Timur Kuran, The Long Divergence: How Islamic Law Held Back the Middle East (Princeton, 2011).

Readers looking at the title of Timur Kuran’s new book might be forgiven for thinking it had come from some pre-Orientalism time warp where it was still possible to make essentialist generalizations about Islamic law and Middle Eastern backwardness. And they would be mostly correct.

Yet, if readers stopped there and simply threw the book aside, they would miss something important. Kuran has a track record of provocative contributions to global political economy. His 1989 Public Choice article on revolutions, “Sparks and Prairie Fires,” provides an eminently useful way of thinking about the tipping point when popular discontent becomes a national mobilizing force, as in Tunisia in December 2010. And Kuran’s book is one of the first sustained attempts to steer the Middle East into the increasingly powerful stream of institutional history unloosed by Avner Greif in Institutions and the Path to the Modern Economy (2006). Though extremely tricky to pin down in its pre-modern form, the notion of institutions -- what Kuran calls “socially produced regularities that shape and in turn are shaped by individual behaviors” -- has begun to inform studies of economic history at both ends of the Mediterranean, whether in Christian and Islamic Spain (Eric Chaney) or in the Ottoman heartlands (Şevket Pamuk). This new approach is certain to be used in future studies of structures like the waqf (religious endowment) and the family firm, both of which feature strongly in Kuran’s analysis of the way such institutions failed to adapt to the global economic environment that came into being between 1750 and 1914.

Kuran’s basic argument is a variation upon one familiar to students of Max Weber and his critics. On the one hand, there is a set of Western institutions -- laws, regulations and new organizational forms -- that support the large-scale development of productive resources by lengthening time horizons, mobilizing mass savings and harnessing new technologies. On the other hand, there are static Middle Eastern organizational forms limiting what economic actors could borrow, invest or produce. Such forms then proved incapable of galvanizing the structural transformations that led to capitalist takeoff and prosperity in the West.

The time has certainly come to place the Middle East -- and the Arab world in particular -- more securely into the larger historical discussions about the key determinants of economic growth and the shifting relations between different parts of the world that made such “development” more or less likely. It is here that the concern with pre-modern institutional forms is likely to be of great help.

Putting aside the impressionistic aspect of all such statements, as well as the difficulty of testing their historical rigor, there is certainly something to Kuran’s thesis. But where many economic historians of the Middle East would differ involves the question of how to explain the growing disparity between the two sets of economic practices. While Kuran blames the straitjacket of shari‘a for the fact that commercial partnerships formed among Muslims typically involved only a few partners who pooled resources for short-lived ventures, and for the narrowness of late eighteenth-century credit markets consisting largely of individuals capable of making only very small loans, others would point to the flexibility of the Islamic approach as expressed, for example, in the creative use of waqfs to circumvent the rules concerning inheritance, and its willingness to allow, perhaps even to encourage, interest. Such practices were common to Jewish and Christian merchants and moneylenders as well. Moreover, many of what Kuran describes as particularly Islamic handicaps to dynamic growth were also to be found in parts of the non-European world where the hold of shari‘a was either much less tight or non-existent, say, as in China.

Even more to the point, it is imperialism, defined as the exercise of unequal economic and political power, that ought to be at the heart of the story that Kuran is telling. The strategy of defensive modernization employed in Istanbul and Cairo in the early nineteenth century came quickly to grief via the concessions made to Western powers, primarily the grant of capitulatory privileges to foreign and foreign-protected indigenous merchants. After the capitulations came bankruptcy and the imposition of a more or less open economy on the entire region. For Kuran, though, the relationship with the West was much more perverse; he cites “foreign meddling” as the result, not the cause, of Middle Eastern economic weakness. As for the capitulations themselves, while he notes that “these privileges” were withheld from local Muslim merchants, he still praises them for the way they “enhanced commercial efficiency” by “replacing dispute resolutions characteristic of personal exchange” with ones based on “organizations” (presumably the capitulary courts) specializing in contract enforcement. Here he gets the economic impact wrong and the deeper causality backwards.

Nevertheless, there is much more to Kuran’s approach than that. To begin with, he makes a good case for his concentration on “institutions,” noting that he has shifted the argument from an exaggerated focus on the state to the organizational capacity of the private sector. This last subject is certainly under-researched: Historians still do not have an adequate understanding of the private sector’s progressive lack of dynamism from the eighteenth century onward, nor of its role as one of the “key determinants of state capacity” itself. Second, despite his concern with the heavy hand of the waqf, Kuran is anxious less to condemn than to examine its passage from a “magnificent institution,” and an alternative to the Western trust, to something much less beneficial. Because of the social services it provided, he argues, it not only held back the development of autonomous municipal governments before the nineteenth century but also proved unable to transform its vast resources into industrial capital and technical know-how.

Here, as elsewhere, Kuran’s narrative links up nicely with the work of historians like Beshara Doumani and Pascale Ghazaleh on the role of waqfs. Such inquiry could lead to a new and better understanding of the significant economic and social role of this most important “Islamic” institution of them all.

Given the new academic emphasis on global connections and the fresh interest taken by Amartya Sen and others in the roots of human development, the time has certainly come to place the Middle East -- and the Arab world in particular -- more securely into the larger historical discussions about the key determinants of economic growth and the shifting relations between different parts of the world that made such “development” more or less likely. It is here that the concern with pre-modern institutional forms is likely to be of great help.

Hence, those engaged in the study of Middle Eastern history must work together, first to identify the key institutions, and then to develop a research agenda in which the logic of their activities and influence are both systematically examined and then fitted together to tell a larger story. Scholars ought to begin by concentrating on the early years of the Ottoman Empire, when, due to bureaucratic imperatives, many of the relationships between ownership, wealth, law, credit and commerce were clearly in view.