[Marxism] Is Islam Compatible with Capitalism?

Louis Proyect lnp3 at panix.com
Thu Aug 4 07:00:23 MDT 2011


(This article appears in a neoconservative magazine. It is an 
answer to the new book by Duke University economist Timur Kuran, a 
Turk, who claims that Islam retarded the growth of capitalism. My 
interest in the topic stems from my research into the "transition" 
debate that involved Sweezy vs. Dobb, Brenner vs. Sweezy, Blaut 
vs. Brenner, etc. I am planning to read Maxime Rodinson's "Islam 
and Capitalism" the first chance I get to answer Kuran, but will 
be sure to take a look at some of the references in this article 
that implicitly make the case against Kuran. I also have plans to 
read up on the supposedly "feudal" nature of Indian society at the 
time of the British colonial onslaught in the light of the 
"Asiatic Mode of Production" theory. In terms of Kuran's 
arguments, even before I have had a chance to read his book, the 
notion of Islam holding back capitalist transformation seems 
particularly dubious in light of the Anatolian tigers of the 
textile industry that constitute the base of the AKP in Turkey.)

http://www.city-journal.org/2011/21_3_muslim-economy.html

Is Islam Compatible with Capitalism?
The Middle East’s future depends on the answer.

by Guy Sorman

The moment you arrive at the airport in Cairo, you discover how 
little Egypt—the heart of Arab civilization—is governed by the 
rule of law. You line up to show your passport to the customs 
officer; you wait and wait and wait. Eventually, you reach the 
officer . . . who sends you to the opposite end of the airport to 
buy an entry visa. The visa costs 15 U.S. dollars; if you hand the 
clerk $20, though, don’t expect any change, let alone a receipt. 
Then you make the long hike back to the customs line, where you 
notice that some Egyptians—important ones, apparently—have helpers 
who hustle them through. Others cut to the front. It’s an annoying 
and disturbing welcome to a chaotic land, one that has grown only 
more chaotic since the January revolution. It’s also instructive, 
effectively demonstrating why it’s hard to do business in this 
country or in other Arab Muslim lands, where personal status so 
often trumps fair, universally applied rules. Such personalization 
of the law is incompatible with a truly free-market or modern 
society and helps explain why the Arab world’s per-capita income 
is one-tenth America’s or Europe’s.

The airport experience, had he been able to undergo it, would have 
been drearily familiar to Rifaa al-Tahtawi, a brilliant young imam 
sent to France in 1829 by the pasha of Egypt. His mission: figure 
out how Napoleon’s military had so easily crushed Egypt three 
decades earlier, a defeat that revealed to a shocked Arab world 
that it was now an economic, military, and scientific laggard. At 
the outset of the book that he wrote about his journey, The Gold 
of Paris, Rifaa describes a Marseille café: “How astonished I was 
that in Marseille, a waiter came to me and asked for my order 
without my looking for him.” Then the coffee arrives without 
delay. Finally—most amazing of all—Rifaa gets the bill for it, and 
the price is the same as the one listed on the menu: “No 
haggling,” he enthuses. Rifaa concludes: “I look for the day when 
the Cairo cafés will follow the same predictable rules as the 
Marseille cafés.” But nearly two centuries later, the only 
Egyptian cafés that live up to Rifaa’s hopes are the imported 
Starbucks.

Egypt is, of course, a Muslim nation. Should Islam be indicted for 
what was in Rifaa’s time, and remains today, a dysfunctional 
economy? The question becomes all the more important if you extend 
it to the rest of the Arab Middle East as it is swept by popular 
revolts against authoritarian rule. Will the nations that emerge 
from the Arab Spring embrace the rule of law and other crucial 
institutions that have allowed capitalism to flourish in the West? 
Or are Islam and economic progress fundamentally at odds?

Muslim economies haven’t always been low achievers. In his seminal 
work The World Economy, economist Angus Maddison showed that until 
the twelfth century, per-capita income was much higher in the 
Muslim Middle East than in Europe. Beginning in the twelfth 
century, though, what Duke University economist Timur Kuran calls 
the Long Divergence began, upending this economic hierarchy, so 
that by Rifaa’s time, Europe had grown far more powerful and 
prosperous than the Arab Muslim world.

A key factor in the divergence was Italian city-states’ invention 
of capitalism—a development that rested on certain cultural 
prerequisites, Stanford University’s Avner Greif observes. In the 
early twelfth century, two groups of merchants dominated 
Mediterranean sea trade: the European Genoans and the Cairo-based 
Maghrebis, who were Jewish but, coming originally from Baghdad, 
shared the cultural norms of the Arab Middle East. The Genoans 
outpaced the Maghrebis and eventually won the competition, Greif 
argues, because they invented various corporate institutions that 
formed the core of capitalism, including banks, bills of exchange, 
and joint-stock companies, which allowed them to accumulate enough 
capital to launch riskier but more profitable ventures. These 
institutions, in Greif’s account, were an outgrowth of the 
Genoans’ Western culture, in which people were bound not just by 
blood but also by contracts, including the fundamental contract of 
marriage. The Maghrebis’ Arab values, by contrast, meant 
undertaking nothing outside the family and tribe, which limited 
commercial expeditions’ resources and hence their reach. The bonds 
of blood couldn’t compete with fair, reliable institutions (see 
“Economics Does Not Lie,” Summer 2008).

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