Claims that Muhammad established a civil society and a proto-modern state are used by Robert Bellah, John Esposito, and other scholars who happen to be Muslims. The argument is usually these: Muhammad united the many tribes in Medina and created the first "modern" constitution, shahifatul madina, which regulate such society.
My question is two-fold:
How true is the claim that a constitutional state (a modern establishment) and a civil society (also a modern concept) was established in Medina? It is particularly interesting because today "civil society" is translated as "masyarakat madani" in Malay and Indonesian (the term "madani" deriving from "medina").
Prior to Muhammad, what was Medina (Yathrib) like? Was it a center of a trade like Mecca? Did some kind of proto-capitalism develop there (as has been argued by scholars like Ahmad Suhelmi in Mecca)? Why did Muhammad choose Medina as his destination?
I'll try to answer this but it is a bit difficult as from what I know there is limited primary sources from this period itself and most information about this time period tends to be written after the fact and therefore shows some level of bias.
What occurred in Medina would not be reconized as a modern state in modern times. Central governments were not powerful enough to control large swaths of territory to the same level that they are in modern times. As well, Arab tribes in the area tended to be very tribal which does not occur to any large extent in modern states (you could argue that it still occurs in some places). When the constitution of Medina is refered to you have to realize that this is not really a constitution in the modern sense at it was more of an alliance between the tribes of Medina where certain rights were established and certain duties were imposed (this became important when certain Jewish tribes were accused of not honouring their duties and were expelled from the city). That being said, treaties like this had occurred before and laws of the land being established was not a revolutionary concept at this time. You could argue that some features of a modern state occurred in Medina but overall there were some major differences (also, do you mean modern as in a secular modern state or what is your definition of modern as this can change the interpretation).
Prior to Muhammad Medina was largely a farming oasis populated mostly by Jewish Arab tribes. It was largely a farming village that was not a major trade post and was not overly wealthy. I have personally never read any source saying that a proto-capitalism developed there but I have never looked into that either. Muhammad choose Medina after he had been expelled from Mecca because it was one of the few places that would actually accept him. The tribes of Medina had been having some social issues and invited Muhammed to join them if he would agree to be a neutral mediator. From what I understand, no one else really wanted him so he choose it largely out of need.