May 9, 2018

FIRST, BREAK THE CURSE OF OIL:

BIRTHPLACE OF CAPITALISM (Nima Sanandaji, 05/09/2018, New Geography)

Already before the rise of Islam, the deep deserts of the Arabian Peninsula had thriving cities, which lived of the specialized manufacturing and export of goods. The Arab tradition of trade lives on in the faith and traditions of Islam. The Prophet Muhammed himself was a merchant for many years. He married his first wife Khadija, a renowned merchant capitalist, after having managed some of her trade affairs. Khadija is seen as one of the most important female figures in Islam, commonly regarded by Muslims as the "Mother of the Believers." She is a rare example of a ancient female entrepreneur who had a demonstrable impact on history. When the tribe of Quraysh in Mecca gathered their caravans to embark upon the summer journey to Syria or the winter journey to Yemen, Khadija's caravan equaled the caravans of all other traders of the tribe put together.

During the Islamic Golden Age, Middle Eastern trading cities prospered through enterprise. During the early Middle Ages, Baghdad was one of the wealthiest cities in the world, as seen in the stories of the One Thousand and One Nights collection of Middle Eastern folk tales. In these tales, the heroes are often merchant capitalists, who - through their pursuit of wealth - benefit themselves as well as the rest of society. The Eastern tradition of portraying entrepreneurs as heroes differs sharply from the modern Western tradition, in which the agent of an economic enterprise is often the villain, and the hero characterized by his disregard for material wealth. Modern Western institutions are shaped in accordance with the principles of the market economy, but contemporary culture --- influenced in large part by elements of Christianity and its secular off-shoot, Marxism --- still retains a hostile view of enterprise, commerce, and wealth accumulation. On the contrary, these things are all celebrated in Middle Eastern cultures.

Of course, the market-based exchange in the historic Middle East competed with feudalism, tribalism, and state control. In rural areas, much of the population was mostly self-sufficient farmers. Yet, in several cities in the Middle East, North Africa, India, and China mature and durable market institutions emerged. The Silk Road bound together these market centers, and merchants brought the goods from Middle Eastern market cities such as Aleppo to Europe and Africa. Today, the story of globalization and commerce is told almost exclusively from a Western viewpoint. However, much of the development occurred in the East and the South. Zanzibar and other trading cities across the Swahili Coast, for example, grew wealthy by attracting African, Arab, Persian, Malaysian, Indonesian, Indian, and Chinese merchants.

Proponents of economic freedom focus almost exclusively on the Western origins of free-market ideas. In fact, many of these ideas originated in Eastern philosophy. The Tale of the Moneyed Rat Trader is an old Indian folktale which explains how voluntary market exchange and capital accumulation can allow even the most impoverished individual to climb the social ladder. The idea that government tax revenues will fall when the tax rates reach a certain level is today associated with the U.S. economist Arthur Laffer. This theory was originally developed by the 14th century North African Arab intellectual Ibn Khaldun, who used the theory of stifling government taxation to explain the rise and fall of entire dynasties. In Qabus Nameh, a major work of Persian literature from the 11th century A.D., the mythological king of Iran, Kai Kavus, advised his son on economic matters. The ideas of rational self-interest expressed in this work lies very close to the thinking of Western free-market intellectuals such as Adam Smith and Ayn Rand.

This long tradition of enterprise is evident also today. Iranians, Arabs, Turks, Jews, Kurds, Armenians and the myriad of people who inhabit the Middle East have widely different cultures. Yet they are all dealers and hagglers, with market exchange almost encoded into their cultural DNA. Middle Eastern immigrants to Europe and the Americas have high rates of entrepreneurship. It might not be recognized in the West, but there is a great deal of interest to shift towards free markets in countries such as Iran and Saudi Arabia. Corruption, oil-dependency and war have so far hampered the development - but a market renaissance for the Middle East is certainly a possibility. 



Posted by at May 9, 2018 4:14 AM

  

« SIC TRANSIT TRUMPISM: | Main | ACCOUNTABILITY: »