Terrorism and the Wealth of Nations

In the wake of the devastating attacks on the World Trade Centre and the Pentagon on September 11th, and the subsequent backlash of accusations and speculation concerning the motivations and nature of the (possible) perpetrators, it is perhaps unsurprising that one would be swept in the wave of currently fashionable explanations concerning the cause of the crisis: misguided American foreign policy, the increased militancy of Islamic fundamentalist groups coupled with the belligerent aspects of Islam, retribution for the misdeeds of the United States, and even the prophetic utterances of a 16th century astrologer.[1]

Whereas there are grains of truth in all these explanations, the enormous weight of counterfactuals lays the burden of proof on these theories to prove their value as the central factor for the terrorist acts. Indeed, the primarily Saudi origin of the belligerents leaves the foreign policy misstep explanation wanting, since Saudi Arabia is an ally of the United States, and has not endured aggressive American military action. Similarly, the existence of cordial relationships between the U.S. and nations such as Indonesia and Malaysia - majority-Muslim nations - demonstrate that Islamic nations need not possess sour relationships with the West. Furthermore, retribution and hatred for America does not necessarily have to manifest itself in the form of suicidal terrorist displays. Hence, as far as theories go, the conventional explanations are symptomatic - even catalytic - but certainly not bottom-line, truth. The question that begs to be asked is: what drives young men into acts of unadulterated violence?

The answer, interestingly, lies not in the machinations of one man, or even in a diabolical network of twisted minds. It lies in the entire circumstances that surround the nations of the Middle East - nations that, despite their enormous oil wealth, remain in abject poverty,[2] and where economic growth for the past thirty years has trended not upwards but down. When the mind and body remain idle due to double-digit unemployment figures and globalisation has largely passed one by, it becomes easy to recruit young, idealistic minds [3] that see little difference between death and the present hell that they have to content themselves with as daily life.

But why has this been so? The answer lies in the absence of a free-market system in the countries of the Middle East. Business power is often wielded by a small cosy of wealthy elite, often associated with the ruling government. Where multinational enterprises have established a presence, the system in place - which gives scant thought to proper incentives for education and veiled respect for full enforcement of property rights - has meant that there is little motivation for these companies to invest in the local economy. Other than in petroleum, free trade is more often than not a rhetorical vibe rather than an experienced reality. Income distributions remain fractured, leading to widespread discontent - a discontent that is often directed towards external sources rather than the ruling elite.

Ironically, perhaps, the very opponents of globalisation that have argued against 'unadulterated capitalism' and the 'evils of free trade' could have sown and nursed the seeds of the terrorist mindset. An exaggeration? Not entirely. When one considers the transmission mechanism - where protesters enact physical and non-physical barriers that prevent the efficient workings of the market system, which then subsequently leads to endemic growth and an enlargement of the poor and unemployed, leading to a restless army of jobless youths from which - as elaborated above - a few ready and willing suicide killers may be found.

The solution, then? Allow the invisible hand to operate. In the absence of barriers to free trade and laissez-faire capitalism, private actors will find incentives to seek profit opportunities, lowering economic inefficiencies and raising the level of employment. Reassert the importance of a respect for individual property rights, and remove regulatory restrictions that allow small businesses to grow and thrive. Only through the operation of the free market will the economic conditions that breed terrorist sympathy and sentiment be curbed and mitigated. Then, perhaps, the countries of the region will rejoin the rest of the world in enjoying the fruits of economic prosperity. And perhaps then the lessons of September 11th will not just be a singular episode, but a lasting legacy.


Cordesman, A.H. 'Geopolitics and Energy in the Middle East'. CSIS Middle East Reports. Washington, DC: CSIS, 1999.

World Bank. World Development Indicators 2001. Washington, DC: World Bank, 2001.


1. The wildly-circulated quatrain that supposedly predicted the destruction of the twin towers and the beginning of the next world war - allegedly attributed to Nostradamus - is a case of both a clever hoax coupled with an excellent, though unregulated, propagation mechanism - e-mail.

2. The average per capita income in the Middle East is about $2,100, compared to $23,800 for high income states - more than a multiple of ten (World Bank 2001).

3. Approximately 40% of the region's population is under 17 years of age, with real and disguised unemployment for males between 18 and 25 years estimated at an average of over 20% (Cordesman 1999).

Related Work

A much earlier article published in the Atlantic Monthly by eminent Islamic historian Bernard Lewis, explores the The Roots of Muslim Rage from a slightly different perspective.

This article is unpublished.