An Evaluation of the Ottoman Economy and Industrialization Initiatives in the Light of the Qur'an and the Sunnah

Abstract

This study examines the classical economic structure of the Ottoman Empire and the industrialization and fiscal modernization initiatives that gained momentum during the nineteenth century within the framework of fundamental economic principles, taking the Qur'an and the Sunnah into account. Although the Ottoman Empire accepted Islamic law (fiqh) as the fundamental basis of the state, evolving economic needs and shortages of cash gave rise to certain fiscal practices that departed from classical interpretations of fiqh. In particular, cash waqfs, the iltizam (tax farming) system, and methods legitimized under the concept of muʿāmalah sharʿiyyah were among the foremost of these practices. The study analyzes the counterparts in Islamic fiqh of the principles of provisionism (iaşe), traditionalism, and fiscalism, which constituted the pillars of the Ottoman economic mentality, and discusses the role of the miri land regime and the waqf institution in the broader distribution of wealth. The study also examines, from the perspective of normative Islamic economics, the fiscal regulations introduced by the sultans through their customary (örfi) and Sharīʿah-based (şer'i) authority, the debasement (tağşiş) policies adopted by the state during periods of crisis, the gradual transformation of the capitulations into institutional dependency, the borrowing processes carried out through the Galata Bankers and foreign-owned banks, the transfer of banknote-issuing privileges, the industrialization efforts of the nineteenth century, and the external borrowing process that began with the Crimean War. As a result of the analyses, it is concluded that the replacement, during the later period, of the classical principles of Sharīʿah-based property, justice, and trusteeship with interest-based mechanisms (riba) and external economic dependency was one of the principal factors that accelerated the fiscal collapse of the Empire (Düyun-u Umumiye). Furthermore, the study addresses as a structural deficiency the question of whether the pace of the Ottoman Empire's institutional transformation in the face of the West and Islamic legal reasoning (ijtihād) were capable of responding dynamically to this process.