"Much will depend on building viable economies in the areas that the Palestinians are to take over," R.W. Apple reported in The New York Times after Yasir Arafat and Yitzhak Rabin signed their famous agreement on the White House lawn. If there was to be Palestinian self-rule, there would have to be a Palestinian economy. Within two days the diplomats were in high gear. They agreed that the benefits of self-rule should be not only conspicuous to the inhabitants of Jericho and the Gaza Strip, but speedily conspicuous. And so there would have to be foreign aid.
The World Bank placed "immediate needs" at $3 billion. The Palestine Liberation Organization did their own arithmetic and said they would prefer $11.6 billion. Two weeks after the signing, 43 nations pledged to contribute $2 billion over the next five years. U.S. taxpayers were in for $500 million. Israel's foreign minister, Shimon Peres, always the dreamer, talked about rolling back the desert and beating swords into microchips.
The agreement stipulated that to promote economic growth, a Palestinian Council would establish a Palestinian Electricity Authority, a Gaza Sea Port Authority, a Palestinian Development Bank, a Palestinian Export Promotion Board, a Palestinian Environmental Authority. The "Protocol on Israeli-Palestinian Cooperation in Economic and Development Programs" foresaw the need for a Water Development Program, an Energy Development Program, an Industrial Development Program, a Human Resources Development and Cooperation Plan, and yes, an Environmental Protection Plan.
Lots of Authority, in other words, and lots of Programs. But other than the political right of voting for the council, no rights were specified in the agreement. In particular, there was no mention of the fundamental institution that has undergirded Western economies for over 200 years and has accounted for the prosperity of the West: property rights.
One of the most important developments in history is the sudden rise of the Western world in relation to the Islamic world, beginning in the late 17th century. Yet this change has remained something of a puzzle to historians. Broad surveys of history usually do not even try to explain it. The growing prosperity of the West had something--perhaps a good deal--to do with it, historians often concede, but how to account for that?
Property rights, I submit, are the key to understanding the rise of the West, as they are to understanding why the Industrial Revolution occurred when and where it did. Among the few economic historians to have made this point explicitly are Douglass North, who shared the 1993 Nobel prize in economics, and Robert P. Thomas. By the 18th century, they write in The Rise of the Western World, "a structure of property rights had developed in the Netherlands and England which provided the incentives necessary for sustained growth." In the Islamic world, no such change took place, and to this day it still has not.
This difference has consequences outside the economic sphere. As property ownership became widespread and secure in Europe, and as the institution of contract developed, the state increasingly accepted that its proper role was not the seizure of wealth but the enforcement of agreements by private parties to exchange it. The idea of constitutional government emerged: The powers of the state should be limited and specified. The emergence of contract in the West signaled a rising acceptance of the idea that ordinary people were capable of looking after their own best interests. Legal institutions in the West gradually adapted to this philosophy, and individual freedom became a central political concept.
In the Muslim countries of North Africa and the Middle East, these liberal ideas never took hold. There, notes Princeton's Bernard Lewis, "Good government was thought to be a duty of the ruler, not a right of the subject, whose only recourse against bad government was patience, counsel and prayer." In the 1830s, the Ottoman ambassador in Vienna discussed the essential differences between East and West, concluding that European progress and prosperity were the product of "complete security for the life, property, honor and reputation of each nation and people, that is to say, on the proper application of the necessary rights of freedom." By contrast, the term freedom in a political sense does not appear in Arabic before the late 18th century, and even then it is "patently due to European influence," Lewis writes. Scholars did not even know how to translate the word into Arabic. They used a word denoting "collective rather than personal freedom--i.e. independence rather than liberty in the classical liberal sense."
In short, Western notions of civil rights never took hold. Feminists who today draw attention to the absence of women's rights in the Muslim world are correct, but they overlook the point that men also lack such rights. Men may indeed be free to oppress women at home or in the workplace--but they may themselves be oppressed by others acting with the authority of the state. As David Pryce-Jones has amply documented in The Closed Circle, the weak are at the mercy of the strong in the Arab world, and in a polity based on power women are bound to be the losers.
This contrast between the rights of the Western world and the tyrannies of the Muslim Near East is amply documented in the historical record. In his Narrative of a Journey into Khorashan, published in 1825, James B. Fraser vividly described the pervasive tyranny and poverty he found in the East. The naive European, he wrote, is quite unprepared for "the mass of misery, filth and ruins which the best of these cities present to his gaze." Frazer concluded that "the principal direct check to improvement and prosperity in Persia is the insecurity of life, limb and property, arising from the nature of the government.... This must always repress the efforts of industry; for no man will work to produce what he may be deprived of the next hour." Even the "greatest noble in Persia," he wrote, is not "for one moment secure in his person or property."
This situation persisted in 20th-century Persia (Iran). In her Landlord and Peasant in Persia (1953), Ann Lambton noted that the country's problems should be viewed against an enduring back-drop of insecurity: "the insecurity of the landowner against the caprice of the government...and the insecurity of the cultivator vis a vis the landowners and others." The law was not "backed by a predominant and impartial force," she wrote. "Effective power therefore rested with whoever wielded the greatest force."
The classical economists noted this great defect in the Muslim world. In the second edition of his Essay on the Principle of Population, Thomas Malthus attributed "the low state of population in Turkey," by which he and others meant the...