The Persistent Simplicity
of Islamic Partnerships
In the tenth century exchange was essentially personal everywhere, in Italy and India no less than in Iraq. An investor would finance a merchant known to him as trustworthy, or known as dependable to trustworthy friends. He would not place trust in strangers, as we now do when investing in the stock market or buying merchandise through the Internet. Courts existed to adjudicate commercial disputes. Because judges treated economic relations as resting on personal ties, these disputes amounted to contractual conflicts among individuals. If Islamic partnership law spread to places far from Islam’s heartland, this is because prior to the last two centuries of the Middle Ages, generally considered to have ended in 1453, it provided an advanced solution to the universal problem of supporting cooperation among non-kin. In the tenth century nowhere in the world was the regulation of impersonal exchange a pressing concern.
It was around that time that Islamic partnership law assumed its classical form. From then until the era of industrialization, it underwent no major changes. Up to the nineteenth century it served as the basis for commercial cooperation among non-kin throughout the Middle East, except, as we shall see, in sectors that came under foreign domination. It did not give rise to structurally more complex commercial organizations with indefinite time horizons. Meanwhile, western Europe saw the emergence of more durable and much larger organizations. Although simple and short-lived partnerships continued to be formed all across Europe—as is still the case, in the twenty-first century—complex enterprise forms were