A civilization constitutes a durable social system of complementary traits. Some of the complementarities of any given civilization are between elements of "material" life and ones commonly treated as integral to "culture." Identifying the mechanisms responsible for a civilization's observed trajectory involves, therefore, causal relationships that cross the often-postulated "cultural-material" divide. Complementarities make it difficult to transplant institutions across civilizations on a piecemeal basis. They imply that reforms designed to jump-start an economy will fail unless they are comprehensive. Civilizational analysis can benefit, therefore, from attention to institutional complementarities, including ones involving both cultural and material variables. © 2009 Elsevier B.V. All rights reserved.
The historical record belies the claim that Islam impeded entrepreneurship by inculcating conformism and fatalism. However, the diametrically opposed view that Islamic institutions are necessarily supportive of entrepreneurship flies in the face of the historical transformations associated with economic modernization. Islamic institutions that served innovators well in the medieval global economy became dysfunctional as the world made the transition from personal to impersonal exchange. The key problem is that Islamic law failed to stimulate the development of organizational forms conducive to pooling and managing resources on a large scale.
A community's culture is defined by the preferences and equilibrium behaviours of its members. Contacts among communities alter individual cultures through two interrelated mechanisms: behavioural adaptations driven by pay-offs to coordination, and preference changes shaped by socialization and self-persuasion. This paper explores the workings of these mechanisms through a model of cultural integration in which preferences and behaviours vary continuously. It identifies a broad set of conditions under which cross-cultural contacts promote cultural hybridization. The analysis suggests that policies to support social integration serve to homogenize preferences across communities, thereby undermining a key objective of multiculturalism. Yielding fresh insights into strategies pursued to influence cultural trends, it also shows that communities benefit from having other communities adjust their behaviours. © 2008 The Review of Economic Studies Limited.
Classical Islamic law recognizes only natural persons; it does not grant standing to corporations. This article explores why Islamic law did not develop a concept akin to the corporation, or borrow one from another legal system. It also identifies processes that delayed the diffusion of the corporation to the Middle East even as its role in the global economy expanded. Community building was central to Islam's mission, so early Muslim jurists had no use for a concept liable to facilitate factionalism. Services with large setup costs and expected to last indefinitely were supplied through the waqf, an unincorporated trust. The waqf thus absorbed resources that might otherwise have stimulated an incorporation movement. Partly because the waqf spawned constituencies committed to preserving its key features, until modern times private merchants and producers who stood to profit from corporate powers were unable to muster the collective action necessary to reform the legal system. For their part, Muslim rulers took no initiatives of their own to supply the corporate form of organization, because they saw no commercial or financial organizations worth developing for the sake of boosting tax revenue.
In the 19th century, financial reforms in the Middle East included the legalization of interest, the establishment of secular courts, and banking regulations, all based on Western models. Exploring why foreign institutions were transplanted, this article shows that Islamic law blocked evolutionary paths that might have generated financial modernization through indigenous means. Sources of rigidity included (1) the Islamic law of commercial partnerships, which limited enterprise continuity, (2) the Islamic inheritance system, which restrained capital accumulation, (3) the waqf system, which inhibited resource pooling, and (4) Islam's traditional aversion to the concept of legal personhood, which hampered private organizations. © 2004 Eslevier B.V. All rights reserved.
During the second millennium, the Middle East's commerce with Western Europe fell increasingly under European domination. Two factors played critical roles. First, the Islamic inheritance system, by raising the costs of dissolving a partnership following a partner's death, kept Middle Eastern commercial enterprises small and ephemeral. Second, certain European inheritance systems facilitated large and durable partnerships by reducing the likelihood of premature dissolution. The upshot is that European enterprises grew larger than those of the Islamic world. Moreover, while ever larger enterprises propelled further organizational transformations in Europe, persistently small enterprises inhibited economic modernization in 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. © 2011 by Princeton University Press. All Rights Reserved.