Daniel Hannan is an MEP for South-East England, and a journalist, author and broadcaster. His most recent book is What Next: How to Get the Best from Brexit.

During their exile in Medina, Mohammed and his followers were hit by a food shortage – a common enough affliction in those sparse lands during the seventh century. Fearing famine, community leaders asked the Prophet to order a cut in food prices. Mohammed refused, telling them that prices were “in the hands of God”.

The idea that governments shouldn’t fix prices was centuries ahead of its time. A faulty bit of wiring in our brains creates the false idea that commodities have an intrinsic value, just as they have an intrinsic volume and an intrinsic mass. Selling at the “wrong” price was, for hundreds of years, called “profiteering” or “speculation”, and was often treated as a criminal offence. Only in the modern era have we come to understand that there is no such thing as an intrinsic price – that a price is, by definition, what people are prepared to pay at any given moment.

Mohammed, who had spent much of his life until that point as a trader and entrepreneur, evidently understood that rigging markets is harmful. He had already established a tax-free market in Medina – something that, again, was at odds with the philosophy of the age. He went on to use his last sermon to proclaim the sanctity of property.

These things are worth recalling in an age when free markets are often seen a Western imposition on the rest of the world. That slightly chippy view is shared by plenty of radicals both in Muslim-majority states and in the West. Iran’s “Islamic Revolution” was as much about the second word as the first: the ayatollahs were anti-monarchy, anti-business, anti-Western, anti-bourgeois. To this day, many of the violent radicals drawn to Islamism are motivated by the same utopian Marxism that inspired, say, the Baader-Meinhof Gang or the Red Brigades.

The men who struck at the World Trade Centre were deliberately targeting a symbol of global commerce, just as fascists and communists had done in the 20th Century. The Nazis, for example, repeatedly aimed their bombs at London’s stock exchange. Defeating authoritarian ideologies requires us to defend market capitalism as a moral force and poverty alleviation mechanism.

While fascists and communists are anti-capitalist by definition, there are sound reasons to recover the indigenous free-market tradition within Islam. The economic historian Benedikt Koehler has argued that the capitalist economy was a Muslim creation. We conventionally say that capitalism developed in the 17th Century among the Dutch and the English, who were drawing on the example of the north Italian city states. But where did the Italians get the idea? Koehler shows that Venice picked up the basic elements of modern capitalism through its trading concession to the Ottoman Empire. Muslims had long operated their caravans as joint stock ventures. The Venetians, Koehler demonstrates, adapted the model from convoys of camels to convoys of ships.

For several years, largely through the Alliance of Conservatives and Reformists in Europe, sometimes alongside a wonderful organisation called the Istanbul Network, I have been working with friends in North Africa and the Middle East to disinter Islam’s indigenous liberal traditions. If anything is a colonial imposition on the Arab world, it is not capitalism, but Nasserism, Ba’athism and Arab Socialism. Market reforms in the region have tended to come from parties that are, in the West, called soft Islamists, notably in Morocco, Tunisia and, until very recently, Turkey. Indeed – rather unexpectedly from a Western perspective – these are the parties dismissed by local conspiracy theorists as CIA-funded fronts. The fiercest anti-Americans in the region are generally not Islamists but secular Leftists.

Perhaps the greater challenge is at home, especially among young, Western-born Muslims whose education was dominated by anti-colonialism. How many Brits, Muslim or non-Muslim, are aware of the 14th Century philosopher Ibn Khaldun, whose work on open markets and free trade anticipated Adam Smith’s by 400 years? Among other things, Khaldun, at odds with the prevailing theories of his time, explained why “privately owned businesses must, over time, outperform those owned by princes”.

How many of us, similarly, are familiar with the Islamic concept of the waqf – a form of trust that allows independent foundations to deliver charitable goals outside the remit of the state? A legal tradition that formally elevates the wishes of an individual, even when dead, over the needs of the living, is the ultimate check on government.

I’m obviously not arguing that you can’t be a Muslim socialist; that would be as silly as arguing that you can’t be a Christian Tory. All revealed religions can be interpreted in more than one way – necessarily so, since prophets seek to convey transcendent ideas in earthly language.

Still, it’s striking that Islam lacks the moral elevation of poverty – or, at least, dislike of money – that used to be central to the Christian tradition. Not until Puritanism did Christians begin to contemplate the idea that wealth, honestly acquired, might be a blessing – a shift, as R.H. Tawney put it, from a “distributive” to an “acquisitive” ethic. Islam, by contrast, has generally been comfortable with the idea, with private assets matched by private philanthropy.

The belief that Islam is intrinsically at odds with the market is not just inconvenient; it is false. Yet it is widely believed. After I spoke at a conference on the subject earlier this month, a young British Muslim told me: “It’s so obvious, but I never thought it until you said it just now. Islam is the only big religion founded by a businessman.” Yes, I replied, these things are often easier to see from the outside.

There is, of course, a strain in contemporary Islam that is far from favouring an open society. Ibn Khaldun was, though he didn’t know it, living through the last moment when Islam was, by the standards of its age, relatively liberal and individualist. I am not so naïve as to believe that embracing market ideas will, on its own, cure all Islam’s ills. Still, a recognition of the ideas that lifted mediaeval Islam to its golden age as a mercantile civilisation, might help redress the balance.

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