Printing and Interest Restrictions in Islam & Christianity: an Economic Theory of Inhibitive Law Persistence and Divergence

Until recently, many scholars attributed the divergence in Middle Eastern and Western European economic development to the "conservative nature" of Islam. This paper departs from such scholarship, suggesting that institutions supporting economically inhibitive laws are more likely to be self-enforcing in the Muslim world – providing an appearance of conservatism. A theoretical model suggests that this outcome emanates from the greater dependence of Islamic political authorities on the dictates of religious authorities. I substantiate this claim by analyzing the history of interest bans and printing restrictions in Islam and Christianity, highlighting the institutional mechanisms supporting divergent paths within and across religions. PRELIMINARY – DO NOT CITE WITHOUT AUTHOR’S PERMISSION DRAFT: JANUARY 22, 2008 1 This paper is derived from chapter three of my dissertation, completed at Stanford University. I am extremely grateful to Avner Greif and Timur Kuran for helpful guidance, comments, and insight. I also wish to thank Ran Abramitzky, Gavin Wright, and participants in workshops at Cal State Fullerton, Stanford University, UC-Irvine, and the 2007 Meetings of the Association for the Study of Religion, Culture, and Economics for helpful observations. All errors are mine. 1