partnerships dissolved whenever any member died, and so they tended to include only a few partners -- making it difficult to compete with European industrial and financial corporations backed by hundreds of shareholders.
I gather that sharia was one of Islam's 'killer apps' -- if I might put an ironic twist to Niall Ferguson's use of the expression -- for it seems to have killed economic development in the Muslim world. These two examples aren't wholly unfamiliar to me, for I've seen references to them before, especially to the latter, i.e., on the absence of a concept of the corporation in Islamic law. The West developed the concept of the corporation as an individual protected by law, enabling it to survive the death of those who founded it. Corporations could therefore bind together hundreds of partners, amass great wealth for investment, and develop long-term strategies for making money. They could also grow in experience over centuries and learn good business practices.

As for Professor Kuran's argument that these regulations in sharia retarding economic development in the Islamic world were a secondary development in Islam, inessential to the faith, I suppose that I'll need to look into this book to judge for myself, but I am often skeptical of attempts to rehabilitate some religion or other by claiming a distinction between an original, pure form of the faith that was liberatory and secondary practices that corrupted the faith and confined the believer.

Not that Professor Kuran is doing that, but I'll only know from taking a look at his argument.

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