The origins of political economy

Another task of the volume is to see whether old-fashioned notions of the origins of the subject of economics, such as ‘Political economy is in truth the creation of what has been called the European genius’ (Nys, 1899, x), have any validity whatsoever, or are entirely imperialist constructs.

The Middle East again provides some illumination. It is conventional to highlight a ‘golden age' in the Muslim world occurring roughly from the eighth to the thirteenth centuries, which was based at least in part on an expanding ‘Islamic Empire'. This Empire included the various Muslim Caliphates and absorbed ‘Persian culture in addition to the Hellenistic culture brought by Alexander' (Backhouse, 2002, 35). Muhammad had helped to establish a unified form of government in the Arabian Peninsula under Caliphate rule, although later the Sunni and Shia versions of Islam diverged over the function and status of the Caliph as ruler. But, as has been astutely outlined, the Muslim ‘golden age' was not entirely Muslim:

What was this ‘golden age'... a surprising union of cultures which took place in the late eighth and early ninth centuries... The new Abbasid dynasty who ruled from Baghdad not only favoured trade, commerce, and public works (which, as usual, require mathematics at some level), but... saw a value in pure research... Scholars from what we can see as a melting-pot — Syriac, Greek and Arabic speakers, Christian, pagan, and Muslim — combined in the work of translation... a synthesis was essential.

(Hodgkin, 2005, 109-10)

That mathematics was highly regarded is evident from the Arabic term ‘al-jabr (restoration), the origin of the English term algebra, as found in the title of Al-Khwarizmi's Book on Restoration and Balancing from around 825 ad, which dealt with finding solutions to mathematical equa­tions.

But this positive understanding of Muslim history is partly a recent development. One contributor to this volume notes the disproving of the ‘great gap' thesis advanced by Joseph Schumpeter. According to Schumpeter ‘we may safely leap over 500 years to the epoch of St. Thomas Aquinus' (Schumpeter, 1954, 74), i.e. nothing much happened in economic think­ing for half a millennium, during most of the Muslim ‘golden age'. This echoes a previous quote on political economy being the result of European genius.

On this issue it is worth highlighting a relatively neglected yet rather interesting book entitled Researches in the History of Economics by Ernest Nys, which was first published in English in 1899. One interesting aspect of this book was that it treated economics more as culture than as pure theory. Another was that it highlighted the fact that:

Musulman [i.e. Muslim — VB] culture gave to the mind the first impulse towards research and enterprise... Progress in the art of engineering and in the use of projectiles, develop­ment of the study of geography, medicine, botany, and mathematics, these were some of the effects of contact of the West with Arabs during the Crusades.

(Nys, 1899, xxiii-iv)

Nys had evidently never heard of anything like a ‘great gap' thesis. Obviously the natural sciences are not economics, but according to Nys, in the ‘Arabo-Berber states' the ‘Musulman govern­ments' were based on religion in association with prosperous trading, as theorized by contemporary scholars such as Ibn Khaldun (1332—1406) of Tunisia, the author of a major work that ‘wove together economic, political and social change' to explain the growth of civilizations (Backhouse, 2002, 38). That ‘Arab-Islamic' economic thought did reach the West shows that while national cultures do exist, they are not immune from external influences, even from very different cultures and distant geographical regions.

Of course in the Middle Ages, the distinctions between natural, social and applied/practical knowledge were much less clear than they are today. Thus, in the Medieval Arab world ‘biology was always considered a subsidiary branch of agriculture and medicine', yet ‘Arabic agricultural texts were mainly derived from Greek sources' (Taton, 1963, 416). This is perhaps why one scholar has used the term ‘Greco-Arab Islamic ideas' to describe early Arabic economic thinking. When considering such distant eras, it is sometimes difficult to be precise about cultural origins.

The contemporary Middle East region is very different from the period of the ‘golden age' of Muslim culture: the period after 1973 could perhaps be termed a new ‘black-golden age' of Arab economic power, but perhaps not of Arabic contributions to economics. A defining policy feature of the oil-rich Gulf States has been the existence of the OPEC oil cartel. Insiders within OPEC like Fadhil Chalaby, for some years its Secretary General, have documented the ineffectiveness of OPEC, arguing that it became a prisoner of its member states' budgets and the need to get maximum income in any given moment (Chalaby, 2011). It has thus provided lessons in the problems associated with managing a cartel when the interests of its members diverge, as had been predicted some years previously by a Nobel Prize-winning American economist (Stigler, 1964). But does this example signify that neoclassical price theory has been proved correct and applicable to all regions?

It is interesting to note that the OPEC oil cartel merits only one brief mention in Ingrid Rima's Development of Economic Analysis, where an economic technique for reducing OPEC's monopoly price is recommended (Rima, 1996, 536). It is also worth pointing out that although the collapse of the Soviet Union in 1991 put an end to central planning across Eastern Europe and Russia, in Saudi Arabia the ninth five-year plan was set in operation for the period 2010—14, and therefore neoclassical economics is not entirely triumphant in the region, despite the fact that OPEC has not always been successful in its cartel policies.

The major political issue in the contemporary Middle East is of course Israel and the Palestinians, and Judaic economic thought has a very long history, just like its Muslim counterpart (Sauer and Sauer, 2012). As with Islam/Arabia, Judaism as a religion is distinct from Israel as a nation-state, although there are obvious links between the two. However, while in the case of the link between Islam and Middle Eastern countries, Muslims identify themselves with various currently existing nation-states and only sometimes with a wider Islamic nation, in the case of Judaism this religious identity is linked to only one state: the complex links between economic ideas and the construction of a nation are revealingly explored in the chapter on Israel.