This ethnicity of leftovers is also very much in evidence in the world of financial services. The overfeeding of banks in years of plenty has seen the scraps being tossed into a curry of sorts, that curry being the world of Islamic finance and economics dressed up in Keynesian, Marxist, socialist, shared-ownership and Islamic terminology – all of which challenge the capitalist free trade mantra that has brought us to our present crisis. The irony is that Islamic finance is built on the concept of eschewing interest, but interest is something rank and file Muslims have a problem giving up. Thus the countries that the City of London looks to for wholesale Islamic money actually have little regard to this article of faith.
The truth is that the Gulf states have been aping the stock markets, the derivatives and the hedge funds strategies of the West so as the recession unravels, likewise we will see the unravelling of the economies of these countries.
And if you look to the retail market, this lack of faith in Islamic finance as a system is also in evidence – Muslims prefer to ensure the meat that they eat is halal rather than the money they use to buy it.
As soon as you mention the idea of interest being wrong you see hairs bristling and hear the laughter of sceptics, as if this is a utopian dream. But let’s not forget that interest as we see it today does not go back to the creation of the world – it is only a few hundred years old. In fact, the Catholic church didn’t outlaw usury until one of its ruling families spotted an opportunity to increase its personal wealth.
The Islamic economic and moral case is steeped in a vision of free trade, but not the one that states we can all do whatever we like within a system that cares more for the survival of the biggest rather than the moral fittest.
Rather it accepts that business is about taking a risk but also about creating a level playing field and bringing down the barriers to economic power.
So a bank must take a risk with the person it’s lending money to. It must be an investor in more than name and not earn money upon money and then use this to create wealth not based on assets but on paper. In banking terms, that would have once been deemed fraud.
This is the key to understanding the ethics of Islamic finance, Marxist finance and shared-ownership or co-operative enterprises – the bank or building society concerned is seen as a partner in any venture at an agreed price at a certain point of time.
Similarly, the borrower cannot use the asset involved several times over to create wealth that has not materialised, thereby creating an unsustainable debt. It’s not too radical but just 12 months ago, such talk would have been deemed blasphemous.
The heads of the G20 countries rallying round to protect the status quo in the economic system have something to worry about because the rest of the world has noticed that their system is as exposed as the emperor in the fairy tale.
But the established system will probably reassert itself. Materialism thrives however much true Islamic finance tries to move away from the live now, pay later mentality.
Using the factors of production to create wealth in a Marxist and Islamic sense may be flavour of the month for some but living beyond our means is ingrained in all our psyches. Islamic finance is not immune from this. The scepticism of rank and file Muslims is a result of personal expediency, epitomised in the phrase: “I don’t believe this financial product is halal and Islamic.”
This is the result of Islamic finance following the well worn path of City lawyers, accountants, banks and hedge funds in creating products built on semantics rather than the essence of Islam, dressing up status quo products in veils or turbans.
Cynicism will abound if banks create an Islamic finance template endorsed by 14 or so scholars. And this cynicism will only deepen if governments and press releases celebrating the launch of Islamic financial products incessantly go on about the market being worth so many trillions of dollars.
This is to represent Islamic finance as a business opportunity rather than an attempt to subscribe to the values of a system based on equity for all, treating customers fairly, shared risk and shared profits and an end to interest being charged on loans to create a debt mountain that is excellent for lenders’ balance sheets, but only until the bubble bursts. Muslims may recognise that Islamic finance does not exist as it is portrayed in the marketplace but they must also share some of the blame for refusing to challenge their own commitment to their principles.
It’s not enough for them to look at the concept of interest as someone else’s responsibility – they need to look at their personal values and how they have been drawn into the ‘I want it now’ economy, thereby contributing as much as anyone else to the credit problems we face today.