Prosperity and the rise and fall of Islam

By John L Perkins

At one time Muslim culture led the world in knowledge and prosperity. Now, in most respects, it lags far behind. What are the factors that led to its rise and subsequent fall? Are the factors due do Islam or in spite of it? Is the West to blame for the relative poverty of Islamic societies or does Islam itself contribute to this situation? To investigate these matters we need to look at historical developments, the nature of wealth generation and the role of Islam in it.

In its early years, Islam spread rapidly. Within a century, Islam had conquered Persia, Palestine, Egypt, and had swept across North Africa and into Spain. The reasons for this expansion were partly a matter of conquest, especially on the part of the Umayyad caliphs, who ruled from Damascus. The role of slavery in this military success cannot be discounted, as well as Islam’s ease of recruitment, and its promise of paradise. But Islam’s success may also have been due to its ability to transcend nations and races, its provision of a common language and its moral code which provided a great advance over tribal culture, assisting commercial relations, trade and trust between traders. In addition its monetary and accounting systems and legal code were useful in adjudicating financial contracts and disputes. This expansion in trade, as well as the open intellectual environment of early Islam, gave rise to the wealth of its civilization.

The Abbasid dynasty, which ruled from Baghdad from 750 to 1258, provided the peak of Islamic civilization. In the 9^th century the collective sayings and interpretations of the early caliphs were recorded in the hadith. The Abbasid’s greatest achievements were in the area of philosophy, science and mathematics, in which they led the world. They studied, preserved and translated the Greek classics. The Muslim world is justifiably proud of its achievements in this regard. Muslim scholars provided major contributions to mathematics, algebra, trigonometry, chemistry, physics and medicine. This was a civilization that surpassed all others in its prosperity and achievement.

Much of the knowledge of the Greek philosophers was known to the Romans, including for example the teachings of Aristotle, who advocated reason and logic. While the Romans had a sophisticated financial sector, they showed little interest in mathematics. In 529 Christian Emperor Justinian closed down the Athenian schools of philosophy. What followed was the Dark Age in Europe, in which there was no progress for centuries and no practice of science or philosophy. The works of the ancient Greeks were lost to Europe. Meanwhile the teachings of the Greek philosophers were preserved in the East and were continued, enhanced and developed by Muslim philosophers.

A great advantage was provided by the introduction from India of Hindu-Arabic numerals, which provided a pivotal advance over the cumbersome Roman numerals. This development of a more convenient number system assisted progress in science accounting and bookkeeping. Key to this was the use of the number zero, a concept unknown to the Romans. These numerals were adopted by the Arabs, starting around 750. Around 820 the mathematician Al-Khwarizmi studied them and used them in calculations. Al Khwarizmi originated "algebra". He applied this knowledge to contracts, surveying and tax collection. The use of this number system spread throughout the Muslim world over the next two centuries, assisting the development of science. The system was first mentioned in Europe around 1200, but Christian adherence to the Roman system hindered its use and introduction. It was only fully accepted in Europe after it was adopted by the Italian traders in the Renaissance of the 16th century, who followed the practice of their Arab trading partners.

Another of the great Muslim philosophers was Ibn Rushd (known in the West as Averroes), who lived in Muslim Spain in the twelfth century. He continued the philosophy of Aristotle. He wrote of the harmony of religion and philosophy. He believed the Quran contained the highest truth while maintaining that its words should not be taken literally. He proposed a dual method of expounding theology, one for the intellectuals and another for the masses in general. He believed that to the masses, one must speak of religion, but to the enlightened few one may disclose scientific truth. He was saddened by the fate of women in society, stating that no scope was allowed for the development of their talents, and that they seemed to be destined exclusively to childbirth and servility to their husbands. His writings did not please religious zealots and he was removed from his post as judge and physician to the ruler in Cordoba.

Subsequently in the Muslim world the teachings of Averroes were considered to be too rationalistic, and the religious orthodoxy was not further challenged by philosophers. This came to be known as the closing of the "gate of ijtihad" (independent thought). However in Christian Europe, Averroes’ teachings aroused much interest. The philosophy of the ancient Greeks was rediscovered via the Muslim world. Many centuries were spent trying to reconcile this philosophy with Christian belief. As the universities slowly obtained greater independence from the church, the writings of Aristotle and Averroes’ interpretations of them became a subject of debate. This created turmoil in the minds of many medieval European intellectuals but helped sow the seeds of the Renaissance and stimulate interest in scientific investigation.

Muslim scholars argue that Quran urges quest for knowledge of nature by observation, and this inspired the development of scientific method by Muslims. However in the 12^th century when Muslim philosophers began to suggest that truth itself may be revealed by empirical observation as well as from the Quran, there was a religious crackdown, the gate of ijtihad was closed and scientific research largely ceased in the Muslim world. It was eventually pursued in Europe, but not without resistance from religious authorities there. The start or the 13^th century saw the beginning of the relative decline of Islamic civilization. This decline was not caused by outside forces. It was not caused by a lack of dedication to Islam. It was caused by Islam itself. This is because rejection of science and scientific method was rejection of what was to later become the main driving force in industrial prosperity.

Scientific research in the Muslim world declined and the intellectual environment became inhospitable to the open and honest exchange of ideas. The craft guilds, which also existed in Europe, may have been more successful under Islam in preserving their monopolies, excluding competition and product improvement. Craftsmen were granted higher status than merchants, and were able to restrict the idea of free competition. There was a feeling in the Muslim world that improvement was unnecessary, except perhaps in the technology of warfare. Gradually all the advancements known to the Muslim world passed to Europe, where the knowledge was eventually utilized to greater effect.

Another invention of the Muslims, arising from their advantage in numeracy, eventually also proved of great benefit to Europe. This was the accounting innovation of double entry book keeping. This was originally devised to reduce bookkeeping errors. Every transaction was entered both as a debit and a credit. The totals of each should balance. It was soon seen to have other advantages. It enabled managers to determine the net worth of their business at any time, and enabled the business as to be seen as an entity in itself, distinct from the owner. This assisted in another aspect of trade, that of the extending of credit to parties who are not well known to the lender, by providing and accepted basis for business valuation.

The bookkeeping system, and its numerical basis became known to Italian merchants through their contact with Arab traders, and later spread through Europe. The innovation of double entry bookkeeping led to other financial innovations. Bills of exchange, were used in the 13^th century by traders. These were promissory notes which allowed merchants to transfer amounts they owed each other without the need to exchange coins or goods directly. Lesser merchants found that by depositing funds with prominent trading families, they could obtain drafts which were credible money in distant places. Others found that they were able to purchase at a discount, bills redeemable at a later date. This was an implicit interest rate that for the Europeans did not violate the prohibition on usury.

Such a prohibition has always been recognized in Islam, where any borrowing or lending of money for interest is considered usury. Certain measures have been developed to provide alternatives, or to circumvent the ban, but this type of economic sanction has traditionally been held as one reason the Islamic countries began to fall behind Europe after about the 13^th century. The prohibition of interest in Islam prevented the development of financial markets and institutions that later became essential to the provision of private investment beneficial to the community.

An inevitable aspect of government finance is the collection of taxes. In ancient times the collection of taxes was often hash and inequitable. The task of collecting taxes was often contracted out to private agents or "tax farmers". These tax collectors often had the power to extort and intimidate, and confiscate property. They may have forced deficient taxpayers into agreements involving delayed payments with excessive interest penalties. These agents were often closely associated with the financiers and profiteers from public works, combining to give the industry a poor reputation. This is reflected in the views of the ancient philosophers regarding the morality of such activities. The ancient religions including Islam all adopted the belief in the immorality of interest payments. However in later Christian philosophy it was considered that if a person was to lend a sum of money, and forgo any claim on it until a certain future date, then that person was entitled to some monetary reward for that sacrifice. That reward, in relation to the sum, was interest. It was thus considered that only an excessive rate of interest, rather that all interest, could be considered usury. Such an interpretation is prohibited in Islam.

In the 13^th century, European governments began to move away from arbitrary systems of taxation and towards more predictable collection. In England and later in Holland, this was performed by the merchant class, on behalf of the government. In the Muslim world tax collection remained in the hands of a centralized bureaucracy. The tax environment in Europe allowed capital assets such as ships and trading stations to be owned and operated without fear of arbitrary seizure by governments. Large scale private investments were then possible. This provided great advantage to European merchants over their counterparts in the Islamic world, as well as in India and China.

In 1258 Baghdad fell to the invading Mongols and the empire collapsed. Soon however, three separate Islamic empires rose to replace it. Isfahan became the centre of an Iranian empire, Delhi was the centre of the Mughal empire and Constantinople, renamed Istanbul, was the centre of the Ottoman empire. Islam retained its military prowess for many centuries but it never regained its technological or economic supremacy. Eventually it fell victim to Western imperialism and colonialism. This did not lead to any particular examination of Muslim society, or any real consideration of the reasons for its comparative decline. Rather, it led to a reaffirmation of Muslim values. While there was resentment of western influence, intensified due to the generally non-Islamic colonial elites imposed on them, there was little desire to emulate the European urge to explore and exploit. Unlike the Crusaders, the European imperialists were interested in trade rather that religious conquest. Local religions were tolerated. Muslims meanwhile, contented themselves with their Islamic sense of moral superiority.

The colonial administrators of Muslim countries often viewed Islamic culture as inimical to development and progress. It was suggested that Islam’s attitude to material values, to work, thrift, productive investment, honesty in commercial relations, experimentation and risk bearing, and to equality of opportunity were all unhelpful to growth and development. The choice for Muslim leaders was between "Mecca" and "mechanisation". On balance, it appears the argument has mostly been won by Mecca. The first printing press to serve Muslims was not established until nearly three centuries after its use began in Europe. It was suggested the education system, with emphasis on rote learning, inhibited the development of inquiring minds devoted to problem solving. But for too long, the real problem has been avoided and ignored. Islam is the problem. It does not provide knowledge but rather suppresses the quest for knowledge. In doing so, it does not encourage prosperity but discourages it. It does not benefit society but harms it. Muslims desperately need to break out of the strait-jacket that Islam imposes upon them.

Modern prosperity, with all its improvement in welfare, has been delivered to humanity by science and technology. In the last two centuries especially, science has delivered better lives for people, longer lives, and for larger populations. The key to unlocking the source of these benefits was scientific method, the relentless search for truth though observation, theorizing and testing. It has been the historical role of all religions to attempt to suppress this quest for truth. Such a quest threatens the basis of all religions – the unquestioned "truth" of the sacred book. The first words of the Quran are "This book is not to be doubted". Why should God fear doubt? A prohibition of doubt is a virtual admission of untruth. All books should be doubted, especially if they attempt to suppress it. Doubt is the source of all knowledge. Only by the expression of doubt, and from that the the elimination of falsity, can truth be revealed. The Quran does not contain truth. It does not benefit Muslims to believe it. Neither does it define morality – it contradicts it.

In the 13^th century the Muslim world, with its development of the culture of science, mathematics, physics, chemistry and medicine, led the world. This was despite Islam, not because of it. The Muslim world once possessed in its hands the keys to the future prosperity that technology could deliver. Not only that, but with the invention of double entry bookkeeping, it possessed in its hands the blueprint of the plans for the modern corporation. Because of Islam, because of the Quran, these keys were thrown away. Eventually, after several hundred years, Europe was able to absorb this knowledge and overthrow the dark constraint of its own religion to unlock the mysteries of science and discover the path to prosperity. If the Muslim world had been able to continue on this path itself, the cause of human progress would have been advanced by about five hundred years.