POST-WAR IRAQ: I've written a few pieces about post-war Iraq (who hasn't?) and in the end the main difficulty facing the Iraqi people is that their economy is stagnant, and bloated with monopolized oil wealth. Part of the solution to this problem is for the new Iraqi government to divest itself of its oil holdings, and to put them into the hands of private corporations. Expanding on this idea, John Micklethwaite and Adrian Wooldridge argue over at Opinion Journal that corporations are indeed the economic revolution needed throughout the Arab world.
Companies, and lots of them, are exactly what Iraq (and indeed the whole of Arabia) needs. Developing private-sector corporations is the key to unlocking Iraq's economic potential. This will also help unleash a powerful liberal force in a society that has tasted too little freedom. ...
Yet the Arab world--just like that other erstwhile commercial pioneer, China--failed to develop private-sector companies in the same way that the West did. The decisive break came in the mid-19th century, when Victorian Britain passed a series of Companies Acts making it easy to establish limited-liability private-sector companies. Capital that had been trapped in fragile family partnerships (like Dickens's Dombey & Son) or stodgy state-approved monopolies was suddenly free to roam. In the West and Japan (the only Asian country to embrace the form), these new "Ltds," "Incs" and so on revolutionized productivity, showered consumers with a relentless series of innovations and drove the first great age of globalization.
The Arab world's failure to adopt this revolution meant that it fell ever further behind the West. Islamic inheritance law--dividing estates among sons--made it difficult for partnerships to grow to a size where they needed outside capital. The state still dominated the economy. When the Arabs did try to catch up with the West, inspired by "the lion of Egypt," Gamal Abdel Nasser, they chose to imitate the centrally planned economies of the communist world, further marginalizing private companies. Nasser, a devoted reader of Le Monde and Britain's New Statesman, would have been better off studying the Harvard Business Review.