City Journal Winter 2016

Current Issue:

Winter 2016
Table of Contents
Tablet Editions
Click to visit City Journal California

Readers’ Comments

Guy Sorman
Is Islam Compatible with Capitalism? « Back to Story

View Comments (78)

Add New Comment:

To send your message, please enter the words you see in the distorted image below, in order and separated by a space, and click "Submit." If you cannot read the words below, please click here to receive a new challenge.

Comments will appear online. Please do not submit comments containing advertising or obscene language. Comments containing certain content, such as URLs, may not appear online until they have been reviewed by a moderator.

Showing 78 Comment(s) Subscribe by RSS
Fascinating. Interesting. And, about the most intelligent article I have read about the Sea of Troubles in which the Muslim/Arab world finds itself.
And, as I am from the future, the premise that the Muslim/Arab world cannot free itself from its malaise is now self evident.
Mr. Sorman should write an article about the current Great Muslim Arab Sectarian Civil War - the "Muslim Reformation" - that has been ongoing for the last 100 years.
If some Arab/Muslim entity does not step up to the plate in the near future - based on Mr. Sorman's analysis and based on the massive fratricide of the Arab/Muslim world, a few billion are going to die and portions of the earth will be uninhabitable.
Its not the sharia that crumbled our economy. we've been using sharia for 1500 years and it didnt damage it. what damaged it was the corruption of the governments; and more importantly, the people.
Mustafa Kamal Rokan March 30, 2012 at 6:07 AM
Very Wanderful, i've got very good article here. So thanks so much
Please note that the name of the scholar mentioned above is Sevket Pamuk, not Evket Pamuk. Also, he is a historian, not an economist.
Interesting Piece. Education is key to putting the world on equal footing. We have seen this is many societies. Having the Continent of Africa and other societies (not just the Muslim world)increase education and in turn entrepreneurship will help move us in the direction of a more peaceful world.
Weren't many of the Genoans also Jewish?
Sharon Maclise, Canada October 07, 2011 at 4:33 PM
Very interesting article but a highly speculative conclusion. Exactly which emerging political parties in the Muslim Middle East are "supporters of free markets"? Why do you "think" the "young men and women behind the Arab Spring will continue to push for open markets"? Can you point to actual recent events and facts that would support this conclusion? As it is you have just formulated a hopeful-sounding liberal opinion on this matter.
Turkey is founded October 29th, 1923. Not in 1921.
The author's mention of apostasy law is not based on a thorough analysis of the Islamic society in general, and of the one in Egypt in particular. It is almost impossible to find cases where people of different ideas and concepts were treated and punished for apostasy, particularly in Egypt. I don't think apostasy law is any relevant to the decline of free enterprise in the Arab society.

The author, on the other hand, fails to mention the international support to the corrupt governments of the Arab world. Most tyrants in the Arab world enjoyed their strong connections of wealth and prestige with the developed world, especially the US and Europe. Can you imagine dress code in the society being regulated by laws? This happened in Tunisia, where women are prohibited from having skirts longer (not shorter) than knee-level. These tyrants were considered by the Western leaders as their guarantee for a lesser impact of Islam in the society.
Re: "Is Islam Compatible with Capitalism?" The answer is "yes," the Muslim world in principle has no objection to capitalism or doing business, but this isn't the relevent question. The real question is whether or not Islam is compatible with western civilization - to which the answer is in the negative. Islam and the Koran cannot be reconciled with western-Judeo-Christian civilization generally, or the constitution and declaration of independence of the United States. Even a cursory A-B examination of these documents side-by-side with the Koran proves this conclusion to be correct.
Ataturk promulgated Swiss commercial law in Turkey. If it has not been eroded by creeping Islamism and shariah, that may help explain Turkey's relative rule of law.
Western capitalism is, at its best, open to all comers, irregardless of religion. Islam, by contrast, is intolerant of non-believers. It imposes a special tax (jizyah) and attendant humiliationon them. Their testimony in shariah courts is worth less than that of Muslims. Furthermore, productive economic minorities were often driven out of the Middle East and North Africa during the 20th century. I believe that the first Islamic centuries were prosperous because there were lots of commercial non-believers to exploit, ex. Copts in Egypt. Today, Malaysia and Indonesia thrive because of their large pagan Chinese populations. Islam itself usually encourages fatalism. I can't explain the evident exuberance of Turkish capitalism, however.
The distinction between the West and the Arab World is individualism v. tribalism. Sorman gave excellent examples both historical and present day illustrating the Arab mentality of collectivism either through nationalism or through religion. Whereas the West went through a cultural renaissance in the 14-16th century the Arab world did not. They stayed tied to tribalism and as a result stagnated both economically and intellectually. If the Arab Spring is to bring the rule of law and to have a lasting effect they must first learn about individualism and the respect of an individual's life as the standard of value.
UncompromisingIdealist September 22, 2011 at 3:51 AM
This is intellectual hogwash.
Houses and cars are not very cheap and not every person is able to buy it. However, loan are invented to aid people in such cases.
This article exemplifies conservatives’ lack of understanding about the fundamentals of capitalism, a social system based on the idea that individual rights, including private property, are inalienable.

The author, Guy Sorman, exhibits many misunderstands of this social-economic system throughout his piece (e.g. “crony capitalism”), and this sentence near the end is the killer:

"Even the notorious Muslim Brotherhood is on board with capitalism: 'Our economic program is a free-market society in order to pursue social justice,' says Sameh al-Barqui, an American-educated economics expert with the Brotherhood."

So, Sorman here quotes approvingly a member of a radical, violent Muslim organization who equates "social justice”— which in translation means socialism—with capitalism.

With so-called defenders of capitalism like this, is it any wonder that the essence of this system is eroding rapidly here and abroad?
This article is exemplifies conservatives’ lack of understanding about the fundamentals of capitalism, a social system based on the idea that individual rights, including private property, are inalienable.

The author, Guy Sorman, exhibits many misunderstands of this social-economic system throughout his piece (e.g. “crony capitalism”), and this sentence near the end is the killer:

"Even the notorious Muslim Brotherhood is on board with capitalism: 'Our economic program is a free-market society in order to pursue social justice,' says Sameh al-Barqui, an American-educated economics expert with the Brotherhood."

So, Sorman here quotes approvingly a member of a radical, violent Muslim organization who equates "social justice”— which in translation means socialism—with capitalism.

With so-called defenders of capitalism like this, is it any wonder that the essence of this system is eroding rapidly here and abroad?
People in the world get the business loans in different banks, just because that is easy and fast.
Hope springs eternal, but the imams will always find ways to weed it out.
Excellent article/analysis!
That is understandable that cash can make people autonomous. But what to do when someone doesn't have cash? The one way is to get the credit loans or credit loan.
Moreover, while the heading of his article speaks of "Islams" compatibility with capitalism, Sorman focuses his attention exclusively on the Arab world with complete disregard for other countries and regions that are predominantly Muslim though not Arab. For example, the economies of Malaysia and Indonesia are, in relative terms, quite prosperous and the standard of living in both of these countries is, for the region, quite high. Lastly, while we can look at the corruption in certain Arab/Muslim states in absolute disdain, condemning the social hierarchies that might exist in these countries, let's not for a moment forget that within our own Western democracies, the same problems exist. The fact that those with wealth have better access to healthcare, education and a higher standard of living and better opportunities is something that we must interrogate. Let's not also forget the problems that have emerged with capitalism and the corruption that the free market economy has brought about for the West. The Great Depression, recessions, corporate tax heavens, insider trading, etc have all lead to the degradation of trust between the citizenry of these Western countries and the state's ability to protect its citizens. At least, within the social conscious of Islam, making money is also tied to the improvement of living conditions of all Muslims. In the West, the accumulation of wealth is not intrinsically tied to a social betterment for all. Unlike the pillar of Zakat that compels all Muslims to give of their wealth, there is no compulsory regard for the less fortunate.
Cars and houses are quite expensive and not everyone is able to buy it. However, loans are created to aid different people in such kind of hard situations.
"Is Islam Compatible with Capitalism? The Middle East’s future depends on the answer."

Imagine a future depending on an answer. If the answer is 'no' the Middle East has no future. If the answer is 'yes' it does have a future. The answer is 'yes'. Capitalism is contagious. And Islam is not immune from it. They just have to learn to get better at it.

When you are in the corner and have got no money to get out from that point, you will require to receive the credit loans. Because it should aid you unquestionably. I take secured loan every year and feel myself OK because of this.
very good article, well job done. Arab yung men. we need open markets.and fair rule of law.
so we live with peace.
I received 1 st loan when I was 25 and that aided my business a lot. Nevertheless, I need the secured loan again.
That is cool that people can take the mortgage loans moreover, it opens new chances.
"sharia required a husband’s wealth, upon his death, to go in equal portions to his widows and children" This is flatly untrue. As put forth in the Koran, the portion of the daughter must, by law, be one-half that of the son. (Allah commands you regarding your children. For the male, a share equivalent to that of two females. 4.11)

This leads to the important point, that the author makes inaccurate distinctions between the Koran and Shariah. Yes, much of Shariah came after the death of Mohammed, but it is all supposed to be derived, first, from the Koran, and secondly from observations of Mohammed's behavior while he was alive.

Furthermore, the distinctions the author makes between culture and religion in Muslim societies are meaningless. Islam is an overarching system of law, religion, economics, culture and politics.

These errors call into serious question the author's understanding of Islam.
If you do not know who Fethullah Gulen is, you pretty much know nothing about the Turkey of about the last two decades.

You do need a more than shallow research, though.
If you seriously think that AKP is not a fascist party but Ataturk's reforms are, you are extremely ignorant/ do not know what you are talking about/ only have read very few extremely biased books or papers.

This kind of idiocy is getting pretty boring and at this day and age is not acceptable.
"Turkey’s per-capita income is now higher than Saudi Arabia’s"

Please come and visit Turkey. It will take you an hour to understand how that figure was calculated (that money is in the hands of may be about 10 per cent of the population).

Why should anybody care/find interesting that kind of "growth"?

Just a bunch of clever man making use of religion's super abusive powers to fuel/abuse capitalist growth.

What you really should investigate is: has Turkey become a producer/inventor of anything?

This whole conclusion you have reached is just an orientalist little story. Capitalism/ its success in Turkey has nothing to do with family values or faith. It has everything to do with corruption and abuse of religion. Please do your research better and stop trying to sell us centuries old stories.
I'm pretty sure you're dumb.
I regret that Mr. Sorman is far too generous in his evaluation of the results of the Arab uprisings, at least in regards to Egypt. As an Israeli, I follow events in Egypt with interest, and the results of Egyptian public opinion polls, and the words of Muslim Brotherhood spokemen and other Egyptian leaders.

Based on open-source information, assuming the new Egyptian government is elected democratically, it will be more ideologically and practically hostile to the West, especially to the United States. The majority of the revolutionists hated Husni Mubarak, and hate his sponsors (the U.S.) and of course hate Israel and want an end to the Egyptian-Israeli peace treaty. It is already clear that the post-revolutionary Egypt will be more hostile to Israel - the repeated sabotage of the Egyptian-Israel natural gas pipeline and the possibility that that Egyptian forces may have provided background assistance to the terror commandos who attacked Israel last week provide early circumstancial evidence of this.

Along with many other groups, a number of socialist oriented groups were active in organizing and encouraging the Egyptian revolution. These groups are small in membership, but well organized, such that their effect belies their numbers. These socialist groups, as well as more Islamically-oriented activist groups, are quite hostile to what they consider to be the colonialist oppressors, meaning America and Britain.
- - - - -

It is true that Turkey is prospering economically, but Recep Tayyip Erdogan -- Turkey's prime minister and head of the Justice and Development Party -- is using the Islamic card to distance himself from Israel and the West, while at the same time cozying up to Iran, and to Syria until Bashar Assad's recent problems. Erdogan is all in favor of Iran's nuclear weapons development program.

Syria is another worrying case. Sure, life under Assad was and is no democracy, and Syria's economy is rather stagnant. A significant number of Syrians -- possibly a majority -- wants him to leave. Considering that his government is clan and crony based, his fall will usher in a whole new power clique. Iran's tentacles will be pulling a lot of the strings behind the scenes in the replacement administration. I'm sure they're working on it already. This does not bode well for American interests in post-uprising Syria.
- - - - -

To directly address the article's theme, in my opinion Islam is not incompatible with textbook capitalism per se, but it is quite hostile to capitalism as it exists today, with the West holding the reins. It would far prefer to see a capitalism without the U.S. and Britain and Israel. Islam doesn't for the meantime seem to have any big problems with China and Russia.

China's Muslims - the Uighur people -- have had some problems with China's government, but this has not aroused world Islam. And then there is Chechnya, but religion isn't the driving force in that struggle.
There is a major difference between what Islam as a religion is and what many almost all Muslim countries now practice. It is not the fault of Islam, but the weakness of Muslim population against their IMPOSED Muslim rulers.
What about the role of the Westerners themselves I mean the Western invasion of the Middle East after which the Arab world didn't have any stability.
All this discussion made me think of a book written by Jane Jacobs, "Systems Of Survival". In it she lists two contradictory systems. She presents them as two moral syndromes, The Commercial Moral Syndrome and The Guardian Moral Syndrome. I think you can guess which one applies to capitalism.

The two systems developed different morals. Basically it is the differing morals why most of the Islamic world is still incompatible with capitalism. In capitalism we have developed virtually laissez faire, bottom/up morals while Islam has maintained traditional, hierarchal morals. Capitalistic morals have allowed us to engage freely and develop a common, across the board trust, something still underdeveloped in the Islamic world. Competition/cooperation and pragmatism are also morals capitalism highly values, morals the Islamic world is just beginning to embrace.

In the commercial moral syndrome Jacobs lists "Dissent for the sake of the task". For the guardian moral syndrome she lists "Deceive for the sake of the task". The moral implications of the latter explains a lot about why Islam is still underdeveloped in its economics, because its structure favors devious and corrupt behavior, things that thwart economic development.

Guy Sorman, the author of this article, wrote an article entitled "Economics Does Not Lie". Of the two moral syndromes you will find that the least lying about economics occurs under the commercial one while under the guardian one you will find lying about economics much more prevalent.
When Hosni Mubarak lost power in Egypt, the newspapers reported that large businesses in Egypt were routinely approached by Mubarak's son and "invited" to accept him as a partner. (Strangely enough, they didn't see fit to impart this information until Mubarak and his son had both been arrested, though it must have been an open secret among business people and journalists in Egypt.)

This kind of corruption will likely persist long after any regime change. An prerequisite for successful businesses is a judiciary that is both independent of other arms of government, and cannot be bribed or coerced. This is something that we take for granted, but it is a deeply radical idea in most countries that have dictatorships.

It is doubtful that the Western mainstream media will pay attention to such details, because their main concern will be the extent to which the new governments, when they arise, espouse Islamic radicalism. We will be inclined to overlook the flaws in any new regime, as long as it appears to be friendly to ourselves. This was the mistake that we made with Yeltsin's Russia in the 1990s - and it paved the way for an eventual return to authoritarianism.
Capitalism works in part because it encourages trade with strangers based on contracts. I no longer need a personal connection to trust and deal with my trading partner. Is that possible under sharia? Would an observant Muslim allow a Jew to cut his hair or teach his children?
Seems a lot of wishful thinking. The muslim brotherhood will eventually rule in Egypt. The palestinians teach hate to their children so that no future generation can accept peace with Israel. Hate and envy are all they have. islam is doomed to be second rate for all time because it can't reform like Christianity. Because of that it is doomed to remain in the 4th century.
It is striking that the author completely neglected to mention or factor in the 100's of years of colonial rule,clientele and lack of basic education to generations of muslims. Also arbitrary partitions of lands and rule trough client rulers, usually the western powers supported the most cruel and extreme rulers. As it has been the case in recent years. There is a price to pay for all the expoitation we continue to inflict today. As for coruption, look no further, what do you think the bailout was all about, even there we beat them.
Amaç Herdağdelen August 12, 2011 at 6:53 AM
Nice article. Firstly, a small correction: Turkish Republic was founded in 1923, not in 1921.

Secondly, considering that 1929 was a significant year for all countries, depicting the Turkish economy between 1923-1938 as being under étatism does not do justice. You should look into the policies between 1923-1929 to see see the first attempts of recovery (e.g., Izmir Economic Congress in 1923:

Muslim societies and nations, barring Iran, are full of low IQ populations brought about by Islamic in-breeding and the rigid sharia that inhibits free thinkers.

Their gene pool is irreversibly spoiled and it's just the oil money that's keeping them alive.

And such a outdated religon would ensure that the society would not make it past the primitive rural economy that was in muslim world during the middle ages
What has happened in Turkey can not be generalized to most of the countries with Muslim majorities. Many of those nations have corrupt practices embedded in the fabric of society. That is not the key to prosperity.
For the author to imply that the Anatolian success story is applicable more than a few Muslim nations is just plain wrong
Islam invented many great things that are in use today all over the world. But one vital thing it didn't invent is the system that allows all of us, from different cultures and religions, to interact and live together, the secular systems of democracy and capitalism.

Without those systems of human integration and governance all the rest would have be meaningless.
Recent global economical developments tell us to question the capitalist system. Nothing to disagree about the observations on how hared it is in Arab lands to do business...
I see a different issue. Islamic thought never developed a concept of "Divine" or "Natural Law", which hlds that the Creator made immutable laws of science which governes the universe. Rather, in the Islamic world, things are as God wills them to be. Hence the common expression "In-sh'alllah". If enough people see the world through that view- that things are the way that they are because God wills them, and not because of laws to which God has limited His creation- the result is fatalism. Little can be done to change that.
One of the silliest pieces I have ever read, full of defective observation, historical misinformation, and political nonsense.
The main thing that undercuts this thesis is the supreme cultural bias the author himself sits on. This is apparent a few times, the clearest of which is when the real causes (cronyism and corruption) of middle-eastern stagnation are buried after an overlong paean to massive wealth accumulation and corporate ventures. Is the present climate not enough to bare these things as harmful ideals?

Elsewhere, we have repeated references to "efficiency" but this is the classic ideograph which masks harm. Capitalism's main talent is passing inefficiencies off to the government, the environment and the worker. Climate change on its own is evidence of massive INefficiency on the part of capitalist enterprises, to say nothing of subsidies, tax breaks, and whole classes unable to retire.

Finally, this tired reference to what is often called the "free market" has always been fiction. In 'Wealth of Nations,' even the patron saint of the concept says governments must step in when things get lopsided. Even today, governments provide things like public education and public transportation (and is now being called upon to do the same for health care - for real this time) because free market corporations routinely leave out entire segments of the population. The West has always had state capitalism at best; the only thing revealed by the collapse of the Soviet Union or the lag of the Middle East is that massive corruption will crush a community unless propped up by a skilled but distracted workforce and something like an American Dream.

The ME has its problems, but all a sugar-coated version of capitalism will do is make the wealth accumulation of the very few a bit more legal.
If you compare Western society today with 500 years ago, I think the differences can be summarized as capitalism, science and democracy. All three represent battles against arrogant certainty; by assuming that ideas about economics, nature and society are all the products of limited and ignorant human minds, and hence require testing against the marketplace, evidence and the ballot.

Islamic societies might respect trade and science and yearn for democracy; but they are still in the grips of a very arrogant certainty about many things. Until someone convinces them that the question of whether the most supreme intelligence in the universe wrote the eternal instruction to all mankind using the language and culture of seventh century Arabia, they will never have the philosophical underpinning to make the power of ignorance work for them.
"Islam is the only religion founded by a trader"

Judaism was also founded by a trader: Abraham. According to the Bible story, Abraham was a successful trader
Conflating democracy and liberal values with capitalism is a ruse. One does not need to exercise political freedoms in order to reap the fruits of capitalism, as any Chinese citizen can tell you.
Does Islam stiffle innovation? Yes.

Can an Islamist innovate? It depends.
All this is really saying is that capitalism is not inconsistent with Islam in an Islamic society. How is that relevant to the non-Muslim world?

A lot of stuff was invented in the Muslim world. But who made the best use of those inventions?, the West. Who landed on the moon?

Now the Muslin world is adopting back from the West improved version of what they supposedly invented, such as capitalism.
This article is sheer nonsense. As anyone who has traveled and lived in the Muslim world, there IS a rule of law; there are cops on the streets; and life in most Muslim countries is generally more orderly and safe than in most American cities. FYI capitalism was practically INVENTED by the Muslim world; Europe merely took it over from them.
The secular republic established by Kemal Ataturk laid the foundation for whatever prosperity has come in recent years. Unlike the Military in other Islamic countries, the Turkish military revered the modernizations of Ataturk, although it was not without some corruption. The prosperity of the Anatolians was that they realized they could win the game by being successful at business. They are competitive. Now that the Turkish military has been defanged ( the whole general staff resigned) we will see what happens. I foresee that conservative Islam will restore the same obscurity and custons that existed in the time of the Ottoman Emperors, and their prosperity will go out the window. I see the prosperity as a ploy not a principle.
A lot of generalizations with no citations.
insightful article, but not every flawless!
Mr. Sorman,

This article of yours, which I found to be on the mark, directed me to your article "Economics Does Not LIe" (2008).

Economics may not lie but it doesn't always make things as clear as you make them out to be. This becomes more apparent in your article "The Free-Marketeers Strike Back" 2010.

I found your understanding about what caused the financial crises wayward and simplistic. There were many more layers involved than you mentioned. And the idea that the financial crisis was caused by the recession that started in 2007 is just head spinning. The recession was brought on by an over zealousness and a housing bubble greatly engineered by the banking community and it unscrupulous lending practices, and a glaring breach in oversight of the industry.

If the banking system had been more honest and diligent, and hadn't been so uncapitalized as it was, the financial crisis of 2008 would not have happened, nor the recession it started in 2007 be as deep.

So maybe you are right, the recession caused the financial crisis. But it is the banks that caused both. Greenspan certainly didn't help with is monitory policy and belief in lax or no regulations. But he is a libertarian like you are.

Bush's desire for an 'ownership society' didn't help things either. That policy helped inflate the housing bubble. That policy was based too much on faith rather than reality. The Bush administration should have paid more attention to your adage that 'economics does not lie' instead of following the view that the laws of economics had been repealed, like many in his administration, including him, seemed to believe. (At the end of the day Bush asked, how did we get into this mess. I guess his MBA education didn't learn him the fundamentals.)

The Declaration Of Independence mentions the 'right to the pursuit of happiness'. I think one of the factors behind the recession and the financial crisis is that there was a bit to much of that purse by the American people.

Because of the huge hole that was dug, mostly in the years between 2001 and 2008, the American economy will take years to recover. That's truly unfortunate because America now doesn't have the resource that could help a struggle Islamic world fine its economic bearings.

This is a truly superb article and I'm interested in purchasing this book now that I've read it. This shows exactly why simple democratic elections are not the immediate panacea to life, liberty, and the puruit of happiness. There are first governmental and non-govermental institutions that must start up, be accepted by the population, and develop over many years if not decades. This acceptance may be impeded by culture and religion as Sorman points out. I must strongly disagree with the statement that "Greif’s theory suggests that cultural differences explain economic development better than religious beliefs do." In many Muslim nations, there is simply no difference between religion and culture, much like there was no difference with the early Puritans in New England, they are one in the same. This is also true of sharia and the Koran, they are so interwoven both must accept partial credit and partial blame for success or failure. Since the Muslim faith often puts everything in the hands of Allah, there is no "invisible hand" guiding the market, only Allahs.
The true cultural differences emerge in the Turkic, Persian, and Arab interpretation of the Koran and sharia, as well as Sunni and Shia interpretaiton, and how that impacts national economies. It would have been beneficial to know how the Indonesian Muslim economy compares to Middle East Muslim economies and if Jordan has benefited from a more stable form of government. Truly, it may be that a stable, representative government, whether it is monarchical or even leans towards autocracy or oligarchy, is better for a developing nation than a democractic form.
Conclusion Islam is not anti-capitalist but some values really ruined it like waqf , qadi , mullahs self interpretation of Koran etc and tribal background .
Good informative article !
"But Muslim merchants began to establish waqf as fronts for commercial enterprises, depriving the government of sufficient funds to function properly. This tax evasion contributed to the failure of the Arab kingdoms and the Ottoman Empire to build a competent minimal state, which is essential to the effective rule of law."

Sort of what taxing compensation for hedge fund managers at long-term capital gains rates instead of ordinary income tax rates produces. And what about corporate tax avoidance?
Sorry but there are a few mistakes regarding Turkey:
_ Turgut Ozal was not brought to power by the military. He acted as a front until the elections of 1983 (he was minister) where the mulitary supported another party, which made him look like the only democratic alternative. Also, he became prime minister in 1983, not 1987.
Pure excellence. WASP
Mark said: Fascinating article! I share the author's optimism that much of the Islamic world may gradually embrace open-market liberalization. Sure many people give their own opinion but base on what? look around in the USA,Britain and European union, open market has destabilized their economy where corporation have transplanted their industries to Asian countries such as china,India, where the paid is below dirt cheap and people are out of work in western nations looking to support their families,so who does indeed benefit from the globalization going on today. why would the Arab nations fallow a corrupt western style economy? only if they offer themselves to work as slaves for pennies on the dollar
Andrew Kohlhofer July 31, 2011 at 9:40 PM
Greif’s theory suggests that cultural differences explain economic development better than religious beliefs do. Of course, he seems to forget that western culture was formed within Christianity and Arab culture formed with Islam.
"... but instead sharia ..."

That may be one of the major parts. Islam in general, and sharia in particular, divides the world into "us" ("Dar al-Islam") and "them" (Dar al-Harb"). It's not easy to see how two people from those different houses can freely and meaningfully negotiate. The "culture of corruption" is certainly another impediment. Unfortunately, it's been going on for so long that I doubt anyone can imagine it going away.

One encouraging note is that while they are on the outside looking in (at us), there are windows in that wall. Eventually, enough people will ask, "why does it have to be this way?" - and demand an answer.
Excellent article!
I found it very interesting that the author of this article referred to the 12th century while discussing the present situation in the Arab and Turkish world. It is refreshing to read nonetheless. I liked the way the author brought out the cultural contradictions and frustrations of the Moslem world as it watches the rest of the world pass it by while it is locked in the past. Islam is not necessarily to blame but neither is it totally blameless for the predicament countries like Egypt find themselves in today. More importantly however as the author points out, has been the deliberate suppression of a functioning middle class even today. Without which no economy can succeed. Turkey appears to have learned such a lesson least for the present.
Two quick points: first, just a minor point that Christian orthodoxy is not ambivalent about business and money in the way Dr. Sorman suggests. Jesus cleansed the merchants from the temple not because they were merchants, but because they had turned the court of the Gentiles into a bazaar. His teaching that "the poor will inherit the earth" is not, so to speak, a heavenly policy but a paradox to undermine the prevalent understanding that wealth was a sign of God's favor (see also Jesus comments on the camel passing through the eye of the needle).

Second, and more to the point, Dr. Sorman convincingly explains the role various cultural institutions have played in the economic poverty of the Arab world, but at some point his explanations begin to sound a little strained. Is the effect of Islam on the character of Arab peoples so slight that it is irrelevant to their economic success?

Bribery and corruption are manifestations of deep-rooted cultural problems. If dishonesty is a way of life in a place like Egypt, there are a few possibilities: either Islam does not make men honest, these men are not good Muslims and more religion is the answer, or religion is irrelevant and something else must make them honest. But what, and how? Not Islam itself, Dr. Sorman tacitly suggests. And regulations will only help so much, because integrity forced by threat of punishment will only work so far. Problematically, you will never convince someone to stop taking bribes on the rationale that it's good for the economy, because it's certainly good for his economy.

Dr. Sorman seems to believe that Islam will not impede economic success, and that it is "compatible" with it, but is that good enough to be confident for the future general welfare of Arab nations?
Recruiting Animal July 31, 2011 at 11:08 AM
Greif's thesis has been challenged by Jeremy Edwards and Sheilagh Oglivie.

"Not a single empirical example adduced by Greif shows that any ‘coalition’ actually existed.

"The Maghribis cannot be used to argue that the social capital of exclusive networks will facilitate exchange in developing economies.

"Nor do they provide any support for the cultural theories of economic development and institutional change for which they have been mobilised."
Random notes from a non-expert who's never traveled or studied the region extensively: 1) Although the Kuran respects trade, it's view of wealth creation assumes land-based assets, like agriculture and mining; the Arab/Muslim world thoroughly missed the knowledge economy, probably due to the intellectually stifling Koran. (For a place that sat at the crossroads of civilizations for a thousand years, it originated and synthesized remarkably few new ideas.) 2) IMO, it's not possible to dissociate Arab culture from what's in the Koran, since the latter is essentially the religious implementation of the former. The closest you can come is to study explicitly non-Arab cultures like Indonesia and Albania, to see how they differ from the Arab and Arabic-speaking regions. 3) The part about inheritance rules concentrating wealth is, IMO, the fundamental problem of the relation of economics to democracy. The macro economy is favored by concentrated wealth, while disperse wealth improve living conditions better An amount of money that would improve my financial position nicely, would be sand on a beach to a billionaire, and a life-transforming fortune to someone truly destitute. America's gilded age industrialized rapidly, but led to the progressive era. Since the percent of income that goes to immediate consumption is higher for poorer people, I don't see a historically poor land both democratizing and economically advancing simultaneously.
maaliq mitchell July 31, 2011 at 6:00 AM
you hit the nail right bang on the head GUY, i've been through the cairo airport shuffle many times, and each time the "weight" of it just gets heavier, this whole personal space thing is non existent in the Arab or Muslim society, i've mulled over it many times, and my surmise is that its got to do with the everybody is your brother or sister, so what if my child stomps all over your brand new jeep cherokees bonnet, you're my family its my car too, or don't tell me i can't answer my mobile in the movies, it's everywhere, there is absolutely now respect or common sense, another point i'd like to bring up before signing off, is the utmost lack of living or respecting nature, look around egypt for instance, "why do i have to care about the here and now, when i'm assured of a place in paradise once i close mine eyes forever" thanks for your little piece of wisdom, MAALIQ.
Paulo Roberto de Almeida July 31, 2011 at 2:28 AM
Superb analysis of the non development and the non democracy in Arab and Muslim countries. Much in line with analyses made elsewhere, like in "The Wealth and Poverty of Nations" and False Economy"
Fascinating article! I share the author's optimism that much of the Islamic world may gradually embrace open-market liberalization.

Unfortunately it seems that parts of the western world are moving in the opposite direction - how long before it'll be easier to open a bakery in Cairo than in California?