The Speculist

The Most Powerful Force?

Reason Online provides an in-depth look at a an unexpected movement, Islamic Libertarianism:

Imad A. Ahmad is the president and director of Minaret of Freedom. In books, lectures, and classes at the University of Maryland, he draws on everything from astronomy to medieval history to Murray Rothbard's economic theories to show that Islam is not only compatible with but intimately related to free speech, free religious exercise and free markets. Although Minaret of Freedom, founded in 1993, is still a tiny organization with a minuscule budget, Ahmad says the organization and its principles are attracting a growing number of followers.

Ahmad contends that Islamic civilization, as it was originally conceived and established, has more in common with Western civilization than we realize. And he makes a fairly persuasive argument to that effect:

Just as when some westerners talk about "western values" when they're really talking about universal values, I think some Muslims go around talking about Islamic values when they're really talking about universal values. They're universal values that have been articulated by Islam, but they are values for everybody whether they're Muslim or not. I think that the biggest thing for agnostic or atheist libertarians to learn from Islamic law and economics is how the experience of Muslim civilization confirms our libertarian theory. In fact, when I see people try to deny the role of Islamic teachings in the success of Islamic civilization, I propose a thought experiment: Ask yourself, as a libertarian, if you really believe that free markets and liberty are necessary to human progress, then how was it possible for the Islamic civilizations to have been so successful for so many hundreds of years? Either they were established on similar principles, and therefore prove our point, or they were established on different principles and disprove our point. As someone who firmly believes that we are correct about these things, I find it important to note that the Islamic civilization was built on those principles.

But if that's true, what went wrong? If Western civilization and Islamic civilization are founded on many of the same principles, how is it that we ended up with a Western world that is hugely successful (albiet somewhat flawed) and an Islamic world that is an unmitigated disaster — "successful" at all only by the coincidental location of oil deposits, and largely indifferent or even hostile to most of the basic freedoms that we would consider essential?

I don't have the answer to that question. Even Ahmad is forced to paint in fairly broad strokes when describing this transformation. However, in making the highly unusual claim that the Islamic injunctions against "usury" were originally aimed not at the practice of charging interest per se, but only at abusive over-charging, he describes an interesting point of divergence.

If you look at Islamic history, they had strong business, they had international trade, they had factories, science, innovation. Yet somehow they never made that final leap to an industrial revolution. And when I look at the fact that the steam engine was called Fulton's Folly, I can't help but wonder, to what degree did the availability of interest play a role in the commercialization of the steam engine? And is it possible that the Islamic prohibition on interest meant that that just wasn't gonna happen in the Muslim world?

Interesting. So what if the Islamic world had had an industrial revolution of its own (or even just participated in the one that was taking place)? We can't be certain that they would be any more free than they are now. After all, both socialism and facism showed up in the west after industrialization. But it is possible that rapid economic growth might have gone a long way towards preserving individual rights and holding back Wahhabism.

It may be apocryphal that Albert Einstein ever called compound interest "the most powerful force in the universe." (Then again, he may have said it. It seems to be one of those things that everyone "just knows" Einstein said. If anybody has a reliable reference, I would appreciate it.) But what we know he did say is still pretty compelling: "It is the greatest mathematical discovery of all time."

Einstein was impressed by the tremendous generation of wealth (or in my case, debt) that the application of a simple mathematical rule could bring about over time. But there's another kind of doubling that the application of interest apparently plays into.

In his book The Age of Spiritual Machines, Ray Kurzweil provides a timeline of technological development, from the dinosaurs all the way to the Technological Singularity, which marks the end of the human era. (Or, if you prefer, the beginning of the posthuman era.) A somewhat more modest version of the timeline is provided here, culminating in a computer passing the Turing test. It is Kurzweil's thesis that the doubling of computing capability that we have come to know as Moore's Law has actually been going on for a lot longer than we realized. Even those who seriously doubt Kurzweil's thesis, or who are skeptical about the Singularity (or for that matter, the Turing test) would have to agree that this chronology shows an amazing — and accelerating — rate of technological development.

One of the things that struck me as I read through the timeline the first time was when things really started to get interesting. Sure, we went into full turbo mode in the second half of the past century, but the two hundred years leading up to that were incredibly fast in comparison to any other era in human history. Of some 350 entries on the timeline, more than 300 occur after 1760. In many ways, this entire era has belonged to the West. The vast majority of the accomplishments listed were achieved in Europe or North America. How much of this monopoly can be attributed to the fact that the West overcame its relgious misgivings on charging interest, while the Islamic world still hasn't? Surely there are many, many other factors that have to be looked at. But this simple difference is compelling.

A couple more questions:

How would all these accomplishments have panned out if the Islamic world had overcome its aversion to interest? And what kind of future would we now all be facing together?

Via InstaPundit

UPDATE: Dean Esmay wonders what the LGF crowd will have to say about Minaret of Freedom. Meanwhile, Joe Katzman offers (via Egyptian author Tarek Heggy) another possible cause of the divergence: despotism.

Posted by Phil at July 29, 2003 06:16 AM | TrackBack