In the 16th century, Europe and, later, what would become the United States began to create an entirely new kind of society. In what we call the pre-modern world, all civilizations were based economically on a surplus of agriculture, which could be used for trade. But at the time of the scientific revolution, the West began to create a society founded on technology and reinvestment of capital, enabling Europe and America to replicate its resources indefinitely.
This involved major change at every level of society, and it was a painful process. Modernity did not come fully into its own until the 19th century, and during that time the Western countries experienced revolutions, violent wars of religion, exploitation of workers in factories, the despoliation of the countryside, and great distress as people struggled to make sense of this profound change. (Similar upheavals are going on now in developing countries, including the Islamic countries, as they make this difficult rite of passage.)The new order demanded change on every level: social, political, intellectual, scientific and religious. And the emerging modern spirit had two main characteristics: independence and innovation.
There were declarations of independence in nearly all fields. The American Declaration of Independence was a modernizing document, and the war with Britain a modernizing war. But people also demanded independence intellectually: scientists could not permit themselves to be impeded by a coercive state or religious establishment; the Protestant Reformers who declared their independence of the Catholic Church were also forces for modernization. And innovation figured in this: constantly people were making something new, breaking unprecedented ground, discovering something fresh. There was excitement as well as the distress that inevitably accompanies major change.
It was found that in order to be fully productive and thus provide a sound basis for the new civilization, more and more people had to acquire the modern spirit and therefore a modicum of education, even at a quite humble level. Printers, clerks, factory workers and finally women were brought into the productive process. As the populace became more educated, they quite naturally demanded a share in the decision-making process of society.Similarly, to make full use of its human resources, governments found they had to draw upon minority groups such as the Jews, which had been either persecuted or confined to ghettos in Europe. In England, Catholics were emancipated. Those societies that were secular and democratic seemed to work best. In Eastern Europe, countries that reserved the fruits of modernity for an elite, and that used more draconian measures to bring Jews into the mainstream, fell behind.
In some Islamic countries, furthermore, modernity has not been accompanied by independence, but by colonial subjugation. Even after colonialism, powers like Britain or France, and latterly the United States continued to control the political destiny of these developing nations. Instead of independence, we've seen an unhealthy dependence. Secondly, instead of innovation, the Islamic world has had to settle for imitation. We are simply too far ahead.
Islam is not inherently opposed to democracy, however, and the attack of September 11th was not a war against democracy or freedom. There are principles in Islamic law, such as the need for shurah (consultation) before passing new legislation, which would be very compatible. And it is not strictly true that Islam is incapable of separating what we in the West call "church" and state.
In practice, Muslims have perforce kept religion and politics separate. In the Shiite world, this separation of religion and politics was a sacred ideal, because all states were seen as corrupt. In the Sunni world, there was a de facto separation of religion and the political life of the caliphal court. The shariah, the Islamic legal system, began as a counterculture, as a white revolution against what they saw as the corruption of the court. The ulama (religious scholars) promoted a more egalitarian, principled and just system of law than was actually feasible in the realpolitik of the court, which had its own aristocratic culture, known as the adab. Some Muslims do have semantic problems with the Western definition of democracy: "Government with the people, for the people and by the people," is not tenable, because in an Islamic perspective God and not the people is sovereign.