An Economic and Social History of the Ottoman Empire by Prof. Halil Inalcik is an excellent resource for anyone who wishes to understand, in detail, the nature of Ottoman economics. It is particularly interesting, for example, to note that one of the reasons that the author gives for the decline of Ottoman economic power relative to Europe was that the Ottomans had implemented a command economy and found themselves unable to compete with the dynamic free markets of Europe.
Inalcik describes the silk and dye trades — two of the most important industries to the Ottoman economy — and how the government had tightly regulated these industries: controlling the quantity, price and even quality of the output. Even though markets were rapidly expanding and there was increasing demand for new and cheaper products, the Ottoman central planners refused to allow this demand to be met and went so far as to regulate the quantities of silk and other fibres that could be used in particular textiles. Indeed, it became necessary for craftsman in the 15th century to actually bribe Ottoman officials in order to be allowed to produce more than what the central planners deemed necessary or to produce textiles of differing quality to that legislated by the state. This kept prices artificially high, but it also left considerable demand unmet and exposed markets under Ottoman control to cheaper imports from the rapidly growing economies of Europe.
Of this issue, Inalcik writes:
This case illustrates how the Ottoman economy was bound under the strict control of a strong centralist state to follow a typical medieval economy with a fixed market and production levels. This also explains, I believe, the dichotomy between stagnant Ottoman industries and commerce and the dynamic European market economy which first appeared in Italy and the Low Countries and then in other Western countries. Thus, it was European market expansion and competition which stimulated new technologies producing cheaper and better quality goods. These changes secured Western economic supremacy and the decline of Eastern industries. Ottoman woolen and silk industries and mining were severely affected by the growing import of cheaper Western products at the end of the sixteenth century.
Whereas the market economies of Europe had led to the development of more efficient means of production, initially in textiles and metallurgy but then in all sectors in the Industrial Revolution, the commnd economy of the Ottomans had led to stagnation because, when the state is controlling your production, there is little incentive to innovate. Whilst there were obviously other factors that led to Ottoman decline — such as war with the Russians and later in World War I — it seems almost certain that a failure to develop a free economy was one of the contributing factors.
18 comments ↓
While the command economy did not help the Ottomans you are missing some obvious points. First is the European “discovery” the Americas. It was Europe that got all the benefits of the Colombian Exchange. As the Americas developed this was bigger and bigger market that was exclusive to Europe. And Europe “found” the Americas because they were looking for a way around the Ottomans. The Colombian Exchange made modern Europe. The products of the Colombian Exchange are so ingrained and mostly humble we don’t notice them. While Aztec Gold and Inca Silver get the top billing it is the more prosaic goods that have transformed the world we know. Maize, Potatoes, and Tobacco made more wealth for Europe than silk. The Products that the Ottomans provided became less important and thanks to new trade routes Europeans could get them from other sources.
Second was the Scientific revolution. The outrageous success of Columbus’s experiment started a beneficial feedback loop that continues today. Europe clutched materialism to its’ breast because materialism produced spectacular results. Fueled by Mercantilism, Materialism and Potatoes Europe underwent the Industrial Revolution. While finance is important, so too was the revolution in thinking.
Finally I also think that the Shattering of Christian unity also played a part in European World hegemony. I know this concept must sound odd or possibly offensive to Muslims. But the century long conflict of Protestant vs. Catholic were both eventually lost to the secular state is critical to the world we now know. From that conflict came the age of reason which was then superseded by the age Imperialism. Modern European toleration springs directly the wars of faith. After killing numerous of their fellow neighbors over the questions of faith, Europeans decided that it was better just to worry about their own faith and not that of others. As Faith became less important the State became more important.
Modern Nationalism has taken over many of the passions once reserved for religion. And nationalism killed the Empires. WWI was the beginning of the long slow death of Imperialism. Even the empires that survived WWI were mortally wounded. They were dead men walking. Even with a robust economy I just don’t see the Ottomans surviving past WWII. The centrifugal forces of ethnicity and nationalism would have torn them asunder.
Thanks for your thoughtful comments, James.
I wasn’t suggesting that economic mismanagement was the only reason and alluded to that in my closing point. Certainly, as you rightly point out, the West’s discovery of the New World was a disaster for the Ottomans on several levels. Not least of all was the effect that the sudden influx of Peruvian gold had on the Ottoman currency. Even though they were accumulating more and more precious metals through taxes, conquest and state-run mines (particularly in the Balkans) they were becoming poorer and poorer as the price dropped due to inflation.
My only point was that I suspect that if they had adopted a free market system, producers would have found ways of dealing with the downturn in European demand for certain products due to the discovery of the Americas. For example, they would have innovated new products, found cheaper means of manufacture or developed new markets.
Would this have prevented the Ottoman decline? Probably not because ultimately one of the principle causes of their decline was engaging in expensive and ultimately unproductive wars with the Russians and later the British.
As for your comment regarding nationalism, I am not sure if that would have been the case given that, even now, Islam remains a powerful unifying force amongst common Muslims. They would still tend to identify themselves as belong to a pan-Islamic state of sorts — the ummah — before identifying with the nation state.
Of course, as with all these sorts of discussions, it is impossible to know what could have been; although I highlight the economic mismanagement of the Ottomans primarily because much of the contemporary discussion about how to create an “Islamic state” in the 21st century is based around similarly bad economics as those that at least contributed to the Ottoman decline.
Informative article.
The command economy was detrimental to the Ottoman Khilafah. A market economy as Amir pointed out would of made the Ottomans more competitive on the international scale and possibly avoided the pointless wars with Russia and Britain.
That being sad it is worrying that many of those calling for a return of the Khilafah tend to lean towards a command system rather then a free market system.
The reason why the Ottoman economy faultered was because it was a kleptocracy. Ottoman statesmen used to unjustly confiscate property of their subjects, and use the wealth for their own benefit. Jean Baptiste Say, a 19th century French economist, in his book, ‘A Treatise on Political Economy’had this to say about the Ottoman economy:
“Amongst abundance of other causes of the misery and weakness of the countries subjected to the Ottoman dominion, it cannot be doubted, that one of the principal is, the vast quantity of capital remaining in a state of inactivity. The general distrust and uncertainty of the future induce people of every rank, from the peasant to the pacha, to withdraw a part of their property from the greedy eyes of power: and value can never be invisible, without being inactive. This misfortune is common to all countries, where the government is arbitrary, though in different degrees proportionate to the severity of despotism.”
It is considered an oppression in Sunni Islam to confiscate a Muslim’s or a Dhimmi’s life, honor, or property without a just cause or compensation, so Islam has nothing to do with the fall the Empire. However, this did not stop Muslim rulers from acting oppressively. This oppression is what caused the downfall of the Ummah. In Western countries, property rights are held dearly, which is why they have become so powerful.
Good points, Hamed.
The Ottomans also ran a system of tax farming where they essentially sold the right to collect tax to individuals who then decided how they would tax the peasants in their area, how much they would keep for themselves and how much they would send back to the Ottoman state. It was a disgraceful policy that created a class of feudal lords running an oppressive and, at times, arbitrary confiscatory tax system, whilst, at the same time, not delivering any benefits to the Ottoman state beause most of the taxes got siphoned off. By the time they got around to attempting to address the problem, in the early 20th century, it was far too late.
A second problem, which was really a result of the economic mismanagement, was that the Ottomans were borrowing huge amounts of money from Europe in order to fund its wars against Russia. By the late 19th century, over half of all the revenue coming into the empire was being used to service the debt. This would rise even further towards the turn of the century as the Ottomans, unable to produce advanced weaponry themselves, tried to fund a massive upgrade of their military.
Very interesting Amir. Does the book mention that the Greek were a ‘Market Dominant Minority’ under Ottoman rule, while the common Muslim was generally poor (much like modern Indonesia with the Chinese)
The Greeks after time, cast their lot with the Europeans and this further contributed to the decline of the Ottomans
It is funny, when you read the HT manifestos, they are calling for this type of command-style economy as an “Islamic model” seemingly unaware that this has failed
Thank you for bringing this book to my attention. This is a subject that doesnt get a lot of attention and Muslims tend to ignore but has been a major factor in the decline of the Ottomans.
Tariq: The Greeks were mostly members of the mercantile class rather than primary producers, trades people or craftsmen. Therefore, they didn’t experience the same degree of regulation. As a result, they were able to acquire a considerable amount of capital and came to play a major role in Ottoman society. The Ottomans, for example, actively encouraged Greek merchants to trade with the West (via the Balkans and via Adriatic shipping commerce). The Greeks also came to outbid Muslims for the right to run the customs agencies in a number of major ports and they were also very prolific tax farmers. Their dominance in the shipping trade and banking, for example, was such that it continued even after the collapse of the Ottoman empire.
On top of what James mentioned with the “discovery” of America, much of the Ottoman infrastructure (roads, trade routes, etc) were designed to run into Europe instead of linking the cities inside the Empire. Europe was more connected to some provinces in the empire than the capital.
Overall, good find…I plan to get the book, Insha Allah
Good post. Hopefully, it is another nail in the coffin of statist fantasies too many Muslims labour under.
There were a combination “isms” that eventually led to the Ottoman’s rapid decline… however the most significant events that powered the Empire’s downfall consisted primarily of choices by the Ottoman’s. For example, the decision to enact “hegemony” of Turkish-speaking over others within the Ottoman Empire. And the alliance with Germany as a last minute scramble for allies against Britain pressured the “Young Turks”.
I am of the opinion that the leadership of the Ottoman Empire shot themselves in the foot chasing after the idea of Nationalism. They did not realize that with a strong political effort and reform from the ground up the religious bond was stronger than Nationalism could have been utilized to protect Muslim interests. There were just too many internal coteries.
[…] Austrolabe: Did the Command Economy kill the Khalifah? (tags: wasalaam) […]
what countries are part of the command economy? i’m doing a project in my school, and i need to know.
Cuba and North Korea come to mind immediately, but I’m sure there are others
It’s a pity some Muslims continue to think Ottoman rule was just all mung beans and rainbows with little children frolicking in rivers of chocolate. The last days of the Ottoman Empire were really just a forerunner to the Soviet Union.
Which HT manifestos call for a command economy? I thought HT literature was pretty clear that state intervention in the market of the price, production level fixing sort was not part of the Islam economic system. References suggesting otherwise would be appreciated.
Wasalam
Toff, who precisely suggests that? [”Ottoman rule was just all mung beans and rainbows with little children frolicking in rivers of chocolate.”] I know a lot of muslims, though, who suggest that the Ottomans were no worse than any other empire at the time, and considerably better than what has replaced them in the MENA region, or in the so-called ‘muslim countries’ - having heard the Arab nationalist argument many times that the Ottomans “stole our wealth, built huge monuments and palaces, and kept us ignorant” - I would ask how are your current rulers better, and doesn’t your complaint describe them accurately?
Abdullah, if you look at the HT proposed constitution for the Islamic society, it reads like a communist manifesto.
http://www.hizb-ut-tahrir.info.....tution.htm
You think HT believe in economic freedom, free trade and private property? Look at these articles in their constitution…
Leave a Comment