The age-old debate about Islam's role in the political backwardness of the Middle East has returned to the fore. Dramatic developments of the Arab Spring, followed by re-emergence of authoritarian tendencies, reignite the debate. While debates will continue, a tentative answer can be offered: Flirtation with authoritarianism could be linked more to millennia of Arab history and culture rather than with Islam.
In his seminal work, Muslim Society, eminent British social anthropologist Ernest Gellner boldly asserted that, judged by various criteria, "of the three great Western monotheism, [Islam is] the one closest to modernity." He goes on say that had the Arabs won at Poitiers and gone on to conquer and convert Europe, the modern rational spirit and its expression in business and bureaucracy could only have arisen from Islamic thought. A Muslim Europe would have saved Hegel from indulging in tortuous arguments to explain how an earlier faith, Christianity, is more final and absolute than a chronologically later one, namely Islam. And in 1770, Edward Gibbon had little difficulty imagining Islamic theology being taught in Oxford and across Britain.
But there's an acute deficit in development and freedom in the Muslim world, evident from the United Nations and World Bank Development reports, giving rise to contentious debate about the causes. Culprits include Islamic theology and culture, oil, Arab culture and institutions, the Palestinian-Israeli conflict, desert terrain and institutions, weak civil society and the subservient status of women.
Perhaps the most contested debates center on whether Islam is the main cause of these twin deficits of development and freedom. Evidence shows that, before the balance of power shifted after the European expansion in the 17th century, the Middle East was economically just as dynamic as Europe. Muslim merchants were just as successful in carrying their commerce and faith to far corners of the world as their European counterparts if not more.
According to the late economic historian Angus Maddison, in the years 1000 AD the Middle East's share of the world's gross domestic product was larger than Europe's - 10 percent compared with 9 percent. By 1700 the Middle East's share had fallen to just 2 percent and Europe's had risen to 22 percent. Standard explanations for this decline among Western scholars include Islam's hostility to commerce and its ban on usury. But these reasons are unsatisfactory because Islamic scripture is more pro-business than Christian texts, and for usury Torah and Bible do the same. The Prophet Mohammed and his first wife, Khadija, were very successful merchants. Many Muslims blame their economic backwardness on Western imperialism. So why did a once-mighty civilization succumb to the West?
Duke University economist Timur Kuran, in his book The Long Divergence: How Islamic Law Held Back the Middle East, persuasively discards these and related explanations. He marshals impressive empirical evidence to show that what slowed economic development in the Middle East was not colonialism or geography or incompatibility between Islam and capitalism, but laws covering business partnerships and inheritance practices. These institutions benefited the Middle Eastern economy in the early centuries of Islam, but starting around the 10th century they began to act as a drag on economic development by slowing or blocking the emergence of central features of modern economic life - private capital accumulation, corporations, large-scale production and impersonal exchange.
An Islamic partnership, the main organizational vehicle for businesses of Muslim merchant classes, could be ended by one party at will, and even successful ventures were terminated on the death of a partner. As a result most businesses remained small and short-lived. The most durable and successful business partnerships in the Muslim world were operated by local non-Muslims. Inheritance customs hindered business consolidation because when a Muslim merchant died, his estate was split among surviving family members which prevented capital accumulation and stymied long-lasting capital-intensive companies. The resulting organizational stagnation thus prevented the Muslim mercantile community from remaining competitive with its western counterparts.
Likewise, research by Harvard economist Eric Chaney debunks theories that the root cause of the democracy deficit in the Middle East is Islam or Arab cultural patterns, oil, the Arab-Israeli conflict or desert ecology. The democratic deficit, as reflected in the prevalence of autocracies in the Muslim-Arab world, is real, Chaney notes, but it's a product of the long-run influence of control structures developed in the centuries following the Arab conquests.