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Is Europe Saved?

September has been a good month for the euro-zone. Mario Draghi committed the ECB to buy unlimited amounts of sovereign bonds of troubled euro-zone countries. There are realistic plans for joint banking supervision. The German constitutional court backed the European Stability Mechanism (albeit with some reservations). And Dutch elections reaffirmed voters’ support for pro-Europe parties. There is a collective sigh of relief in Europe and around the world. European markets are rallying, and Spanish bond yields have already dropped and are expected to drop further in another auction on September 20.

So is Europe saved?

We think not. The problems underlying the European crisis were institutional. What we are seeing now are mostly short-term fixes, not true solutions to these institutional problems.

The roots of the crisis lie in the difficulty of operating a currency union without centralized fiscal authority. But that’s not all. The problem was made worse by implicit guarantees to markets concerning the sovereign debt of all euro-zone countries, which enabled Greece, Italy, Portugal and Spain to borrow at sharply lower rates than before. This then enabled the dysfunctional political economy in Greece, Italy and Portugal (and to some degree in Spain) to persist with borrowed money and transfers.

This is not to deny the role of the global recession in triggering the fiscal problems or the fear of contagion that increased the borrowing costs of Italy and Spain, plunging these countries into a more severe macroeconomic crisis. It is certainly not to deny that austerity measures have been counterproductive or that with the ECB balance sheet behind them, these countries and their banks will have some breathing room.

But the point remains that Europe’s underlying problems cannot be tackled by short-term fixes. For the euro to survive and contribute to European economic prosperity in the medium term, Europe needs to follow the example of the United States as it transitioned from the Articles of Confederation of 1781 to the U.S. Constitution, which entailed strengthening the currency union with debt renegotiation (with the federal government assuming state liabilities) and more importantly, meaningful fiscal centralization.

And yet, there is no realistic plan for true fiscal centralization in Europe. Fiscal centralization doesn’t just mean better monitoring Greece’s austerity plans. It means a European organization with the power to set taxes and harmonize labor, product and credit market institutions. But this is not possible without some centralization of political and military power. It was crucial that with the U.S. Constitution, political and military power shifted to the federal government.

This is not on the cards for Europe, not least because Greece or France or Spain wouldn’t accept the shift of economic, political and military power to Germany that this would entail. So for the time being, we have to make do with short-term fixes, and in all likelihood, Europe isn’t saved just yet.


Sex and Repression  

Lots of interesting details in Barbara Demick’s Nothing to Envy: Ordinary Lives in North Korea about how the highly repressive, extractive regime in North Korea works. Here is one that is fascinating: all sorts of sexual activity, including dating and kissing, are highly repressed in North Korea (Most marriages are arranged by families or by communist party officials and grandees). Most people would not have had a boyfriend or girlfriend before marriage, and unmarried men and women cannot be seen together. State officials and defectors to the South claim that there is no premarital sex in North Korea. And all this despite the fact that Kim Il-Sung discouraged early marriages, declaring that men should marry at 30 and women at 28. The state even regulates women’s hairstyles and length of their skirts. And this of course sharply contrasts with the much more permissive attitudes towards dating, sex and marriage in South Korea.

Perhaps there is a pattern here. Sex — of course for regular people not the elite and their thugs —was highly repressed and regulated in Mao’s China, Stalin’s Soviet Union, and Nazi Germany. Why would this be?

Could it be that authoritarian regimes cannot pick and choose which freedoms to recognize? Could it be that you cannot give people sexual freedom and then totally repress their political and civil rights? 


Islam, Authoritarianism and Intolerance  

Yesterday’s news might be seen as a confirmation of Samuel Huntington’s Clash of Civilizations idea, pitting Islam against the West.

First was the headline news that Islamist militants, angered by a trailer posted on YouTube depicting Prophet Muhammed as a sexual predator, homosexual and child molester, attacked the US Consulate in Benghazi, set the Consulate ablaze, and killed ambassador Christopher J. Stevens and three members of his staff. There were violent protests elsewhere, including in Egypt.

Second was the perhaps equally disturbing news from Pakistan of an 11-year-old illiterate Christian girl (described as “slow” by the news reports) now freed from jail but still running from the mob, threatening to kill and burn her and her family, because of “blasphemy” (she’s accused of burning pages from an Islamic textbook).

Add to this the general poverty and authoritarianism of the Middle East and North Africa and other Islamic countries (especially if you leave out oil wealth), the case seems open and shut.

There are many versions of why Islam is at the root of authoritarianism, backwardness and poverty in these countries. Perhaps the most famous one argues that Islam, by failing to recognize the separation of religion and state, naturally leads to authoritarianism. In a now famous book, What Went Wrong, historian Bernard Lewis popularized a version of this idea. He wrote, for example:

The idea that any group of persons, any kind of activities, any part of human life is in any sense outside the scope of religious law and jurisdiction is alien to the Muslim thought (page 100).

He went on to compare Islam to Christianity in this regard:

From the beginning, Christians were taught, both by precept and practice, to distinguish between God and Caesar and between the different duties owed to each of the two. Muslims received no such instruction. (Page 103).

Though popular, this view doesn’t seem entirely well grounded in history or scripture.

First, as we argued in Why Nations Fail, there is another obvious explanation for extractive economic and political institutions in the Middle East and North Africa: the legacy of Ottoman rule and institutions.

Second, the close relationship between politics and religion is not confined to Islam. Rulers have used religion to cement their power or support their attempts to conquer new lands throughout the ages. For example, though colonialism was not a religious endeavor, religious rhetoric and the project of converting heathens to Christianity did play a role in motivating the Spanish and the English alike and provided a pretty good “cover story”.

Third, it is true that secularism, in any of its forms, has been all but absent in Muslim lands, but this is at least as much because politics has co-opted religion rather than the other way around.

Fourth, there is really nothing in the Koran or even the Hadith about constitutions or how the government should be organized and operated.

But the question remains: it’s unlikely to be a coincidence, nor easily explained by the Ottoman legacy, that most Muslim countries are not democratic and almost totally lack civil society, and most branches of political Islam are intolerant and often violent.

Jean-Philippe Platteau suggests that this is in part because the particular organization of Islam has led to an “obscurantist deadlock” in which various individuals, parties and social movements compete for legitimacy by arguing to be the ones that are true to the faith — and often subscribe an extremist version of the faith in doing so. He writes:

… when despots use religion to legitimize themselves in a highly contested environment they may provoke a counter-move in the form of religious backlash in which the ruler and his opponents compete to demonstrate their superior fidelity to the faith.

This equilibrium is made possible by the fact that, just like Protestantism, Islam does not have a centralized authority with which rulers can make exclusive deals (in the way that European rulers did with the Catholic Church in the Middle Ages).

This would be consistent with the patterns emphasized by Gilles Kepel in his insightful book, Jihad: The Trail of Political Islam. Many rulers with secular backgrounds — whom we would call extractive — have tried to use Islam and co-opt a subset of the Islamic scholars, the ulema, to gain legitimacy and suppress democratic, often left of center or socialist, movements. This includes Nasser, Anwar Sadat and Hosni Mubarak in Egypt, Zulfikar Ali Bhutto in Pakistan, Saddam Hussein in Iraq, the Assad family in Syria, Houari Boumediene in Algeria, and the military junta under the leadership of Kenan Evren that came to power after the 1980 coup in Turkey. In each case, the strategy worked for a while and ultimately backfired. Bhutto’s cynical policies in Pakistan, for example, paved the way for the religious fanaticism and repressive dictatorship of Zia ul-Haq, with disastrous consequences for Pakistan and for the region.

But why is it that we see this sort of dynamics in Islam but not in Protestantism? Though it is true that protestant radicalism emerged during certain periods, for example in the run-up to the English Civil War as documented by Christopher Hill in The World Turned Upside Down, many of these radicals such as Roger Williams fought against authority and for freedom rather than for a world order in which they would get to repress others and dictate to them what to do (see this interesting book on Roger Williams).

Here is one idea: as we argued in our previous post, Muhammed develop his teachings and Islam in the context of a state building project. This may have made Islam and Islamic scholars particularly receptive to calls by rulers or would-be rulers. The general tendency of Islamic scholars towards state authority is well captured by the famous Islamic scholar and philosopher al-Ghazali (cited in Albert Hourani, A History of the Arab Peoples, page 144):

the tyranny of a sultan for a hundred years causes less damage than one year’s tyranny exercised by the subjects against one another.

This combined with the powerful role that Islamic scholars occupy in Islamic societies, particularly in view of the fact that the Koran leaves a lot unspecified and open to interpretation, may have paved the way for a subset of the scholars to make deals with any despotic ruler or any usurper to suppress dissent. This sort of intense repression, especially shutting off any legitimate political organization opposing the authority of the ruler, may have left religious rhetoric as the only channel through which people could formulate and partially voice their grievances. The decentralized organization of Islam and Islamic scholars may have then created a platform in which another subset of the scholars would support movements using this channel to oppose the ruler; and what would be more natural than claiming greater purity and devotion to Islam in the circumstances, thus leading to Platteau’s “obscurantist deadlock”?


Religion and State Building  

In Why Nations Fail we discussed how King Shyaam took a major step in the process of state building in what is today the Democratic Republic of Congo, founding the Kuba Kingdom. Though we do not know the details fully, we know that this was not an easy process, necessitating King Shyaam and his men to build new institutions, defeat rivals and increase their domination. Though this was mostly a political process, it did have a religious component also. King Shyaam, like many chiefs at the time, was also a medicine man (magician).

In fact, religion and state building are often intertwined. We also saw in an earlier post how the emergence of sedentary societies preceding the Neolithic Revolution was not only a major institutional innovation but also closely associated with the emergence of a religious elite class and new elaborate religious rituals.

Looked at through these lenses, Muhammed’s huge success in spreading Islam in Medina and Mecca, and then more broadly, can also be seen as a political process. Perhaps Muhammed was as much a state builder as a prophet (as Montgomery Watt also argues in Muhammad: Prophet and Statesman), and Islam developed as part of a complex of institutional innovations necessary for initiating and maintaining the process of state centralization.

To agree with this perspective, one need not go as far as the 19th-century French religious scholar Ernest Renan who claimed in Studies of Religious History that: the Muslim “movement was produced almost without religious faith”. Instead, it is sufficient to observe that before Muhammed, the Arabian Peninsula consisted of diverse tribes with no centralized authority and its polytheism was but a reflection of this diversity of authorities and traditions. It seems plausible that a successful attempt at political centralization must also centralize beliefs, a task in which Muhammed was very successful. But what Muhammed built wasn’t just a centralized, monotheistic religion but also, by the standards of the time, a centralized state which became the basis of the later expansions of Islam out of Arabia.

Nor is the interplay between religion and state building just confined to Islam. It is plausible that one of the main objectives of Emperor Constantine in adopting Christianity as the religion of the Roman Empire was one of increasing the — by then dwindling — authority of the state over the vast territories of the empire. Constantine’s objectives were not so different than his equally illustrious predecessor, Diocletian, who also made great strides in further building Roman state institutions and stemming the tide of decline, though in the process also ruthlessly persecuting Christians. Constantine, like many emperors of this era, was another usurper and would-be centralizer. And, in contrast to Diocletian, he was able to rule as the sole emperor of Rome — and for quite a while.

None of this is to argue that Constantine did not really believe in Christianity (he probably did, but he was also probably less than fully monotheistic) or to agree with Renan that the movement that Muhammed led was almost without faith (almost without doubt, his early followers were devoted believers). Rather, it is to suggest that religion — just like culture more broadly —both needs to be understood in the context of institutions and the politics of the time in the place, and plays a major role in the political dynamics of its era.


Politics and the Origins of Religious Rituals  

The culture hypothesis, as we dubbed it in Why Nations Fail, is partly based on the presumption that there are certain beliefs, values, attitudes and traditional practices that are not only important for economic activities but also unchanging, or very slow changing, and largely exogenous. What better example than religious rituals?

For example, Muslims, as part of their religious duties, pray facing Mecca, fast during the month of Ramadan, do not eat pork and circumcise their male children. These seem tailor-made for illustrating these exogenous, unchanging rituals.

But several religious historians have argued that the origins of these rituals are also endogenous and related to the political alliances that Muhammed was trying to build.

Muhammed was born in Mecca, an important trading town Arabia at the time dominated by a tribe called the Quraysh. In Mecca he got a dedicated but small following, and in the year 622, after his relationship with the leading families of the Quraysh became almost untenable, he was forced to leave Mecca for the oasis settlement of Yathrib, which would later come to be known as Medina, about 200 miles north of Mecca. It was in Medina that many key parts of Islam got formulated and Muhammed became both politically and religiously stronger, with a much greater following.

Robert Wright in The Evolution of God, in part following Montgomery Watt’s classic Muhammad: Prophet and Statesman and Jonathan Berkey’s The Formation of Islam, argues that key rituals, such as fasting, ban on pork and circumcision, all rituals common with Judaism, were adopted because Muhammed was trying to attract, or perhaps develop friendly relations with, the Jewish tribes of Medina. What’s more, Muhammad instructed his followers during this period that Muslims must pray facing Jerusalem, just like the Jews did.

Political alliances were again key.

Overall, there seems to be little doubt that throughout this period, Muhammed preached friendly relations with other Abrahamic religions, and particularly with Jews. 

More interestingly, later in the Medina period, Muhammed took a much harder line against the Jews, after certain Jewish tribes supported the enemy in the wars with the Quraysh of Mecca. Thereafter, Muhammed abandoned the project of converting Jews, violently expelled some of them from Medina, in the process killing scores of them, and his teachings became less friendly to Judaism. It is during this period that Muslims stopped praying facing Jerusalem and instead started facing Mecca. Of course there is some debate on all of this, and Robert Wright even questions whether the break with the Jews really happened in this form, though this seems to be a minority view.

What seems more certain is that even religious rituals that appear so exogenous and unchanging are as much an outcome of political struggles, of political alliances, successful or unsuccessful, and of one group using all aspects of all institutions in society to achieve their objectives.