Thoughts on economics and liberty

Why Islamic cultures suddenly fell off their perch

It is somewhat surprising that Islamic cultures, which generated a scientific attitude and thereby blossomed into great wealth, suddenly collapsed over the past few hundred years.

This seems to have happened due to ossification of its 'laws' which nipped all freedom and innovation in the bud. It would appear that a few but simple laws are better than excessive detail which allows priests (mullahs) to muzzle the minds of the people.

For the first five hundred years of Islam, its leaders promoted learning and innovation. ALL the learnings from across the world were brought together in Baghdad and carefully documented, studied, and expanded upon. Great was that era of Islam – the greatest in human history up to that point in time. But somewhere down the line (and from my limited readings on this topic it appears that Muhammad al-Ghazali [1058-1111] was one of the major Islamic thinkers responsible for this), Islam stopped absorbing innovations that were occurring across the world, particularly in the West.

From about 1200 AD its leaders started DICTATING to the people. Without an ability to either absorb innovation or to innovate internally, Islam started sliding back rapidly from the technical frontier. As a result, today, except for a few oil-rich parts of the world, the Muslims are among the poorest and most illiterate; and constantly fighting with each other and with everyone else [e.g. in Somalia, Iran, Iraq, Afghanistan, Pakistan]. An entire religion, an entire culture is now on the back foot, frustrated, not capable of understanding what has gone wrong.

Timur Kuran's analysis

Timur Kuran, my erstwhile Professor, and an Islamic scholar of great eminence, has presented an excellent analysis of the causes of this decline (divergence) in his book: The Long Divergence: How Islamic Law Held Back the Middle East. 

I introduced readers of this blog to this book in November 2010, but I recently came across another excellent review of the book in The Economist, which is useful to briefly discuss.

In this book Kuran identifies the company with limited liability as the KEY innovation that pushed the West firmly ahead

My analysis

No doubt this point that Kuran makes is perfectly true. Company structures enabled far greater risk taking and allowed agglomeration and economies of scale. The limited liability company is therefore a great institutional innovation. And this is consistent with my summary analysis of growth (here). Institutions are embedded in opportunity and governance: they form the technology of a society. The better the institutions, the more the opportunity.

All of these are however, underpinned by the level of freedom in society.  Thus, the corporation is merely one example of the many things that arise from free societies. Not just the invention of the corporation but printing, the modern cannon, the modern ship, and many other inventions and innovations were crucial to the leap made by the West from about the time of the Renaissance.

The package of modern economic growth is best attributed to increased FREEDOM in the West, not to one or two selected innovations.

Muslim societies, however, consciously put a blindfold over their eyes from around 1200 AD. This did not prevent them from conquering even more backward places like India – that had ossified much earlier (e.g. by around 1 AD, India was mentally dead; a mere fossil), but it kept reducing Islam's competitive advantage, both commercial and mlitary, over the West – till finally it fizzled out, and political power went to the West. 

Islam has deteriorated today into a SLAVE culture. No one is permitted to think. Instead of being servants of God, these people have become the slaves of dictators.

As can be seen from the actions of people like Gaddafi, everyone is muzzled. Its people are not allowed to think!!! How can they possibly succeed in life??

Islam, FREE YOURSELF, if you want to recover your vitality. Else it is inevitable that Islamic culture will die out – out of sheer ignorance and incompetence.  

The more I read about Mohammed the more I begin to believe that he was a great political strategist. He DID NOT want to create a slave race. But that is what Islamic cultures have become. Its incompetent teachers and petty 'mullahs' have lost the way. There is no intellectual leadership of any calibre from within Islam today (except a few academics like Timur Kuran who don't have mass following).

Unfortunately, without the use of our brains, we must necessarily become beasts. That is what many Islamic terrorists have become. The dénouement of once great culture is nigh. I'm sure Mohammed must be tossing about, deeply disturbed by what is going on, in his grave.

As I wrote a few weeks ago, there is an urgent need to recover the strategic and vital Islam that Mohammed brought to mankind: something created for the welfare of everyone. No, I'm not religious, and I'm not preaching Islam, but I'm definitely suggesting that Islamic intellectuals are now obliged to reverse this decline of thought leadership. Timur Kuran is a bright light – that I hope will shine the way forward for Islam.

EXCTRACTS from the review of Kuran's book

"Europeans inherited the idea of the corporation from Roman law. Using it as a base, they also experimented with ever more complicated partnerships. By 1470 the house of the Medicis had a permanent staff of 57 spread across eight European cities. The Islamic world failed to produce similar innovations. Under the prevailing “law of partnerships”, businesses could be dissolved at the whim of a single partner. The combination of generous inheritance laws and the practice of polygamy meant that wealth was dispersed among numerous claimants.

"None of this mattered when business was simple. But the West’s advantage grew as it became more complicated. Whereas business institutions in the Islamic world remained atomised, the West developed ever more resilient corporations—limited liability became widely available in the mid-19th century—as well as a penumbra of technologies such as double-entry book-keeping and stockmarkets."

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One thought on “Why Islamic cultures suddenly fell off their perch
  1. The Mindset

    for the first 500 years Muslims were not in majority.
    When they became majority they imposed the complete Sharia Law hence killing all innovative thinking.
    Islam is responsible for their backwardness

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