Introduction
The objective of this paper is to present an economic history of the Ottoman Empire. Specifically, the work reviews the development of the Ottoman Empire’s economy in the perspective of European forces such as capitalism and mercantilism. A coherent comparison of Ottoman economics to European and global economics during the period will provide the framework of the research. Using such a framework, the research reports the Ottomans approach to competing in a free market, the impact of inventions like the steam engine, and agricultural advancements like coffee and sugar that serve subjects to explore the history of Muslim participation in an emerging global market during the 19th century. The paper finds that even while the Empire existed during the eras of industrialization and globalization, it remained protected from the rest of the world for a long time. However, interactions with the outside world were prompted by the need for military and fiscal support from Britain, which caused an engagement into external trade with Europe. Mercantilist and Capitalist principles were widely adopted in Europe by then, but they proved unsuitable for the case of the Ottomans Empire. The incompatibility of the ideals of each principle with those of the Ottomans Empire is cited in this paper as the main reason why the foreign policies proved unsuitable for the Ottomans. For example, while the foreign policies advocated profitable businesses and minimal governmental interference, Ottomans approved provisionism, traditionalism, and central bureaucracy.
Features of the Economic System of the Ottomans
The emergence of capitalism in Europe is exclusively understood to be a phenomenon of Western Europe. In this case, non-European societies were only exploited by the changes that this new system brought to the society. The growth of capitalism meant that any society was supposed to adopt the developments that were instituted in trade if it was to be at par with the rest of the world. One thing that these revolutions were brining was that of stopping relying on agriculture alone 1 2 . There had emerged a new means of production, which relied on industrialization for capital creation and business development. However, the Ottoman Empire experienced such a problem at the time of the industrial revolution since its economy was largely based on agriculture. It meant that the Ottoman economy by then did not provide an incentive for physical capital investments for the fact that such type of capital would not be invested in agriculture. Industry within the Ottoman Empire in the 18 th century did not look similar to the explosive industrial growth that had taken shape in Western Europe by then. It should be noted that at times, the Ottoman industry shrunk, or expanded or at times stagnated, which was normal anyway 3 . However, the Ottoman industrial development patterns do not show signs that are potential indicators of contemporary economic growth occasioned by the Industrial Revolution.
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What reasons could have resulted in the failure of the Ottoman Empire to institute measures that would enhance rapid industrial growth? As much as there could have been other reasons, extant literature reports that the Empire relied on policies that did not favor the changes necessary for such development 4 . It is noteworthy that the Ottoman Empire relied on the principles of fiscalism, traditionalism, and provisionism that were the pillars of its economy, and it is argued that they might have deterred the adoption of the changes occasioned by the industrial revolution in the rest of Europe. There are plenty of theories, such as the neoclassical growth model, that explain the importance of adoption of new technologies in the improvement of economy. According to such theories, Ottoman Empire failed to capitalize on an opportunity that would have increased efficiency in production and lowered the production costs. Just how then did the principles on which the Ottoman economy was founded affect the development of the economy?
First, the Ottomans used the principle of provisionism that championed a steady supply of products and services that would ensure that all the services and products were of the best quality, supplied in plenty, and were cheap 5 . This principle, therefore, sought to ensure that the supply of services and goods within the Ottoman economy were at their optimum levels, which would be enough to avoid any shortages. Such a policy meant, therefore, that imports were preferred over exports. In fact, there was an institution of quotas on exportation being introduced along with heavy taxes. However, in contrast, the Ottoman Empire fostered import trade through not having any policies for import substitution such as taxes, quotas, and tariffs as long as such imports were meant to address the issue of a steady supply of commodities. In addition, policies of import substitution were put in place as soon as it was realized that the imports were not used for maintaining a steady supply of products 6 .
The principle of provisionism also ensured that the Ottomans minimized their expenses as much as possible through policies such as miri mübayaa. This policy utilized a type of tariff in the facilitation of the supply of services and goods for the empire at prices that were relatively lower than the market prices 7 . It should be noted that the same policy did not concern imports, which meant that import substitution policies were only implemented when the size of imports posed a threat to the fiscal standing of the Empire. Even during such times, the Empire did not seek the use of strong customs of protectionism since it was understood that such policies would result in an increase in the prices of the internal market. Nonetheless, the policies became quite limited in 1838 by the Baltalimani Agreement, which opened the Ottomans’ economy to external interaction . In the years that followed this event, the Empire had to deal with huge budget deficits on its current account because of the excess demands for imports that could not be met with the revenues that the exports from the Empire generated 8 . The Ottomans began to borrow debts from foreign nations and economies to finance the budgetary deficits. Consequently, the severe deficits resulted in the depletion of the international monetary reserves, a reduction in the pace of economic growth and deterioration of economic power of the Ottoman Empire ().
Traditionalism was the second most fundamental principle on which the Ottoman Empire was founded. This principle may be considered as a preference for sticking to existing systems as well as conditions as opposed to looking for novel alternatives and models of solutions in the event of change 9 . The Empire was motivated by its motto, which encouraged people not to work against things that have been in existence for a long time, ’kadimden olagelene aykırı iş yapılmaması.’ According to Genc (1994, pp. 60), this expression continued to be a critical reference to the economic system of the Ottoman Empire since it remained unchanged until the 18 th century. Fiscalism was another principle that defined the Ottomans Empire. In this policy, the motivation of the policy makers was to maximize the income of the treasury and avoid such income from falling to levels below those that have already been attained 10 . It should be noted that raising the levels of income by the treasury was slow and difficult for the fact that it paralleled a rhythm of slowed increase in the capacity of production of the economy of the Ottoman Empire as well as the levels of monetization. For such a reason, the fiscalism of the Empire advanced in the direction of ensuring the prevention of a fall in incomes and a reduction of expenses. According to Genc (1994, p. 60) the fiscalism policy of the Ottoman Empire was quite flexible to the extent that it considered all economic activities in terms of the revenues from tax collection.
Economic Principles of the Ottomans
Having understood the economic policies of the Ottoman Empire, a need exists to describe the economic policies underpinning it because it is critical in explaining why mercantilism and capitalism did not suit it. Before describing the economic policy of the Ottoman Empire, there is a need to describe the qualities of the Empire and its relationships with the different social groups it contained. There were intensive wrangles between the aristocracy of Turkish origins and the bureaucracy related to the central government, which resulted from the move by Sultan Mehmed II to confiscate privately owned land and the shifting of power to the bureaucracy from the aristocracy 11 . This move marked the end of the later system since it was founded on a private land ownership system. Central bureaucracy of the Empire wanted to establish a social order that would centralize authority in which they would control the city’s supplies, long-distance trade, as well as imports that would ensure the stability of the social order. In this case, the Empire was actively involved in supporting operations undertaken by merchants, moneylenders, and guilds on the basis that they contributed in the stability of the social order. As much as central organizations weakened between the 17 th and 18 th centuries, merchants and producers were not strong enough to force the state into reconsidering transiting from the conventional policies 12 . Meanwhile, mercantilist and capitalist policies were dominant within Europe since the merchants and producers were strengthening their position rapidly (Pamuk, 2009, p. 21).
The engagement into long distance trading and control of the trade routes became a priority for the Empire following its conquest of Egypt and Syria during the 16 th century 13 . At this time, it should be noted that the Ottomans were depicting special interests in foreign merchants for the fact that they supplied products that were not obtainable within the Empire. The same period also saw a number of privileges being granted to the merchants. It is similarly reported that central state prioritized the generation of financial income, which it did through intervening economic activities for the collection of taxes 14 . At that time, the Ottoman authorities had realized that the economy required to be strong and vibrant if it was to stay fiscally powerful. The third priority of the central state of the Ottoman Empire was to maintain the traditional order. As noted, there was a balance among the farmers, the merchants, and the guild, and the state was dedicated to sustaining this order. The attitude of the state towards the merchants posed a dilemma since on one side, it considered that merchants were vital to the economic administrations of the city but regulated the activities for profit generation of the same merchants on the other since they resulted in scarcity 15 .
The Contact between the Ottomans and Outsiders
The Ottomans were distinguished from the rest of the developing world during the era of globalization by their strong centralized system of government. From the start of the 19 th century during the royalty of Mehmut II, the Empire made several transformations against increasing economic and military power of Europe and ethnic minority nationalism movements of the Balkans and distant provinces 16 . Because of such activities, the influence of the minorities reduced. In addition, the control of the central government in political and military aspects was increased. Nevertheless, for the Empire to raise the control and power of its central government, it was necessary that the Ottoman’s seek the support of Europe 17 . Europe, especially Britain, was supporting reforms, which meant that Ottomans would seek its help in military aspects. The support was particularly helpful since it would enable the Empire defend itself from external attacks such as that from Russia 18 .
There is a need to note that Europe demanded that the Ottomans open themselves into the free market system that existed at that time if they were to obtain military, financial, and political support as they had wished. These demands resulted into reformations that were geared at ensuring the concession of foreign capital and foreign trade. In addition, the control of the Empire by Europeans was strengthening gradually as it opened up its economy to an interaction with the outside world. For example, with such reforms instituted in 1856, and in 1867, foreign investment and purchase of land respectively was allowed into the Ottoman Empire 19 . The Ottomans had a chance of breaking the vicious cycle of little levels of saving and investment that resulted into slow growth. The acquisition of additional capital would soon enable the Empire to acquire new technologies for trade and farming. For instance, the invention of the steam engine in Britain and its wide adoption in the rest of Europe meant that trade was facilitated with ease between the Empire and the outside world. In addition, the interaction of the Ottomans and the outside world introduced new crops into the Empire such as coffee and sugar, which meant that the farmers would slowly start shifting from subsistence farming to commercial farming. It means that the Empire had transformed into adopting foreign trade with the rest of the world, mainly Europe and Asia 20 . Furthermore, the emergence of railroads in the area enabled more control of the central government in the rural regions of the Empire through facilitating easy transportation of soldiers and collection of taxes.
Why Mercantilism and Capitalism Did Not Suit the Empire
As much as the Ottoman Empire opened itself to trade with the external world, it is reported that European capitalism and mercantilism did not prove suitable for its mode of operation. The question in this case is why. For example, why did the mercantilist and capitalist ideas not help the Ottomans improve their economy in the same way Europe developed? An additional question concerns why the Ottomans failed to predict the destructive forces of the large volumes of imports on its economy. While answering these questions, there is a need to refer to the economic model and principles of the Empire discussed previously. While referencing the previous sections, it turns out, therefore, that the Empire supported large-scale importations because of the ideals of provisionism that ensured a steady supply of products to its local markets at relatively affordable prices. On the contrary, exportation was only considered an option when the market had been amply supplied. This difference appears to be the most significant factor between Mercantilism and the economic model of the Ottomans.
While Ottomans recognized the existence of Mercantilism, they did not adopt its policies for many reasons, some which may be unsupported by sufficient literature. For example, of the weaker reasons, the fact that the Ottomans did not foresee the effects of extensive importation could explain why Mercantilism was not suitable to their model of economy 21 . According to this view, it is considered that the imports did not affect local production, which gave an assurance to the planners in the Empire that their model of trade would not backfire. However, most of the studies connecting the two models consider that the failure to adopt Mercantilist policies resulted from an extreme desire of the Ottoman Empire to maintain central bureaucracy, which was not a feature of Mercantilism 22 . The desire for this central bureaucracy did not allow the Mercantilist policies to dominate the mode of trade of the Empire even during the 17 th and 18 th centuries the foreign policies had gained much prominence in the regions of the Empire that were far away from the headquarters. For such reasons, the Ottomans stuck to their economic model and principles.
The Capitalist principles of economy did not suit the Ottoman Empire for similar reasons, as did the Mercantilist ones. Conversely, it should be understood that while capitalism was meant for the profit motif, Ottomans did not approve of such a motif 23 . As explained, the Ottomans did not believe on the principle of profitability since the government intervened to control the prices of products through the principle of provisionism. On the contrary, capitalism advocated minimal control from the government, which was undesirable under Ottomans model of economy. Therefore, the Ottomans remained intact with their economic principles up until when the policies proved obsolete, a time when the Empire collapsed during early 20 th century.
Conclusion
The Ottoman Empire remained distinct from the rest of the world in terms of its economic principles for a long time. Despite the fact that the empire existed during the industrial revolution and the globalization periods, its three fundamental principles shielded it from a corruption by the outside world. For example, the principles of provisionism, fiscalism, and traditionalism enabled the Ottoman’s to preserve their economy from an outside inference by capitalism and Mercantilism. The pressures of these two systems became apparent when the Empire sought military, fiscal, and political help from Europe during its war with Russia. As much as there were interactions in terms of trade occasioned by the ultimatums of Europe requiring the Ottomans to open up their economy for globalization, the foreign systems remained irrelevant to that of the Ottomans. For example, while the foreign systems advocated free trade, profit-oriented production, and limited control from the government, Ottomans believed in the need for central bureaucracy that would assert much control of the government on the activities of traders. In addition, the Ottomans did not believe in the principles of profitability, which is why the two models were unwelcome. According to Ottomans’ principle of provisionism, engaging in profitable trade with the outside would mean that the central state exports products to the outside, which would affect the volumes of supply to the local markets and cause a rise in the prices of products. However, as much as the fiscalism principle failed to operate sufficiently (the Ottomans ran into budget deficits), the Empire stuck to the rest of the principles. Even while this concept is not addressed in this paper, it may be argued that fiscalism must have been the main contributor to the economic failures of the system. By this, it means that the Empire relied too much on external aid to finance its budgetary deficits while not generating enough revenues from trade to refinance the foreign debts.
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1 Gwartney, James D., Robert Lawson, and Walter Block. Economic freedom of the world, 1975-1995 . The Fraser Institute, 1996.
2 Duranoglu, E. and Okutucu, G., 2009. Economic reasons behind the decline of the Ottoman empire (Master's thesis).
3 Genç, M., 1984. 18. Century of Ottoman Economy and War. Works, Journal of Social Research , 49 , pp.52-61.
4 Ibid. pp. 60.
5 Pamuk, Sevket, 1980. Foreign Trade, Foreign Capital and the Peripheralization of the Ottoman Empire , 1830-1913. 0388-0388.
6 Somel, Selšuk Akşin. The modernization of public education in the Ottoman Empire, 1839-1908: Islamization, autocracy, and discipline . Vol. 22. Brill, 2001
7 Ibid. pp. 67.
8 McCarthy, Justin. The Ottoman peoples and the end of empire . Oxford University Press, 2001.
9 Islamoǧlu, Huri, and Çaǧlar Keyder. "Agenda for Ottoman history." Review (Fernand Braudel Center) (1977): 31-55.
10 Islamoǧlu, Huri, and Çaǧlar Keyder. "Agenda for Ottoman history." Review (Fernand Braudel Center) (1977): 31-55.
11 Duranoglu, E. and Okutucu, G., 2009. Economic reasons behind the decline of the Ottoman empire (Master's thesis).
12 Duranoglu, E. and Okutucu, G., 2009. Economic reasons behind the decline of the Ottoman empire (Master's thesis).
13 Gwartney, James D., Robert Lawson, and Walter Block. Economic freedom of the world, 1975-1995 . The Fraser Institute, 1996.
14 Ibid. pp. 103
15 Gwartney, James D., Robert Lawson, and Walter Block. Economic freedom of the world, 1975-1995 . The Fraser Institute, 1996.
16 Duranoglu, E. and Okutucu, G., 2009. Economic reasons behind the decline of the Ottoman empire (Master's thesis).
17 Ibid. pp. 29
18 Ibid. pp. 31
19 Pamuk, Sevket, 1980. Foreign Trade, Foreign Capital and the Peripheralization of the Ottoman Empire , 1830-1913. 0388-0388.
20 Nisancioglu, Kerem. "The Ottoman origins of capitalism: uneven and combined development and Eurocentrism." Review of International Studies 40, no. 2 (2014): 325-347.
21 Pamuk, Sevket, 1980. Foreign Trade, Foreign Capital and the Peripheralization of the Ottoman Empire , 1830-1913. 0388-0388.
22 Ibid. pp. 21
23 Nisancioglu, Kerem. "The Ottoman origins of capitalism: uneven and combined development and Eurocentrism." Review of International Studies 40, no. 2 (2014): 325-347.
