Middle East

The Middle East Needs Free Markets, Not Troops

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As Washington prepares to battle with ISIS, Dr. Imad-ad-Dean Ahmad of the Islamic libertarian tank Minaret of Freedom Institute warns that warfare won't lead to stability in the Middle East.

In March, Reason TV interviewed Dr. Ahmad, who believes free market policies are the best way to bring peace and prosperity to the region—and are compatible with Islamic teaching.

Watch Can Muslims be Free Marketeers? above and read the original post below:

"The biggest fear in the Muslim world is the association in their minds of free markets with imperialism," says Dr. Imad-ad-Dean Ahmad, president of the Minaret of Freedom Institute. "But those of us familiar with the history of libertarian thought know that true devotees of the free market have always been opposed to imperialism."

There is nothing inherent in Islam or the Koran, claims Ahmad, that prohibits Muslim-majority countries from joining the world economy. The Minaret of Freedom Institute seeks to educate Muslims and non-Muslims on the libertarian values within the Islam religion. Ahmad sat down with Reason TV's Nick Gillespie to discuss how libertarian and Islamic values actually complement one another.  

About 15 minutes.

Produced by Amanda Winkler. Camera by Winkler and Joshua Swain. 

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  1. A few thoughts:

    (1) To be an “out” free-market Muslim must take balls of titanium, given the apparent authoritarian proclivities of Muslim governments and various activists.

    (2) I thought the Koran prohibited “usury”, meaning charging any interest at all. That will be a challenge in a free market/capitalist economy/world.

    1. And (3):

      You’re not going to get free markets without first disposing of most if not every government in the Muslim Middle East. That’s going to take armed conflict. Sorry, doc, but the road to freedom is awash in blood in this fallen world of ours.

      1. Governments can fall without (much) armed conflict. See the former Soviet Bloc countries.

      2. Not much of a market for lame-ass homemade dance videos.

    2. 2) They just call interest something else and do it anyway.

        1. Er, yes.

    3. Someone around these parts linked this video a few days back. The fellow discusses the problematic state of collective ownership in business ventures under Islamic law due to unusual inheritance customs, and how it hobbled wealth accumulation and financial innovation. During the q&a someone asks about the prohibition on usury, and the lecturer describes it as a ban on exploitative levels of interest rather than any interest whatsoever. Who knows whether his is the correct interpretation, but the talk is worth watching.

      1. His book is well worth reading, as well.

        As he points out, the corporation developed very differently in the Islamic world and is far more difficult to set up and continue than it was in the West.

      2. …”the lecturer describes it as a ban on exploitative levels of interest rather than any interest whatsoever. Who knows whether his is the correct interpretation”…

        The fact that it *requires* interpretation means it will be prohibited by those with the most thugs.
        ‘That which is not required…’

    4. Other potential problems:

      1) Legitimate Muslim governance requires that “People of the Book” (Jews and Christians) be subject to discriminatory law, thus showing their inferiority and Allah’s supremacy. This could be interpreted in a “slap on the wrist” manner, but historically generally resulted in social and economic sanctions. Naturally, non-Abrahamic faiths were treated even worse. This can be a problem for development, when most investors are of a non-Muslim faith. The Ottoman Empire in the 19th century experience precisely this problem when their own populace reacted poorly to attempts to level the playing field between Muslims and their native Christian and Jewish populations (which were far more mercantile).

      2) Heretics (which Sunni and Shia consider each other) are treated about as badly as people of non-Abrahamic faiths. Again, this presents a problem when there are large minorities of Sunni and Shia interspersed throughout the Near East.

      3) Islamic courts have very, ah peculiar jurisprudence which makes consistency difficult. There is little no tradition of common law in Islam, and statuatory/civil law is often in conflict with fiqh. This has been a major impediment to implementing a consistently free market state with stable rules in the Near East, and has generally required unilateral imposition on the part of an autocrat to get reform to stick.

      1. I’d like to think systematic discrimination really retards successful markets, but our own history refutes that idea pretty well.

        I do think your last point is excellent though. One problem some libertarians is realizing how important to successful markets consistent and even strong certain basic governmental actions can be.

        1. I’d like to think systematic discrimination really retards successful markets, but our own history refutes that idea pretty well

          Sure, if the population you’re discriminating against is poor and uneducated (as in the US) or if you are better than the alternatives (as in the early Caliphate). If you’re discriminating against your main investor, and they have options? Doesn’t tend to work out so well, and right now the Islamic world at large is in the position of supplicant rather than master.

          1. OK, I get what you are saying now I think. In the present a thriving Middle Eastern market economy would be one that has to deal with a significant number of non-Islamic investors and the beliefs you describe would inhibit that.

            I wonder, how do relatively successful Islamic (albeit non-Arabic) nations like Malaysia deal with that?

            1. The most successful Islamic countries I know of (Oman or Turkey, for instance) have autocrats who essentially break the power of the religious authorities some way or another and exclude them from the secular court system.

              Malaysia is very different from other Islamic countries I’ve visited — much more in line with the expressive values of the West, though I would not say that their practice of Islam was inauthentic as a result. This may have to do with the relatively peaceful and gradual spread of Islam in many parts of SE Asia as opposed to its violent imposition from the region spanning the Maghreb to the Indus.

              1. That different form of spreading does provide a logical and intuitively appealing explanation for why Malaysia is in a different place than most Islamic nations.

              2. It has a lot more to do with the salafist having not had time to concentrate on Malaysia yet. None of the so called secular, stable Islamic republics have survived contact with widespread salafist proselytization without experiencing a profound politicization of Islamic piety. The entire Attaturk legacy is about 80 percent destroyed. It will not survive longer than two decades. Malaysia is already home to a surprising level of anti-semtism due to Soros’s bet against their currency. Safalism will likely run rampant once given a chance.

            2. Agreeing there are certain tenets of Islam that are in conflict with equal justice, which is necessary for a healthy market.

              Also, yes, you can have *markets* minus equal justice, but they will produce all sorts of distortions and definitely not be what we think of as “free”. I mean, economics always applies everywhere because it is innate, but it doesn’t lead to pareto optimal outcomes unless certain conditions are met.

        2. that’s a very good comment,consistent law.But,when you have GM and large banks being bailed out [to big to fail] and certain industry such as ‘green’ ,farmers ect. sucking on the government tit you do not have that.Until you treat the auto industry the same as the Pit Stop carryout near me you do not have consistency.

          1. Those are all bad things but consistency of law in the US (and heck Europe) is still leaps and bounds above what IT is talking about in the ME.

            1. Tallest midget…

  2. Do Muslims not know that their fore fathers were into empire building as much as the west.Arab armies swept through the middle east,north Africa,parts of Russia and Europe,including Sicily .Then there’s the Ottomans.These people are pissed they lost and are stuck in the 14th century

    1. Muslim history is all about conquest and empire from day one. I think most of them do know that. And the dangerous ones are trying to bring that back.

      1. The majority of Sunni Muslim support in some way a restored Caliphate. So it’s hardly just the most dangerous ones.

  3. Free markets only work if you have a society that is not tribalist. The point of a free market is to allow collective wisdom to create a meritocracy. You can’t have a meritocracy in a tribal society.

    1. So true,you see it in the aftermath of the Iraq war.Of course ,the same goes for Africa,and the fact their governments are all corrupt with little property rights

    2. See also: Barry Weingast on the violence trap, or Tyler Cowen on the impediment to capital accumulation caused by implicit communal obligations (when you’re understood to have money stashed away, you’re expected to fork over more than your nominal share). In short: poor countries have a way of sustaining their poverty.

      1. “In short: poor countries have a way of sustaining their poverty.”

        Rich countries do that too, if they have proggies around.

    3. But the tribalism itself is a function of the lack of effective legal structures like contract enforcement. People do business with family members and within their tribe because those are the people they can trust and whom they can apply social pressure to to live up to their bargains. An outsider can scam you and run off with your money and you can’t do anything about it without effective contract enforcement.

      In the absence of effective law enforcement, people ALWAYS turn to tribe and family.

  4. The other Mosaic religions managed to lose their disdain for merchants, money-lenders others involved in commercial activity; Islam hasn’t.
    So first, Islam will have to admit it is laudable to make money before anything other than sustenance markets are really accepted without religious intervention.

    1. Islam didn’t used to be this way. it has taken a step back in the last 50 years.

      1. That often gets over-looked by a lot of people. The Islam that exists today is a fairly recent development. There are certainly a lot of moving parts as to why that is, but I think that the cultural impediments to economic and scientific growth that are built into it made cultures founded in it less competitive, and, when they got rolled by both the West and the East there was an urge to double-down on it rather than question it. That’s pretty natural, really, but I wonder where Islam would be today if there was no oil in the ME to fund this regression.

        1. While this is true, Islam has been central to governance. There was no true church-state separation in Islam as in Christianity or Judaism; mosques were owned by non-church establishments, the political structures ruled by religious figures, and the courts were almost exclusively religious in majority-Islamic countries. This was exacerbated by Islam coming into possession of a large empire of non-adherents very early on; the faith is essentially characterized by its approach to empire and expansion and it is very difficult to dislodge this from a Muslim’s conception of the state and what it should be limited in doing.

          1. I’m struggling to think of a time, I guess until quite recently, when one couldn’t say that Christianity saw itself as essentially characterized by its approach to empire and expansion, and yet free and successful markets developed and thrived through that.

            1. Generally speaking, Christianity either saw the church heavily influenced by the state (as in the Byzantine and Russian empires), or the Church heavily influencing the state (as in most of the west until roughly Enlightenment times). However, outside of a handful of powerful prince-bishophrics and such they were considered separate spheres. A Christian could not be bishop and king simultaneously, nor were ecclesiastical courts and secular courts equivalent. This allowed for a number of models to develop vis a vis church-state relations within Christianity (some bad, some good), as well as a non-state sphere held as important to adherents. (The same, AFAICT, is broadly true of Buddhism which had a similar influence in SE Asia and Japan as the Catholic Church did in Western Europe).

              Judaism simply wasn’t powerful after the Jews were kicked out of Palestine, and was almost completely outside the states it interacted with.

              1. Sure, I think that part of your comment was spot on. It was the part about the tendency to empire I was responding too. I guess one difference, perhaps ironically, is that Christian expansionists tended to Christianize those they overtook, thus less of the problem with having many non-adherents.

                1. It was the part about the tendency to empire I was responding too

                  This came to Christianity much, much later than it did to Islam and was not as explicitly religious in nature. What’s more, Christianity had two major historical periods where it had no choice but to expand through voluntary conversion, both during the early years of the faith (roughly 0 – 320 AD and after the collapse of the Roman empire, 476 – 799 AD). This is to say nothing of the massive churches which fell under outside occupation in the Middle East. (Population-wise, there were more Christians living east of Antioch than west of it until ~1000 AD.) Voluntary conversion and a non-state tradition are central to Christianity in a way that it isn’t in Islam, and of course Judaism had no secular rulers to call upon anywhere (except the Khazars for a very brief time).

                  Christian expansionists tended to Christianize those they overtook, thus less of the problem with having many non-adherents.

                  Excellent point, and again it has to do with differences between Christianity vs Islam. In Islam, the temporal power of its adherents was itself a form of testimony to the unbeliever and a rationale for consistent, non-arbitrary discrimination; in Christianity evangelization was more of an immediate priority.

                  1. You’re right that Christianity was formed at a time where violent expansion was not going to happen and so it’s texts don’t reflect the push to that that Islamic scriptures do. But once Christianity became state religions they certainly seemed good at reinterpreting their faith to not only allow coercive expansion, but make it an imperative.

                    Anyways, I won’t belabor the point since I think the areas where we agree go a long way towards explaining some significant differences in the development of Christian and Islamic cultures and nations.

                    1. It seems to me that the difference between Islam and Christiantity’s approachs to expansion is Christianity’s syncretic approach to religious conversion. The Christians simply absorbed many pagan religious beliefs, thus allowing entire populations to convert without giving up their pre-existing faith.
                      Islam, on the other hand, demands people convert at the point of a sword.

              2. A Christian could not be bishop and king simultaneously

                Cardinal Richelieu farts in your general direction.

                1. Heh, granted every rule has a Historical Badass Exception.

                  1. 🙂 But the joke supports your point. For all that Richelieu really ran France, he didn’t occupy both positions.

                    The exception was actually Henry VIII.

            2. not until the fall of empires and the rise of the US.The 1800’s was not a time of free markets,and WWI was a war of empires.WWII was the beginning of the end for colonialism.

            3. I think, but don’t have the proof at my fingertips, that the difference in enterprise and economic freedom comes down to Protestantism. Empires built by Catholic countries have, I believe, tended to stay poor.

              I may be wrong. I don’t know enough about the imperial behavior of countries other than Spain, France, Germany, the U.S., and England (and Belgium in the Congo, but that seems to be a freak). It may come down to the Brits and the tradition of English common law.

              1. Not sure it’s a Protestant/Cathohlic distinction. But there is a marked difference between former British colonies and former Spanish colonies. Former British subjects tend to be less authoritarian politically and less plundery economically, as compared to the Spanish and the French to a lesser extent.

                The British were capital investors, the Spanish were slavers. That economic philosophy carries through to this day.

      2. Not really,name one Arab country that ever produced anything of value.Maybe Egypt,grain,cotton,and they were under Greek and Roman rule for centuries.As for the Arabs,they got every thing from conquest and then being lucky enough to herd goats over a vast pool of oil.All of said profits go to the state

        1. Turkey, Iraq, Iran Lebanon were all great places sixty years ago. The Turks spent 200 years kicking the Europeans’ asses. They were not backward crazy fucks like the Saudis and Pakistanis are now.

          1. Turkey and Iran are not Arab,which is where most of the problem is.Lebanon has a more mixed population and had a large tourist industry before their civil war.Iraq has been under strong man rule since it’s independence.If not for oil they’d have nothing.They import a large part of their food and have no industry..Same for Saudi Arabia and the gulf states.Israel is the only country in the region with a productive,market economy.

            1. Beirut was once known as “Paris of the Middle East”.

          2. But it is perhaps worth noting that Islamic cultures often relied on an infusion of Western technologies and ideas to remain competitive. The Ottoman Empire was a haven for some of Europe’s persecuted minorities, most notably Sephardic Jews from Spain, who brought better practices along with them. The ME of 60 years ago was very different due in (large, I think) part to influence from Europe. In both cases as hostility to Europe increased the productivity and stability of those societies decreased. Islamic cultures historically have tended to stagnate.

            1. very true,they have shut themselves off from the world.Sure they like to buy cell phones and lap tops,but build a tech industry,not gonna happen

            2. I don’t get this comment. First of all, wouldn’t the fact that Islamic cultures were open to (‘relied upon’) best practices and people’s rejected by other cultures itself be a part of their culture? Also, how do Islamic cultures ‘tend to stagnate’ any more (or less) than European cultures? It seems to me that Spanish culture, once dominant then stagnated, as did the British, etc.

              1. that Spanish culture was of war and conquest,as most were at the time.Go to Spain now,they have their problems but compare them to say,Jordan,Yemen or any other Arab state.Same for the rest of Europe.You don’t see dictatorships or theocracies.They also have viable industries,won’t see people stoned ,lashed or beheaded there.

                1. I don’t know, up until quite recently (in historical terms) Spain was a dictatorship. Granted they do not have the retrograde practices you describe as commonplace events, but since there were times where Islamic cultures were powerful and culturally developed this suggests to me less a general rule of Islamic stagnation as that they just have not crossed the ‘modernity’ threshold very well. But that strikes me as true for other former subjects of colonization.

                  1. They were powerful during the time of empire ,very true,they had great societies for their time.The problem is they have not advanced since.In many ways they have regressed.Name one Arab country that’s evolved as much as Spain,through the civil war and Franco.

                    1. Yes, I would agree with this view 100%.

              2. /attempts to kick football one last time

                The use of dispossessed minorities by the ruling class of the Ottoman Empire in specific industries was not an example of their overall culture embracing best practices at a basic level, but of the ruling elite doing what it thought was in it’s best interests at any given time, and subject to change quickly based on whim. As the Sultans changed the practices could as well.

                I thought it would be understood that my remark about stagnation was relative from one culture to the next. Relative to European cultures of that era Islamic ones stagnated in comparison. Relative to modern Europe modern Islamic nations have stagnated as well.

                1. I did take your comment to be about the relative stagnation of roughly contemporaneous Islamic and Christian cultures, but, and I stress I am not an expert here, it occurs to me that, for example, Imperial Spain or France seems similar to the Ottomans, Mughals, etc.

                  1. I’m not an expert, either, just a very interested layman. History has fascinated me from a very young age.

                    To get a sense of if it just look at where they ended up. The Ottoman empire the first known as “The Sick Man of Europe.” In the cultural competition it had fallen the farthest. Many of it’s territories had move backward compared to increasing prosperity in European ones. While technological and financial well-being was improving in Europe the Islamic world would shortly be ripe for colonization by European powers on the ascendant. (I should specify that when speaking of Europe I am mostly focused on Western Europe, though not totally so)

                    Individual kingdoms would wax and wane but the overall trend is pretty plain in retrospect.

                2. The use of dispossessed minorities by the ruling class of the Ottoman Empire in specific industries was not an example of their overall culture embracing best practices at a basic level, but of the ruling elite doing what it thought was in it’s best interests at any given time, and subject to change quickly based on whim. As the Sultans changed the practices could as well.

                  Czarist Russia did this as well to some extent with similar results.

        2. Baghdad was one of the largest cities in the Middle Ages, if not the largest. While their contribution to science, architecture and medicine are highly exaggerated, they are still extant. In the early years of Islam, many Muslims made contributions to philosophy and many of the Caliphs were far better administrators of their territory than the previous owners. After significant Visigothic mismanagement of its territory, the Umayyads restored Andalusia to its status as a major agricultural producer of Europe. It’s not even close to true that Arabs have never produced anything of value.

          1. I would agree with this generally. I think that the elites of Middle Age Islamic cultures tended to be more capable than their European counterparts, but the systemic impediments to change within them rendered them increasingly unable to compete while European culture learned, adapted, and changed.

            1. Here’s the thing though, how far ago would you say the gulf in the ability to learn, adapt and change occurred? I wonder if it is longer than the period that the reverse might have been said, that is, that for a decent chunk of history Europe seemed mired in backwardness unable to advance while some Islamic cultures seemed to be learning, adapting and changing past them. If I’m right here it makes me think that the relative strengths of the cultures is not necessarily related to something fundamental in their faiths.

              1. Europe as a whole got kicked in the nads by repeated barbarian invasion, and was less populated and advanced than Asia for most of its history. When the Roman empire was divided, its western half was not considered anywhere near the prize that its eastern half was; this only deteriorated after the barbarian invasions. Europe was mired in backwardness, but not for reasons of stagnation — rather as a result of being less developed and urbanized in the first place than the oriental world prior to Christianity, and also as a result of invasion on the part of less advanced cultures. Given these factors, Europe advanced relatively quickly during the Middle Ages towards parity with the Islamic world by the late Middle Ages and to advance past it during the Renaissance.

                I’m not saying that an exclusively religious interpretation of this trend is necessary; others have posited different explanations based on feudalism or the enormous number of small states in competition with each other in Italy and Germany during this period (as opposed to the large empires which characterized the Islamic world), but there wasn’t quite an equivalent in Europe to the long decline of the Islamic world.

                1. I’m not saying that an exclusively religious interpretation of this trend is necessary; others have posited different explanations based on feudalism or the enormous number of small states in competition with each other in Italy and Germany during this period

                  I think that all of these factors played a role. The answer historically to the question “which” is often “yes, ” but it is hard to think of a single factor more influential than religious differences in the cultures of the time. The ability for Christian elites and clerics to more freely question and alter religious doctrine led to a culture that was more flexible intellectually.

    2. The other Mosaic religions managed to lose their disdain for merchants, money-lenders others involved in commercial activity;

      Well, except for the way anti-Semitism is a bigoted embodiment of those.

      1. “Well, except for the way anti-Semitism is a bigoted embodiment of those.”

        There *is* a remnant; hell we get Merkin here every time he can fake a new handle.

        1. A sentiment that was recently on clear display at many OWS events. Not that all, or even a majority subscribed to it, but it was definitely there.

          1. I’d forgotten the ‘jews/bankers’ rhetoric; it was certainly there.

            1. I think you might be veering into Al Sharpton land here, though not without some historical reason. True, historically anti-semites often conflated denunciations of jews with bankers, but denunciation of banks doesn’t necessarily=anti-semitism.

      2. Doesn’t that get the direction wrong? Money lenders and merchants were not disliked because they were Jews as much as Jews were money lenders and merchants because those roles were disfavored, allowing religious minorities who had less moral qualms about them to fill them.

        1. And when Jews profited from this, they became disliked due in part because of jealousy over their success. More of a cycle than a primary cause – secondary effect relationship.

        2. Religion gets tied up into it because both Christianity and Islam has religious laws restricting such practices. However, like any number of religious restrictions that restrict the advancement of the powerful the elites in those societies found a cosmetic work around.

          Christian rules used Jews as bankers, rent-collectors and the like as a way of having it both ways. Over time the connection between the industry and the Jews became reflexive which has made them popular scapegoats from the Medieval era onward.

        3. It was less moral qualms it was that Christians for much of the Middle Ages were prevented by law from usury.

  5. Way back when we were first getting ready to invade Iraq, I argued the best thing we could do – other than not invade – would be to give every Iraqi a share of the ownership of Iraqi oil. If every Iraqi had a few shares of Iraq Oil Inc., that they could keep, buy, sell, or trade, a stable market would emerge, and peaceful cooperation would result.

    Of course, that idea never caught on. Oh, well.

    1. They don’t have a culture of ownership though.All the oil states in that area are owned by the state(royals,dictators,what ever]Socialism is ingrained in those countries

    2. I own a few shares of a hundreds of companies. If I thought that radical secularist were going to seize power and impose religious restrictions on me Id fight them in a heart beat. With the added benefit of hey if I win I’ll get to double my shares with the losers shares. You obviously don’t understand the mechanisms at work here.

  6. “The angel of the LORD said to her, I will greatly multiply your descendants so that they shall be too many to count. ? Behold, you are with child. And you shall bear a son; And you shall call his name Ishmael, ? And he will be a wild donkey of a man, His hand will be against everyone, And everyone’s hand will be against him; And he will live to the east of all his brothers.” Genesis 16:10-12

    So they have that going for them.

    1. +1,I almost spit my beer out

  7. my buddy’s step-mother makes $63 hourly on the laptop . She has been laid off for 9 months but last month her pay was $20573 just working on the laptop for a few hours. website link ….

    ???????? http://www.netjob70.com

  8. The Middle East needs free MINDS, not troops.

    FIFY

  9. The Middle East Needs Free Markets, Not Troops

    While free markets would certainly be good for the Middle East, a secure physical environment is a prerequisite to their proper functioning.

  10. Sort of on topic: The Arab Curse in Libya, or why Arab armies suck. Free markets are great, but social/tribal factors may still dominate.

    1. All these traits were reinforced, from the 1950s to the 1990s, by Soviet advisors. To the Russians, anything military was secret, enlisted personnel were scum, they had no use for NCOs and everyone was paranoid about everyone else.

      Yeah, by the time I got to this I was not surprised at all. It sounded to me from reading it that this was the result of mixing the Soviet model with Arabic tribalism. The idea that we were ever going to train an effective Iraqi was a joke. The US military is the end result of a long line of innovations, some technical, some social, that we were just jumping over. The same with trying to set up real democracies. A functioning representative government pre-supposes a great numbers of things that have yet to happen in that part of the world.

  11. Good luck with the that.

    The trouble is a religion whose whole basis is basically to conquer and enslave the rest of the world. Why trade with someone when you can kill them and take their stuff, rape their women and prostitute their children?

    The problem is Islam. It needs to be fought, not with troops, as you point out, but as an idea. It needs to be attacked critically and socially.

    I think Muslims know this, which is why they go berserk at even the mildest criticism or mockery.

    1. JeremyR|9.20.14 @ 11:39PM|#
      …”I think Muslims know this, which is why they go berserk at even the mildest criticism or mockery.”

      Interesting; insecurity as a driver of culture. Russia has been accused of the same.
      I can’t find a reason to disagree in either case.

    2. I agree. That’s one reason I keep recommending the book that Calidissident hates so much: not because I think Muhammad didn’t exist, but because the book makes a convincing argument that the history of early Islam is quite different from the official version. It seems to me that proving that the Koran was not dictated by Allah to Muhammad, and was instead largely assembled like the Bible, would go a long way to undermining the Islamist fanatics.

      1. Of course, so would shooting the sumbitches every time they provoke us. It’s what kept them as fringe elements in society when Colonialism was rampant. It’s the recent history of trying to sit down and reason with them that allowed them to grow into a rampant problem.

        *shrug*

        What can I say. I’m grouchy in the morning.

  12. Not exactly right. What they need are the governing institutions of free markets:

    1) The rule of law
    2) Equal justice
    3) Property rights
    4) Contract enforcement
    5) All of the above, sans corruption

    The problem isn’t that Egypt’s market is too highly regulated, it’s that it’s legal system is horribly corrupt and lacks effective or equal enforcement of rights for those operating in it.

    1. But even that won’t be enough if the type of culture is to some degree incompatible: low trust, tribal, etc.

      1. Low trust and tribalism are functions of the lack of effective contract enforcement.

        Who do you do business with when you can’t trust the courts to fairly enforce the laws? You do business with the people closest to you who you trust the most- family, and by extension tribe.

        The basic institutions of governance make it possible to extend trust to strangers. Anywhere that people can’t legally resolve disputes, they turn to alternative mechanisms, whether it’s gangs or tribal affiliations.

        1. True, but there’s a chicken and egg problem. It’s not as if contract enforcement in the West appeared and grew to supplant tribalism. The tribalism in the Arab world and elsewhere is so strong that it actively prevents those legal systems from performing as we would like.

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