On the ‘Credit Crunch’
By Andrew Booso

There has been an exceptional media focus on the recent trials of the global economic system. Indeed, the course of events is of a magnitude that has long been unheard of. From a Western perspective, many of us have found our normal living costs rising while our wages have not risen in line with inflation, many of our homes have lost substantial value, and numerous people have seen the value of their business investments and shares fall dramatically. Such events have made people with no academic background in economics feel threatened by these matters, even if they despairingly fail to comprehend the stark reality and details of the problem. However, the one thing that they will be sure of is that their standard of living is falling and is precarious, and that they are seemingly impotent to shape the future for the better.

A common villain has been identified for the scandal: the greedy bankers. Thus there have been calls for governments to improve regulatory standards as a means of preventing future disasters of a similar nature. Moreover, governments have come under some criticism for having allowed such a disaster to transpire in the first place. Both of these observations are apt, but they belie a certain naivety. In fact, while the mythology of essentially free markets functioning for the common good has been laid bare for its untruth, the mythology behind the essence of the contemporary capitalist system – with its usury and fiat money – has rarely come into discussion. Even when left-wing commentators – such as Milne, Bunting and Younge or non-left wingers like Jeffrey Sachs (21 October) in the Guardian comment pages – have called for an alternative for the future in light of current events, they have failed to touch upon meaningful details – a fact which only speaks of the bankruptcy of the left to bettering the current system.

The fragility and openness to abuse in the system is rooted in the mechanics that fail to submit to true authority and accountability. The construction of fake authority – as the case with communism or the ‘invisible hand’ of the market, amongst others – has been humiliated by recent history in terms that are qualitative, as well as quantifiable.

Now I do not doubt that a Galbraithian approach to capitalism – as argued by Stephen Dunn in the Guardian comment pages on 15 October 2008 – would have largely averted the current disaster, by God’s will. However, I would contend that the nature of the beast dictates that the values of Galbraith will, on most occasions, be overthrown by the greed factor inherent in the essential make-up. Thus when Gordon Brown, the Prime Minister of Britain, wants to invoke for the markets the ‘values’ that it cannot generate itself, but which are values of ‘fairness, stewardship [and] cooperation’ derived from those ‘learned in families, neighbourhoods and communities and developed in the relationships we enjoy as a society’ (Telegraph online, 18 October 2008) – then we must question whether our knowledge of these factors supports the notion of capitalism now being refined for the better. Or is this just another of the endless cycles – as outlined by Dunn – that capitalism thrusts upon us from time to time, and we are simply required to bear?

Unsurprisingly, some Islamic-minded economists have set out a more just and stable method of banking within the current system. Nevertheless, the conventional banking system has largely ignored such proposals for numerous reasons, unless it means a piecemeal development of a limited number of products that allow the main actors to gain the wealth of Muslims. The nature of such a scenario means that the tail is truly only ever wagged by the dog, as dictated by the dog.

A subordinate role as this leaves such a nascent and confined area like ‘Islamic banking’ open to severe victimisation by the normative conventions. As a result, numerous Islamic economists have proposed an alternative ‘gold’ system of economic finance, together with the Islamic prohibitions of such practices as usury, monopoly and tyranny. [I have discussed these alternatives on a previous post of mine. BBC news recently covered an interesting story on gold: Banking on Gold]

Of course, detractors to these alternatives will claim that such proposals lack fine detail, and are therefore idealistic. The reality is that there is sufficient theory for such alternatives, which are only to be refined when implemented; and such theory is not to be simply over theorised in academic centres and journals. Indeed, capitalist economic theory, likewise, only has certain theoretical principles, and it is only the fact that they are implemented which leads to the resulting wealth of analysis. [This warning against over-theorising was also articulated by Sayyid Qutb in the second chapter of his Milestones, as a warning against being sidetracked in this manner whilst pursuing the path of justice for humans.]

The fact remains that a wealth of specific economic policies of a programme can only be accurately developed in real contexts – and not in theoretical PhD’s and publications, which might be outdated very soon after publication. If one takes a siratic view as Muslims, one can see how the early Muslims had principles of economics that they applied to ever-changing economic environments. For instance – again in light of the sira – one can only respond to events with monumental economic consequences such as the Boycott of Bani Hashim (616-619), the Battles of the Trench (627) or the Expedition to Tabuk (630) when these events actually occur. Moreover, this is not only true of economic hardship, but also true of economic prosperity, as the early Muslims received during the times of ‘Umar and ‘Uthman (may Allah be well pleased with them both). [For the events of the sira, one can view Abul Hasan Ali Nadwi’s Muhammad Rasulullah: The Apostle of Mercy (peace be upon him) – this is my favourite work of this genre – and Sa’id Ramadan al-Buti’s The Jurisprudence of the Prophetic Biography and Akram Diya al-‘Umari’s Madinan Society at the Time of the Prophet (upon him be peace); and ‘Ali Muhammad as-Sallabi has works on ‘Umar and ‘Uthman, published by IIPH and Darussalam, respectively; and Shibli Nu’mani’s al-Farooq: The Life of Omar the Great is a wealth of information.]

Muslims in the West should have a positive voice that contributes to the eradication of economic injustice. Yet, the fact is that an Islamic voice on the matter holds values that are at odds with the current principles that dominate the main discourse. In this light, the psychological profiles of how minorities in the West usually defer to majority opinions, even when such minorities have a conviction in their initial conclusions – as outlined in brief by Philip Zimbardo in The Lucifer Effect: How Good People Turn Evil – are of particular note for Muslims engaging in discussions about improving economics for the good of humanity. Just because a majority agree on something does not mean that it is necessarily correct. In this regard, accusations against Islamic economics on the grounds that such alternatives are ‘wrong’ or ‘unrealistic’ should not be a means of Muslims relinquishing their convictions based on sound derivative principles for articulations of the Sacred Law.

In fact, the history of true Islamic economics is a remarkable narrative of economic justice and prosperity, without the extreme ‘booms and busts’ of modern capitalism. Interestingly, the economic story of Islamic peoples takes a turn towards effective slavery when they started to replace their own system with the modern system of capitalism, based on fiat money. This last part is borne out of analysis of the last great Islamic dynasty, the Osmanlis. Her story is worthy of a Shakespearean tragedy, whereby she lost what was like a game of Monopoly with someone who had control of the bank, and had permission to print as many notes as they desired in order to win the game. The History of the Ottoman Empire and Modern Turkey, Vol. Two by Stanford and Ezel Shaw gives an enlightening account of the late-Osmanli’s enslavement to bank loans, even when the rule of an excellent ruler like Sultan ‘Abdal-Hamid II (ruler from 1876-1909) was still crippled by the interest-bearing loans accepted by his predecessors, and the huge percentage of the total budget that it consumed, despite the fact that the economy was thriving under his wise and innovative economic policies. Thus highlighting the extreme odds faced by those wishing to pursue just economic principles in the current climate.

By the grace of God, our Sacred Law is the pure water from which true justice springs. Of course, the sweetness of this water is only known through truly tasting; and this tasting is only found in submitting. Now if one is tasting, then one has more right to the truth found in the lyrics of Speech from Arrested Development on the track ‘Tennessee’ (1992 – perhaps the best mainstream attempt at spiritual rap):

Now I see the importance of history
Why my people be in the mess that they be
Many journeys to freedom made in vain
By brothers on the corner playing ghetto games
I ask you Lord why you enlightened me
Without the enlightenment of all my folks
He said cuz I set myself on a quest for truth
And He was there to quench my thirst
But I am still thirsty…

In this light, a Muslim must remember that one’s pursuit of social justice is a flame lit from the intense fire that is one’s spirituality; and that focus can never be lost, for then one’s pursuit of justice is nullified (especially in the otherworldly sense if our focus is deeply corrupted). On the topic of spiritual tasting (shawq) or drinking (shurb), the following anecdote from Qushayri’s Risala is a powerful reminder that eclipses Speech’s words above:

‘It is said that Yahya bin Muadh wrote to Abu Yazid al-Bistami, “Here is one who has drunk from the cup of love till he no longer thirsts.” Abu Yazid wrote back to him, “I am surprised at the weakness of your state. Here is one who drinks the oceans of existence, and his mouth is open asking for more!”’

The early Muslims set the most glorious example of spiritual excellence leading to committed activism for social justice – which has been illustrated by Abul Hasan Ali Nadwi in Islam and the World, with numerous anecdotes from that period. If that spiritual thirsting and drinking is again found in men and women who follow their example in our time, then – by the will of God – this world will come to a better state of affairs as a consequence. Jamaal al-Din Zarabozo has written in his monumental Commentary on the Forty Hadith of al-Nawawi – on the authority of Taataay – that a society based truly on Islam does away with frictions between ‘the rich or upper classes and the poor or lower classes’. Zarabozo explains:

‘This is because rich believers do not exploit their wealth and use it extravagantly as is done in non-Islamic environments. Instead, they use their wealth in the proper manner and they also distribute to the poor and needy. Hence, the existence of the rich is a means by which the needs of the less fortunate are met.’

If it was not for the fact that history – even recent history – bears testimony to this truth, then this reality could be more easily dismissed as a fairy tale or mere wishful thinking.

P.S. Out of respect for the dominant position of the four schools of law on the prohibition of music, I am in no way encouraging people to listen to the original music score that contains the above lyrics. I am here quoting the lyrics as a form of avant-garde poetry. I was able to obtain the lyrics without the music after a Web search.