Artunç paper on legal decentralization and the Ottoman Empire

Awhile back Tyler Cowen linked to this paper (pdf) by Cihan Artunç on legal pluralism in the Ottoman Empire, and I found it to be really interesting. Here is the abstract, followed by some comments from yours truly:

Throughout the eighteenth and nineteenth centuries, non-Muslim Ottomans paid large sums to acquire access to European law. These protégés came to dominate Ottoman trade and pushed Muslims and Europeans out of commerce. At the same time, the Ottoman firm remained primarily a small, family enterprise. The literature argues that Islamic law is the culprit. However, adopting European law failed to improve economic outcomes. This paper shows that the co-existence of multiple legal systems, “legal pluralism,” explains key questions in Ottoman economic history. I develop a bilateral trade model with multiple legal systems and first show that legal pluralism leads to underinvestment by creating enforcement uncertainty. Second, there is an option value of additional legal systems, explaining why non-Muslim Ottomans sought to acquire access to European law. Third, in a competitive market where a subpopulation has access to additional legal systems, agents who have access to fewer jurisdictions exit the market. Thus, forum shopping explains protégés’ dominance in trade. Finally, the paper explains why the introduction of the French commercial code in 1850 failed to reverse these outcomes.

Got that? If not, you know where the ‘comments’ section is. What stood out to me the most in this paper is that the Ottoman Empire limited choice of law to a specific population within the realm:

“Muslims were restricted to Islamic law but non-Muslims could use any of the available legal systems, including European jurisdictions upon paying an entry fee. This subsection extends the model by allowing variation in the legal options agents have in order to capture this asymmetric jurisdictional access.” (11)

This looks, to me, a lot more like the Jim Crow South in the United States, or the present-day Maori in New Zealand, than a good case study for understanding legal pluralism. I guess the Jim Crow-esque laws in the Ottoman Empire can be described as “legal pluralism,” but I think this is a bit of a stretch on the part of Artunç. Perhaps not. Maybe there needs to be a distinction between “good” and “bad” legal pluralism? I was under the impression that legal pluralism meant difference court systems operating under an assumed set of rules rather than a different set of laws for different classes of people within a society.

Another interesting tidbit is that Artunç attributes the empire’s economic stagnation (“Such an expansion in asymmetry increases the buyer’s payoff for moderate values of effective enforcement, but will always decrease investment, partnership size, seller’s payoff and total surplus.” [12]) to legal pluralism rather than the Jim Crow-esque legal system actually in place.

I’d say this paper does a good job explaining, in an off-hand way, how Ottoman Jim Crow created a path dependency of poverty for the states encompassing the territory of what used to be the Ottoman Empire. I’d say it does a much worse job explaining what legal pluralism is (Artunç defines legal pluralism as “a single economy where two or more legal systems coexist.” [1] That’s it! That’s his definition of legal pluralism!), and enhances that weakness with an analysis based upon a definition of legal pluralism that is, if I read the paper correctly, wrong, or at least sorely lacking in depth.

For the record I have my doubts about legal pluralism as it can sometimes be interpreted by anarcho-capitalists. Anarcho-capitalists argue that the “assumed set of rules” I identified above that are necessary for legal pluralism to work are largely, naturally understood by humanity and therefore provide Anarcho-Capitalistan with everything it needs for a fully functional legal system. I think that’s stretching it a bit. In fact, it’s close to ludicrous. I think legal pluralism does work in systems like the one found in the US (where circuit courts compete with each other, for example, or state and federal courts clash).

Regardless of my opinions on libertarian legal theory, I think it is clear that Artunç’s brilliant paper is brilliant because it tackles an important topic (Ottoman Empire and, more deftly, international trade) that can be used as a stepping stone for further research, but I cannot bring myself to buy his conclusion (legal pluralism is to blame for the path dependency of poverty in the post-Ottoman world rather than Timur Kuran’s “Islamic law” thesis) because he gets legal pluralism so wrong. (I don’t think Kuran’s thesis is right either, but that’s a story for another blog post and has nothing to do with the fact that he once taught at USC; briefly, Kuran argues that Islamic law was responsible for keeping the Ottoman and Persian empires poor while Europe grew rich, but this is as superficial – and important – as Artunç’s thesis; importantly, Kuran also confuses the Ottoman Jim Crow system with legal pluralism, which suggests Artunç’s critique of his work is less robust than initially thought.)

Holla back!

From the Comments: Red State Blue State Edition

Now that I have a trusty laptop again, I can answer questions and discuss comments a bit more efficiently. Hank Moore asked the following question in response to a link I provided on Left-wing secessionist sentiment:

That California piece was good. What’s your take on the whole red states mooching off the blue states thing? I keep hearing this whenever the secession question comes up. Those few libs who don’t want to confiscate Texas from the Texans say “good riddance, you’re a tax burden anyways!”

It doesn’t quite fit into my version of the conventional wisdom for some reason. [1] Are the blue states paying more than their “fair share” simply because they are underrepresented and thus the fault is the constitution, or [2] is it because they already have large populations they naturally attract big businesses in spite of the fact they aren’t as friendly to free enterprise, and because of this there is more tax revenue to be collected? [3] And then there’s the fact that some red states may in fact still be feeling the effects of being on the losing side of the Civil War (scorched earth warfare, unconditional surrender, reconstruction). These are the three possible explanations that fit with my way of thinking. Maybe its just that I’m cherry-picking “evidence” for a conclusion I’ve already arrived at.

Any thoughts?

All three of Hank’s reasons are good, but I’d like to zoom in on the last one about the Civil War. I think has the gist of why many red states are poorer than blue states, but with a couple of tweaks. Continue reading