Guardian: ‘Could Islamic finance save capitalism?’

Is there a place for ethics and morality in the global economy? Should we continue to rely on governments to tweak at the margins of financial regulation, or is there a credible argument that a root and branch reformation is required – a revolution in capitalism?

Anthropologist and co-founder of the Occupy Wall Street movement David Graeber believes – along with an increasing number of leading intellectuals – that the world’s reliance on our current banking system has had a catastrophic impact on society, leading to an increasing divide between rich and poor, an increase in contemporary versions of debt bondage, and perpetuating the idea that credit creation is a mark of human progress…

…Intellectuals such as Mufti Taqi Usmani, a renowned scholar of Islamic jurisprudence, contend that Islamic economic theory may have some answers to the thorny dilemma of balancing the free market with protection of the vulnerable.

Indeed, the Prophet Muhammad in his last sermon before he died emphasised human and property rights to his followers, leaving them to codify the ethical principles he had bequeathed through the word of God and the documented precedent of his own life. This codified law is known as sharia and is perhaps more misunderstood today than at any time in its history…

When Europe’s barbarous principalities once slumbered through their Dark Ages, the Islamic world experienced an age of scientific, literary and philosophical enlightenment, borrowing whatever was good from the cultures around them and building on it. Islamic scholars in medieval Baghdad and Cordoba developed rules and mechanisms to encourage entrepreneurship, leading to the dissemination of financial innovations along the Silk Route and into southern Europe. These were the roots of modern capitalism, but somehow along the way the protection of the weak became forgotten…

Harris Irfan is author of “Heaven’s Bankers: Inside the Hidden World of Islamic Finance” and managing director at EIIB-Rasmala, a boutique investment bank.

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