Jared Rubin on Christian and Islamic Economic History
Date: November 28th, 2011
One of the great puzzles of economic history is why a disorganized and war-torn medieval Europe economically surged ahead of the more culturally advanced Islamic world beginning roughly in the 11th century, eventually culminating in Europe being the birthplace of the Industrial Revolution. Are the reasons for these different trajectories related entirely to secular causes, or does religion and religious institutions play a role in conditioning each region’s path? Prof. Jared Rubin, assistant professor of economics at Chapman University (known for being across the street from Bruxie’s), leads us through this fascinating story beginning with what each civilization looked like in the early-mid medieval period (c. 9th and 10th centuries). He then reviews the standard economic explanations for this divergence and we briefly discuss why economists have largely ignored the role of religion and other cultural factors. Jared then primes us for his explanation that focuses on the relationship between religious and political authorities by focusing on one crucial difference that emerged between these two societies — the role of usury laws and how they were enforced. We talk about the origins of usury doctrine, noting that usurious interest was a common practice for consumption loans (as compared to entrepreneurial investment) and was seen by Judaism, Christianity, and Islam as sinful or improper. Jared then traces how changes in the relationship between political and religious authorities affected how prohibitions on usury (and regulations on interest in general) changed in the two regions. With political authorities gaining the upper hand on religious authorities in Europe by the 1400s and 1500s, laws prohibiting or regulating interest rates were significantly relaxed allowing investment capital to pool more easily in Europe, thereby spawning a virtuous cycle of economic growth. These changes did not occur in the Islamic world where religious and political authority remained more tightly intertwined. We finish our discussion with a preview of Prof. Rubin’s work on the economic role of the printing press in European economic development. While the role of the printing press is often given a central role in the economic history of Europe, Prof. Rubin provides a new reading of why it was so important. His full explanation will have to wait until his book is published and/or he returns to our podcast. Recorded: November 8, 2011.
Jared Rubin’s personal website and Chapman University site.
Association for the Study of Religion, Economics, and Culture (ASREC) via ARDA.
Timur Kuran on Islamic Law and Economic Development.
Larry Witham on the Economics of Religion.
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