SERVICIOS DE APOYO PARA LA FORMACION PROFESIONAL

The emergence of Islam has revolutionised Arab society and with it its institutional environment. Apart from its transcendental dimension Islam provided a framework of very explicit guidelines for social and also economic interaction. The most fundamental improvement, from an institutional perspective, is the explicitly universal character of Islam (Ayubi, 1995; Ali, 2005). While society in pre-Islamic Arabia was shaped by a particularistic system of blood and kinship relationships and conflicts between clans, Islam emphasised the equality of all believers and the bond that united all followers within the umma al islamiya (Ali, 2005). This new framework was supposed to overcome old tribal rivalries and particularistic tensions in Arab society and provide a base for peaceful coexistence. While in pre-Islamic times an individual´s identity was determined by his tribal background and beyond the secure domain of one´s own tribe one had to fear distrust, in the umma one Muslim was supposed to treat every other Muslim respectfully regardless of the tribal background. In contrast to the premodern system of kinship and family, the umma proposed by the prophet Mohamed was a progressive and universalistic approach that aimed to modernise Arab society fundamentally. Despite this very ambitious aims to create a universalistic society, Islam at the same time strongly emphasises particularistic elements and to a certain degree contradicts its own universal principles by anticipating traditional Arab family values. “The consciousness of belonging to tribe and behaving accordingly… in its extreme form always was – and still is, to this very day – inherently and implacably opposed to Islam.” (Ghazi bin Muhammad, 1999: 21) The establishment of Islam must be understood as a process that despite its divine origin was bound to a this-worldly process of diplomacy,

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violence, alliance building and compromise. Since the prophet was lacking the power to simply superimpose the teachings on the society, alliances had to be built and convinced. As part of this process traditional Arab institutions have been anticipated so that Islam got a narrative that alliance partners would find easier to accept. This mutual influence of Islam and Arab culture resulted in a universalistic teaching emphasising the umma and identity beyond all family bonds but at the same time less radically accepting and supporting traditional and particularistic institutions (Eisenstadt, 1992; Ayubi, 1995). “The nomadic tribal formations, so explicitly condemned by Quran, are not in fact dissolved but are merged in a higher integrative level in the name of the Islamic umma, which is in reality –at least initially – basically all Islamised Arab tribes of the Peninsula.” (Ayubi, 1995: 55) Despite what looks like a contradiction from an institutional perspective, Islam has been an integrative force by introducing universal approaches to Arab society and built a more integrated society compared to traditional Arab tribalism (Hourani, 1992).

Apart from providing a universalistic worldview on the abstract level, Islam has introduced very concrete institutions that regulated social but also economic interaction. The degree of codification and explicit formulation have had a very modern character and helped to reduce transaction costs. Although it has been argued by some scholars that Islam is not compatible with capitalism, it is beyond the scope of this study to assess this problem, more recent research outlines the modern character of Islamic economic institutions denies the explanation of Islam as a barrier to economic development. The “Islam and capitalism” discussion is rather dealing with issues of incentives and work ethic but it is undoubted that the institutional structure of Islam provides a framework for economic cooperation and rational organisation (Metwally, 1997; Wilson, 2006).

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Compared to the previous situation in which strong social capital and personal trust were required to trade or invest, Islamic institutions reduced the risk of economic ventures, allowed strangers to engage in economic interaction and reduced the necessity to create social embeddedness prior to any activity. Shariah, Islamic law derived from Quran and Sunnah, and three secondary sources Ijma, Qiyas and Ijtihad, provides very explicit rules for a wide range of economic activities. From guidelines for financial transactions to law enforcement on markets, Shariah and Islamic judicial reasoning regulates a large set of economic activity and so allows interaction with a large number of actors, division of labour and specialisation (Zubaida, 2005; Wilson, 2006; Abuznaid, 2006; El-Gamal, 2009).

Property rights are the most fundamental pillar of any capitalist activity. If property rights are not established or enforceable any exchange requires complicated procedures of trust-building and investment in joint activities becomes a risky venture. Despite some rhetoric of Islam being antagonistic to capitalist development, private property is acknowledged and enforceable according to Islam. Despite some limitations by Shariah, private interest is subordinated to public interest; private ownership is no contradiction to Islamic principles. Islam also provided a framework for financial transactions that reduced the risk of investing capital and made claims enforceable. Under the principle of musharakah two parties agree on the sharing of profits that are gained through the investment of capital. A musharakah agreement is then enforceable according to Shariah. Such an institution is significantly reducing transaction costs in a financial transaction (Wilson, 2006; El-Gamal, 2009;).

The reliability of information on a market is crucial to prevent the collapse of exchange systems. As described in a study of the market for lemons (Akerlof, 1970), if information- costs to assess to quality of products in an information asymmetry are too high trade will not take place. The difficulty of verifying information about the goods exchanged can lead to a

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delay which can create opportunity costs for actors on a market. A muthasib had the function of regulating markets; according to Islamic jurisprudence, that exchange could take place efficiently and information-costs could be reduced. The role of a muthasib on bazaars was to guarantee that business was compatible with guidelines of Shariah and to prevent fraud. The supervision of transactions assured that standards would be kept and reduced the necessity to acquire information and create social embeddedness in a business transaction. These modern aspects of Islamic institutions provided a base for secure interaction through its codification of law and a higher predictability compared to ancient Bedouin institutions.

Nevertheless, the philosophy of Islamic jurisprudence differs from the formality of institutions based on Roman law or case law in the sense that rules are codified and are supposed to provide stability, but consensus is a cornerstone of decision making. The Quran is quoted: “Let there be amongst you traffic and trade, by mutual good will.” (Metwally, 1997: 942) Codified law in continental Europe and in Anglo-Saxon countries in an ideal case provides perfect predictability and a framework that does not require social embeddedness among actors to build trust. In Islam mutual commitment plays an important role and is required in some economic activities such as financial investment. Money cannot simply be lent for a fixed interest rate an invested in an anonymous project, but the creditor is required to share the risk and only allowed to receive a certain percentage of the profit of the joint venture as agreed in the musharakah. A credit is not an anonymous commodity on traded on a market but requires the creditor to be involved in the venture (El-Gamal, 2009). This way of investing is hard to undertake just based on arm´s length ties relationships, since it requires a profound understanding of the business and requires a flow of detailed information and creation of trust (Uzzi and Lancaster, 2003).

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Consultation is a cornerstone principle of Islam. Instead of rigorously enforcing bureaucratic roles that have been formulated ex ante, the principle of al-shura requires that voice is given to all actors. Consultation is supposed to create of solidarity and commitment among all parties involved. “… it is believed that those who get consulted will become more serious and more committed to the success of such a decision made because he/she took part in its making. The Islamic tradition of consultation stands diametrically the opposite to authoritarianism.” (Abuznaid, 2006:133)

Despite the formal and codified institutions provided by Islam which in institutional theory make social embeddedness redundant by reducing transaction costs, personalism is not ruled out but anticipated explicitly as a normative force.

Some pre-Islamic customs remained even after Islamization. The principle of al “urf wal adah” is a rule that allows reference to customs and established practices as a legitimate source of law, as long as, they do not contradict Shariah. Many of the rules of conduct practised before Islam continued to be honoured after its rise, especially customs relating to personal honour, hospitality and courage (Al-Rahami, 2008a). Along with other norms and values the principle of reconciliation and arbitration got anticipated by Islamic jurisprudence. While jurisprudence in the West is in an ideal case considered to be a math-like process- basedalgorithmic decision making ideally with the highest possible degree of predictability, the preferred process for dispute resolution in Islam is arbitration. In Islam the “duty to reconcile” called Sulh seeks to settle dispute by compromise based on mutual agreement of all parties involved in the dispute. Such an agreement can be reached either by the help of a third party or by the dispute-parties themselves. Sulh, as a mechanism to settle disputes, is considered ethically and religiously superior by Islam. The Prophet is quoted: “If two parties among Believers fall into quarrel, make ye peace between them… make peace between them

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with justice, and be fair: For God loves those who are fair and just.” (Al-Rahami, 2008a: 76) To reach reconciliation or Sulh through a process of arbitration based on the principles of Shariah became the cornerstone of Islamic jurisprudence. The philosophy behind this judicial system is to reach commitment of all parties and so increase the acceptance of any solution and avoid bitterness among any party involved (Al-Rahami, 2008a).