The absence of the corporation in Islamic law: Origins and persistence

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2005-09-01

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Abstract

Classical Islamic law recognizes only natural persons; it does not grant standing to corporations. This article explores why Islamic law did not develop a concept akin to the corporation, or borrow one from another legal system. It also identifies processes that delayed the diffusion of the corporation to the Middle East even as its role in the global economy expanded. Community building was central to Islam's mission, so early Muslim jurists had no use for a concept liable to facilitate factionalism. Services with large setup costs and expected to last indefinitely were supplied through the waqf, an unincorporated trust. The waqf thus absorbed resources that might otherwise have stimulated an incorporation movement. Partly because the waqf spawned constituencies committed to preserving its key features, until modern times private merchants and producers who stood to profit from corporate powers were unable to muster the collective action necessary to reform the legal system. For their part, Muslim rulers took no initiatives of their own to supply the corporate form of organization, because they saw no commercial or financial organizations worth developing for the sake of boosting tax revenue.

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Kuran

Timur Kuran

Gorter Family Distinguished Professor of Islamic Studies

Timur Kuran is Professor of Economics and Political Science, and Gorter Family Professor of Islamic Studies at Duke University. His research focuses on (1) social change, including the evolution of preferences and institutions, and (2) the economic and political history and modernization of the Middle East. His current projects include a study of the role that the Middle East’s traditional institutions played in its poor political performance, as measured by democratization and human liberties. Among his publications are Private Truths, Public Lies: The Social Consequences of Preference Falsification (Harvard University Press); Islam and Mammon: The Economic Predicaments of Islamism (Princeton University Press); The Long Divergence: How Islamic Law Held Back the Middle East (Princeton University Press); and a tri-lingual edited work that consists of ten volumes, Socio-Economic Life in Seventeenth-century Istanbul: Glimpses from Court Records (İş Bank Publications). After graduating from Robert Academy in Istanbul in 1973, Kuran went on to study economics at Princeton University (AB 1977) and Stanford University (PhD 1982). Between 1982 and 2007 he taught at the University of Southern California. He was also a member of the Institute for Advanced Study in Princeton, the John Olin Visiting Professor at the Graduate School of Business, University of Chicago, and a visiting professor of economics at Stanford University. He currently directs the Association for Analytic Learning about Islam and Muslim Societies (AALIMS); is a member of the Executive Committee of the International Economic Association; edits a book series for Cambridge University Press, serves on numerous editorial boards; and is a member of the Turkish Academy of Sciences. He has served on the World Economic Forum’s Arab World Council.


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