Saturday, October 4, 2008

Capitalism's Grief vs Islam's Ethics

I've been listening to commentators for the past two weeks. I've been thinking about materialism and genuine religion. I say genuine religion in opposition to political movements and strategic sermonising - the ethical basis that is at the heart of each Prophet's message. A deeply felt awareness of God is present in all their messages, an accountability for action is also there, but there is no Prophet whose message has been more for today than Muhammad - the Final Messenger (peace be upon him). All Prophets have criticised greed and required care of the poor, but the jargon and the insistence of the recent decades of materialism have overtaken every religion - except the teachings of Islam and especially its ethical economic teachings.

While I am not an economist, it is apparent that understanding the true value of an asset has different interpretations - and this has ethical aspects. According to many reports this week, and cited again today on the ABC's Insider's Business Report - the amount of 'leverage' applied by banks in recent times on an asset has been up to 20 times it's actual value! In other words, against your $10 deposit, the banks have borrowed $200. Another example is share investment. For example, Woolworths have allowed those with cash to buy a slice of their company - thereby increasing it's asset base and sharing it's profit (or loss if that was what happened). But shares today have little regard for that profit or loss return as can be seen right now in the resources sector. Mining companies which dig giant holes in parts of Australia amongst other long suffering countries are still exporting mega-tonnes to China and other developing nations. But 'fear' that China's growth will now be slowed has meant that the price of mineral shares has dropped significantly. Rumour, fear and greed have been the reason d'etre of share prices for many years now.

The Prophet of Islam though, told his followers to exchange like with like - sell your slice of a gold company for a slice of Woolworths - not a speculative guess at what returns might be gained or lost in the next few months or years. Sell your dates at their current value for wheat at its current value. He instituted very strict market regulations aimed at curbing dishonesty and misrepresentation in the marketplace, and of course the Quran legislated against the whole concept of interest or 'riba' and it's consequent injustice to the poor.

The Prophet also legislated against speculation - for example, that you could not sell your crop of wheat until it had been harvested. You could not estimate it's value and speculate on its worth - it had to be harvested, packed and ready. Only then could a buyer know exactly what he or she was getting for their money. Such a regulation would have eliminated the 'short selling' - where investors sell something they don't even own!

For many years I have engaged in a debate with members of my family about interest - as have many Muslims living in the 'modern world'. Interest - demanding an increase on the return of borrowed money regardless of whether the money generated profit or loss - is seen as an inherent and inescapable part of normal society. But interest is the cause of much of the capitalistic problems of today:
* it encourages people to borrow and consume above their means in the hope they can repay
* it allows those with capital to benefit from the desperate hopes of others without any accountability
* it builds an unrealistic inflation into the economy (commentators this week have been saying that business cannot access credit resulting in the immediate slowdown of growth in business which is dependent on credit for even their daily transactions)
* it effectively means the wealthy parasitically live off the earnings and assets of the poor - the root cause of suffering throughout most of the world today (

The awful reality of capitalist greed was reflected in the news that just HALF of the current bailout of Wall St could eliminate poverty in the developing world as outlined in the United Nations Millennium Development Goals. For the 1.4 billion or so in the world who struggle to survive on less than US$1.25 per day (that's one in four of us), and the vast majority of the world who struggle to put shelter over the heads over the children, this bailout of greedy capitalists is an unbelievable slap in the face to justice and equity.

Ethics has only recently entered the economic debate - with the likes of Kamran Mofid a Christian economics professor who has toured the world speaking about ethical economics and in 2005 called on the First World Islamic Economic Forum to be part of a "Spiritual Revolution" to bring justice against the "false religion of materialism". It is time that Muslims educated themselves about the fundamentals of their ethical religion, rejected the 'false religion' of materialism and began to campaign for an end to capitalism. There is another way - but we have to study it, and to live it, before we can help others with it. But before all that, Muslims in particular have to restore their integrity and their ethics, given that Muslim countries are amongst the biggest investors in speculative markets and corrupt social systems. We have to reconnect with the ethical and socially just message of the last and most relevant Messenger from God - the Prophet Muhammad (peace be upon him.)