Adbusters

Islamic Finance and the Possibility of Rebirth

We've never really grounded our financial culture in solid principles, other than the sole one of making as much money as possible.

With the financial markets in the gutter, and the trickle-down effect starting to be seen in many of our daily lives – friends and neighbors losing jobs (I especially see it around here in New York) – now seems like a good time to reflect on our financial culture here in the West.

A lot of us probably hate the idea of finance, think it's a sleazy profession motivated by greed. But in many ways the developments in finance in Europe over the past five hundred years have been a crucial part of our development, helping to make possible a huge array of innovations, from the first clothing factories in England at the end of the 18th century, to the development of the iPod at the end of the 20th. Despite the gains facilitated by finance, the benefits to society have always been coupled with a wild irregularity, a boom-bust cycle, which Marx described as part of the inherent contradictions of capitalism, contradictions which would eventually lead to its demise. We've never really grounded our financial ideas in solid principles, other than the sole one of making as much money as possible.

Perhaps there's another way. A shining example that has come out in the past fifty years, one that casts serious doubt on the Western no-holds-barred style, is the recent development of the principles of Islamic Finance. Based on Sharia law, which derives its authority from the Holy Qur'an, the principles of Islamic Finance have provided a beacon of clarity and common sense in good investment practices which are desperately needed here in the West.

What is at the core of the philosophy of Islamic Finance is the idea of money a measure of value, and not a real asset in itself. According to the principles of Islamic Finance, profiting from money–including charging interest on loans–is regarded as riba, or non-permissible investing activity under Sharia law. Instead, what Islamic Finance emphasizes is the idea that the investors should share the risks involved in whatever projects they are investing in, and that they should be investing in real things, whether it's land improvement projects, housing, or helping start up a new business. This represents a glaring difference from daily activities of investment firms in the West, who get huge returns by hacking variations in currency exchange rates, legally manipulating stock prices, and engaging in the kind of risk-spreading and avoiding activities (through an ever-increasing range of derivatives) that have created the huge mess we're in now.

We have to learn to differentiate between the legitimate function of finance, which is to provide money to start and expand a wide range of projects, and the activities that are really disconcerting: the hacking of the markets, currency trading, calls, puts, the entropic soup of Western instruments many of which do nothing, absolutely nothing to help start projects, nothing to help businesses stay afloat during the hard times and expand during the good, nothing to help people buy their first homes or first cars or, yes, even go to college. These do nothing at all except fatten the pockets of the financiers that carry them out. They're like skimming off the top of a huge pot of resources made from the commonwealth, from the work of people who make an honest living. And at the end of the day this "skimming" leaves everyone a little bit poorer, with a little bit less left in the pot, and it's a practice that really ought to provoke outrage.

At a time like this we need to start thinking about how to put real principles into the world of finance, ideals that are at the core of Islamic Finance and at the core of human decency.

In my idle time, I dream of the day when I can walk down Wall Street and see coffee shops, music halls, see kids busking on the street, see the hideous cigar store on Broad Street turned into a hangout space for artists and philosophers where they talk about the latest ideas and ideals while on break from the tedious job of handling finance. I dream of the day when flower vines grow over the grotesque naked buildings of the financial districts here and in London and in Tokyo and in Dubai, for the day when finance is again the pulsing heart of the coming Renaissance. I dream of the day when--as one of my friends put it--a tree grows from the New York Stock Exchange.

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104 comments on the article “Islamic Finance and the Possibility of Rebirth”

Displaying 61 - 70 of 104

Page 7 of 11

cargocult

The trickle-down effect: kings steal from peasants to fill their tables with delicious food; the peasants get the crumbs that fall off the table.

The negative-trickle down effect? Let's see... you must be a supply side economist. "Wealth destruction" and "wealth creation" are your Friedmanian notions - but they are nonsense - the modern equivalent of astrology.

You guys believe in this, right? Mathematically, modern economists say that this is the same as "energy creation" and "energy destruction".

You won't find "energy creation" in any physics text - because energy (matter) is conserved; it can be converted from one form to another, but not created or destroyed. Economists don't even understand basic 19th century physics - it's not part of the curriculum.

Wealth is also conserved. Our planet has a limited amount of surface area; that surface area is land or water, and all wealth comes from the land or water. Sunlight keeps everything from freezing. That's our basic life-support system.

The wealth that we have relied on over the 20th century to fuel our economy is called fossil fuel - and while it provides us with useful energy, it also has been polluting and degrading our planet to the point where the life-support system itself is under increasing stress - meaning it will not be supporting as much life as before.

To economists, there is no problem with that - because an economist is incapable of looking more than about 5 years into the future. That's true naivety - but since it serves the interests of the modern-day aristocrats, economists get away with that kind of nonsense.

A supply-side economist is an even dumber version of a modern economist - one who believes that by controlling supply, one can control the economy. They are incapable of understanding the most simple of concepts, which is that a healthy economy is only possible if the underlying ecology is also healthy.

We are seeing a downturn in agricultural output due to global warming, we are seeing increased insurance losses due to more extreme weather events, we are seeing fuel riots all around the world over supply interruptions - because we've raided nature's pantry without replenishing it, trashed to oceans and the atmosphere, and now all we have left are scraps.

We are going to have to build a new economy, and the basis of the new economic paradigm is going to be the healthy ecology. That mean relying on sunlight and wind and photosynthesis as the basis of our energy platform, for starters.

We are simply not going to allow economic activity to undermine the health of the ecosystem, because that will also eventually destroy the economy. It's either that or go down in flames - unfortunately, many of our psychotically greedy and nihilistic billionaires and their wholly owned politicians and other trained monkeys (academic economists) are perfectly happy with the latter course.

cargocult

The trickle-down effect: kings steal from peasants to fill their tables with delicious food; the peasants get the crumbs that fall off the table.

The negative-trickle down effect? Let's see... you must be a supply side economist. "Wealth destruction" and "wealth creation" are your Friedmanian notions - but they are nonsense - the modern equivalent of astrology.

You guys believe in this, right? Mathematically, modern economists say that this is the same as "energy creation" and "energy destruction".

You won't find "energy creation" in any physics text - because energy (matter) is conserved; it can be converted from one form to another, but not created or destroyed. Economists don't even understand basic 19th century physics - it's not part of the curriculum.

Wealth is also conserved. Our planet has a limited amount of surface area; that surface area is land or water, and all wealth comes from the land or water. Sunlight keeps everything from freezing. That's our basic life-support system.

The wealth that we have relied on over the 20th century to fuel our economy is called fossil fuel - and while it provides us with useful energy, it also has been polluting and degrading our planet to the point where the life-support system itself is under increasing stress - meaning it will not be supporting as much life as before.

To economists, there is no problem with that - because an economist is incapable of looking more than about 5 years into the future. That's true naivety - but since it serves the interests of the modern-day aristocrats, economists get away with that kind of nonsense.

A supply-side economist is an even dumber version of a modern economist - one who believes that by controlling supply, one can control the economy. They are incapable of understanding the most simple of concepts, which is that a healthy economy is only possible if the underlying ecology is also healthy.

We are seeing a downturn in agricultural output due to global warming, we are seeing increased insurance losses due to more extreme weather events, we are seeing fuel riots all around the world over supply interruptions - because we've raided nature's pantry without replenishing it, trashed to oceans and the atmosphere, and now all we have left are scraps.

We are going to have to build a new economy, and the basis of the new economic paradigm is going to be the healthy ecology. That mean relying on sunlight and wind and photosynthesis as the basis of our energy platform, for starters.

We are simply not going to allow economic activity to undermine the health of the ecosystem, because that will also eventually destroy the economy. It's either that or go down in flames - unfortunately, many of our psychotically greedy and nihilistic billionaires and their wholly owned politicians and other trained monkeys (academic economists) are perfectly happy with the latter course.

Anonymous

That is a good comment. This reminds me of what is put forth in "Zeitgeist:Addendum". However, we really need to be thinking about structure, not just philosophy. What structures do we put in place to assure intelligent management of resources? To avoid mis-placed power?

Anonymous

That is a good comment. This reminds me of what is put forth in "Zeitgeist:Addendum". However, we really need to be thinking about structure, not just philosophy. What structures do we put in place to assure intelligent management of resources? To avoid mis-placed power?

Anonymous

I know it Muslims finance is totally awesome! Who doe you tyhink stole the zero coupon bond strategy from the muslims, and used it to get around usery laws? The Crusaders of course! That's how industrial revelation in 1700;s started, stolen Muslim financiel techniques tricked out to Boost the man's plans to produce things. Took Muslim finance tools from them and made them impoverished

Anonymous

I know it Muslims finance is totally awesome! Who doe you tyhink stole the zero coupon bond strategy from the muslims, and used it to get around usery laws? The Crusaders of course! That's how industrial revelation in 1700;s started, stolen Muslim financiel techniques tricked out to Boost the man's plans to produce things. Took Muslim finance tools from them and made them impoverished

Aggy Hadist

Yes!!!

We have to take a good look at Islam, beyond the hate speech. The power elite of the world want to destroy Islam for the finance reason alone. Islam is the last of the religions of the book to stand adamant against Usury. The Jews long ago embraced it. The Christians did so with the reformation. The followers of Zoroaster still call it "The worst sin" but they are few in number. Only Islam stands against Usury and if one does not believe the Prophet, pbuh, well... Just look at how nearly unregulated usury has done far more damage to your country than a thousand 9/11s... Yes, a thousand times, for look at the wars, the CIA terror, the lowering quality of life, the rape of the earth, a thousand times the damage is a mild guess, and all to make rich elite people richer.

I'd suggest pursuing the work of the philosopher Peter Lamborn Wilson aka "Hakim Bey". One of the books he's written is "Pirate Utopias" and another is "Dancings on the Margins of Islam". America is a lousy "Christian" nation, but it'd make a decent "Moderate Muslim" nation.

Aggy Hadist

Yes!!!

We have to take a good look at Islam, beyond the hate speech. The power elite of the world want to destroy Islam for the finance reason alone. Islam is the last of the religions of the book to stand adamant against Usury. The Jews long ago embraced it. The Christians did so with the reformation. The followers of Zoroaster still call it "The worst sin" but they are few in number. Only Islam stands against Usury and if one does not believe the Prophet, pbuh, well... Just look at how nearly unregulated usury has done far more damage to your country than a thousand 9/11s... Yes, a thousand times, for look at the wars, the CIA terror, the lowering quality of life, the rape of the earth, a thousand times the damage is a mild guess, and all to make rich elite people richer.

I'd suggest pursuing the work of the philosopher Peter Lamborn Wilson aka "Hakim Bey". One of the books he's written is "Pirate Utopias" and another is "Dancings on the Margins of Islam". America is a lousy "Christian" nation, but it'd make a decent "Moderate Muslim" nation.

Anonymous

I usually enjoy your blogs and articles, but promoting Sharia law? This makes me seriously question the motives of your campaign. For one thing, modern muslims have argued amongst themselves and their legal scholars as to how Sharia laws should be interpreted, so how is that supposed to apply to the largest financial system in the world? Also, I saw no mention of the "tax for non-muslims" a Sharia law financial principle meant for "subduing" people of different faiths. Are you promoting that as well? Adbusters missed the boat on this piece. One time, I can scratch my head and forgive your shortsightedness, but if the tone of your pieces continues in this manner-you've lost my support.

Anonymous

I usually enjoy your blogs and articles, but promoting Sharia law? This makes me seriously question the motives of your campaign. For one thing, modern muslims have argued amongst themselves and their legal scholars as to how Sharia laws should be interpreted, so how is that supposed to apply to the largest financial system in the world? Also, I saw no mention of the "tax for non-muslims" a Sharia law financial principle meant for "subduing" people of different faiths. Are you promoting that as well? Adbusters missed the boat on this piece. One time, I can scratch my head and forgive your shortsightedness, but if the tone of your pieces continues in this manner-you've lost my support.

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