Rulers, Religion, and Riches: Why the West Got Rich and the Middle East Did Not (Cambridge Studies in Economics, Choice, and Society)

by Jared Rubin

  Nevertheless, the English and Dutch cases are worth studying, even though they are not perfectly replicable. Not all of the steps along their paths were random. Many resulted from institutions whose importance is clear when contrasted with institutions of the Middle East. This is not to make the generic claim that “institutions matter,” but the much more specific claim that it matters who propagates rule. How the English and Dutch – and, eventually, other European nations and the United States – got to the point where a “good enough” propagation regime was in place is of course critical to the story. Equally important is understanding the outcomes that followed once those regimes were in place. The latter pursuit has relevance for contemporary problems.

  Implications for the Twenty-First Century and Beyond

  Nearly half of the world’s population lives on less than $2 a day, and around one-fifth live on less than $1 a day. Clearly the fruits of the modern economy have not spread far enough. One of the most depressing aspects of widespread poverty is that it is unnecessary. Unlike, say, five hundred years ago, humans have the technological capability to provide a comfortable lifestyle for the entirety of the world’s population. Why, then, do so many people still live in abject poverty?

  There are of course many answers to this question, and context clearly matters. The poverty of sub-Saharan Africa has different causes than the poverty of South or Central Asia. History, culture, and geography all play a role in separating the haves from the have-nots, and no one panacea exists for global poverty. But one thing common to most impoverished areas – as well as many wealthier but far from “developed” regions – is bad governance, especially with respect to economic issues.

  This book provides a first-order reason why bad governance exists despite the presence of low-hanging economic fruits. Most of the time, it is a result of the manner in which rule is propagated. In the twenty-first century, bad governance is generally associated with propagation by a military or militia. They help keep otherwise unpopular rulers in power in return for a seat at the bargaining table. Generally this ends up meaning that their pockets are well-lined. Religious propagation is also sometimes associated with bad governance – Afghanistan and Saudi Arabia stand out as two nations whose leaders rely heavily on the support of religious authorities to the detriment of their people’s economic well-being.

  A skeptic might ask: Aren’t some of the wealthiest countries (in per capita terms) Arab countries whose leaders rely on religious legitimacy? Indeed, Qatar, Kuwait, and the United Arab Emirates all have higher per capita income than the average OECD country – but with one obvious caveat. All of the wealthy Middle Eastern countries derive most of their wealth from oil, with the exception of Turkey, which is middle income.

  It is far from clear that the oil-producing nations of the Middle East are primed for long run economic success. As long as the oil is flowing, their governments can easily stay afloat, although they must distribute the oil wealth in a manner to forestall discontent. But what happens when the oil starts to run dry? Or what happens when alternative, cleaner fuels become more cost-effective – thereby driving down the demand, and therefore the price, of oil? Likewise, what happens if the price of oil drops due to excess supply?

  This book provides a historical example of a case very similar to the one facing the oil-producing countries in the twenty-first century: sixteenth-century Spain. Consider the facts. The Spanish Crown received a huge wealth boost from the gold and silver flowing in from the Americas, and it received legitimacy from the Church. On that basis it could ignore the economic elite and pursue any type of policy it wanted. As a result, precious few laws and policies were enacted that protected property rights, encouraged capital accumulation, provided public goods, or supported domestic finance. Over time, the Spanish economy fell further and further behind its Western European counterparts in both relative and absolute terms. The average Spaniard was poorer in the early nineteenth century than in the sixteenth century.

  The good news is that the oil-producing nations can avoid Spain’s fate. The key will be to bring a wider swath of economic interests to the bargaining table – not just oil producers, but specialists in finance, trade, tourism, agriculture, manufacturing, and other services. This is all the more important for large oil-producing states, like Saudi Arabia, with populations large enough to make industrial diversification feasible. The United Arab Emirates has begun to diversify away from oil, but almost all “diversified” work is done by foreigners, who will leave if oil revenues dry up.

  I am not optimistic that the large oil-producing nations will escape this fate. Their rulers are highly autocratic, and most restrict the freedom of their citizens. They are able to successfully rule in this manner – at least, for the time being – for the same reason that the sixteenth-century Spanish monarchs did so: they have independent sources of wealth as well as access to religious legitimacy. They can avoid long-run stagnation by seizing the short-term opportunity provided by oil to build economies capable of long-term success. Whether they do so remains to be seen, but history does not suggest reason for optimism.

  Identifying the “problem” of the religious elite playing too much of a role in governance relative to the economic elite is one thing. It is very much another to change a society’s institutions to the point where rulers have incentive to turn to the economic elite over the religious elite to propagate their rule. This book only diagnoses the problem; it does not offer a solution. It does, however, draw historical lessons that can help shape the solution.

  Democracy is the most obvious contemporary solution for governance that considers the voice of the economic elite while also ensuring that their power is sufficiently constrained to keep their narrow interests from taking precedence over the rest of society. It is not much of a stretch to say that for at least the last century or two, “good” propagating arrangements were usually found in democracies, and “bad” propagating arrangements were found in non-democracies, where “good” and “bad” are used only to reflect their association with economic outcomes. Of course, not all democracies are well-functioning; India is a good example of a democracy with glaringly inefficient regulatory and legal systems. And economic improvement can certainly happen in non-democracies; China since its pro-market reforms of 1978 provides an important example.

  But does this simply mean that poor, nondemocratic countries should have democracy imposed on them and everything will be flowery after that? Of course not. One cannot simply impose democracy on a country, regardless of context, and expect it to work. This is hardly an original point, although it was one the United States failed to heed in Iraq in the early 2000s. But why can’t democracy simply be imposed on a society and be expected to work? What are the obstacles to transitioning to a successful democracy? This book offers some insight. Most importantly, democracy imposed by the outside can only work in a state that has institutions that are conducive to rule propagated by democratic elections. If potential rulers can rely on other sources of propagation, democracy can easily be undermined. In such a state, any enterprising outsider that enjoys the support of the religious establishment or the military can instigate the overthrow of democratically elected leaders. And even democratically elected leaders may find it hard to relinquish power if they have propagating agents at their disposal that can keep them in power.

  This, more than anything else, is likely why democracy has had such a difficult time of it in the Middle East and North Africa. Of the 167 countries surveyed in the Economist’s 2014 Democracy Index, the most highly ranked countries in the region were Tunisia (70th) – ironically, the birthplace of the Arab Spring – and Turkey (98th). Most nations in the region fell under the category “authoritarian regime” (i.e., the least democratic type of regime): Morocco (116th), Algeria (117th), Libya (119th), Kuwait (120th), Jordan (121st), Qatar (136th), Egypt (138th), Oman (139th), Bahrain (147th), Yemen (149th), United Arab Emirates (152nd), Iran (158th), Saudi Arabia (161st), and Syria (163rd).
In all of these nations, there appears to be only three possible types of propagating arrangements: brutal authoritarian rule propagated by force (e.g., Syria, Libya), oil-funded monarchies propagated by the religious establishment (e.g., Saudi Arabia, Qatar, Bahrain), or some combination of the two.

  This is not surprising. Islam is highly conducive to propagating rule, and the cost of using Islam and Islamic religious authorities is much lower than using democratic elections. Indeed, it appears on the surface that the only mechanism that can support rule in the Islamic world without appeal to religion is brute force. For examples, one need look no further than the reigns of Saddam Hussein, Muammar Gaddafi, or Bashar al-Assad. One consequence of these propagating arrangements is that “imposing” democracy on an Islamic country may be a fool’s errand, at least in the early twenty-first century.

  This is hardly to say that Islam and democracy are incompatible with each other. The largest Muslim-majority country in the world – Indonesia – has, since 2004, held direct presidential elections. The only point made here is that political Islam is a more potent force than political Christianity. Accordingly, democracy works differently in Christian-majority countries than in Muslim-majority countries. Importantly, it is nearly impossible to imagine democracy working in the Middle East without a major role for religious authorities in the election and governing process.

  It is even more difficult to see how a transition toward democracy – or any form of government that gives more political power to the economic elite – could arise indigenously in the Middle East unless the religious elite played an important role in governance. This is a point also made in Noah Feldman’s penetrating book The Fall and Rise of the Islamic State. Feldman argues that the primary reason why religious legitimation was historically important in the Islamic world was that it checked the autocratic tendencies of rulers. When a series of unsuccessful nineteenth-century Ottoman reforms aimed at emulating Western forms of governance undermined the “traditional” Islamic state, the check provided by the religious establishment fell with it. This, according to Feldman, is why autocracy was the twentieth-century norm in the former Ottoman lands in North Africa and the Levant. Feldman goes on to argue that one possible solution to bad Middle Eastern governance is democratically elected Islamic parties. These insights are consistent with the arguments of this book. Under ideal circumstances, Islamic parties could insulate themselves from religious extremism by co-opting the religious establishment while also feeling the need to bring the economic elite to the bargaining table in order to win future elections.

  As of 2016, such a possibility has not come to pass and, not surprisingly, democracy has not flourished in the Middle East. One cause and consequence of this democracy deficit is that most Middle Eastern rulers are much weaker than they were historically. It may not seem so on the surface, as many of the late twentieth-century Middle Eastern leaders ruled with an iron fist. Yet, as the Arab Spring revealed, autocrats who rely primarily on military propagation are susceptible to revolt. And the rulers of the “oil states” are vulnerable to declines in the price of oil. One consequence of this relative weakness, and one of the themes laid out in Chapters 5 and 6, is that Middle Eastern rulers often restrict freedoms – particularly access to information on the Internet – to keep power out of the hands of potential rivals. Those chapters argued that efforts to monopolize information were successful in the early modern Middle East because it was in the interest of rulers and their propagating agents to inhibit the spread of information. If such anti-technology motivations were present in the fifteenth and sixteenth centuries, they are present even more visibly in the twenty-first century, where information technology allows for subversive ideas to spread in milliseconds.

  Indeed, the Islamic world has been at the forefront of Internet censorship. While censorship certainly exists in non-Muslim authoritarian regimes (e.g., China, North Korea), it is especially in vogue for governments of Muslim-majority countries. By 2015, regimes in Iran, Syria, Afghanistan, Pakistan, Turkmenistan, Tajikistan, Libya, Bangladesh, and Sudan blocked YouTube. Facebook is highly censored in Iran, Saudi Arabia, Turkmenistan, Uzbekistan, and Syria. In Turkey, the Erdoğan regime attempted to ban Twitter and YouTube. The reason for these restrictions is similar in all cases: rulers simply cannot control social media, and threats to their power can spiral out of their control. The Arab Spring is the most potent example of what can happen when censorship weakens. What began with the self-immolation of Mohamed Bouazizi – a Tunisian street-vendor who was fed up with the government confiscating his goods – spread like wildfire throughout the Middle East and North Africa.

  Although the Arab Spring was not successful everywhere it spread – the Bahrain government repressed it, it triggered a savage civil war in Syria, and it created a power vacuum in Egypt and Libya – its contagion was in no small part due to the power of social media to instantaneously spread information. Social media provides citizens the ability to coordinate protests and, more importantly, coordinate information about each other’s preferences vis-à-vis their governments. The latter type of information frightens authoritarian governments the most. Throughout most of the history of the Islamic world, the power to coordinate opinion on all sorts of issues was normally the purview of religious authorities. This is what made them so powerful, and it was among the reasons why rulers were so eager to bring them to the bargaining table.

  Can social media undermine religious authority in the twenty-first-century Islamic world in the same manner that the printing press undermined the Church in large parts of Western Europe in the sixteenth century? The obstacles are larger in the Middle East than they were in Western Europe. But twenty-first-century information technology is also much more potent than it was in the sixteenth century. The Reformation took decades to spread and even longer to fundamentally undermine propagating arrangements. If twenty-first-century information technology is going to have a similar effect in the Islamic world, it is reasonable to expect that it will transform society much more quickly. This, of course, is a big “if”: numerous powerful groups, including religious authorities, have an interest in maintaining the status quo. Even if revolts undermine the status quo propagation regime, it is far from clear who will fill the power vacuum: the Egyptian and Iraqi experiences suggest that radicalized Islamic groups will play an important role in the power struggle. Nevertheless, a fundamental change in the manner in which rulers propagate their rule – spurred on by information technology – seems to be the primary hope in the Middle East for the emergence of institutions where the economic elite play some role in propagating rule. Whether or not this happens is one of the most important determinants of the twenty-first-century economic fortunes of the Middle East.

  Concluding Thoughts

  There is nothing about Islam per se that led to the economic stagnation of the Middle East except its conduciveness to legitimizing political rule. To be clear, this legitimate use of Islam by political rulers is very different from its misuse to “justify” the actions of violent jihadists in al Qaeda, the Taliban, or Islamic State. Islam is as open to misinterpretation and misuse as its Abrahamic brethren, Christianity and Judaism. Islam is no more culpable than religion itself for its cynical misuse. There will always be some type of ideology available to justify power grabs. In some parts of the world, it is Islam. In other parts it is some other religion or secular ideology.

  Too many Westerners confuse correlation with causation when connecting Islam with terrorism or anti-Westernism. Those who think that Islam offers a uniquely violent ideology need only read the Old Testament to see the falsity of those claims. A simple thought experiment further illustrates this confusion. Imagine a world – say, an imaginary twenty-third century – in which the Middle East is the world’s economic and military powerhouse: Middle Eastern governments are constantly interfering in European and American politics while Middle Eastern militaries are ubiquitous throughout the West. Poverty is common in the West, and autocratic
rule is the norm. Is it really too difficult to imagine Western sentiment focusing on the “Middle Eastern devil,” as some Middle Eastern sentiment is focused on the “American devil” in the twentieth and twenty-first centuries? Is it at all a stretch to think that anti–Middle Eastern sentiment would appeal to Christianity? I do not believe it is at all. After all, this imaginary world is not too different from the one faced by Europeans around the time of the Crusades, although with eleventh-century technology and less direct conflict between European and Middle Eastern states.

  There is nothing about Islam per se that is anti-Western, antidemocratic, or anti–economic growth. Anti-Western sentiment in the Middle East results mainly from imperial policies, colonization, Western support of ruthless dictators, bloody one-sided conflicts, and Western extraction of resources – not Islam. Islam provides a nice and simple cover for such sentiment, but it is not its source. Instead, the sources of these sentiments lie in the factors that allowed the “West” to rise in the first place. The purpose of this book has been to shed some light on these factors. In the process, it hopefully has contributed to our understanding of which factors are actually important to economic stagnation and political instability, and which factors are merely symptoms of stagnation and instability.

  There is room for cautious optimism for the future of the Middle East and the broader Islamic world, and this optimism links closely to economic activity. Where Muslims have had a taste for the much higher standards of living associated with the modern economy, rulers have found that sound economic management can be a powerful source of propagation, and their citizens place less importance on their religious credentials. Complete integration with the world economy will not be easy, and many powerful vested interests stand to lose their seat at the bargaining table. But integration still stands as the best hope to spring the Middle East into a “virtuous cycle” whereby prosperity encourages changes in the manner in which rulers propagate their rule, which encourages more prosperity and so on. This means integration well beyond trading oil, arms, and a few other goods. It means political integration. It means a reduction of the role of the religious elite in politics, but not at the expense of ceding to authoritarian rule. It probably means democracy, or at least some hybrid form of it. Most importantly, it means some political power for the economic elite. It is far from clear whether Middle Eastern nations will take this path in the twenty-first century. Too many unknowable future events could trigger a path in any direction, although it is likely that the price of oil will play a role in determining the shape of this path. History gives us reason to be both pessimistic and optimistic. Time will tell which sentiment is correct.