Free Market Revival of the Middle EastPosted: September 25, 2013
One little known fact about Middle Eastern history is the long tradition of pro-market culture. Like many civilizations the length of this free-market run is not consistent. However there was a tradition among the early Islamic religious leaders to the philosophers of Andalusia of free-markets and especially free trade.
Ibn Khaldun was famous for theorizing that lower tax rates equal high tax revenues. He developed the Laffer curve before Laffer was born, before Laffer’s parents were born. He was not the only one many influenced the school of empiricism. The tradition emphasized the belief of personal experience and spontaneous society. Arab merchants spread Islam by trade not conquest. They were good businessmen and Africans and Asians correlated their religion with their good trade habits. The prophet of Islam was a merchant and many of the early members of the Caliphate focused heavily on free trade.
History is not perfect. The Ottoman Empire loved controlling trade. They loved state owned enterprises and likewise the dynasties before them loved central control. The freedom in Andalusia was finally reined in and not surprisingly it fell in a few years. The influence in economics since this fall caused the Middle East to disintegrate from there and the recovery looked impossible.
With repeated dependency on an all knowing leader the Arab world delved into centuries of dictators, sultans and semi colonization. While some of it was perpetuated by outside forces the demise was mostly done by shift in political views. Socialism became the new Islam and embargoes became the new trade policies.
I might be biased towards free-markets but such bias is not unwarranted. Free markets lifted the North America and Europe to supremacy in terms of economic and cultural growth. Now we are seeing Far East countries such as Singapore and China grow and develop because of increased freedom in the economy. The U.S. had Friedman and Hayek. The U.K. had Adam Smith. The reason why they never reach the Middle East a place that started this revolution is confusing.
The difference between Friedman in the U.S and Ibn Khaldun in the Middle East is based on education. No one is educated about economics in the Middle East. No one participates in discussions about economics as much. With many of the countries run under monarchies or socialist regimes it is no doubt they would ban books and information that would be used to destroy them. However, with the Arab Spring no matter how dicey the situation is right now the freedom of speech has increased in places like Libya and Egypt dramatically. This means that there needs to be Friedmans and Hayeks all over the place. All they have to do is pull out existing books written by Arab scholars to change their ways. No need for a new system. There is one already, built on freedom and liberty. One that has worked in different times, in different places in the Middle East.
The value of capitalism is not so America can get cheap oil, on the contrary it is about the Middle East having a better environment and conversation on a macro and micro level. If the ignorance of some individuals is removed by the respect of property rights and belief in voluntary exchange than free markets have done its job but thats not only it. Countries like Syria and Lebanon, plagued by economic woes may experience growth. Market thus improve the culture as well as the well being of the Arabs. The issue however how do you change a society’s mind and show it that the central planning and tyranny it experienced for the last 400-500 years needs to end and that it won’t end even if you depose the leaders.