The Long Divergence: How Islamic Law Held Back the Middle East

In the year 1000, the economy of the Middle East was at least as advanced as that of Europe. But by 1800, the region had fallen dramatically behind--in living standards, technology, and economic institutions. In short, the Middle East had failed to modernize economically as the West surged ahead. What caused this long divergence? And why does the Middle East remain drastically underdeveloped compared to the West? In The Long Divergence, one of the world's leading experts on Islamic economic institutions and the economy of the Middle East provides a new answer to these long-debated questions. Timur Kuran argues that what slowed the economic development of the Middle East was not colonialism or geography, still less Muslim attitudes or some incompatibility between Islam and capitalism. Rather, starting around the tenth century, Islamic legal institutions, which had benefitted the Middle Eastern economy in the early centuries of Islam, began to act as a drag on development by slowing or blocking the emergence of central features of modern economic life--including private capital accumulation, corporations, large-scale production, and impersonal exchange. By the nineteenth century, modern economic institutions began to be transplanted to the Middle East, but its economy has not caught up. And there is no quick fix today. Low trust, rampant corruption, and weak civil societies--all characteristic of the region's economies today and all legacies of its economic history--will take generations to overcome. The Long Divergence opens up a frank and honest debate on a crucial issue that even some of the most ardent secularists in the Muslim world have hesitated to discuss.

Preface ix PART I Introduction Chapter 1: The Puzzle of the Middle East's Economic Underdevelopment 3 Chapter 2: Analyzing the Economic Role of Islam 25 PART II Organizational Stagnation Chapter 3: Commercial Life under Islamic Rule 45 Chapter 4: The Persistent Simplicity of Islamic Partnerships 63 Chapter 5: Drawbacks of the Islamic Inheritance System 78 Chapter 6: The Absence of the Corporation in Islamic Law 97 Chapter 7: Barriers to the Emergence of a Middle Eastern Business Corporation 117 Chapter 8: Credit Markets without Banks 143 PART III The Makings of Underdevelopment Chapter 9: The Islamization of Non-Muslim Economic Life 169 Chapter 10: The Ascent of the Middle East's Religious Minorities 189 Chapter 11: Origins and Fiscal Impact of the Capitulations 209 Chapter 12: Foreign Privileges as Facilitators of Impersonal Exchange 228 Chapter 13: The Absence of Middle Eastern Consuls 254 PART IV Conclusions Chapter 14: Did Islam Inhibit Economic Development? 279 Notes 303 References 349 Index 393