Is Islam Bad for Business?

In this week’s New Yorker, John Cassidy asks whether Islam may be to blame for slow economic growth in the Arab world. It’s a commonly held theory, popularized by academics like David Landes and Bernard Lewis. “No one can understand the economic performance of the Muslim nations without attending to the experience of Islam as faith and culture,” wrote?Landes, the Harvard economic historian. Ultimately, though, Cassidy disagrees: “[D]ay-to-day worship of the sort practiced by hundreds of millions of Muslims is no more what is holding back the Middle East than Hinduism was what held back India or Roman Catholicism was what held back Ireland. Despite the arguments of new Weberians, people have always found a way to serve their gods and Mammon, too.” [%comments]


Harrison Brookie

It's more likely that Islam is just not good for business. If the Protestant work ethic is so great, maybe by comparison Islam is bad.

Bheesham Kumar

I don't think it is the religion itself, it maybe a question of how much time people spend to practice their religion (any) and for business.
Further, does only time spent for business play a key role in economic growth??

Ian Kemmish

Indonesia had a monopoly on parts of the global spice trade while Europeans were still trying to figure out how to charge interest without endangering their immortal souls. Sounds like pretty good business to me.

DaveyNC

How does a business owner prepare for what seems to be the inevitable riot?

I believe there are injunctions in Islam against either charging interest or paying interest, or both. That would hamstring any one trying to build a business beyond a mom and pop sized business.

Rosemary C. Buja

This observation has perhaps more to do with culture than religion, but if half a society's workforce is forbidden to work, won't prosperity take twice as long to arrive?

Jacob AG

It's worth remembering that economics is about utility, not money. If prayer derives utility, then business does well by prayer, no matter its effect on GDP.

It's also worth remembering the Islamic prohibition on charging or receiving interest. Historically it has been a major drag on economies in Muslim-majority countries, but in the last half-century or so there has been a sea-change in Islamic economics. Where an Islamic mortgage was an oxymoron just 40 years ago, for example, today it's quite common.

dude

Apples and oranges.

If there are rules for commerce in protestant Christianity, they should be compared to the rules for commerce in Islam. You can't compare people's work ethic and say it has anything to do with their belief system.

Compare the religious law only OR compare cultural attitudes on work ethic but don't combine them and attribute it to a single religion. Muslims in Malaysia are not the same as those in Yemen and the work ethic culturally is not the same.

The religious rules don't change but the culture is so vastly different that it is truly apples and grapes. It's ridiculous to make that comparison. It's like saying the work ethic of Christians in America is the same as those in Laos.

MangoPunch

Some disjointed thoughts:

Turkey (or India) seems like an obvious counterpoint to "Islam is bad for economic growth".

I would also gander that a study of Muslims in Western economies would probably show more wealth creation versus non-islamic peers.

Since over-regulation / control is generally a main culprit in slow or stagnant growth in developing nations, it's concievable that Sharia law could suppress growth. But suppresive regimes have many faces and bad policy stems from the government, not the religion of the governed.

Luckily we have a real life test case: I've seen estimates that up to 2/3rds of the Egyptian economy was blackmarket/extra legal under Mubarack. Post revolution, more business friendly policies should spur growth - regardless of the fact that the nation will remain Islamic.

geek

Gross generalization and simplification.
In India, Muslims thrive alongside Hindus, Christians, Parsis, Sikhs, Jains, Buddhists, Jews. even Muslim women.
In Indonesia, Malaysia, even Singapore (not majority), Muslims actively engage in education, businesses, enterprises, no holding back that spirit. Even Muslim women.

Something else is the problem in Middle East, it has got to do with Wahabbism, autocratic rule by minority rulers, locals lacking education and skills, hence foreign workers fill jobs from highly skilled to lowly menial jobs. Islam holds them back to the extent that extreme religious views have made them rigid and that is hurting them, those who are dictated by these extreme religious views.

Emily

Is no one mentioning the fact that these countries are run by incredibly corrupt people who have laws in place that allow them to grab part of the profits from any company that wants to do business there?

Also, inside these countries, there are no laws set to regulate monopolies and trusts and these modern day robber barons have a great deal of political power within their government so they can push for laws that would make it difficult for any serious competition to emerge.

Eric M. Jones

Wait just a minute...Roman Catholicism was what held back Ireland. Had they been mostly Jewish, things certainly would have turned out differently.

To claim that religion has no part in outcomes is patently ridiculous.

Look at the religious cults that didn't believe in men and women "getting together". Anymore Quakers in your neighborhood? Any Manicheans (who didn't believe that more kids were better)?

As for HIndus...don't get me started.

Mal fabian

Muslim traders and business peoples lead the commercial world for a thousand years , until western gunboats and most of them licensed to operate as pirates on commission basis with western monarchy , who destroyed then forced western controlled monopolies onto Asian suppliers at gun point for the majority of the last 500 years , thank god the times are a changing . Sadly Muslim business in the west are still targeted by many different parties should they ever grow strong enough to build up wealth , it soon attracts attention of the Islamophobic anti Islam lobby and has done so for hundreds of years , During his election speech at Port Augusta, in March 1893, Alexander Poynton made it clear that he was against the importation of more Afghans and their camels. If elected 'he would put a prohibitive Poll Tax upon them'. A month later it was reported that 94 Afghans had landed at Port Augusta and 'meant business and money getting'.

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Emeth

@Ian

About Indonesia,.. it was the Netherlands who did the 'spice thing' there and made the profits

Albana

Greed, ruthlessness, overwhelming corruption, a centralized economy (as in former communist countries) and war are bad for business. We've seen plenty in our Western world too of all the above. Think of the reasons of the last financial crisis: Nothing to do with religion.

James

Re #3: "Indonesia had a monopoly on parts of the global spice trade..."

Similarly, Saudi Arabia has a pretty dominant position in the international oil trade. Were either of these the result of any particular enterprise on the part of the Indonesians or Saudis, or were they simply the chance result of happening to live where spices and oil were to be found?

We might also reflect that Europe wasn't all that prosperous in the days when Christianity held sway over the daily lives of the people. It wasn't until the Enlightenment managed to pull a good few of the demon's teeth that people could begin improving their lot in this world.

Seems to me that the problem is not whether it's this religion or that religion, but the degree of power whatever religion the culture is inflicted with is able to exert.

Sandeep

What is holding back most Muslim states, particularly those in the Middle East is not Islam, but oil. It is the "paradox of plenty" that has killed innovation and creativity in parts of the Muslim world. When a state centers its economy on a natural resource, it does so at the expense at other industries, particularly value ladden industries. Industries where workers obtain skills and capital necessary for them to compete in the job market. If your job is to drill oil out of the ground then you have very few transferable skills.

Also oil suppresses democracy. In Saudi Arabia and other oil producing states, the industry is really controled by a small elite. Especially if the oil industry is nationalized. Even in a privatized industry, oil revenues are still controled by a small elite. There are no incentives for these countries to invest in education, participatory democracy, or the growth of human capital

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Anon

I haven't read the New Yorker article, but I would say that Islam is a considerable impediment to commercial activity. The problem is not the lack of a profit motive, but rather the severe restrictions on charging interest, which is central to a modern economy. There are workarounds, but they do not seem to be completely effective. Note that this was also a problem for Christian economies prior to their allowance of interest.

It's also a problem that many Islamic states have a high degree of corruption, which over the long term is a central factor in impeding economic development. I don't know to what extent this can be blamed on Islam, though. There obviously are many non-Islamic states that also have a lot of corruption.

Husni

The practices of anthropologists are to be part of the community in order to have a better understanding on anything of their interest. Otherwise, it would be merely a plain opinion, assumption and conclusion. Understanding of knowledge from books is different than applying it.

ChefL

Most Christians have completely forgotten that usury (charging interest on a loan) is a sin. Let's not single out any one religion as an impediment to economic progress.

Pat

My 'shot from the hip' breakdown.

The state of the economies in primarily Muslim countries is due to:
10% Religious - which includes cultural
90% Governmental - i.e., absence or restriction of freedom.

Look anywhere else around the world. Totalitarianism is a disincentive to economic growth, regardless of religion.