Cihan Artunç is studying legal pluralism in the Ottoman Empire

by on January 3, 2014 at 2:24 pm in Economics, History, Law | Permalink

Here is the abstract from his job market paper, he is from Yale:

Throughout the eighteenth and nineteenth centuries, non-Muslim Ottomans paid large sums to acquire access to European law. These protégés came to dominate Ottoman trade and pushed Muslims and Europeans out of commerce. At the same time, the Ottoman firm remained primarily a small, family enterprise. The literature argues that Islamic law is the culprit. However, adopting European law failed to improve economic outcomes. This paper shows that the co-existence of multiple legal systems, “legal pluralism,” explains key questions in Ottoman economic history. I develop a bilateral trade model with multiple legal systems and first show that legal pluralism leads to underinvestment by creating enforcement uncertainty. Second, there is an option value of additional legal systems, explaining why non-Muslim Ottomans sought to acquire access to European law. Third, in a competitive market where a subpopulation has access to additional legal systems, agents who have access to fewer jurisdictions exit the market. Thus, forum shopping explains protégés’ dominance in trade. Finally, the paper explains why the introduction of the French commercial code in 1850 failed to reverse these outcomes.

There is further interesting work at the link.

dearieme January 3, 2014 at 2:53 pm

Someone should have helped him with his English.
“to acquire access to European law” does not mean the same thing as “adopting European law”. failed to improve economic outcomes. And why did “key questions” need explaining; were they obscure or ambiguous?

On t’other hand, I assume Economics could gain a great deal by attention to economic history – especially, perhaps, to economic history involving people who don’t speak English.

Steve Sailer January 3, 2014 at 3:45 pm

The Ottomans had multiculturalism a long time ago.

Didn’t end well, though.

JWatts January 3, 2014 at 5:34 pm

I think you mean the Byzantines had multiculturalism a long time ago. Didn’t end well, though.

Oh, wait, I meant the Romans had multiculturalism a long time ago. Didn’t end well, though.

…rinse and repeat…

simplicio January 4, 2014 at 11:15 am

Eh, they had a six-hundred year run.

Willitts January 3, 2014 at 3:46 pm

I think it’s pretty heroic to write a dissertation in a foreign language, although it IS the preferred language of his chosen profession.

The thesis is interesting and not surprising. I’m just concerned that the model begs the question. Doesn’t added uncertainty always decrease investment?

FC January 3, 2014 at 4:14 pm

All will be explained by my forthcoming dissertation which develops a model proving that economists will believe anything phrased in the form of algebra.

david January 3, 2014 at 4:38 pm

no, he really meant “acquire access to European law”. The supreme secular Ottoman government recognized the limited extraterritorial jurisdiction of foreign courts.

Ray Lopez January 3, 2014 at 3:31 pm

Having lived in Greece and visited Turkey several times, I am an expert on this matter. No I’m not, LOL. But I do have a book that I’ve been meaning to read that argues Muslim law was a retarding force for the Ottoman empire–can’t be bothered to dig up the author (was it Bernard Lewis? Nah, too famous but it could be), but this guy attempts to rebut this thesis. Furthermore, it’s interesting that the Ottomans got 67% of their revenue from the Greeks but left the Arabs largely alone. So the Greeks were their bread and butter–when they lost Greece in the 1820s it was all downhill. As for this model, it’s very ambitious–can you really get that much information on such an obscure topic? Wish him well but it seems like a futile quest. He says: “first show that legal pluralism leads to underinvestment by creating enforcement uncertainty” – well another probably bigger factor to consider is the Ottomans had rigid job categories–and often hereditary–and there was a ‘permit’ required for everything, from selling bagels in the street to shining shoes. Reminds one of today’s mature and stagnating USA.

Willitts January 3, 2014 at 3:42 pm

Was this when you were a porn star or a professional Cricket player?

The Dos Equis guy has nothing on you. :)

Steve Sailer January 3, 2014 at 3:35 pm

It’s definitely worth learning more about the Ottoman Empire as the Ottoman-inspired Gulen cult becomes the new Deep State in Turkey and is the largest operator of charter schools in America:

http://isteve.blogspot.com/2013/10/obama-administration-crime-up-again-in.html

Steve Sailer January 3, 2014 at 3:43 pm

Here’s a 2011 New York Times article that demonstrates that the Anatolian Gulen cult doesn’t much need American contract law even though they get hundreds of millions annually from American taxpayers to operate about 130 charter schools in America. Why not? Because they barely do any business with Americans and instead only engage in business dealings with their fellow Turkish cultists. The NYT looked at $85 million in construction contracts to build Gulen charter schools in Texas, and over $83 million went to Gulen-affiliated Turkish-run construction companies. If there is a contract dispute among cultist firms, their Imam Gulen in Pennsylvania can arbitrate.

http://www.nytimes.com/2011/06/07/education/07charter.html?pagewanted=all

revver January 3, 2014 at 4:22 pm

anybody care to explain how to pronounce his name?

Xvo January 3, 2014 at 6:35 pm

See han ar took

Xvo January 3, 2014 at 6:37 pm

Nono… Let me try again… see han ar tunce

monty January 3, 2014 at 7:08 pm

Actually it’s more like ji – han ar – toonch. C makes a ‘j’ sound in Turkish and ‘c’ with the tail makes a ‘ch’ sound.

revver January 3, 2014 at 7:18 pm

many thanks

So Much For Subtlety January 3, 2014 at 7:15 pm

I am having trouble following this argument precisely. The ability to move between European and Ottoman law gave the Ottoman Christians and Jews an advantage over the Ottoman Muslims *and* the Europeans? OK. I suppose I can see that. But that it worked well for these minorities, but resulted in more poverty for the Ottoman Empire as a whole? I am not sure I can see the logic of that. How does the fact that the main tax payers of the Ottoman Empire did well make everyone poorer?

There is another likely explanation – Muslims had better career options. All over the world religious minorities excluded from government jobs do well in business. European Jews, British Quakers, French Protestants, Russian Old Believers, you name it. Ottoman Muslims probably just took government jobs. If not government jobs, they had another career option – being rabbis. Well, I suppose you’re not supposed to call them that when they are Muslims. Ulama. You can see the world’s Ultra-Orthodox Jewish population, which could achieve business success if they so chose, at least their cousins can with little trouble, choosing instead to be poor, observant and studious.

Finally, how do you separate out the effects of grossly incompetent government from the impact of the European legal systems? I suspect you cannot.

Willitts January 3, 2014 at 8:35 pm

Off the top of my head, financial institutions that can lend and collect interest would do well amongst others who could not do so because of religious proscription. Isn’t this the standard story of how Jews became prominent European bankers?

Some institutionalists showed that nations operating under common law developed faster than those under civil law, ostensibly because of the former’s flexibility and protection of property rights. I’m not familiar enough with sharia law to guess as what strictures would inhibit growth – all except interest on debt which I’m familiar with.

Any form of restriction unrelated to market failures will reduce the choice set and, by definition, restrict upside potential. In this case, though, the uncertainty arises with which set of laws will be applicable for a given transaction. The thesis is that a plurality of legals systems creates uncertainty that inhibits individual returns and collective growth.

You can certainly have a minority group not bound by restrictions doing better, on average, than the population. I’m guessing there is asymmetry in the application of law, with muslims being subjected disproportionately to the stricter of the two systems more often. This happens a lot with international financial transactions – the stricter rule governs returns.

Muslims arent going to make a killing in the liquor, banking, and gambling ventures.

guest January 4, 2014 at 2:59 am

why are you letting your common sense get in the way of someone writing a book that no one will ever read again but will grant this Turk access to a job for life? Silly you, knowledge advances!

Willitts January 4, 2014 at 6:58 pm

Understanding how political institutions affect commerce and economic growth is important to policy. If this guy’s entire paper is boiled down to one of several citations supporting one legal system over another, it will be worthwhile. And even if the topic is garbage, his methodology might be useful.

Asli Demirgüç-Kunt, also from Turkey, is the Director of Research at the World Bank – a policy oriented body. I’m sure that most people never heard of her or read her research, yet she has key input to development pilicy.
Asli

Zelený drak January 4, 2014 at 6:16 am

An example of this were the Sudiți from Romania ( http://en.wikipedia.org/wiki/Sudi%C8%9Bi ).

TGGP January 5, 2014 at 11:37 am

The book everyone should read as a precursor on the economic effects of Islamic law (particularly in the Ottoman empire) is The Long Divergence by Timur Kuran.

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