Religion and Political Economy in History (Part III)

In my previous two Broadstreet posts, I discussed various ways in which religion has played a role in historical political economy. These included ancient religious (“big gods”), religious legitimacy, and religious persecution. If those topics interest you, you should check out those posts! Although they hardly cover the entire literature, I think they give a nice flavor of some of the best work recently done on these topics.

Today I want to address another topic at the intersection of historical political economy and religion: public good provision. This is a central topic in HPE, and some recent work suggests some avenues through which religion may have played a role in shaping its development.

The Economic Legacies of the Waqf

Since the first century or so of Islam, public good provision in the Middle East was overwhelmingly provided by the waqf (plural awqāf). The waqf is a “pious trust” that is meant to provide some good in perpetuity—schools, fountains, bridges, and the like. They were a great mechanism to incentivize public good production in a relatively low fiscal capacity, autocratic state. Their “pious” nature gave a founder local prestige while also making it less likely that rulers would confiscate their assets.

However, this benefit of awqāf had many unforeseeable consequences, as spelled out in a series of articles by Timur Kuran and his wonderful book, The Long Divergence. While the distributions provided by a waqf generally had positive social benefits, it also had economic and political consequences due to particularities associated with their founding.

The waqf complex of Bayezid II in Amasya (Source: http://www.turkishculture.org/lifestyles/institution-967.htm)

Perhaps most importantly, the rules laid out by the waqf founder were extraordinarily difficult to change, even generations after his or her death. On the surface, this may not seem so bad: people still put stipulations on trusts in the 21st century so that those with rights down the line will not use the resources poorly. So why was this such a big deal?

One reason has to do with how awqāf were historically used to evade Islamic inheritance law. These laws made it difficult to pass on one’s inheritance in whole to a single heir. Instead, there was a pre-ordained formula which would see many heirs receiving a slice of the pie. This was especially true for wealthy merchants who likely had many wives and many children.

One could keep assets consolidated by endowing a waqf. Sure, the waqf had to have a publicly beneficial purpose. But the endower could also pay the administrator (mutawalli) a very handsome salary. Conveniently, this administrator could also be the founder’s preferred child. Since waqf assets were relatively secure from the prying hands of the state, they were an attractive way to consolidate assets over multiple generations.

So how is this related to the difficulty of changing waqf rules? Kuran argued, quite convincingly in my opinion, that the waqf was the most likely candidate in the pre-modern Middle East to transform into an organizational form capable of conducting “big business” (à la the corporation in Europe). It had perpetual life beyond that of the founder—a key component of larger business organizations. It was relatively free from confiscation. It permitted the consolidation of assets in a manner that was otherwise absent in Islamic law. It provided social prestige to its founder. For these reasons it was ubiquitous: wealthy Muslims regularly endowed awqāf, and they were among the most important institutions of the pre-modern Middle East.

This is precisely why their inflexibility mattered. A waqf that was directed to endow a madrasa had to do so in perpetuity. It could not use the returns from the endowment in any manner not approved by the founder. Awqāf could therefore not respond to new economic opportunities.

In short, Kuran claims that two aspects of the waqf ended up contributing to the long run economic stagnation in the Middle East. On the one hand, because of their many attractive features noted above, they absorbed a lot of capital. This would not have been so bad if they could have transformed in a manner that would have permitted them to employ the capital to highly valued uses. However, they were legally not allowed to do so. Their inflexibility meant that all of this capital ended up in an organizational form that could not respond to changing economic circumstances.

The Political Legacies of the Waqf

Awqāf also had implications for the politics of Muslim states. Kuran argues that similar mechanisms that led to economic stagnation also led to political stagnation – i.e., authoritarianism. As noted above, awqāf controlled significant resources in many Muslim societies, especially among those that were privately controlled. Kuran argues that this meant that waqf directors should have been in a prime position to enter into political coalitions that could build civil society and act as a counterforce to the autocratic tendencies of the state.

But awqāf were never employed this way. The reason, again, is that the waqf mission was fixed. It could therefore not enter into new political coalitions that formed after its directives were set. According to Kuran, this meant that one of the most likely sources of resistance to the state did not in fact resist the state. This set the stage for autocracy to thrive, as it has in most Muslim states in the pre-modern and modern periods.

Indeed, the rise of Islamism has been linked to waqf activities, at least in Indonesia. A fascinating study by Samuel Bazzi, Gabriel Koehler-Derrick, and Benjamin Marx explores the consequences of a sharp increase in the amount of land transferred into waqf in the 1960s. For similar reasons as noted by Kuran, this was done to avoid the prying hands of the Indonesian state, which became much more expropriative in this decade.

Waqf assets were exempted from the redistribution plans of the state, and they were thus an attractive “investment” for one looking to get something (social prestige) out of their capital in the face of a regime that sought to expropriate from society at large. Local religious leaders ended up being the big beneficiaries of this transfer. Awqāf supported Islamic schools and madrasas, both of which increased their local power.

In the short run, this did not have much impact on local politics. However, in the long run, those places with stronger, better-funded religious authorities were in prime position to become leaders in Islamic political parties. This ended up having a host of downstream consequences. Those places with greater waqf investment in the 1960s had, decades later, greater support for Islamist political parties, larger religious sectors, and greater adoption of local sharia laws.

Public Goods after the Reformation

It is not only in the Islamic world where religion has played an important role in public good provision. For most of European history after the fall of the Roman Empire, the Church played a key role in the provision of certain types of public goods. This was particularly true of poor relief. Most premodern European states had weak fiscal capacity and could neither afford nor administer broad social welfare initiatives. The Church tended to be the organization that filled this void.

This raises the question: what happened to this type of public good provision after the Reformation undermined Church authority – and Church resources – wherever it took hold? Surely something must have replaced the Church as a provider of public goods.

In a recent paper, Jeremiah Dittmar and Ralf Meisenzahl argue that the birth of secular public goods institutions, at least in Germany, were a direct result of ideological and political competition brought upon by the Reformation. Throughout the 16th century, a number of German cities adopted ordinances that led to greater public goods provision, particularly in welfare and public education. Unlike before, it was secular government that was responsible for its provision. Why was this the case?

Dittmar and Meisenzahl’s analysis suggests that a combination of things led to this result. First, the Protestant Reformation created ideological competition between the new Protestant groups and the established Catholic Church. This gave Protestants an opening to use local public goods as a means of competing for adherents. This was all the more the case in places that had recently been hit by plagues – which weakened incumbent elites and raised the demand for public goods. These forces combined to make public goods institutions more likely to pop up in cities recently hit by plague. In the long run, this had a host of positive consequences for human capital, administration, and city growth.

Once again, the articles I have overviewed here are just the tip of the iceberg in terms of high-quality studies linking some aspect of religion and HPE. While eventually I will move on to blogging about something else, it may be a while…

Author(s)

  • Jared Rubin is a professor of economics at Chapman University. He is an economic historian interested in the role that Islam and Christianity played in the long-run “reversal of fortunes” between the economies of the Middle East and Western Europe. His book, Rulers, Religion, and Riches: Why the West got Rich and the Middle East Did Not (Cambridge University Press, 2017), which addresses these issues, has won multiple book awards.

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