Your opinion on Timur Kuran’s Arguments?

Wa alykum as-salaam,

I am more familiar with his work “Islam and Underdevelopment” than “The Long Divergence,” but regardless, the issues that plague his arguments are ever-present, and if anything, have gotten worse as time goes on.

Now, before I continue I’d like to commend Tumir Kuran’s work on the concept of “Riba” which has been packaged as “interest” in the modern “Islamic Banking” systems that have emerged, it is without question that in these matters, i.e. those that actually deal with his expertise (economics) that he is quite impressive.

Yet, he runs into problems when he attempts to expand past that expertise and tries to evaluate the relative strength or flexibility of systems and institutions, which is not what I have a problem with, rather, it is that he dismisses rather pertinent issues that impact institutions which underlines a rather elementary misunderstanding of how institutions work.

Institutions change their function and their purpose relative to what they experience, in other word, when “shocks to the system” happen then you have reactions. So when the Great Depression hit the United States, institutions were created to cope with that shock.

The central (if not fatal) flaw of his work is that he has put forth an idea that Islamic institutions were immune to change, that they were not receptive to shocks, because his argument is to take historical facts and to assign reasons with a dangerously selective process, to the point that he argues that colonialism is not even a factor in the economic stagnation of the Middle East.

I don’t think you have to be an expert to find that argument lacking, because to remove colonialism from the table, in my mind, is rather jarring, not just for the immediate impact, but also, for the economic disparity that it would create, specifically: even when you remove the fact that Middle Eastern countries were (not all) colonized, the fact that the West utilized colonialism and had access to colonies was the central divergence in the economic strength of the two regions.

All the other stuff he talks about, the companies, the credit markets, etc, they all emerge when there is a “New World” to exploit, which the West had and the Middle East did not.

This glaring omission underlines another central aspect that he ignores, Middle Eastern economic strength was dependent on the centrality of overland routes to control access to markets. So, when Columbus is trying to find India, is it for funzies? No, it’s because the Middle Eastern states had a complete grip on the most efficient (at the time) method of transporting goods from India etc.

As Western Europe establishes colonies to expand their pool of resources, because remember, Spain and England and all these countries are literally just grabbing money from the New World, and from there, other parts of the “Old World,” and on top of that by using the Cape of Good Hope, and other sea routes, the central defining element of the Middle Eastern economy, the control of overland trade between the East and the West, is gone.

To ignore this element, in my mind, literally makes no sense.

In fact, Jeffery Sachs, the famous economist, underlines the geographic element to the above argument, so it’s not like it’s my random internet psuedo-research, it’s just, er, something that’s hard to ignore.

Yet the fact that Kuran ignores the tremendous advantage that having overseas colonies and essentially free resources that did not have to be attained via very costly wars, is saddening, and it would be a far stronger explanation as the defining element to Middle Eastern economic strength was its control of trade routes that were more secure and cheaper, which–as I mentioned earlier–were rendered far less important with the growth of colonies and Atlantic trade.

However, it must be said, I am not anywhere close to Kuran in terms of economics, and while there are an entire gamut of world-class economists who would highlight the issues I raised, there is no question that Kuran’s grasp of economics could very well mean that I misunderstand economics, its implications, and what truly are important indicators.

Yet, I do study institutions, and when it comes to his characterization of institutions (as I said earlier) his work discounts rather basic issues that surround the formation, incentives, and progression of institutional structures. What makes the divergence between Western Europe and the Middle East, economically, so striking is that it is characterized by something that institutions generally don’t experience.

So, when Empire A and Rising Power B clashed in history there would be something to change that power structure, and as argued in the famous work Power and Plenty the rather clear link between strength of trade and strength of empire, it is access to making money that would fuel technological disparities that would change that make up. So, Empire A (henceforth referred to as “A”) starts losing its control of some province, that Rising Power B (henceforth referred to as “B”) takes over, which gives B the ability to invest in new technologies, better infrastructure, a better military, etc so that it can overcome A. Pretty basic, right?

However, the way it worked for the longest time was that the relationship between A and B was usually over the same space, more-or-less. What makes Western Europe’s explosion of growth so interesting is that it changes this system because instead of fighting over areas that were known, Western Europe just found this new place: the New World.

It was like they were playing a strategy game and had a cheat code for unlimited resources playing against someone who didn’t. It’s not surprising that with this new access to immense resources that you would see one side beat the other.

Institutions evolve around these considerations, and what I don’t understand is why when it comes to the Islamic Institutions he mentions he seems to fail in seeing this nuance, because what he does is utilize a process of essentialized characteristics, apply it to the institutions, and then link the failure of the Middle Eastern empires and states to this essentialized characteristic while ignoring the entire context which surrounds the relative health of a particular empire.

So, what I’m saying is that, bouncing off of the idea (established in Power and Plenty) that strength of trade is linked to strength of empire, his argument would mean that if Islamic Institutions were not inflexible, then by using his logic, the Middle East should have continued to have economic strength, regardless of their waning geopolitical strength and that the life blood of their economic power was diminished (overland trade routes).

This makes no sense to me.

From a simplistic understanding of institutions, there’s no way to evaluate them without evaluating what they deal with, so when we use the “A and B” example earlier, the institutions would reflect damage as a result of something being taken from them. What happened between Western Europe and the Middle East was not a dispute over resources or trade directly, that came later, the issue is that over time the underlying assumption of the Middle Eastern economy diminished its importance and strength withoutthe Middle East losing its holdings, rather, it was that its holdings (of overland routes) became less and less important combined with the fact that Western Europe had a greatly increased access to resources with very little costs in acquiring them. This “painless” (on the colonizer’s part) process of accumulating resources allowed different structures, more flexible ones as mentioned by Kuran, to develop because of the opportunities afforded by this gush of resources.

So from a simple accounting of how institutions develop, what spur on their growth, their creation, their alteration, Kuran does not account for this to the grand detriment of his argument.

Therefore, when Kuran ignores this entire consideration in his evaluation of institutions he has removed the most critical aspect of determining the trajectory and incentives for institutions to either change or stay the same.

If we dive even deeper, we see something even more glaring as a result of this omission. Kuran cites legal institutions specifically. Why is this problematic? Anyone who thinks that legal incentives, alone, explain economic success or regression has ignored a rather clear fact when one assess the law, the law is endogenous to politics, and politics are formed by the factors I discussed earlier.

Furthermore, there is the little fact that Islamic Law changed, was marked by different practices and procedures in different regions, and that even within the Ottoman Empire, which utilized Hanafi Fiqh as its State Madhab, that did not mean that its provinces necessarily also followed suite, as Egypt’s role as a bastion for Shafi’i thought illustrates, although Hanafi traditions grew, but not until much later after Egypt’s acquisition by the Ottomans.

Furthermore, he fails to consider that the Ottoman Empire was in the ascendancy over its European rivals until 1700. He also fails to consider the gutting of these Islamic Institutions in the Ottoman Empire in the mid 1800’s which simply plunged the empire into further disarray  combined with the political costs of nationalism which not only led to minorities like Greeks to rise with increasing resistance  but it even challenged the very nature of citizenship among the non-Turkish Muslims as the Ottoman Empire’s character was increasing Turkish as opposed to ardently Muslim.

The impact of removing the Ulema from their traditional seats of power, from creating the institutions of a parliament (which was shut down rather quickly) and changing around the social order, to ignore that and cite the Waqf system of endowments  for example, to me, is just odd.

I mean, if you are going to construct an entire argument that centers upon legal structures, Islamic or not, and yet ignore the most basic assumptions associating with how to understand them, their incentives, and so on, then your argument is going to be quite weak, which Kuran’s is.

I pray this reaches you and your families in the best of health and Iman, insha Allah.