The contribution made by the Arabs to science and mathematics is well known. What Mr Koehler shows in an excellent well-researched book is that they did something similar in the field of finance and economics.
Living in largely barren territory, the Arabs became traders. Trading with countries in faraway places entailed taking great risks. People were prepared to put up money (capital) in risky ventures so long as they got a share of the profits. Usury was condemned on loans where repayment of the principal is obligatory. Where the capital is at risk it is entirely reasonable to demand a share of the profits.
Islam laid down guidelines on trade, consumer protection, business ethics and property. Muslim Arabs evolved the concept of what we now call trust, where you hold assets on behalf of others. Madrasas, funded by endowments set up under trust, educated people in law. They churned out a judicial class that arbitrated in disputes. The Koran was the primary source, the sayings and actions of the Prophet (hadith) next. Failing those, they had to use their own judgment but be guided by other similar cases. In this they often relied on Christians and Jews. The judgment handed down then formed a precedent. This was the beginning of common law.
Arabs were also responsible for a series of financial innovations such as the creation of corporations, business mathematics, business management techniques and monetary reform. Through their links with Venice, these ideas were copied by the West. The mediaeval Italian mathematician Fibonacci wrote a treatise on Arab business mathematics for European readers and Francis of Assisi, who dismayed the Vatican by renouncing wealth, saw the madrasa model and educational establishments funded by charitable endowments as a way forward. The first Oxford and Cambridge colleges (Merton and Peterhouse) were based on that principle.
Interestingly, the author makes no claim for the Arabs in the invention of double-entry book-keeping, credit for which remains with Luca Pacioli, a Venetian renaissance mathematician.
Why then did the Arab influence decline? The then global principal trade was in silk from China and pepper, from India. The discovery of a new trade route to the east, via the Cape of Good Hope meant that the Spanish and Portuguese could bypass the Arabs. The Suez canal was four centuries too late. The discovery of America was another nail in the coffin. Venice suffered and Genoa assumed ascendancy.
Francis of Assisi sought to demonstrate the superiority of Christianity over Islam by challenging a Muslim to walk with him through fire; the standard medieval approach to test a man’s faith. The challenge was rejected due to the fact that the Islamic court’s approach was to sift the evidence and assess the competing arguments, rather than rely on miracles.
Today we have the Taliban and the so-called Islamic State dispensing injustice. How times have changed.
Published by Lexington Books
Icki Iqbal is a former director of Deloitte
