Disputes between Sunni and Shi'a Muslims arose over a disagreement over who would govern the Muslim state after the Prophet Muhammad died without a male descendant in 632. Those we today call Sunnis imagined an oligarchy in which the most suitable were designated as Caliphs. The ones we call Shias today believed the caliph had to come from Muhammad's family: his cousin and son-in-law, Ali. The Sunnis' caliphate quickly developed into a dynastic monarchy where the leader did not have theocratic power, while the Shiites held the notion that religious and political power was united in the Imam.
Structurally speaking, the development in Islam after this is similar to that of Christianity: Real or mythical events that are symbolically added to the power are pointed out. There are deviant teachers - these are usually fought as heretical. And of course, any religious community with aspirations to survive must keep a close eye on the political rulers at all times.
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