Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts

Monday, April 25, 2011

the economics of sharia law

Kuran, Timur, The Long Divergence. How Islamic Law Held Back the Middle East, Princeton: Princeton University Press, 2011. ISBN 978–0–691–14756–7. U.S. $29.95.


Even though Timur Kuran is overall convincing at laying out arguments on the backwardness of Islamic practices regarding partnerships, corporations, banks, loans with interest, waqfs (mortmain properties blocked from circulation), and contracts in general, he seems less convincing at explicating why Islamic societies were held back from competition with Europe from the middle ages up to modern times. Indeed, his main assumption that it was Islamic law that held back the economy escapes the problem rather than points at its cause in a convincing way. Legal systems in general are more an outcome of social conditions, rather than the major force that would bring social relations to a more developed level. In other words, history shows that whenever the law is “behind” social practices, whether cultural or economic, they tend to be addressed sooner rather than later. A case in point, which Kuran explains at length, is the ban on loans with interest that both Jews and Christians had to abide by in the early European middle ages, which in both instances were bypassed due to the socio-economic conditions in Europe at the time. Even in modern times, legal systems tend to struggle in order to match cultural and economic developments. Witness how the American common law had to battle, since the nineteenth century, its formative period, with issues like private property, contracts, the corporation, slavery, rights of minorities and women, abortion, and gay and lesbian rights, in order to become congruent with the nascent capitalism and the mores of the times. It therefore seems quite obvious that for any society and civilization, at every historical juncture, it is the totality of social relations, or the mode of production, which in the last stance is what impacts politics and law. There are times when the law falls behind the evolution of social relations, which could be attributed to anything from the weakness of the state, or to the nature of legal reasoning itself, for instance, a need for complete overhaul that is constantly delayed, due to lack of adequate resources or for political reasons. However, Kuran addresses Islamic law for over a millennium, and for that long a period it would be absurd, as he does, to blame economic backwardness solely on the law, as suggested in the book’s subtitle and its various chapters. It goes without saying, however, that there is a “divergence”—and a wide one for that matter—between Islamic economies and their western counterparts; the Mediterranean economies of the last millennium, between east and west, point to such a divergence. Even though Islamic law shares the blame, it is more of a symptom of a much broader and deeper problem, than the major culprit.

Kuran’s demonstration often questions the reasons that did not push “communities” and subcommunities from tailoring Islamic law to their own needs and aspirations. In other words, if Islamic law proves to be, indeed, the main culprit, or the prima causa, in the history of economic backwardness of middle eastern societies, why hasn’t there been any resistance to its rule? Or why, in the vast Islamic empires since the Umayyads and Abbasids up to the Ottomans, no major challenges were posed to the legal limitations on partnership, inheritance, loans with interest, and waqfs? Why is it that no corporations, loan institutions, public debt and banking services have emerged even in rebellious peripheries? Or why is it, as far as economic and legal practices are concerned, no significant changes are to be noted between the Shi‘i and Sunni sects? Why is it that no group, subgroup, community or subcommunity broke the general rules in order to establish more aggressive economic and legal practices?

Kuran’s reasoning assumes that, first, Islamic law reached such a level of maturity and comprehensiveness so as to rule out any possible defections on the part of groups and communities, whether urban or regional: “On the face of it, the presumed comprehensiveness of Islamic law ruled out self-governance on the part of subcommunities; one could not replace divine law with human-made law even in limited domains.” (107) Such passages do suggest that, first, Islamic law reached such a level of comprehensiveness and a systematic character by the early middle ages to the point that it would undermine other sub-laws from emerging, which would have been secular and more competitive. In other words, the divine character of Islamic law gave it such an aura that no community would have even dared to challenge it. But what if the reverse proves to be the truth, namely, that three to four centuries since its inception, Islamic law failed to develop a systematic character, and that at no point there was even an attempt to develop a system of codes à la Justinian? What in effect persevered since the 10th–11th centuries was a de facto process of “accommodation” of the broad principles of the law, which were never comprehensive in the first place, to the needs and aspirations of the local regional communities; and even at this level, it was custom that reigned supreme, rather than sharia law. Such a failure to create a corpus of Islamic law that would have served as a comprehensive code for the various regions and communities of “the lands of Islam” has been accommodated for in various forms from one epoch to another. In Ottoman times, for example, a clear division was instated between sharia law, on one hand, and the regional bureaucratic “secular” laws, commonly known as the qanunname, on the other, which in itself was a bland admission of the inoperative character of Islamic law in such matters as rent, taxation, and crime. Moreover, even for the core of sharia law, the Ottomans adopted Hanafism out of the four Sunni schools, a flexible school that accepts “custom” as regionally operative, while assuming the status of “law” (“habit is tenacious,” states one of the “general rules” of Hanafism). What the Ottoman centuries therefore point to is precisely the level of “autonomy” that subcommunities have assumed on their own, a self-rule that was made possible not so much by sharia law itself, but rather thanks to the very nature of the societies on the eastern Mediterranean and north Africa.

The main problem in Kuran’s book is not only his desire to see in Islamic law the prima causa of economic backwardness, but more importantly, in an inability to properly describe the sociological and historical nature of the societies and civilizations which were operating under Islamic law. Which gives Kuran’s study the impression that things could have been otherwise were it not for Islamic law. But what if things could not have been that much otherwise, precisely because the societies that were subject for centuries to sharia law operated under their own ecological, tribal, urban and social limitations? Indeed, a major weakness of the book is that it does not delve deeply enough into the political and economic organizations of such societies: Would a system more open than sharia law made them any different? Assuming that in the past millennium the bulk of Islamic societies were under prebendal and patrimonial absolutist dynasties, where prebends in the form of land grants were donated as signs of loyalty to urban élite groups, were the social conditions ripe enough to create a milieu that would have hosted more competitive economic practices from the ones already in place? Is it really a problem with sharia law itself, and the fact that it imposed all kinds of restrictive uncompetitive norms, or was it a limitation coming from social structure? Historians working within a sociological comparatist perspective (such as Barrington Moore and Reinhard Bendix) have often noted that “feudalism” in its European connotations was a privilege that failed to materialize in the middle east and Asia (except perhaps in Tokugawa Japan), and that such a failure was what led to the general backwardness in the past millennium. The point here is that when speaking of economic performance over long periods, one cannot escape the totality of social structure—the “law” being one of the components of society rather than its determining agent. Had the economic practices covered by Kuran been indexed to social structure instead of being reduced to their legal underpinnings, economic backwardness would have eo ipso looked messier, with no prime cause in sight.

Even though a big advantage of Kuran’s approach is his excellent description of economic practices over a millennium with their legal underpinnings, his ascription to “law” the prima causa of all economic backwardness does a disservice to his enterprise. As already pointed out, in various passages Kuran seems uncertain as to how much the “holding back” was an outcome of the “law” itself: was sharia law, as divine law, so powerful that no community could be set free from its creed? And why with all the “autonomy” that communities enjoyed in most Islamic empires, no alternative economic systems came to light? As in the passage above (107), Kuran seems to suggest that the “divine” aspect of the law made it irreproachable. Such arguments, however, do not feed well for a complex undertaking on economic development, and end up too circular, if not solipsistic: Islamic societies have created a divine legal system, to which they’re imprisoned, precisely because of the divine character of the law. For example, notice how Kuran is at loss when he questions the reasons behind the failure of anything close to a “corporation” or a “corporatist structure” in Islam. Having first noted that “free incorporation” would have implied “the right to incorporate at will, without the consent of a monarch, president, or parliament” (121)—which makes “corporation” even stronger than “partnership” (which in Islam was limited to the basics)—Kuran then notes that, under such conditions of “free incorporation,” “of necessity subgroups of the community would enjoy a measure of self-governance” (122), which in turn, would pose a challenge to the ideal of communal unity, and which in the case of Islam would have implied a challenge to the divine character of sharia law. As in other passages, and whenever we’re faced with a crucial “shortcoming,” in this instance the “corporate structure” (even the Roman Church behaved as a corporation), it was the “law” that halted the process: “In adhering to the ideal of a unified community and withholding legal rights from subcommunities, jurists and political theorists doubtless thought to deny social divisions legitimacy.” (122–23) So, if the “corporation” or “the fictitious person,” which as legal notions stand as prerequisites to one another, have not been embraced in Islam, it is because as radical innovations, they would have undoubtedly posed a threat to “the ideal of undifferentiation,” namely the Islamic community of believers known as the umma. The problem with such views is that they give the false impression that it was Islamic law that prohibited communities, which for the most part were based on strong kinship and tribal ties, from embracing the corporation (and other prerequisites, such as the fictitious person and competitive partnerships), hence in moving in the direction of openly liberal markets. But were such handicaps and constraints imposed by the monolithic nature of Islamic law, as Kuran seems to suggest, or by the social structure of Islamic societies, which in turn are an outcome of the ecologies and terrains in which they have evolved?


Zouhair Ghazzal
Loyola University Chicago

Tuesday, April 5, 2011

mysteries of minorities

The harassments that Christians are facing today in countries like Iraq and Egypt tend to be seen in isolation to similar problems across the middle east, on one hand, and from historical precedents on the other; and while routinely associated with a surge in Islamic values across the Arab and Islamic worlds, their economic underpinnings are overlooked.

 

In the old Islamic empires, Christian and Jewish minorities were simultaneously referred to as “the people of the book” and ahl al-dhimma, the former referring to the identification of minorities with their holy scriptures, while the latter limited them to their status as minorities, in particular in matters of political representation and taxation (the special jizya tax). In Ottoman times, such minorities were integrated within the millet system, which grosso modo implied, as with the previous empires, poor political representation and special taxes, together with the legalization of economic practices that were forbidden to the majority of Muslims under sharia law. Thus, when Jews fleeing the Spanish inquisition in the fifteenth and sixteenth centuries opted for the Ottoman empire, they were greeted within the millet system, on one hand, and as potential moneylenders on the other. Such historical millet-specific economic functions tend to be overlooked these days, in particular in relation to the hardships that Christians have been going through in the middle east. That 2010 implied the end of Christianity in Iraq, and that the hardships of the Copts in Egypt have been under the hood during the Mubarak autocratic rule, and have only accelerated since his departure, beg the following questions: How come autocratic régimes, like Baathism under Saddam Hussein, Nasserism up to Sadat and Mubarak, or Syrian Baathism, manage the status of minorities far better than the more “democratic” ones? It is, for instance, no secret that under Saddam Hussein the Christians of Iraq were much safer than now, and that an explanation of the kind that they have been targeted because of a sudden rise of Islamic jihadic groups, which the nascent federal state is unable to control, would certainly not suffice, and is inadequate as an explicans. What needs to be explained here—the explanandum—is the relative “security” that Armenians, Christians and Jews, in their lives and properties, have benefited from in Ottoman, colonial, and postcolonial times, but only when the postcolonial independent state acted like a mini-Ottoman state, with millet rights and privileges. There seems therefore, prima facie, at face value, a contradiction, which is precisely what needs to be explained: Why under autocratic conditions, in countries like Iraq, Syria and Egypt, minorities feel much safer than in less autocratic and more open conditions? The reason is that postcolonial autocratic states have stabilized around post-Ottoman notions of power, where millets were kept with similar economic rights and privileges. Whenever such autocratic states have shifted in another direction, as is the case in Iraq and Egypt, the “protection” accorded by the state is not there anymore, and the minorities find themselves competing with other groups, in particular the Muslim majority.

 

The real secret here may well be the so-called “pluralism” in sharia law, which permitted a special legal status to minorities and foreigners. Up to the early 19th century, such special legal status did not create large economic discrepancies between communities. By the 19th century, however, competition across the Mediterranean pushed for greater legal autonomy to minorities. In areas where sharia law was particularly weak, such as partnerships, moneylending, and corporations, minorities benefited from their special legal status, namely, the fact that laws outside the sharia system were applicable to them—and to them only—either within their own confessional millets, or else through capitulations and special mixed courts.

 

It is, indeed, that relative economic “success” of minorities that is often overlooked today. Is there any connection between the economic and cultural edge that minorities were able to secure, and the harassments and massacres that they had to endure? Let us note here that the first calls for autonomy, in the form of regional and territorial nationalisms, in the Ottoman empire, were to erupt in Greece and the Balkans, in regions where the Greek Orthodox faith was predominant.

 

In a recent book, the economist Timur Kuran notes that until the late 18th century Muslim role in trade and commerce was significant, as there is no historical evidence that Muslim merchants left trade to Christians and Jews, even though both Islamic economic and legal practices lagged behind their counterparts in medieval and early modern Europe in practices like partnership, the corporation, the legal person, primogeniture (as opposed to equal inheritance), money lending, the letter of credit, trust funds (as opposed to the closed waqfs), stocks, bonds, treasuries and public debt. But with the expansion of capitalism, the industrial revolution, trade and colonialism, the trend has begun to shift towards non-Muslim minorities, as more aggressive trade practices were needed. As sharia law leaves the door open for “legal pluralism,” the denominational communal courts served the purpose of granting legal protection for practices that the sharia courts would otherwise not have permitted. Better still, non-Muslim minorities had that unique option to opt for the legal authority of their own choice, pending on what was at stake. “By the end of the 19th century,” however, “the Ottoman Empire’s Muslim merchants were decidedly secondary players in its external trade with Europe, and at home, too, they had lost enormous ground to local minorities” (Kuran 191). Soon, the dhimmi communities who were commercially active became, like the foreigners of the empire, protégés of European powers or of their inside cohorts. Some, seeking better protection, or to be exempted from specific taxes, either became consuls or dragomans (tercümans) in consulates.

 

Herein lies the shift that occurred from the “protected” millet status to one that was life threatening to non-Muslim minorities. To understand the significance of such a shift by the late 19th early 20th centuries we need to go no further than the decline of the populations of non-Muslim minorities in Anatolia. Historians of the empire (Kemal Karpat and Justin McCarthy) give on average 10 to 25 percent for non-Muslim minorities in Ottoman Anatolia, when it was still within the empire’s jurisdiction. But with the killing and deportation of close to 1.5 million Armenians, and other minorities (primarily Greeks) by the end of WWI, Turkey’s population of today’s minorities stands at less than 1 percent of the total of the republic. Nor was such a movement of deportation and harassment to stop with the foundation of the republic or in the aftermath of WWII for that matter. The last episode, known as “the pogrom against Greek businesses,” on 6 and 7 September 1955, when Adnan Menderes was prime minister (1950–60), emptied the heart of Istanbul, the Beyoğlu (Pera) area, from its Greek businesses, amid large scale riots that pushed many Greek families to leave their homes and fortunes behind in their rush for more secure countries (Zürcher 231). Ironically, the Greeks were targeted at a time when Turkey’s economy was most successful, achieving a 9 percent growth rate over the ten-year period of the Menderes administration, with rapid urbanization and industrialization, thanks partly to foreign aid. Which begs the question, Why are minorities targeted even in times of relative economic success, when the country is not challenged by external enemies?

 

Yet, Turkey is the only country in the region to have successfully industrialized and modernized, well situated within the prestigious G–20 membership. Why was it the first Islamicate society to systematically eliminate its minorities? Was the elimination of minorities an operation necessitated by the growth of the nation-state, industrialization, modernization, laissez-faire capitalism? In other words, does the “imagined community,” which acts as a prerequisite for the nation-state, necessitate that “minorities” be targeted to create a “coherence” in the imagined ideology?