Sociological Explanation of Backwardness:
Professor Max Weber, a renowned German sociologist and political theorist had formulated a thesis: The Protestant Ethic. His analysis showed that there was a close connection between interest and success in capitalist ventures and religious notions of the people. After detailed study, he had come to the conclusion that Protestants valued savings and their investments in productive channels. Hence countries which were predominantly Protestants were industrially more advanced than others.
U.P. Bihar, Bengal and Assam, have been ruled by Muslims for centuries and the population of these areas had developed a conservative spirit in matters of capital enterprises. Agriculture was the main source of employment and livelihood. Those who owned land had no interest in improving the productivity. All savings-made by the ruling and land owning classes were spent on construction of luxurious houses and on enjoyment activities. The advent of the British rule brought about a sea change in the economic situation of these states. The British laid a net work of railway lines and irrigation canals. As a result, industrial centers like Kanpur in UP, and in and around Calcutta developed in Bengal. Bihar and Assam also got an economic boost. Until the departure of the British in 1947, this region acted as an engine of growth.
The fact that these states have not shown the deserved growth in the last 60 years indicates that entrepreneurship is missing. This in turn can be traced to the feudal mentality developed during the Muslim era. The widely accepted indicator of economic development, at present, is the level of per capital income. This is further supplemented by data on the share of industry in total Gross Domestic Product (GDP); Recently, progress of states is also measured by Human Development Indices. Based on these yardsticks, it is seen that states like Uttar Pradesh, Bihar, West Bengal and Assam stand no where in comparison to Maharashtra, Gujarat, Tamil Nadu and Goa. The three tables below provide a brief idea of the relative economic backwardness of the North and North Eastern states.
State-wise Per Capita Income (2011-2012)
West Bengal 55,864
State-wise Gross State Domestic Product (GDP) by Industry of Origin (at 2004-2005 prices) (Rs. Crores)
Agriculture and Allied Industry Total
Assam 18829 18829 88537
Bihar 33015 32106 174734
U.P. 103378 98724 465969
W.Bengal 62236 68798 374899
Mah. 67673 255243 89778
Gujarat 47594 167325 427219
Goa 986 9530 28255
T.Nadu 34988 139469 480618
(Source : CSO, Govt. of India)
The story is no different in Islamic countries in the Middle East. A brief write up on foreign experience follows.
HOW ISLAMIC LAW HELD BACK THE MIDDLE EAST:
Professor Timur Kuran, Professor of Islamic Studies at Duke University in his book, The Long Divergence; How Islamic Law Held Back the Middle East has pointed to certain shortcomings in Islamic law that are responsible for the Middle East being not able to keep pace with the industrialization of the western countries. In particular, he has referred to : Islamic law of commercial partnerships ; the Islamic inheritance system; the religious endowments system and the individualism of the Islamic law. During the first millennium, Middle East was much ahead of the countries in western Europe. However, it suffered a decline in the second millennium for reasons mentioned above.
Institutions: Institution is slippery concept that requires definition. By institution means a system of socially produced regularities that shape, and are in turn shaped by individual behavior. An institution of great importance to Middle Eastern daily life was the holy law of Islam (shariea), also known as Islamic law. In principle, Islamic law covered all human activity. In the political discourse of the Ottoman Empire (1299 AD-1922 AD) there was even a category of laws known as "ruler's law" (kanun), as distinct from Islamic law, and also a third category, customary law (orf), which rested on precedent rather than religious scripture or learning. The two areas in which the Middle East fell conspicuously behind, right up to modern times were: People entered into contracts that followed an Islamic template and were enforced through Islamic courts. They apportioned estates according to Islamic inheritance rules. Residents of the region's great cities obtained services mostly from waqfs, which were trusts formed under Islamic law and supervised by officials with religious training. Almost all law suits involving at least one Muslim were litigated by Muslim judges, under Islamic legal principles. Cracking our puzzle thus requires close attention to the practical consequences of Islamic law. With respect to economic institutions, the eighth and ninth centuries saw the emergence of an Islamic law to govern the trusts known as waqfs as well as the refinement of the Islamic law of partnership. Successful imitation of foreigners required the transplantation of alien institutions, such as stock markets, municipalities, and laws supportive of large companies capable of outliving their founders.
Whereas commercial partnerships formed under Islamic law typically involved a few partners who pooled resources for short-lived ventures, whereas westerners were forming indefinitely lasting enterprises with tens, hundreds, and even thousands of shareholders. In traditional Middle Eastern credit markets, suppliers typically were individuals capable of making small loans. Westerners had access to commercial banks that could channel capital mobilized from the masses into large-scale productive ventures. No stock markets existed for trading shares of indigenous Middle Eastern companies, which tended to be ephemeral. Stock markets were gaining prominence in the West, where investors in long-living enterprises liquidated shares at will.
Supply of Social services :
The supply of urban social services offers another contrast. In the Middle East, the traditional provider was the waqf. In the face of breathtaking technological advances, this form of trust proved inadequate as a vehicle for keeping services up to date. The municipality, a standard instrument of local governance in western Europe, was better suited to the rapidly changing needs of cities. Institutions borrowed from the West were used also to limit western influences, preserve old customs, and even invent new traditions.
Islamic bank :
From a historical perspective the concept of an "Islamic bank" is a contradiction in terms. An Islamic bank operates on a scale far larger than any private enterprise the Middle east knew before the nineteenth century. It is a corporation, an organization alien to Islamic law. Islamic banking thus constitutes an "invented tradition." Its architects have used western institutional models not to make Muslim economic life more "western" but, rather, to encourage saving, investing, borrowing, and lending in ways at least cosmetically "Islamic." Their shared goal was to replicate specific western achievements, not to appropriate western culture indiscriminately.
Modern Economic Growth :
By the mid-nineteenth century, which marks the initiation of major reforms, the world had entered a new economic epoch, that of modern economic growth. Its chief characteristic is itself-sustaining economic expansion at an unprecedented rate; although contractions can occur, they amount to temporary reversals along an upward path. If this is granted, it is simply a matter of record that until well after 1750 A.D., considered the start of modern economic growth, the Middle East lacked the organizational forms and techniques.
Other Sources of Underdevelopment
Freedom and human knowledge deficits :
The first Arab Human Development Report, issued in 2002 by a commission composed entirely of Arab thinkers, points to a "freedom deficit" and a "human capabilities/knowledge deficit" as two characteristics of the Arab world today. The former deficit refers mainly to governance patterns inimical to civil and political freedom and the latter to low educational attainment, access to information, and intellectual creativity. The Middle East had become a technological laggard, its states discouraged investment, its inhabitants were poorly educated, and its intellectual life lacked vigor.
Technology and Organizational Capacity :
In the nineteenth century the Middle East was a laggard on both counts. It lacked the know-how essential for mass production as surely as it lacked a law of corporations. England, Germany, and France had both, which enabled their entrepreneurs to form huge companies capable of exploiting new technologies. Hence, Middle Eastern entrepreneurs had trouble competing in the global economy because of both technological and organizational stagnation. The absence of markets for trading company shares posed a more intractable obstacle to the Middle East's economic advancement than its delays in mechanizing.
Private Organizational Development versus
Evolution of the State
For institutions of governance are no easier to transplant than those of commerce or civil society. Witness the Arab Middle East's persistently low international rankings relating to civil rights, government effectiveness, and rule of law, in spite of political reforms over the past century (table ).
Comparative Indicators of Political Performance (2008-2009)
Region, country, Civil liberties Political rights Corruption perceptions Rule of law (-)
or grouping 1 (most) to 10 1 (strongest) to 10 1 to 10 (least corrupt) 2.5 to 2.5 (best)
Middle East 5.1 5.6 2.9 -0.3
Arab League 5.4 6.2 2.8 -0.6
Iran 6.0 6.0 1.8 -0.8
Turkey 3.0 3.0 4.0 0.1
Turkey) 1.4 1.1 6.8 1.2
China 6.0 7.0 3.6 -0.3
It is in turning our gaze to segments of the social system beyond direct state control that stagnant practices become salient. Insofar as inertia explains the Middle East's failure to keep up with western Europe, it is private economic life, not public administration, that calls for primary attention. To put it in terms of the tripartite legal categorization familiar to historians, religious law and customary law merit analytic priority over ruler's law.
Interactions with Other Regions:
In discourses on why the Middle East became underdeveloped, a commonly articulated explanation points the finger at outsiders. The machinations of Europeans, the author says, turned the region into a "dependent," "plundered," and "self-doubting" part of the world. Still, interpretations that attribute the region's underdevelopment to foreign meddling miss vital ingredients of the historical record. Understanding the factors responsible for the West's dynamism will help to isolate obstacles to self-generated development in the Middle East. They will elucidate also why Islamic institutions well adapted to medieval conditions seemed impoverished a millennium later. The heart of the agenda is to examine the dynamics of private economic organization in the premodern Middle East. Why critical transformations failed to occur is the question we seek to answer. Where the particulars involve religion, it is to religion that the argument must lead.
Unintended Secondary Consequences
Of early Islamic Institutions
The Islamic inheritance system spread wealth by providing mandatory inheritance shares to all sons and daughters, and Islamic polygymy had the same effect by enabling the wealthiest merchants to have unusually numerous heirs. What could scarcely have been understood in the early Islamic centuries is that, in the face of outside developments, these institutions would eventually incapacitate Muslim merchants in their dealings with the West, in world markets, and even at partnership.
Over time the curriculum changed less in madrasas than in universities, helping to turn the Middle East into an intellectual backwater. Although many factors contributed to the region's lack of intellectual prominence after several bright centuries under Islamic rule, a basic cause lies in the waqf's organizational limitations. Madrasas and universities were both non-profit organizations. The waqf became Islam's main organizational form for providing social services at a time when western Europe deployed the corporation for many the other ends. The organizational gap widened in the late sixteenth century, when the West began applying the corporate form of organization to profit-oriented production, finance, and commerce. In contrast, the universities of Paris and Oxford initially set up as trusts, in the 12th and 13th centuries had become self governing and selfrenewing in due course.
Inheritance System :
Islam's relatively egalitarian inheritance system raised the costs of liquidating a partnership prematurely, thereby limiting the size and duration of partnerships, fragmenting the estates of successful merchants, and hindering the preservation of businesses across generations. The dynamic consequences are critical here. Members of small and short-lived partnerships felt no urge to develop sophisticated accounting methods or to obtain greater liquidity through tradability. An unintended consequence of such stagnation is that the business community could not even contemplate using an organizational form akin to the corporation.
If the structural stagnation of commercial partnerships constituted one reason for the dearth of organizational innovation in general, another was that successful merchants, lended to convert their wealth into real estate, for reconversion into the corpus of a waqf. They did so for the very reason why founding waqfs gained enormous popularity among high officials: the weakness of private property rights. Like other wealthy groups, prosperous merchants sheltered wealth within waqfs.
Why the Middle East-entered the nineteenth century as an-underdeveloped region? The critical deficiencies were:
frozen waqf assets, atomistic financial markets, courts unsuited to impersonal exchange-none comprehended how such features were mutually reinforcing, or how they were blocking transformations essential to global competitiveness. Through waqfs, residents benefited from subsidized social services. Economic disputes were settled informally through arbitration or formally through courts that rendered judgments quickly. Islamic law, was not considered harmful to economic progress. By the same token, the reasons why the Middle East fell behind would have remained a mystery, To explain the lag in the region's modernization, and Islam's role in this delay, we have had to focus on aspects of the Middle East's organizational heritage that turned into weaknesses gradually, through transformations elsewhere.
An Islamic partnership lacked entity shielding, in that any member could force its dissolution unilaterally, and its assets were exposed to demands from third parties. The death of partner terminated the partnership automatically, giving his heirs an immediate claim on a share of the assets; all surviving members incurred costs. The number of heirs could be large, because Islam's inheritance law assigns mandatory shares to designated relatives of the descendant. The partnership termination rule, like the lack of entity shielding, thus discouraged the formation of large and long-lived partnerships. Merchants and investors would form small and short-lived partnerships in order to lessen the risks of untimely dissolution. In allowing polygyny, Islam compounded the incentives to keep partnerships atomistic and ephemeral. This is because merchants with multiple wives tended to have more heirs. Rarely did the business empires of the most successful merchants survive them, because their estates got divided into too many pieces to make recombination practical. Incentives to trade share were dampened. In sum, several self-enforcing elements of Islamic law-contracting provisions, inheritance system, marriage regulations-jointly contributed to the stagnation of the Middle East's commercial infrastructure. (Table)
Islamic Institutions that Helped to Delay Economic Modernization
Present in Islam's first few decades Developed mostly or entirely after Islam's initial period
Inheritance system Contract law
Acceptance of polygyny Waqf
Ban on riba Court system
Absence of corporation Capitulations
Choice of law limited to non -Muslims
Prohibition of apostasy
Absence of merchant Organizations
The Islamic inheritance system delayed organizational modernization only because, with the corporation precluded, the partnership remained the only possible starting point for developing durable and large commercial organizations.
The third of the seven problematic institutions present from the beginning, the ban on riba, was a steady irritant to suppliers and users of credit. By requiring the use of stratagems, it raised credit costs. Although Islamic banks ostensibly do only interest-free business, in reality they give and take interest through means resembling the stratagems used in medieval financial markets.
That the Islamic legal system emerged without a concept of corporation contributed to keeping Middle Eastern businesses atomistic. The final problematic pattern that was present at the birth of Islam is the absence of merchant organizations serving them in foreign lands.
The fifth original institution was the choice of law. Allowing Islamic law to trump the legal systems of non-Muslims, and permitting anyone to sue in Islamic court at will, depressed the competition faced by Islamic courts.
Both the Quran and the remembered sayings of Prophet Muhammad contain references to apostasy as a religious offense. On the basis of these references, Muslim jurists of the seventh century declared apostasy punishable by death. The severity of this punishment doubtless contributed to the outcomes of Islamic legal pluralism.
To recapitulate, the question whether Islam's original institutions are compatible with modern economic life admits no categorical answer. Along with traditional institutions that are incompatible with economic success in the modern world, there are those that pose no significant problems. The Islamic inheritance system and its marriage regulations jointly hindered indigenous organizational modernization, but once modern organizations were transplanted from abroad, they ceased to harm economic performance.
Human Development Index gap between Arab countries and highly developed countries in 2010 and its percentage change1970-2010
Country/Religion HDI Gap HDI GAP HDI Improvement Rank
Bahrain 0.91 14% 59
Kuwait 0.94 3% 79
Oman 0.87 88% 4
Qatar 0.93 6% 70
Saudi Arabia 0.88 49% 19
United Arab Emirates 0.93 23% 41
Djibouti 0.51 20% 44
Sudan 0.52 40% 27
Algeria 0.78 44% 24
Libya 0.89 29% 34
Morocco 0.68 54% 14
Tunisia 0.80 47% 22
Egypt 0.72 41% 26
Jordan 0.79 21% 43
Lebanon 0.84 3% 78
Arab countries 0.73 43% 3
East Asia & Pacific 0.78 69% 1
Europe & Central Asia 0.76 % -2 6
Latin America & Caribbean 0.84 14% 5
South Asia 0.62 50% 2
Sub-Saharan Africa 0.50 35% 4
Developing regions 0.70 38%
Source : Authors' estimates based on data from Human Development Report,2010.
Note : Refer to background paper "Arab Human Development: Phenomenal Progress or Mixed Results?"
by Abu- Ismail, et. Al for further details on data and methodology.
The first column shows the (Human Development Index) Gap, which is measured by the ratio of the HDI of the developing country or region to the HDI of highest developed countries in 2010 (The latter is calculated as the simple average of the HDIs for the ten countries that have the highest developed countries in 2010). When this ratio is deducted from the corresponding ration 1970, a country/region that is successful in closing the gap will show a positive percentage change. The second column reports this percentage change. On this basis, the third column in the table ranks Arab countries and developing regions according to the progress achieved, or lack thereof.
Although all Arab countries were successful in closing the HDI gap, only Oman is ranked within the top ten HDI achievers using this methodology. It is followed by Morocco and Saudi Arabia (Which rank fourteenth and nineteenth, respectively).
Christophe Jaffrelot, a well known Journalist has come out with a voluminous book on The Pakistan Paradox. The Volume runs into six hundred and seventy pages. Most of the pages are devoted to the history of Pakistan after its creation in 1947.
The Pakistan Paradox, according to the author lies around three types of tension: between a unitary nation-state and provinces with a strong ethnic identity; between an authoritaran political culture and democratic forces; and between conceptions of Islam. The lack of concerns regarding the role of Islam can be traced to the Aligarh Movement of Sir Syyid Ahmad Khan who had defind the community on the basis of a culture rooted in territory, that of Urdu-speaking Muslims in Northern India. Whereas Deobandis took the path of a return to the sources of Islam. These three contradictions have resulted in the instability of the state of Pakistan
For readers in India, it is the creation of Pakistan that is significant to understand. This is because the problems that its creation was expected to solve are still bedeviling India. In this context, the author says; It (Pakistan) grew out of the separatist ideology which crystallized at the end of the nineteenth century among the Urdu speaking Muslim intelligentsia of north India, whose key figure was none other than Syed Ahmed Khan, the founder, in 1875, of the Anglo Mohammedan Oriental College in Aligarh. The Aligarh movement turned to politics in the early decade of the twentieth century when it became the crucible of the Muslim League.
It is accepted by all that it is the Muslim minority provinces who were in the forefront of the demand for Pakistan. Professor M. Mujeeb, Vice Chancellor, Jamia Millia has written it is the Muslims of UP, Bihar and Bombay provinces who led the agitation for the division of India. Justice M. C. Chagla has stated that had the UP. Muslims not insisted on division there would have been no Pakistan. M. A. Jinnah in his Presidential address to the Muslim League in 1943 had said: Do not forget the Minority Provinces. It is they who have spread the light when there was darkness in the majority provinces. It is they who were the spearheads that the Congress wanted to crush with their overwhelming majority in the Muslim minority provinces. It is they who suffered for you in the majority provinces, for your sake, for your benefit and for your advantage.
Muslim leaders from U.P. had suggested a theory of reciprocal hostages to protect the interest of Muslims in the Muslim minority provinces. In this context, Jaffrelot quotes Ayesha Jalal: Indeed, Khaliquzzaman, Muslim Leader from U.P. considered the presence of Hindus in Pakistan as essential because one of the basic principles lying behind the Pakistan idea (was) that of keeping hostages in Muslim provinces as against the Muslims in the Hindu provinces. If we allowed millions of Hindus to go out of our Orbit of influence, the security of the Muslim in the minority provinces will greatly be minimized. Further, the U.P. leader went on to point out that the Muslims of India were forced to partition British India; otherwise there would have been a civil war. In short, Islam was under threat, according to the Muslims.
Given the clear out statements made by the President of the Muslim League, one fails to understand, how Gandhi and Nehru allowed the Muslims of these provinces to stay on in India after the creation of Pakistan. The book does not refer to the exchange of population which was repeatedly suggested by seven prominent Muslim League leaders including M.A. Jinnah. Jinnah in fact had written to this effect to Viceroy Wavell before his departure to England.
The author appears to favour more the Muslim League's view point than that of others. Others who have written on this subject include: B.R. Ambedkar (Thoughts on Pakistan 1940), Jutice G.D. Khosla, (Stern Reckoning,1949) Richard Symonds (The Making of Pakistan, 1949). Their contributions to the subject have been ignored by the author of the present volume.