Print Story The Long Divergence
By aphrael (Thu Jun 28, 2012 at 10:21:25 PM EST) (all tags)

I really don't know on whose recommendation I originally decided that I should delve into The Long Divergence (, but I'm glad I did. The book was fantastic.

It's a legal history book, devoted to answering a single puzzling economic question: why did the econonomy of the Arab world succeed so stunningly in the first half of the second millenium, and why did it then decline in the second half? There are lots of theories about this, but most of them seem to operate at a very vague level of overgeneralization (for example, there's a theory which says that Muslim societies were too traditionalist to discover/develop new ways of doing business, which isn't very specific and is in any case so vague that it's more likely the result of prejudice than analysis).

His theory, which is pretty well laid out, is basically the following:

(a) islamic partnership law, by requiring the dissolution of partnerships upon the death of a partner and by allowing partners to withdraw at any time, discouraged the development of large, wealthy partnerships like the banking partnerships which arose in the fourteenth and fifteenth centuries in Europe;
(b) this was exacerbated by the lack of legal personhood attached to corporate bodies in the Islamic world. The Romans and Byzantines had both had corporate personhood to some degree, and most municipal governments in the west were organized as corporate persons, but the Islamic world deliberately abandoned this in order to prevent tribes from having legal recognition;
(c) it was also exacerbated by islamic inheritance law, which required division of property in a way that impeded the development of large fortunes. this was self-reinforcing; it weakened partnerships in such a way that the partnerships were unable to develop the wealth and power to push for changes in the partnership law.

the vastly oversimplified version of his thesis is that islamic partnership law represented an improvement over the pre-existing partnership law, because it allowed limited liability which promoted the development of medium-size merchant operations, which accounted for the success of the arab world by comparison to its premodern competitors; but the inability to change the partnership law, reinforced by the corporate law and the inheritance law, meant that when europe started developing semi-permanent partnerships with large accumulations of cash, the arab world couldn't compete.

it's an interesting theory, and the book does a very good job of presenting it. it also has an extended bit about how the concessions to foreigners - allowing them to operate under their own law, essentially - morphed out of control in large part because they allowed the Ottoman state to profit off of the activities of foreign merchants without a reformation of law at home, and how it only really broke down when the foreign states started enrolling large numbers of local christians as foreign agents.

all told, it's one of the better, more interesting historical analyses i've read in some time. :)

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The Long Divergence | 6 comments (6 topical, 0 hidden) | Trackback
Sad. by wumpus (2.00 / 0) #1 Fri Jun 29, 2012 at 12:51:09 AM EST
I'm pretty sure that oversized corporate persons would strangle US (and likely UK, EU, and similar western systems) even without full citizenship. Once the sufficiently reduce the number of actors, monopoly profits become trivial.

No answer how an individual builds a fab, or even an oil tanker.


Recognition of tribes by ana (2.00 / 0) #2 Fri Jun 29, 2012 at 07:21:21 AM EST
or, for that matter, political parties, seems to me essentially anti-democratic.

If politics is conducted as a quest for individual voters, each of whom makes up his or her own mind uninfluenced by party spirit, that seems to me the essence of democracy. If an idea is good enough, its backers should be able to get people to vote for it, regardless of what their elders say. 

I now know what the noise that is usually spelled "lolwhut" sounds like. --Kellnerin

There is truth to this by Scrymarch (2.00 / 0) #3 Sat Jun 30, 2012 at 05:35:48 PM EST
And I can see the especial appeal during the last few months of red team / blue team cheering leading up to a presidential election. I cherish my right to be fickle with my vote, the hated and adored swinging voter. However, at least outside the US, the increase in swinging voters has been accompanied by a big decrease in political party membership. The great mass membership parties seem now to be a 20th century phenomenon - there's all sorts of parallels with mass industrialization here. Without a large base, parties become dominated by ideological purists for policy and lobby groups and corporations for funding, neither particularly in touch with the lives of ordinary people.

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It sounds like a great book by Scrymarch (2.00 / 0) #4 Sat Jun 30, 2012 at 05:38:20 PM EST
Out of curiosity, how much does it lean on quantitative techniques in economic history? That sounds testable.

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wasn't discussed <nt> by aphrael (2.00 / 0) #5 Sun Jul 01, 2012 at 09:06:41 PM EST
does he mention ibn khaldun's concept of by nathan (2.00 / 0) #6 Mon Jul 02, 2012 at 07:12:24 PM EST

Declining asabiyyah in the cores of imperial states?

Peter Turchin argues, citing ibn Khaldun, that empires are giant free-trade zones that initially achieve high growth rates by liberating productive forces, but that come to depend on economic growth through expansion to maintain social order. Once the marginal returns on expansion decline sufficiently, the empire  must continue expanding at an ever-increasing rate, but standards of living decline anyway, and newly-conquered areas aren't properly assimilated; eventually some frontier tribe with greater asabiyyah conquers everything.

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