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Dr. Resit Ergener
Bogazici University

Abstract: The historical economic underdevelopment of Islamic countries relative to

the west has been explained by the absence of rationalism (Weber 1963), by the negative
impact of Western imperialism (Rodinson 1974), by the development of Muslim law,
particularly with regard to property rights, (Facchini, 2007), Islamic law of inheritance
which had a negative impact on capital accumulation, absence of the concept of corporation
which blocked the development organizations and of civil society , locking up of vast
resources into waqfs, Islamic form of trusts, which were to become dysfunctional over time
(Kuran 2004) and the disposition of institutions of freedom to the West by Christianity and
not to the Middle east by Islam (Facchini, 2009). Other authors have argued that there was
nothing irrational about Islamic mentality (Rodinson, 1974) and have pointed out the
sophistication of medieval Moslem financial and commercial practices. (Udovitch, 1962) All
of these arguments have surprisingly overlooked the absence of one important institution in
Islam: Monasticism. What Moslem countries failed to achieve, which the Christian West did,
was self transforming growth, based on the mobilization of domestic resources. As Randall
Collins has argued, monasticism was the key institution which made self perpetuating growth
possible in Europe (and also in Japan.) Monasticism also made a significant contribution to
the development of corporate law and property rights, and ultimately of capitalism as well as
to the advancement of learning and to technological innovation. The absence of monasticism
in Islam, which stems from the lack of emphasis on hard work, abstinence and celibacy as
paths to salvation, should be added to the list of causes explaining the historical economic
underdevelopment of Moslem societies.
Keywords: Islam, underdevelopment, monasticism
Why the Moslem Middle East has remained underdeveloped relative to the West has
been the subject of much scholarly debate. Historically, Muslim countries have not always been
poorer than those in the West. Early Muslim states were prosperous. A millennium ago,
around roughly the tenth century, the Middle East was an economically advanced region of
the world, as measured by standard of living, technology, agricultural productivity, literacy or
institutional creativity. Only China might have been even more developed.(Kuran 2004, p.

The economic prosperity was fuelled by the commercial and financial regulations

introduced under Muslim Law (Udovitch 1970) Such regulations would have a favorable
impact on the economic evolution of Western Europe, where they were adopted (Udovitch
1962). Partly based on observations about the economic success of early Muslim societies,

Islamic economics proposes that the economic prescriptions of Islam - its financial
regulations, contracting guidelines, distributional instruments, and behavioral norms - provide
an ideal framework for economic development. For proof, one needs look only at the
impressive economic record of the first Islamic society in seventh-century Arabia. (Kuran
1997, p. 48)
However, the prosperity of an economy does not mean that the economy will be on the
path to future growth. As Kuran (1997, p. 48) points out there is no inherent conflict between
the economic successes of early Islamic civilization and the proposition that Islam itself
discourages economic development. For one thing, the early successes could have occurred
in spite of the religion's growth-inhibiting features; the primary source of development might
have been, for example, the mixing of cultures brought about by conquests, conversions, and
political reorganization. For another, even if Islam promoted growth for a while, it obviously
failed to ensure quick adaptations to later opportunities.
Subsequent performance of Muslim economies shows that early prosperity had failed
to put these economies on the path for sustained growth. Sustained growth in a nation's per
capita income can only occur if there is a rise in output per unit of input (Krugman 1994, p.
67) and if there is a generally accepted practice of deferred gratification, the willingness
to sacrifice current satisfaction for future gain. (Krugman 1994, p. 78) In other words,
technological change and savings are the essential preconditions for self transforming
economic growth. The fundamental reason why the economic performance of Muslim and
Western (and Japanese) economies fared along such different paths, is because mechanisms
evolved in Western and Japanese economies, which raised the level of savings and enabled
technological change in those economies, whereas similar mechanisms failed to evolve in
Muslim economies.
The difference between the economic performance of Western and Muslim economies
became apparent with the industrial revolution which accompanied by the rise of capitalism.
Savings rose and technological change accelerated in the West with the rise of capitalism.
Several authors have therefore associated the historical underdevelopment of Islam with the
failure for capitalism to grow in Muslim countries.

Rodinson (1966/1974) blamed imperialism for the failure of capitalism and

subsequent economic growth to take place in Muslim countries - as he believed there was
nothing in Islam that would inhibit such developments.
Rodinson explored the answers to the questions as to 1) whether the failure of
capitalism to develop indigenously in Muslim countries could be explained by Muslim
precepts and 2) whether Islam was opposed to capitalist development. His answers to both
questions were negative.
According to Robinson, there is no passage in the Koran which opposes private
property or inequality. There are no rules against ownership of the means of production.
Wage labor is acceptable. Koran favors commerce. Sunnah also upholds the right to private
ownership, the search for profit, trade, and production for the market to the same extent as the
Koran. Ban on interest and on speculation (sales which involve uncertainty, such as sale by
auction and contracts based on risk or chance) would inhibit commercial activity. But, such
restrictions were circumvented by Muslim legalists through methods known as hiyal,
meaning ruses. Circumventing these restrictions would have costs which would put breaks on
economic development, but such costs would not have totally blocked economic
development. (Jones 1988)
Kuran blames mainly the Moslem legal system for the economic underdevelopment of
Islamic Middle East. Islam's law of partnerships limited enterprise continuity by requiring
reorganization at every death or retirement. Its inheritance system (which mandates the division of
the estate amongst spouses and offspring) compounded the problem by raising the cost of
reorganization. And the lack of an Islamic concept of corporation blocked alternative paths to
economic modernization. (Kuran 2003, p. 442) The waqf, Islam's distinct form of trust,
which locked vast resources into organizations likely to become dysfunctional over time.
(Kuran 2004, p. 71)
Facchini blames the absence of individual rights and freedoms and of secure private
property rights for the lack of economic development in Muslim countries. (Facchini, 2009)
The main obstacle to the emergence of private property has been the status of land,
originating out of the domination of the first caliphates. This status protects public
ownership and even extends it to cover water rights. This encloses the economy in a

philosophy of enrichment where the opportunities for profit are artificially created through
the rents seized by the ruling class. (Facchini, 2007)
It is not possible to prove that Moslem countries would have developed economically
if there was no imperialism. (Jomo, 1977) Legal practices pointed out by Kuran and Facchini
had their role to play in the economic underdevelopment of Islam. But these practices by
themselves are not sufficient to explain why savings and technological change, which are the
preconditions for economic growth, were not realized under Islam. Given the important role
that religion has always played in the functioning of Muslim societies, it quite possible that that
religion did indeed play a role in the economic underdevelopment of Muslim Middle East.
A religious institution, monasticism played an important role in the emergence of
capitalism and of subsequent self sustained growth in the West and in Buddhist Japan, and
the absence of this institution in Islam can be one of the causes for the failure of capitalism
and of self sustained growth to emerge in Muslim countries.
Monasticism would facilitate savings and technological change in the West and in
Buddhist Japan. Monasticism would also contribute to relieve the legal bottlenecks which
inhibited economic growth in Muslim countries, by defending their corporate rights against
central authorities thereby contributing to the evolution of corporation and of practices
essential for the evolution of capitalism, such as book keeping.
Capitalist markets evolve out of agrarian coercive markets which are dominated by
military aristocrats. (Collins, 1990; 1997) In such societies property rights were absent as
aristocrats could confiscate and redistribute property. Peasant labor was tied up in various
tenure arrangements. Aristocrats did not manage their wealth in a prudent manner since status
was to be gained through consumption. Merchants who are likely to posses economic rationale
(motivation for hard work and prudence) would be held in contempt and under control and
would therefore be in no position to spearhead the evolution to a capitalist market economy.
Collins argues that in the Christian West and in Buddhist Japan, the impetus to change to the
capitalist market economy would come from the religious sector.

Why would the religious sector spearhead these changes? Partly because universal
religions would break down the barriers between social groups and enforce ethical rules which
applied to all. But more importantly, there were teachings in Christianity and Buddhist religions

which regarded hard work and restraining ones consumption as practices which could be
employed in attaining salvation.

It was Weber who pointed out the importance of work ethic and prudence in the
evolution of capitalism. Weber identified these attitudes with the Protestant ethic. But
Catholic (as well as Buddhist) monks had Protestant ethic without Protestantism. (Collins
1986, p. 54) Both in Christianity and in Buddhism, it was the monks, before Protestant
puritans, who regarded work and abstention (limiting ones consumption) as virtuous. St.
Benedict had written in his rule in the sixth century: Idleness is the enemy of the soul.
Therefore the brothers should have specified periods for manual labor as well as prayerful
reading... When they live by the labor of their hands as our fathers and the apostles did then
they are real bonds. (Stark 2006, p. 62) As Stark points out, Capitalism was invented not in a
Venetian counting house or in a Protestant bank in Holland, but it was initiated in the ninth
century, by Catholic monks who, had put having put aside personal worldly things, but were
seeking to ensure the economic security of their monastic estates. (Stark 2006, p. 56)

Let us summarize Randall Collins argument as to how monasticism leads to self

transforming growth under capitalism:

Self-transforming economic growth takes place under capitalism because under

capitalism market niches, new products, and techniques proliferate. (Collins 1997) Giving
Webers model (in his words) a Schumpeterian twist, Collins argues that three
organizational conditions are necessary for self-sustaining capitalist growth to exist: 1)
Markets must exist for factors of production (land, labor, and capital) as well as for
commodities, 2) All factors of production must be controlled by entrepreneurs, 3) Both
entrepreneurs and labor should be motivated to work hard and should be willing to give up
current consumption for the sake of future gains. These organizational conditions were met as
monasteries, temples, and churches at first formed their own market and property relations,
accumulated wealth, and pioneered new economic structures. These made up a substantial
sector in medieval economies where religious organization at times held as much as one third
of the cultivated land, and perhaps even more of the portable wealth. Within its own sector,
religious organization broke through the obstacles to economic growth within traditional
societies. In Schumpeter's terms, monasteries were the first entrepreneurs. (Collins 1997, p.
848) In other words, religion contributed to capitalism not by inspiring lay peoples beliefs

and motivations (as Protestant ethic did) but through the material expansion of monasteries.

Weber and others noted the irony that ascetic Protestants, prohibited by religious
scruples from freely spending the rewards of their disciplined labor, ended up growing rich.
The mechanism is even more evident in the case of the monasteries, where the fruits of
religious discipline became material capital for investment: Because celibate monks could not
siphon this off to family consumption, it was the monastic corporation that grew rich.
(Collins 1997, p. 848)

Throughout the medieval era the Catholic Church was the biggest landowner in
Europe and its wealth surpassed the wealth of all nobility in Europe. (Stark 2006, p.58)
Monastic corporations also spearheaded innovations in production techniques which raised
productivity. Immense increases in productivity were realized because of the switch to horses
from cows when ploughing, the heavy mouldboard plough, three field system. Cistercians
incorporated previously untilled tracts and cleared forests and drained submerged areas (Stark
2006, p.59) As a result, monasteries ceased to be longer subsistence economies and they
specialized in the production of particular commodities, which they sold at a profit. (Stark
2006, p. 58)

The spill over to a secular economy takes place first through the spread of
proselytizing movements that began in the monastic orders. In Europe, China, and Japan
alike, there were periods during which burgeoning movements founded new monasteries,
typically by reforming orders which tightened monastic discipline (Cistercians in Europe,
Ch'an in China, Zen in Japan). These movements had the effects of geographically expanding
the monastic economy and amassing wealth. Religious organizational growth was
accompanied or followed by movements led by monastic preachers proselytizing among the
common people (Augustinian, Franciscan, and Dominican friars in European Christianity; the
Pure Land movements in Chinese and Japanese Buddhism); hybrid forms of quasi-ascetic lay
religiosity were the result. On the material side, these movements spread market relations and
disciplined economic practices in lay society. Still later, full-scale transformation to a secular
economy came about by "reformations," politically based confiscations of the old monastic
property holdings. Monastic wealth was transferred to secular channels, and religious
motivations for salvation were forced into worldly channels, including economic activities.
(Collins 1997, p. 849)

In medieval Christian Europe and pre-Tokugawa Buddhist Japan, the initial

breakthrough of the religious leading sector was followed by a church reformation, in which
the distance between religious specialists and laity was narrowed and religious property was
confiscated. Each reformation resulted in a second wave of self-transforming capitalist
growth. (Collins 1997, p. 862)

It all started then, with the ascetic practices of hard working monks who congregated
at monasteries and saved the products of their labor and introduced technological
innovations. Such developments did not take place in Islam because the Muslim ascetic was
not committed to hard work. Ahis and Bektashis in Ottoman lands for example did valuable
work in legitimizing central authority, in building up the fabric of new society in lands newly
conquered by the Ottomans and in making conversions to Islam. But, members of such orders
were not devoted to abstention and hard work as such, as Catholic (or Buddhist) monks were.
(Barkan 1942; Arnakis 1953)

Why Western Catholic or Far Eastern Buddhist style monasticism did not take roots
in the Muslim world is a subject which needs exploration. There are statements in the Koran
and by Muhammad himself which are explicitly against monasticism: But monasticism they
invented. We ordained it not for them-only seeking Allahs pleasure, and they observed it not
with right observance. So we give those of them who believe their reward, but many of them
are evil-livers. (Kuran 57:27) When Muhammad himself found out that some of his
followers had taken a vow to fast during the day, pass the night in worship, abstain from meat
and fat and renounce intercourse with women, he warned that what they were doing was not
his creed, that their body had rights over them, that they should fast, but also eat and drink
also, that people who renounced women, good food, perfume, sleep and worldly pleasure
would come to ruins, the remnants of whom would be seen in monasteries and convents.
(Chaudhry, 1999)
Weber attributed the failure of capitalism to have an indigenous start in Muslim
countries to the absence of rationalism, prudence, individual initiative and intellectual
boldness in Muslim culture. According to Weber, compared with Christianity, Islam "lacked
the requirement of a comprehensive knowledge of the law and lacked the intellectual training
in casuistry which nurtured the rationalism of Judaism." (Weber 1963, p.18) According to

Weber, Prophet Muhammad's reminder to a person in poor attire that "when Allah blesses a
man with prosperity he likes to see the signs thereof visible on him," should be interpreted to
mean that status in Islamic culture would be attained through consumption, which is how it is
with feudal culture. Weber also asserted that the 'feudalistic Islamic religion provides little
incentive for individual initiative, scientific inquiry, and intellectual boldness." Weber reached
the conclusion that Islam with its "thoroughly traditionalistic ethic ... directed the conduct of
life into paths whose effect was plainly opposite to the methodical control of life found among
Puritans," - the work ethic and prudence of whom made capitalism possible. (Weber 1963, p.
Perhaps, with the above statement, the words in monasteries would be more
appropriate rather than among Puritans.

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