25 June 2018

The true wonders of the world were built by market forces


The pyramids of Egypt are astonishing feats of human engineering. The Great Pyramid of Giza was the tallest structure in the world built by man for more than 3,800 years. Most structures built today would collapse if left unattended for several hundred years, yet the pyramids have survived for millennia.

A question that baffles many today is: how were the pyramids constructed? It is commonly believed that it took around 20 years to erect the Great Pyramid of Giza. Since the structure is so massive, 800 tons of stone would have to have been moved every day to achieve this. Even with today’s modern technology, this would be very difficult to accomplish. Some therefore claim that The Pyramid of Giza must have been built by aliens, or a high-tech human society that existed in the past.

The most probable explanation is, however, equally unsettling – the pyramids are the greatest ever example of government waste.

The pyramids are monuments to how the resources of the ancient civilisation of Egypt were squandered on building man-made mountains, with little actual value for society. Equally interesting is another wonder of the world which was first constructed some 3,000 years ago. This wonder is the qanats, the underground irrigation system that made much of the Middle East viable for human civilisation. While the pyramids were built by central government diktat, and had little if any practical use, the qanats were built through market mechanisms and had massive practical benefits.

The dawn of human civilisation occurred in two neighbouring regions, Mesopotamia and Egypt. It was here that mankind first read, wrote, made laws, and lived in cities under organised government. However, these two civilisations differed in their approach to economic affairs.

The people of ancient Egypt initially made impressive progress, largely thanks to the Nile river and its dependable seasonal flooding which created a natural system of water distribution in a country with ample sunlight. Growing crops to feed a rising population was easier in Egypt than in many other parts of the world.

Yet, it was mainly Mesopotamia, not Egypt, which led the world in economic and technological advancement. A core reason is that the Mesopotamian civilisations of Babylon and Assyria developed the world’s first market economies , while Egypt moved towards a greater level of government central planning. Although merchants, private artisans and businesses certainly were important economic actors in Egypt, state intervention limited the function of markets.

Understandably, much of Egypt’s economy was centred along the Nile, and the state could easily control this important river. The economy became controlled by the government, and the Egyptian pharaohs went as far as believing themselves to be gods. And so, they directed the resources of their rich lands to building man-made monuments to themselves.

The kings of the Middle East also built monuments, such as the Hanging Gardens of Babylon and the impressive Persian capital of Persepolis. But since the state was smaller, the resources put into the monuments to central authority were more limited. The resources of the Middle Eastern civilisations could instead be directed towards private and productive use. Perhaps the best example of this is the qanats.

The qanats are one of the most important infrastructure projects in human history. These underwater irrigation systems, which were first constructed in Iran, made otherwise dry regions habitable. Once water provision was secured, previously barren regions became productive agricultural land. They were vital for development of lands in places such as Iran, Iraq and Syria. With time they also spread to other great civilisations, including Greece, Rome, India and China.

A qanat is a slightly sloping underground channel which transports water from an underground source to the surface. While the concept is easy to grasp, digging a qanat is anything but.

First, one must find a suitable area. Then one needs to find out if this subterranean resource can be used to irrigate lands that can sometimes be many kilometres away. To do this, the expert qanat builders chose appropriate locations and trial wells. It is not enough to find subterranean water, it must be water that is continuously being refilled or is large enough to remain for many generations.

If there is doubt concerning the permanence of the water supply, more test holes must be dug in order to determine the extent of the aquifer and the depth of the water table. However, digging this first well is just the initial step. After this is done, a canal will be dug many kilometres under the earth, to guide the water. This subterranean canal must be sloping a little. The qanat must be aligned so that a slightly sloping tunnel from the water-filled base of the mother well will surface above the irrigated fields of the settlement. Otherwise, water will not flow to the settlement. If the gradient of the tunnel is too steep, water rushing down the tunnel will erode the walls of the underwater channel and soon destroy it.

The ancient people of the Middle East did not build a few qanats, but thousands of them. The people of these lands maintained and expanded on this ancient infrastructure until quite recently. In 1968 Professor Hans Wulff explained that Iran had some 22,000 of these underground structures – comprising more than 170,000 miles of underground channels. Remarkably, three quarters of the water used in the country still came from this ancient network as recently as the late 1960s.

Taken together, the qanats are as impressive as the pyramids of Egypt – although the underground networks are certainly not as visible as the man-made mountains that mark the graves of pharaohs. There are two stark differences between these wonders of the world: the first is that the qanats were a tremendous investment that benefited human progress, while the pyramids were a tremendous waste of time and resource. The second is that the pyramids were built by state diktat and financed by taxation, while the qanats were built through private ownership and private contracting.

The qanats were not mainly built by the state – as with the other wonders of the world, but by farming communities. They were motivated by the land and water ownership granted to those who constructed the irrigation system. This also provided incentives to continuously maintain the underground channel and the wells going to it from the surface – which is needed if the expensive infrastructure is not to collapse.

Not only during the time of the ancient Persians, but also during the market renaissance that occurred during the Islamic Golden Age, qanat construction was incentivised by the property rights received by those who financed the construction. A body of Islamic law even developed to regulate the water-supply system – Kitabi Qani (The Book of Qanats), was in existence in the 11th century as a set of rules to protect the essential but risky investment of qanat construction.

The role of the state was largely to establish the framework of private property rights for water and land that made the outlay on underground irrigation worthwhile. Farmer collectives would never have made the massive investment of building qanats otherwise. The farmers could not by themselves have built the extremely advanced channel network; the actual construction was instead accomplished by specialised engineers.

A thought experiment might prove useful: What if the ancient Egyptians had not built the pyramids? Massive amounts of human labour and resources would have then been freed up to productive work. On the other hand, if the qanats had not been built, much of the land that fostered human civilisation would have continued to be barren. This is one of the best examples of how private ownership and profit-seeking entrepreneurship improve society – while statist control leads to waste of resources. We can learn a lot from history when it comes to economic policies.

Dr. Nima Sanandaji is the president of the European Center for Entrepreneurship and author of some 30 policy books. His new book The Birthplace of Capitalism: The Middle East was recently published by Timbro.