All the shoemakers are on another street and provide identical products and services. There is no competition. On the contrary, the system is designed to eliminate competition. Th e result is a way of life that is very decent, very humane, very gentlemanly. If one of them is not doing well or is known to have problems, his colleagues will direct customers to him and generally att empt to seek a fair distribution. From the human point of view, it is an admirable system; from the economic point of view, it is a catastrophic system in that it eliminates or minimizes competition and, therefore, all the motives for improvement and invention. This lack of competition, compared with the cutthroat competition of the European merchants, was probably one of the main reasons why European trade advanced so rapidly at the expense of Middle Eastern traders.
Th e custom, familiar to visitors to the souks and bazaars, of bargaining over prices is not really a form of competition—rather an elaborate social ritual, normally understood by both sides. Sometimes, when an ignorant visitor agrees and pays too high a price, the disconcerted merchant returns more than the appropriate amount of change. Connected with the lack of competition is another deficiency—the lack of innovation. With this kind of guild system, with manufacturers and merchants not competing but doing the same thing, in the same way, at the same price, there is litt le or no incentive to devise new and bett er methods. Change in itself becomes suspect. Th ere is a religious dimension to this. In Islamic usage, the word bid‘a, literally “innovation,” has a negative connotation. Tradition is sacred; novelty is suspect. The possibility of a good innovation is admitt ed, in which case it is designated as such. The Arabic term is bid‘a hasana. But unless it is specifically described as good, an innovation is presumed to be bad. And that is not conducive to economic development.
Another important factor is the absence, shortage, or dwindling of certain resources, certain raw materials. Probably the most important of these is wood. Western travelers in the Middle East cannot but be struck by the absence of wood and, therefore, of things made of wood. Th is can be seen in housing, transportation, and many other aspects. Where wood is rare or costly, one does not use it for such base purposes as carts, but for more exalted purposes. Not surprisingly, Middle Eastern artists developed a beautiful and sophisticated art of woodwork. But the wheeled cart, the basis of transportation in other parts of the world, was virtually unknown in the Middle East. Travelers from the Middle East to both east and west, in both Asia and Europe, oft en write with wonderment about the wheeled cart, something outside their experience. Its absence from the society clearly had a very negative eff ect on the development of commerce.
Islamic Governance, Prosperous Society and a Fairer World
