An article published in Time magazine recently describes why Islamic societies are so economically backward. Why is this? Because Islam discourages innovation and capital formation. In addition, the penalty for apostacy made it difficult to do business in non-Muslim countries.
Money Jihad provides an overview:
Michael Schuman at Time magazine has written a good article openly supporting the theory that the Islamic world suffers economically because of Islamic law itself. Normally, the mainstream media subject readers to arguments about the legacy of colonial “exploitation” or some other nonsense to explain Muslim poverty, so this honest acknowledgement of the obstacles to economic growth that Islam creates is quite refreshing.
Islam’s prohibition of riba (interest), while not specifically cited in the article, is certainly one of the major factors which retarded the development of modern financial systems in the Islamic world.
The economic condition of Islamic nations is quite depressing. One recent article revealed that inequality is rampant across Islamic countries, and that 230 million people in Islamic countries suffer from hunger. Amazingly, while millions of Muslims live in misery created largely by Islam, Iranians and Muslim allies of the Occupy Wall Street protestors have the nerve to criticize American capitalism and its effects on the world.
The Time article notes:
The new institutions of capitalism gave the West an edge that it has never relinquished. Even after strict Islamic law was eventually liberalized in many parts of the Muslim world, its strictures had already done their damage, leaving the Middle East devoid of the strong private economies it needed to compete.
When Arab countries then tried to copy Western economic institutions, like courts with European commercial codes, they proved a poor fit. Having not emerged naturally from society, the imported institutions didn’t work as they did back home. In modern times, that left the state to play an overly powerful role in the Middle East’s economic development, which didn’t produce the same, amazing results of the Asian model based on trade and entrepreneurship.