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Markets and the Rise of Islam

Economic Conditions, Political Authority, and Social Identity on the Arabian Peninsula, 550 - 750 C.E.


May 17, 2011


"Allah has permitted trading"

-- Qur'an, 2:275


"There is no sin on you if you seek the Bounty of your Lord"

-- Qur'an, 2:198


Globally, modern economies are dominated by the concepts and realities of markets. Theoretically and practically, markets occupy a position of great respect, and therefore, in attempting to comprehend world politics, economics, or history, a student must ask: what is the history of markets? Modern scholarship reveals that any answer to this question must incorporate early Arabian and Islamic developments; however, despite decades of advancement regarding global history, ill-considered Eurocentric theories of market history persist to this day. In this regard, we repeatedly encounter the influential, but now invalidated claims of Max Weber and Joseph Schumpeter. Weber's theories, which dismiss Arabian, Islamic and non-Western developments generally (and even Western developments prior to the sixteenth-century C.E.), continue to "underlie much of contemporary ... historiography and have at least some influence on almost all of it." Looking further backwards, Schumpeter began with Greek and Roman thought, but focused on the West, ignored early Eastern developments, and, on reaching the era of Charlemagne, promptly proclaimed; "we may safely leap over 500 years to the epoch of St. Thomas Aquinas." In addition to Eurocentrism, Mahmood Ibrahim notes many Muslim chroniclers depict pre-Islamic life writ large as a time of Jahiliyya, dismiss the pre-Islamic context, and consequently misunderstand Islamic economic history.

Although historians have corrected these mistakes, and shown the importance of Islamic markets by such phenomena as the Islamic Golden Age, a quick bell-weather poll of popular sentiment, Google, returns many thousands of unfortunate historical inaccuracies regarding Islam, including the sweeping generalization "nothing good has come out of Islam." Hence, because economies are dominated by markets, and because both popular and academic sentiment continually misreckon the importance of Islamic contributions to economic history, and also because we are living today in a historic moment of the Middle East, it is crucial to promote the understanding of Islamic market history.

As noted, the Golden Age of Islam depended on economic markets, and thus the questions arise: What conditions established the economic foundation that permitted the Golden Age? What gave rise to markets in the Islamic medieval economy?

Because the rise of markets is a broad topic that spans centuries, it is necessary to develop a sound understanding of the conditions that existed prior to, during, and immediately after Islam's ascendancy. For this reason, to fully appreciate the history of Islamic markets, we will focus our attention on early developments. We shall first examine the situation that existed with respect to markets during the pre-Islamic era, follow this with discussion of the predominant factors and processes that coincided with the rise of Islamic markets, and close with a high-level survey of their impact.

Looking outside the Arabian Peninsula in the pre-Islamic era, we see that by the second half of the sixth-century C.E. the circumstances of the region were, according to one historian, "devastating." The major powers external to the Arabian world -- the Roman, Sassanid, and Byzantine Empires -- were in decline, and by the close of Justinian's reign, circa 565 C.E., the Roman economy had declined precipitously, never to recover. All three Empires were plagued by agricultural and commercial problems, and by the seventh-century C.E. internal problems and rivalry between the Sassanids and Byzantines drove both Empires to abandon client states. Looking broadly at the period, one historical outline shows prolonged instability, punctuated by repeated instances of state repression, political murders, the abdication of rulers, widespread social disorder, and war.

The pre-Islamic context of the Arabian Peninsula was also perilous, and in the closing decades of the sixth-century C.E. governments were unable to sustain themselves. Political institutions, statism, and even international affairs did however have a history on the Peninsula, and the inhabitants of the Arab world possessed shared social, economic, and political experiences and habits. Trade and markets connected disparate groups, and was an established fact of life across the Peninsula. Examining the material and social bases of groups that participated in trade, we find that groups were largely divided along the lines of labour and lifestyle, being nomads, or pastoral, or settled. Many groups generated a productive surplus, and traded that surplus in market centers. Mecca, for example, arose to prominence as a market center as the result of the intersecting patterns of religious pilgrimage and trade exchange. Already in pre-Islamic Mecca; "Pilgrimage rite and trade were indivisible."

An integral component of trade and markets was the caravan. Caravans were a foundational aspect of the Arabian economy, having existed for many centuries prior to the establishment of Islam, and being large-scale undertakings that frequently involved all members of a tribe. Caravans bearing goods and specie from distant lands entered Arabian markets, and left those markets bearing Arabian goods destined for distant lands. In this way, those who participated in Arabian markets encountered, and developed exchange practices involving monetary elements. Thus we observe here important conditions that contributed to the rise of market centers such as Mecca, and later Medina, and that would see these centers develop into important progenitors of Islamic culture. Notably then, with respect to Jahiliyya, modern observers must therefore be careful not to make unwarranted claims regarding the economic development of pre-Islamic Arabians. As Hosseini notes; "The life of the prophet Muhammad, himself a merchant ... is testimony to this fact." But, as Hosseini also observes, the influence of merchants and the development of markets were limited by the authority of tribal structures, which continued to predominate in all matters.

Tribal culture notwithstanding, the most powerful leaders were those who also controlled land. By controlling land, landowners also controlled, if not always the means of production, their production and surplus. Accordingly, landowning leaders were also large merchants. These "merchant clan-leaders" included political elites, and these leaders cooperated with each other to form state institutions that collectively advanced their individual interests. The merchant clan-leaders' institutions assured the safe passage of their caravans, and thus the safe trade of their goods. Being successful merchants in control of safe and reliable trade, this group thus gained an increasing amount of control over markets, and market exchanges. In turn, the influence of these merchants eroded the traditional tribal structures that had hitherto influenced markets and trade, and this accompanied centralization of wealth and power into the hands of a merchant class, composed of financially ascendant clan-leaders.

Antagonisms and unrest grew, as traditions and politics attempted to adapt to a social hierarchy that was fast becoming organized along new lines, as defined by merchants and markets. Competition amongst merchant clans and other factions increased, and Arabian groups began to shift from a mode of collective leadership towards singular leadership. Extant patterns of tribalism were unsuited to cope with such a shift, and as a result wider social conflict followed this social stratification. By the turn of the seventh-century C.E. then, strong Arabian markets existed, and the strength of trade patterns produced a powerful merchant class, who in turn presented society with a number of crises. The primary crises were: authority; unsustainable fiscal imbalance; social identity; and group cohesion. Although these problems arose quasi-independently, they were interconnected; and the underlying connections of these issues generated a context that effected a new belief system, to address and solve these difficulties by way of a new leadership principle, five pillars, and the ummah; Islam.

Islam, per its Prophet Muhammad, arrived in 610, in the midst of an economic crisis that was born of markets and trade, and that manifest itself socially. Where tribal sociopolitical forms had proven unable to cope with the pace and unfamiliar demands of flourishing markets, Islam arose with a comprehensive resolution to the social and political problems confronting the emergent merchant class. Looking to the previous paragraph, we discover that the new system presented by Muhammad offered direct solutions for each of the major crises facing Arabian society and merchants. Authority: Allah and shahadah. Unsustainable fiscal imbalance: zakat. Social identity and group cohesion: salat, sawm, ummah, and haj. The nature of these problems had been closely connected to market conditions, and, in connection to Muhammad; "Islam sprang from a mercantile society," and addressed the needs of "an active trading community."

Muhammad spoke directly to the needs of those with little access to merchant capital, and, considering the power of entrenched interests, it is important to note that Islam rose quickly to prominence also among the merchant class. Interclass association via the ummah extended social sets, and the obligations of Islam, such as zakat and salat, facilitated new relationships between social groups. Of course, already powerful merchants derived the most benefit, as their business practices and markets became further institutionalized. But, nevertheless, as institutions arose to organize the management and dispensation of resources, new opportunities and positions developed, and formerly suppressed groups were socially and economically enfranchised, as a direct consequence of the socioeconomic reorganization brought by Islam.

Another direct consequence of Islam on the economy was that the successful merchant class -- who had first shaped the conditions of market exchange, but then experienced unrest because of the resulting economic conditions -- were now esteemed for their business acumen. As Muslims, the merchant class enjoyed both divine sanction and political authority, and continued to influence the shape of market institutions; and, to the benefit of all Muslims, merchants now worked to ensure an economic wellbeing that was much less narrow than it had been during their pre-Islamic reign. Therefore, in both intention and effect, what Muhammad and his followers had achieved was the Islamization of the market.

Here it was: the first medieval Islamic market. However, though the market had risen, its rise was not yet over, and Islam continued to focus the lives of Muslims on economic engagement and expansion. Per Hosseini; "Islam, from the very beginning," "placed an emphasis on the economic aspects of life." The Qur'an itself went so far as to inform followers that a Muslim who sails is absolved of sin, and the Sunna further promoted seafaring in support of trade and market related activities. By such facts we observe that Islam possessed an innate passion to expand its economic base, no doubt having developed that passion as a reaction to the political instability within which Islam had arisen.

To combat social instability and facilitate economic growth, Muhammad established Medina as a market without trade taxes, for he believed only the will of Allah should control prices, and that human attempts to install such regulations could only hamper trade, and "destroy the market process." However, though the Medinan market was free of taxes, it, and other Muslim exchanges were not free of all controls. Market activity was foundational to Islamic society, and accordingly, Muslims regulated the access of traders to markets, and employed faithful tribes to secure trade routes.

With well-guarded trade routes and markets established, Islamic support of economic activity bolstered the development of Mecca, and its expansion was rapid; soon, "Houses climbed up the mountains." This focus on economic matters continued well beyond Islam's early years, and, overruling his conservative Muslim opponents, the first Ummayyad Caliph Muawiya (661-680 C.E.) constructed buildings and levied taxes in Mecca, thus exhibiting a belief in the primacy of economic progress over the placation of Islamic particularists. Particularist interpretations of politics had become a pivotal issue upon the death of Muhammad, and a number of tribes that had previously paid allegiance to Muhammad and Islam via taxes and subordination, then attempted to extract payment from Medina for permitting, rather than securing trade. Here, Islamic leaders perceived that to maintain the control of markets and expansion, they would have to undertake a definite program of Islamic expansion. So began the Ridda wars.

Through the Ridda and subsequent wars, Muslim markets and institutions obtained supremacy across the Arabian Peninsula, and Islam assumed dominance in territories from Western Asia to Northern Africa, including regions previously held by the Roman, Byzantine, and Sassanian Empires. Within a little over a century from the birth of Islam, the majority of the Mediterranean coastline came under the control of the Islamic market, and yielded important economic centers; and, with the ascendance of the Abbasid Dynasty which was installed during the latter half of the eighth-century C.E., a large scale market Islamization occurred, as under Abbasid rule all subjects were treated equally with respect to economic policy.

Perhaps the most significant point regarding Islamic markets and economic policy was their durability, which has been proven historically. Via the study of tax collection records spanning multiple centuries, a marked uniformity has been observed in the stability of bureaucratic methods and even vocabulary, as found in the provinces of the Islamic Empire. Similarly, uniformity was also observed in the constancy of wages and consumer prices, again, over extended periods of time. Such uniformities display the remarkable constitution of the Islamic market system, for its basic features remained stable even as the culture and technology it supported continued to evolve, and dramatically so.

Throughout Islam's expansion, political leaders depended heavily on the merchant class for leadership, and with the help of this group the Islamic Empire not only gained jurisdiction over existing trade centers, but also established new cities in which Islamic markets took root, thus expanding the Islamic trade network, and reinforcing both the market's and the ummah's strength.

With the above remarks in mind, we may now present an answer to our opening inquiry: What gave rise to markets in the Islamic medieval economy?

During the medieval ages, at a time when the major powers of the world were in a stage of decline, merchant exchange thrived on the Arabian Peninsula. Traders and merchants found protection and support under the auspices of ruling powers, and a class of merchant clan-leaders emerged. Though the initial upsurge of these market based powers was not entirely welcome, a singular Arabian thinker arrived with a sublime system that offered a totalizing solution to the social, economic, and political concerns of merchant clan-leader elites and the populace alike; Islam. Within a few decades, a society that may very well have given way to civil war instead overcame its internal divisions, organized itself and its markets by the lights of Islamic principles, activated the economic potential of the population, and drove Muslims to expand the base of their economy and their religion beyond the Arabian Peninsula, and to establish themselves as the rulers of a medieval market that spanned an Islamic Empire. The market practices of that Empire, along with Islamic writings on economic thought, would profoundly influence economic activities in places far removed from Islam's birthplace, and contribute eventually to the advancement of Western economic thought -- if not the economic theories of Max Weber and Joseph Schumpeter.

Thus, if we hope to avoid the mistakes of men so profound and original as Weber and Schumpeter, we must understand that any theory of market history necessarily requires a study of the rise of Islamic markets, as well as appreciation of the fact that the history of markets, and thus the world, is inextricably bound to the history of Islam.


Part of the series: UWO