The Scale of Entrepreneurship in Middle Eastern History: Inhibitive Roles of Islamic Institutions

At least from the nineteenth century onward, certain observers have viewed Islam as a religion that discourages entrepreneurship by fostering fatalism, conform-ism, and conservatism. 1 Leading Muslim reformers of the nineteenth century, including Jamal al-Din al-Afghani (1839–97), believed that this view confuses a perverted form of Islam, which counsels passive resignation to events, with authentic Islam, which holds individuals responsible for their acts and requires the use of God-given talents, generally agrees that Islam encourages entrepreneurship. Islam promotes creative experimentation , Islamists hold, at least in regard to science, technology, and economics. Islamic economics, a doctrine ostensibly based on the fundamental sources of Islam, highlights Islamic institutions designed to stimulate entrepreneurship. 2 Islamic banking , the most salient achievement of Islamic economics, is meant to finance entrepreneurs without regard to their ability to post collateral. 3 Islamic economics texts routinely cite scripture interpreted as encouraging entrepreneurship, such as the following: " When the prayers are ended, disperse and go in quest of Allah's bounty " (Qur'an, 62:10) (Sadeq 1990, 25, 36). The uninitiated may wonder whether these interpretations relate to the same region or religion. In fact, each draws a caricature. Islamic economics effectively equates a selective reading of Islamic doctrines with Muslim practices, failing to recognize the existence and historical persistence of Islamic institutions inimical to economic creativity. One contributor presents Islamic banking, which emerged in the 1970s, as testament to the adaptability of Islamic law, neglecting to address why under Islamic law institutions of private finance stagnated for close to a millennium (Ahmed 2006). Al-Afghani characterizes as corruption the deficiencies of Muslim practices, without explaining why " authentic Islam " proved corruptible. For their part, observers who consider Islam fatalistic and conservative overlook that for much of Islamic history the Middle East was considered prosperous. Although the anti-Islamic diatribes of premodern Europe faulted Islam for many things, they did not treat it as a source economic backwardness (Rodinson 1987, esp. 18–23). Visitors of the sixteenth century did not consider the Middle East lacking in entrepreneurship.