The Middle East Could Use Less Warfare and More Capitalism

This article first appeared at The Orange County Register.

Jet fighters, smart bombs, terrorism and ethnic cleansing have not exactly improved the Middle East. Yet the perennial world trouble spot is not without resources — an increasingly educated population, massive energy resources and ample capital — but still suffers economically, with the world’s worst unemployment rates.

Perhaps the way out of the region’s dilemma lies in allowing entrepreneurs to lead the region out of its current chaos. What warfare has failed to do, perhaps capitalism could accomplish, turning a violence prone disaster area into a marketplace success story.

Wherever they settle, people from the region shine as entrepreneurs. In the United States, Middle Easterners traditionally boast among the highest start-up rates. Go anywhere the Mideast diaspora settles — Atlantic Avenue Brooklyn, Edgware Road in London, the Detroit suburbs, the San Fernando Valley, Anaheim and even parts of Germany — and grassroots capitalism flourishes.

The Mideast’s capitalist legacy

The Middle East boasts a proud legacy of capitalist innovation, notes author Nima Sanandaji in his important new book, “The Birthplace of Capitalism: The Middle East.” He traces the world’s first capital markets, banks, artisanal industries and long-distance traders to this region, including in the first great cosmopolitan cities.

In classical times, Greek and Roman aristocrats held their noses about trade while Syrian and Jewish traders played dominant roles in imperial commerce. They continued this role even after the empire fell and well into the Middle Ages. “Iranians, Arabs, Turks, Jews, Kurds, Armenians and the myriad of people who inhabit the Middle East have widely different cultures,” Sanandaji notes. “ Yet they are all dealers and hagglers, with market exchange almost encoded into their cultural DNA.”

Islam, the region’s dominant religion, he adds, was forged by Mohammed, a man from the merchant classes. It does not share a theological ambivalence about trade so common in other faiths.

The Israeli example

Israel, founded largely as a socialist state, long embraced a communalist world-view, epitomized by the kibbutzim. Yet today there is arguably no more capitalist and innovative place on earth than Israel’s secular capital, Tel Aviv.

Of course, religious zealots still flourish, especially in Jerusalem and the settlement towns in the occupied territories. But largely secular innovators have made Tel Aviv, according to the Start-up Genome project, the sixth-richest entrepreneurial region in the world, ahead of Berlin, Los Angeles, Shanghai and Seattle.

Like their ancient forebears, Israeli capitalists are outward looking, and internationalist in outlook. Large U.S. tech companies — Google, Microsoft, Intel — invest there to harvest cutting edge technology and there are an estimated 300 research and development centers in the tiny country.

Dubai: The new Arab way

Respect for Israel’s accomplishments is widespread in the region, albeit only privately. One young Emirati from Dubai confessed recently that his dream was to visit Tel Aviv, which he saw as the cutting-edge city of the modern Middle East.

Although not quite a start-up hub like Tel Aviv, Dubai already represents an important regional role model. Its airport is second to none, its hotels, beaches and conference facilities widely attended by visitors from Russia, India and Europe.

Read the rest of the article at The Orange County Register.

Joel Kotkin is the R.C. Hobbs Presidential Fellow in Urban Futures at Chapman University in Orange and executive director of the Houston-based Center for Opportunity Urbanism