Guy Sorman has an interesting article at City Journal attacking the notion that Islam and capitalism are incompatible:
But a bigger reason for the Arab world’s stagnation is political. In nearly every Arab Muslim country, the prime enemy of entrepreneurship and the free market is an abusive government—and the strong, unaccountable, and usually despotic regimes that have dominated Arab Muslim populations for decades owe neither their origins nor their legitimacy, such as it is, to Islam. All emerged from the decolonization struggles of the 1950s and 1960s, which, since the primary colonizers were Europeans, provoked angry anti-Western and anticapitalist attitudes in Muslim societies. The decolonization of the Arabs did not go well. Violent confrontations were the norm, even when full-blown war didn’t break out, as happened in Algeria. The upheavals brought military regimes to power in most of the decolonized Arab states; even when the military wasn’t officially in charge, it controlled puppet governments, as in Morocco. All these regimes espoused nationalism and resisted any rule of law that might limit state power—or give entrepreneurs a freer hand.
Turkey is a particularly instructive example:
Islam wasn’t to blame for Turkey’s poor economy. Indeed, the new republic was fiercely secular; for decades, no openly devout Muslim could hold any significant position in public service, in the military, or even in business. Modern Turkey started to grow economically only after it began to free up the market under former World Bank economist Turgut Özal, a devout Muslim whom the military had installed as prime minister in 1983 to bring inflation under control. Özal’s reforms opened the way for the openly Islamic, pro-market Justice and Development Party, or AKP, which has ruled Turkey since 2002. Whatever criticisms one might make of the AKP—it has on occasion sought to impose religious norms on a secular society, among other troubling signs—it has brought about an astounding transformation of Turkey’s economy. The state’s budget is balanced, prices are stable, free trade is enthusiastically embraced, and crony capitalism has been constrained.
The relationship between religious doctrine and cultural practice is hard to assess. Does a certain culture behave in certain ways because of its religious views, or does it adopt religious views that fit the pre-existing values of the culture — or does it interpret its religion in the light of its cultural believes? Does the theological chicken precede the economic egg, or is it the other way round?In any case, many Islamic countries today are unhappy with their level of development and while some (Turkey, Malaysia and Indonesia for example) seem to be doing something effective about it, many others are not. It’s unfortunately not likely that any dramatic changes in economic prospects for countries like Egypt will emerge in time to stabilize a liberal democratic regine in the near future. The Arab world will cope with the Arab spring in bad economic conditions, that is the main point and it is one we do well to remember.