Samuel Huntington described Muslims as having “u-shaped loyalties”, strongly identifying with their clan and the ummah but not with their country. At the same time the region has long been associated with “oriental despotism”. I’ve been thinking about that while reading Timur Kuran’s “The Long Divergence: How Islamic Law Held Back the Middle East”. Some of the story begins before Islam itself, which you might think undercuts the thesis but makes sense since Islam was going to codify many pre-existing norms. The “hydraulic theory” of state development is considered discredited today, but Kuran cites state control of large-scale irrigation systems as the reason governments tried to keep independent sources of wealth and power weak (see my earlier post on family vs the state). One of the elements of islamic law that he blames for allowing Europe to race ahead is the relatively egalitarian inheritance formulae, which results in estates being fragmented (contrast the western practice of primogeniture). Pharoanic Egypt, Babylon and Assyria all apparently had laws mandating egalitarian inheritance. I did not know that, assuming that winner-gets-all inheritance and monarchical dynasties went together. Instead Kuran says that primogeniture and monogamy go together. The tendency of the wealthiest merchants in the Islamic world to have multiple wives and a greater number of children results in an even greater fragmentation of wealth. As a result, no aristocracy developed in Turkey, the Arab world or Iran.

The particular course of development of western Christendom is described as being the result of both strong and weak states in different periods. It began of course under the Roman empire which already had an established tradition of law which allowed for certain corporate forms (see Harold Berman’s “Law and Revolution”). The church could not declare itself the supreme law at the time but had to accept the existence of secular law. When the empire fragmented sub-state units made internal law to govern themselves. The church rediscovered Roman corporate law and declared itself to be a corporation, as did many cities, colleges, guilds and so on in a “wave of incorporation” (though the wariness of states toward them as per “Violence and Social Order” meant free incorporation didn’t come until the 19th century). The church was a transnational organization with both autonomous units and (after Berman’s “revolution”) a clear hierarchy over the whole religion. Islam began in relatively uncivilized Arabia, developed centralized states without units below them and had decentralized religious authorities of learned individuals dubbed kadis (with four different coexisting schools of jurisprudence) which could be made subservient to the state.

One aspect which Kuran doesn’t discuss but seems quite relevant is the practice of cousin-marriage. I suppose its more a cultural custom associated with Islam than something codified in the law (like female circumcision), but it is an area where the western church intervened in family life for some of the same motives Kuran describes driving muslim rulers. HBDchick has written at great length on the abolition of cousin-marriage lending to the decline of tribes/clans in western Europe. Cousin-marriage has existed in many times and places, but Islam is associated with a particularly important variety called parallel cousin marriage, which tends to lead to more clannishness and inbreeding. Clannishness existed before Islam, and the religion put great emphasis on suppressing it and the tribal wars it caused in favor of unity of the ummah. Even as the unified caliphate disintegrated and sectarian divisions emerged, Muslim states recognized Muslim subjects (and even those of rival states) as simply “muslims”. The Ottoman empire is well known for its millet system in which sub-communities of Greeks, Armenians and Jews administered themselves and were officially recognized by religion & ethnicity. Muslims did not have any further identity recognized, impeding the creation of nation-states.

Without corporations, Muslim merchants made use of a smaller partnership codified into Islamic law (primarily relying on oral contracts, which would later contrast with the literate west). These partnerships were not permanent and if a member quit or died its assets would have to be dissolved. If all a dead man’s wealth went to one of his sons who had already pledged to continue the arrangement, the partnership could have been quickly renewed (and merchant empires like the Medicis & Fuggers emerged out of just such a mechanism) but that was far less feasible with the complicated split inheritances described above. There was something recognized under islamic law which could get around some issues of impermanence, called a “waqf”. Literally translated it means “standstill”, and as Kuran puts it that was a problem. In some ways it could act like a perpetual business and retain wealth in a trust for its founder’s descendants, but it was given narrow instructions to do a specific thing in a specific place which emphatically could not be changed even as conditions did. In origin and theory it was supposed to be somewhat altruistic (presumably why states that might otherwise be hostile accepted them) and provided public goods that in europe would have been provided by municipal corporations. It could sometimes be limited to something as vulgar as the mere lending of cash, but without the ability to merge such (relatively rare among its class) waqfs operated on a much smaller scale than western banks, and lent primarily for consumption rather than investment or new ventures. In Kuran’s view waqfs outlived their usefulness and led to an inefficiently high investment in charity and a lack of dynasties of wealth & industry. Robin Hanson often complains of our lack of respect for perpetuities and disdain for the “dead hand of the past”, so a waqf might seem ideal for him (and perhaps Gary Becker). So how might Hanson, or primogeniture foe Thomas Jefferson, react to Kuran’s book? The obvious compromise is to allow a wide range of choice in wills, as specific and/or egalitarian as the property owner wishes.

Waqfs and partnerships did not evolve into corporations, nor did some other candidates such as guilds and tax-farms. The centralized states of the Muslim world appointed guild leaders, and tax-farms were a temporary compromise recognizing the difficulty of directly collecting taxes from a community. The emergence of collective identity and action (often hostile to the state) was always a threat, and so when possible the state might abrogate tax-farm contracts to directly tax a community. This wariness toward communal identity is part of why communal status was only recognized for minorities and not Muslims. This actually gave religious minorities an advantage, though it did not become apparent until foreign contact resulted in them adopting western legal forms. Nestorian Christians in Iraq, more separated from western contact, had no more economic advantage than the Kurdish and Shi’ite minorities. Muslim rulers granted “capitulations” (it literally meant “chapters” of the treaty, but would acquire a negative connotation later) to western traders who understandably didn’t trust a Muslim legal system that was not only unfamiliar but was both expected to parochially favor natives/Muslims and had become relatively backward. The agreements initially were fairly reciprocal in allowing western agents (and their dragomen recruited from native minorities) to use western law, but as muslim states declined in relative power the agreements came to stack the deck against native muslims until dhimmis were barely paying any additional taxes (and were exempt from the arbitrary taxes frequently declared to pay for wars) or even had imports charged less than exports. Previously native minorities had hewed close to muslim law in their own communities (which were not the final arbiter, as the loser of any case could have it retried under islamic law), but starting in the 18th century they adopted the western law of corporations and documented accounting which trumped oral testimony. Muslim trading practices were so unsophisticated that immediate copying would have seemed impractical in the absence of existing complementary institutions, which is why in the 19th century rulers created Muslim-owned corporations like banks through top-down measures rather than waiting for their subjects to reinvent them, and even those did not thrive in the absence of a larger overhaul of the legal system.

Tyler Cowen argued for viewing Timur Kuran as a subtle apologist for Islam, and in a certain sense one can read his conclusion that way. Western institutions have been imported long ago and not even the most ardent islamists view them as controversial or incompatible with their religion (with the possible exception of the ban on riba/interest, which in practice has been widely flouted since the earliest days of islam, albeit with some additional transaction costs). However, they arrived through state-led development and the region still has a relatively weak private sector and civil society. It lacks the experience, competence and norms built up over time in the west, and the states engaged in development are themselves relatively corrupt and prone to detrimental ideologies and policies. Even the toppling of those states in the very Kuranian Arab Spring (in the sense of “Private Truths, Public Lies”) will not lead to much short term improvement, as those countries need to outgrow their deficiencies over time. On the other hand, one could read Kuran as indicting Islam as to blame for the region’s problems. He would still be a relatively sophisticated critic who acknowledges what were once beneficial aspects of islamic law and understands the rational reasons why it possessed certain features, but one could make a case from his work that on net the arrival of islam had a negative impact on Middle East’s status today and presumably into the future. I’m not particularly interest in deciding which interpretation is correct, but I can recommend the book as having valuable insight into an issue many people discuss but few examine in such depth and detail.