AUTHOR: Loretta Napoleoni & Claudia SEGRE
Translated by Fernando Esteves, reviewed by Alexandre Leite
must remember how, at the end of the 19th century, farmers and supporters of Islamic finance have expressed repeatedly, his dissatisfaction with the penetration of capitalism in Muslim countries. Some fataawa were published with the intention to reinforce the fact that activities based on the interest of “banks of the colonizers, were at odds with the sharia. However, the only banks operating in the Muslim world were Western institutions, and the Muslim people have used their services even though, under their view, this is unacceptable and an entity founded in activities prohibited by religious law in force, which permeates the tissue socioeconomic Muslim countries.
From the mid-50th to the mid-’70s, economists, scholars of the Shariah and the intellectuals, studied the possibility of abolishing the interest rate and the creation of a financial institution compatible with the Shariah, the second principle of credit banking, namely the prohibition of interest received as remuneration for such time decay. Moreover, it was considered necessary that a new economic system that incorporates solutions obey some of the fundamental precepts of the Muslim faith as zakat, or obligatory to help the poor, reduced by any assets available, rather than finance pilgrimages to Mecca.
The first solutions proposed in the Islamic economics came into force in 50 years in Kuala Lumpur, Malaysia, and in lower Egypt. The experience of Malaysia, organized by the fund management of the pilgrims from Malaysia, was supported by the government. This, in turn, controlled the financial institutions to save funds and investments in accordance with Shariah.
The fundamental and most notably the operation of the Islamic bank is the refusal of any transaction involving interest, either as a pure, applied for credit, either as part of other operations. It is necessary therefore to define alternative mechanisms to establish the rate of return on capital and investments, all in accordance with the precepts of Islam. Islamic economics, unlike the conventional market economy, is supported by religious principles of Islam, and focused in order to keep Muslims in the Shariah, the body of law that directs their lives. The Islamic activists, intellectuals, farmers and religious leaders have always maintained the legitimacy of the ban on interest, the profit of money lenders, and have always pointed to more and ghar, involving speculation and insider trading information. The money in Islamic economics, should not be used as the product itself, to generate more money.
The fund management alternative and the shares are avoided by Islamic finance, since they give rise to artificial creation of money. Money is always half or production facilities, and this principle applied in the sukuk. The sukuk is always linked to real investment: pay for the construction of a road, for example, or a property, but never used with speculative intent.
This principle springs from the prohibition by the Shariah to the haram, which comprises the activities ethically wrong and forbidden by the Koran, as the production and distribution of arms, trade in tobacco, alcohol, pornography and gambling. In the center of the search for an ethical manner that fits the sharia, was established a joint venture unprecedented. This alliance led to a marriage between the wealthy and erudite scholars of Shariah, which began to work together to serve a new and stronger Islamic economics. This unusual combination is a unique phenomenon in the modern economy, but has settled a new economic system.
Among the most glaring differences between conventional economics and Islamic economics, is a joint effort at the community level, which expresses the concept of Umma, the Islamic community considered as a single entity that breathes, thinks and believes in unison. Is the soul of Islam.
Individualism is not known in Islam as it is completely foreign to tribal culture. Islam is rooted in traditional tribal values, as the strong feeling of being part of the community, the obligation to help friends in need and to accept the authority of religious leaders. These are the values that the scholars of sharia are implemented in Islamic economics, principles which for centuries have allowed the Bedouin Arabs support a severe type of life, bound by the harsh desert environment. If the Ummah is the heart, the associations are the heart of Islamic economics.
Our thought is that Islamic economics can contribute to establishing new rules for the world economy, since we are facing a crisis, overcome the first problem, it has become now a real crisis of confidence in the system as a whole. The international banking system, it needs to effectively regulate ethics in business, tools for restoring confidence and help to rebuild the reputation of a model of capitalism that ultimately failed.
People want safe investments, so buy in bulk, government bonds. But yields are falling rapidly and are reaching zero. Western banks could borrow the guarantee scheme or sukuk issue money directly in the form of sukuk in order to help with incentives for economic growth. The sukuk could be used, for example, the shredded automobile or finance the next Olympics in London. After the crisis of 29, graduated from a surplus of liquidity that was stagnant and that should be put into circulation. The sukuk would be the ideal vehicle for such purpose. And the ethical principles of Islamic economics could reconnect the banks and their customers the true spirit of service that should characterize a banking service.
Source : tlaxcala google trltd