PJ O’Rourke on Islamic Economics

A commenter on Hood Bradford’s excellent Islamic Law etc recently posted an entirely off-topic but interesting quote from the American satirist and political writer PJ O’Rourke.

Also, the Islamic religion has the right attitude. In the Koran, Sura II, verse 275, states, “God hath permitted trade.” The Koran orders the use of honest weights and measures, the fulfillment of contracts, and the payment of debts. And one of the sayings attributed to Muhammad makes him not just the Prophet of Allah but the prophet of Adam Smith: “Only God can fix prices.”

This quote is taken from an old piece in The Atlantic Monthly entitled, “Letter from Egypt”.  The article is not available online in its entirity but it does pose some interesting questions.  In seeking to understand what led to the Muslim world losing its position relative to Europe, O’Rourke pins the blame on bad economic policies that deviated from the above proscription.

The Muslim conquerors of the Fertile Crescent may have come from independent and roughly democratic Arab tribes, but they quickly glommed on to state power, as did their Seljuk and Ottoman Turk successors. Despite the laissez-faire prescriptions of the Koran, and the Prophet’s warnings against price controls, the Islamic state proceeded to interfere grossly with the economy. The pre-eminent Western historian of Islam, Bernard Lewis, estimates that Middle Eastern agricultural yields began a decline in late Roman times that has continued almost to the present day. As for commerce, Lewis has written, “Governments seemed to have reasoned that if they could earn so much a year by taxing the pepper trade, they could earn even more by taking it over entirely.” This works so well in Cuba. Lewis argues that Islamic commercial wealth was not destroyed by European innovations in ocean shipping. Rather, Europeans were driven to the sea lanes because in the 1400s the Mamluk Sultan of Egypt nationalized the spice trade and forced the Kmart of nutmeg-and-ginger caravans into Chapter 11.