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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  • BillyHW

    Because people are trying to escape capitalist countries like rats on a sinking ship.

    • Frau Katze

      Yes, I’ve noticed the exodus. Places like Yemen are attracting all the talent.

  • Norman_In_New_York

    Why is the Guardian still taken seriously?

    • DavidinNorthBurnaby

      I think the only people who take the Guardian seriously are the people who write the Guardian.

  • Ron MacDonald

    Contrary to what is written in the last paragraph of this article the Dark Ages were were actually an age of enlightenment. http://www.huffingtonpost.com/quora/how-the-middle-ages-reall_b_5767240.html

    • Frau Katze

      The whole thing is rubbish.

  • Pete_Brewster

    The monopoly of credit has much to answer for, bankrolling communism and the oil states who back Islamic terror among other sins.

    The Guardian’s correspondent, of course, does not actually favour the abolition of usury—he makes too good a living from it, as do the House of Saud. He merely prefers that the monopoly of credit be used to promote Islamic principles—in other words, to make nations choose between Islam or starvation.

  • Jim Horne

    Islamic Banking … the story of the Scorpion and the Frog.

    One day, a scorpion looked around at the mountain where he lived and decided that he wanted a change. So he set out on a journey through the forests and hills. He climbed over rocks and under vines and kept going until he reached a river.

    The river was wide and swift, and the scorpion stopped to reconsider the situation. He couldn’t see any way across. So he ran upriver and then checked downriver, all the while thinking that he might have to turn back.

    Suddenly, he saw a frog sitting in the rushes by the bank of the stream on the other side of the river. He decided to ask the frog for help getting across the stream.

    “Hellooo Mr. Frog!” called the scorpion across the water, “Would you be so kind as to give me a ride on your back across the river?”

    “Well now, Mr. Scorpion! How do I know that if I try to help you, you wont try to kill me?” asked the frog hesitantly.

    “Because,” the scorpion replied, “If I try to kill you, then I would die too, for you see I cannot swim!”

    Now this seemed to make sense to the frog. But he asked. “What about when I get close to the bank? You could still try to kill me and get back to the shore!”

    “This is true,” agreed the scorpion, “But then I wouldn’t be able to get to the other side of the river!”

    “Alright then…how do I know you wont just wait till we get to the other side and THEN kill me?” said the frog.

    “Ahh…,” crooned the scorpion, “Because you see, once you’ve taken me to the other side of this river, I will be so grateful for your help, that it would hardly be fair to reward you with death, now would it?!”

    So the frog agreed to take the scorpion across the river. He swam over to the bank and settled himself near the mud to pick up his passenger. The scorpion crawled onto the frog’s back, his sharp claws prickling into the frog’s soft hide, and the frog slid into the river. The muddy water swirled around them, but the frog stayed near the surface so the scorpion would not drown. He kicked strongly through the first half of the stream, his flippers paddling wildly against the current.

    Halfway across the river, the frog suddenly felt a sharp sting in his back and, out of the corner of his eye, saw the scorpion remove his stinger from the frog’s back. A deadening numbness began to creep into his limbs.

    “You fool!” croaked the frog, “Now we shall both die! Why on earth did you do that?”

    The scorpion shrugged, and did a little jig on the drownings frog’s back.

    “I could not help myself. It is my nature.”

    Then they both sank into the muddy waters of the swiftly flowing river.

    Self destruction – “Its my Nature”, said the Scorpion…

  • Hard Little Machine

    Well no probably not. After all if it worked it would have by now.