ABUJA (2)

I define my life on the roads of Abuja

Where a hole is dug in my pocket; even bigger

As fast cars drive through at break-neck speed

Economics and Freedom in Islamic Societies

“Men persist only with the help, of property. The only way to property is through cultivation. The only way to cultivation is through justice.”[1] “Injustice brings about the ruin of civilization.”[2]

The streets of Iran get festooned in the second week of February with revolutionary bunting. Black and green banners commemorating the martyrdom of the third shi’a imam, Huseyn, flutter from lamp-posts, even though the mournful Ashura rites of late January should have been over. The banners will hang beside national flags looking forward to February 11th, when Iranians mark the anniversary of Ruhollah Khomeini’s Islamic revolution of 1979.

The emotional outpouring that characterize religious festivals in particular, the martyrdom days of important shi’ah saints, are in part convectional, but they are also massive. Men and women weep and moan, smite their foreheads, and in rhythmical unison, beat their chests.[3] Some observers think that these expressions of emotion have social psychological importance, that they are releases of frustrated and pessimistic feelings that are continually engendered by the ethos of insecurity.

The Shi’ite abandon that have flourished most especially in the Persian state for centuries as are other sectarian practices in other parts of the Moslem world, denotes the irreparable divide of the Moslem world over the political question of the caliphate which illustrates a characteristic of Islam, that every Moslem thinks of himself as living in a theocracy, although Islam itself a nomocracy, denounces in strong terms the premises upon which theocracy now reigns in the Moslem world.

The Qur’an recognizes man as a being at once rational, volitional, acquisitive, and ethical – a man completely living in liberty, acting to provide for his existence without sacrificing his moral sensibilities.[4] Thus the Qur’an insists on the harmony of man’s spiritual (liberty) and material (economic) interests, embedded in the most important and comprehensive concept of Islam at the practical level, the shari’ah.

However, because of the diversion from strict Islamic injunctions foretold by the prophet Mohammed (SAW)[5], the gradual devolution of Islamic economic and spiritual practice away from the shari’ah may as well account for why the Moslem world declined in to intellectual darkness and economic stagnation.

Today, economies are blossoming in the UAE, Saudi Arabia and Qatar to mention a few. But the circumstances that lead to the emergence of these economies and the continued deadlock in other Islamic nations to device a means to economic boom, is readily found in their mix of freedom and economic policies.

In ancient Moslem world, freedom denotes property. Ibn Khaldoun surmises, that “whoever takes someone’s property, or uses him for forced labor…does injustice to that particular person.”[6] Thus two aspects of the ethos of insecurity, fatalism and evasive deference to authority as characterized in Iranian culture many denote the lack of freedom either from the state or some external powers, which are identified as inconducive to individual and institutional innovations[7].

There is only one effective method for government to increase its revenues, and that is “through equitable treatment of people and regard for them”[8] so that “they have the incentive to make their capital bear fruit and grow.”[9] When the equitable treatment lacks, the state is certainly tilted towards feudalism, one way or the other. The misconception of this, tarnished the efforts of Iran’s last Shah,[10] crumbled every system (except the military) in Iraq[11] and caused massive bitterness in Lebanon[12] and Syria[13].

Societies are complex orders[14]. They require freedom because the information and knowledge that make them work can never be amassed by a central authority. Freedom to the process of achieving spontaneous order (in this case, stable economies) in society because we do not know in advance which rules will work, because liberty is essential to the trial-and-error process, and because the creative powers of man can only be expressed in a society in which power and knowledge are widely dispersed[15] When knowledge is determined by the existence of power, a feudalist regime would subsequently crush the aims of the Qur’an, principled in the Shari’ah.[16]

The hum of commerce eases the path of social cooperation in a free society, in part because it offers man opportunities that are simply not available when acting alone or in a state of war of all against all. Security and prosperity are interdependent and in free societies far surpasses those of nations where conflict marks difference of faith.[17]

Such celebrations like the anniversary of Ruhollah Khomeini’s Islamic revolution of 1979 usually go unnoticed in nations like Americas. But not of recent. The strong political power play amongst conservatives, clerics and liberals have continued to generate growing concerns from outside, owing to the fact the Iran produces 9% of the world’s total supply of oil, and is a key meddler cum player in issues surrounding the ‘heat’ in the Middle East. Its provocative president, Mahmoud Ahmadinejad denies the holocaust and calls for Israel’s destruction – a complete wipe out form the map.

Iran and America are presently moving rapidly towards a face-off, both over Iraq – where Iran is again meddling – and over Iran’s nuclear programme. Having removed UN seals from its Natanz reactor in January 2006, it resumed uranium enrichment and president Ahmadinejad says his country is “fiddling with uranium and plutonium to produce more electricity.”[18] But America and many other western countries suspect it is building a bomb.

Iran’s problem however, remains its foreign policies that have remained cold, rater towards the countries that seem to have the will power to help it out of its economic shambles, that have brought the whole system to near collapse since the revolution of 1979. One thing remains that Iran continues to see itself as a regional power in the Middle East and must therefore rubbish the efforts of any other, trying to meddle.[19] However stiff Iran’s policies might be to western civilization and freedom at home yoked with strings of limitations, it is pertinent that the slow journey of Iranians out of isolation and in to modern, westernized world is gathering pace. With two thirds of the population under the age of 30[20], Arab tribalism beyond urban fringes is easily broken than idols.

At night in the city of Esfahan, ancient capital of Persia, by the river an on the boulevards, giggling teenage girls dart out to shove scraps of paper in to the hands of loitering boys. On each is scrawled a mobile phone number – “message me, if you like me too”, as the meaning. Surfing internet chatrooms, watching satellite TV from the illegal dish that everyone seems to have and using your mobile to set up a blind date are just a few ways to meet members of the opposite sex and sample the ways of the world outside.

All these despite the restriction of Iran’s powerful clerics and however much they may rail against the cultural invasion of the US and its acolytes – they say – on curbing the spread of Islam, the prime worry remains economic. Prior to the stiffer sanctions in October this year, the investment pinch from earlier sanctions is greatly being felt across the country: the government now offers cash for priority jobs, such as building oil refineries. All dollar exchanges, including small transfers for private individuals have become extremely complicated and it is very hard to use a credit card to buy online from inside Iran.[21]

Iran may seem defiant, but a recent poll showed that a staggering 70% or more think dialogue with America is a good idea. Outraged conservatives might have instantly clapped the pollster in jail, but that won’t change street attitudes, but reformed policies would.[22] Aside that, decentralization of ownership of the resources down to the level of the individual, protected by a system of well defined property rights including the internalization of costs incurred by environmental impact must be the first concern of Iran, and indeed an Islamic government towards an economically successful society. Besides, sound monetary policies are a pre-requisite for sustainable comprehensive development, although it is disturbing that modern Moslem economies have overlooked the fact that a sound money is an indispensable pre-requisite.

The immunity of Mecca’s sanctuary against outlawry and outrage had promoted this city’s commercial importance. The prophet Mohammed (SAW) made Ka’bah, the sanctuary of a monotheistic faith whose sacred writings were impregnated with the injunctions and prohibitions needed by a business community for secure and stable trading. If only successive generations would not drift farther from the principles of the religion.

© 2008 Atlas Economic Research Foundation

My entry for the Ibn Khaldoun Essay Contest for 2007.

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[1] Ibn Khaldoun 1967, v. I, p. 64.

[2] Ibn Khaldoun 1967, v. II, p. 103

[3] Iran: Daily life and social customs. Encyclopædia Britannica Online. http://www.britannica.com/eb/article-230063/Iran.

[4] Ahmad I. A. 1996, An Islamic Perspective on the Wealth of Nations. Minaret of Freedom Preprint Series 96-4.

[5] Prophet Mohammed is said to have foretold, that the first generation of Moslems adhere most closely to the principles of the religion and each successive generation drifts farther from it.

[6] Ibn Khaldoun 1967, v. II, p. 107.

[7] The Islamic idea that property is a consequence of development does not differ from – and anticipates – Locke’s notion that use establishes the right of property. Thus, when lands are conquered, shared and used, it automatically becomes the property of the occupant. Thus property is strictly viewed in terms of individual, communal and state basis. Only through zealous protection of the property rights of the people (both their private property and the environment) can society spontaneously productive economies.

[8] Ibid., p. 103.

[9] Ibid.

[10] Iran: Protest and failure. Encyclopædia Britannica Online. http://www.britannica.com/eb/article-230078/Iran

[11] Iraq: Iraq under Saddam Hussein. Encyclopædia Britannica Online. http://www.britannica.com/eb/article-232292/Iraq

[12] Lebanon: Consequences of the war. Encyclopædia Britannica Online. http://www.britannica.com/eb/article-23382/Lebanon

[13] Syria Ba'thist Syria after 1963. Encyclopædia Britannica Online. http://www.britannica.com/eb/article-29927/Syria

[14] Nigel Ashford. The Freeman: Ideas on Liberty - July 1999. Vol. 49 No. 7. Foundation for Economic Education.

[15] Ibid.

[16] Life in a free society can then be hard because it will force individuals to adjust to the needs of others. The free society works because it coordinates conflicting desires by creating incentives for people to satisfy those of others. This is the opposite of a state in which one can only achieve one’s aims at the expense of others.

[17] Ibid.

[18] The Economist. Volume 382 Number 8515. p.25

[19] It opposes the United State and Israel, the former as a military power that threatens it in the Persian Gulf, and the latter as part of its stance and support for Palestine. Iran thus stands to eliminate outside influence in the region, as seen in its sponsored Taleban government in Afghanistan before the ouster and war.

[20] A birth boom was encouraged during the first years of the Islamic revolution to provide a steady flow of young martyrs for the eight year war with Iraq.

[21] As a result, Iran is finding it increasingly expensive to borrow money. Foreign government-backed credits are getting harder to come by, even legitimate businesses are suffering, as foreign banks find it hard to be certain that the transactions they handle are not being diverted for nefarious purposes, through Iran’s network of front companies. Already, capital is fleeing the country, much of it reportedly ending up in Dubai.

[22] Ibn Khaldoun in his magnum opus – the Muqaddimah, says “in the attempt to earn the increase of capital that constitutes profit, it is unavoidable that one’s capital gets in to the hands of traders” and “all this causes the merchant a great deal of trouble… if he is not afraid of quarrels, knows how to settle an account, and is always willing to enter in to a dispute…he stands a better chance of being treated fairly…” Ibn Khaldoun, Wali ad-Din 1967, The Muqaddimah: An Introduction to History, Franz Rosenthal, trans. (Princeton: Princeton Univ. Press).