“… This is a fresh and thought-provoking argument. But it is based on the assumption that Western financial institutions, and self-serving corporations, are the best possible model for development. Given the havoc that these institutions have caused in recent times, and the fact that injustice and obscene wealth is integral to their make-up, I think it is an assumption too far.

One also needs to consider why Islam insists on the egalitarian distribution of wealth and historically suppressed the emergence of monopoly capital. Perhaps it has something to do with a socially conscience vision of society that emphasises genuine equity and justice? Kuran’s thesis is contentious; but it does provide us with an incentive to reformulate Islamic law. It is an excellent starting-point for a debate long overdue.” Reviewed by Ziauddin Sardar

Reviewer: Çizakça, Murat

Published by EH.NET (June 2011)

Timur Kuran, The Long Divergence: How Islamic Law Held Back the Middle East. Princeton, NJ: Princeton University Press, 2011. xvi + 405 pp. $30 (hardcover), ISBN: 978-0-691-14756-7.

Reviewed for EH.Net by Murat Çizakça, INCEIF, Kuala Lumpur.

Timur Kuran is an avid reader of Islamic economic and legal history and an immensely well informed scholar. This latest work not only combines his earlier arguments but also provides some new perspectives.

The gist of Kuran’s arguments is the following (p. 281)

1. In its early centuries Islam developed a law of contracts that was sophisticated for the time.

2. This law allowed passive investors to shield their personal assets while … however, active partners carried full liability.

3. The death of a partner terminated the partnership automatically.

4. Due to the Islamic inheritance law and polygamy the numbers of heirs could be large.

5. The partnership termination rule, like the lack of entity shielding, discouraged the formation of large and long-lived partnerships. Successful businesses quickly disappeared and rarely survived the death of their founders.

6. The evolution from simple partnerships to the corporation never took place.

7. Thus several self-enforcing elements of Islamic law — contracts, inheritance system, marriage regulations — jointly contributed to the stagnation of the Middle East.

These, otherwise, persuasive arguments (items 2-6) have several weaknesses: First, they are theoretical and some of them are not correct. Take item 2: Active partners in a mudaraba partnership did not carry any pecuniary liability unless proven to have been negligent. Take item 3: In an inan partnership with three or more partners, the death of one of them did not lead to automatic termination of the partnership. So, if the partners wished their firms to have longevity, all they had to do was to establish an inan partnership with three colleagues. Take items 4 to 5: Polygamy and the Islamic law of inheritance certainly must have resulted in a large number of heirs. But primogeniture, much admired by Kuran, or primogeniture-like solutions, could be realized through hiba (inter vivos gifts) or establishing family waqfs. Kuran recognizes the latter but dismisses the waqfs for being too rigid. In doing this, he ignores the “ten conditions” of the Hanefite law, which provided considerable flexibility to the waqf managers, as well as the possibility that the founder of a waqf could always have written a flexible deed to start with, if he so wished. The fact that many waqfs have survived for centuries may indicate that, indeed, they had flexible structures. Without a thorough and comparative analysis of the foundation deeds of waqfs, these institutions should not be dismissed so offhandedly.

Item 6 brings me to the second weakness: Though essentially correct — the evolution from simple partnerships to the business corporation, indeed, did not take place until the late nineteenth century, this failure was probably caused not by any failure or rigidity of the Islamic law but by other factors far more important than those mentioned by Kuran. In a nutshell, these factors were the following: geography, price and profit controls, high rates of interest (twice the permitted rates of profit), property rights restrictions, widespread confiscations and sustained crowding-out effects, in short, primarily the Ottoman “proto-quasi socialism.”[1] The relative power of the state, ever since Roman times, was of particular importance. Kuran recognizes that the European corporation flourished when central authority weakened following the demise of the Roman Empire (p. 103) but fails to contrast this with the situation in the Middle East, where the opposite was taking place and the region was militarizing in response to the Crusades. This failure is all the more striking because, based upon Shatzmiller, Kuran does provide his readers with excellent data on this phenomenon (p. 69).

So far, I have merely showed that Islamic law did provide sufficient flexibility to overcome the difficulties mentioned by Kuran. Interestingly, he is aware of some of these flexibilities (p. 80) but dismisses them. The question, however, remains whether Muslims actually made use of these. Did they, for instance, use the inan partnership with three partners in order to ensure longevity for their firms? Or, did they practice inter vivos gifts in order to protect the family property/firm from fragmentation? Such questions can only be answered by extensive research among the surviving records of the Islamic court registers. Kuran has mobilized a group of professional historians and had thousands of such cases transcribed. The results have been published in ten volumes. Although he deserves to be applauded for this effort, it is strange that he has provided such scant evidence for his arguments. There is no doubt that future historians will use his data as well as many others from among the more than 10,000 volumes of Istanbul court registers to test further.

This brings me to the most important weakness of this work. Kuran has reached a sensational conclusion with theoretical arguments supported by scant evidence. He has not hesitated to advertise his conclusion even in the very title of his book. He is so convinced of this conclusion that although throughout the book his readings clearly point to other possible causes, he has dismissed them. Had he made these logical deductions, the title of his book might have been very different.

All in all, this is a most informative book, one which should be read, however, with a huge grain of salt due to its author’s commitment to discrediting Islamic law.