Is Capitalism Appropriate for the Muslim World?

THE MUSLIM WEEKLY 2004
A symposium took place on Tuesday at the Toynbee Hall in Whitechapel, chaired by Nazmul Haque (Financial Trading Analyst) and it pitted Clive Crook (editor of 'The Economist') against Sajjad Khan (Islamic economist and editor of the forthcoming 'New Civilisation Magazine')

The chair opened by glossing over the scenario of Muslim countries, despite having ample resources, poverty and disillusionment were the norm, citing Bangladesh as a particular case in point. Thus, begging the question: 'Can capitalism work in Muslim countries?'

The billing had a more than adequate representation with Mr. Khan having first-hand experience of the sort of macro challenges that face the Muslim world by way of working in International Finance and engaging in Project-risk assignments worldwide. His counter-part, Mr. Crook having been groomed at the LSE and Oxford, had a wealth of experience including stints at HM Treasury and The World Bank amongst others.

The discussion was shaped by a presentation of views by both gentlemen, which was followed by a Question/Answer session involving the audience.

Mr. Nazmul Haque elected to give first blood to the editor of 'The Economist' who prefaced his discussion with the assertion that, it would be a mistake to think of Muslim countries as a homogonous group, rather that they were a diverse mixture, each of whom functioned independently of the others. This was followed by what appeared to be a series of rebuttals of Mr. Haque's opening statement/s. Notable amongst them was the opinion that countries such as Indonesia, Malaysia and even Turkey (till late 90's) had shown that 'Muslim' countries could function successfully within a global capitalist framework. Furthermore, that the Muslim World wasn't poverty-stricken and thus, there needn't be a polarized debate vis-à-vis Capitalism and Islam.

The theme of discussion developed into highlighting the benefits of Capitalism while acknowledging what he described as constraints. Verily that market forces were inevitable, that in aggregate terms everybody gains and where there are exceptions, economic policy may need to be re-directed. The system certainly wasn't intrinsically evil as some assert, neither does it ruin the environment, perhaps more importantly he argued that it was not the political hegemony of the West.
However, Mr. Crook did concede that Capitalism was susceptible to drastic changes in market forces (viz. old industries making way for new ones) where change could be traumatic if not anticipated and dealt with. Also, that modernization can prove problematic for certain cultures.

Bringing the focus towards world poverty and globalisation, (perhaps, the key signaling posts of the debate) he was sceptical and in fact dismissed UNDP figures on poverty as being misleading, stating that their mode of measurement didn't take into account gradual and dynamic improvements of the majority of countries and wholly ignored discrepancies in cost of living in different countries.

He refuted the suggestion that globalisation was hollowing out democracy, governments were not powerless, they can manipulate policy to provide benefits to the majority. Using the open economies of the US and Sweden as an example of government choice, pointing out they were in stark contrast to each other in relation to public spending.

Islam or Muslims shouldn’t be deeply suspicious of capitalism. Blind greed was counter to the capitalist spirit, rather it required a calm and reflective state of mind.

On the issue of interest (usury), he claimed it was only a small part of the plot, although he commends the notion of risk-sharing (As advocated by Islam).
A good government, rather than religion should be the determining factor.
Capitalism is beneficial to the Muslim world, they have nothing to fear, he concluded.

By this point, Sajjad Khan, to use the proverbial, was straining at the leash. This was exemplified in his opening as statistics rolled out one after the other, most notable was the World Bank's calculation that three billion people were living on less than $2 a day as were 1 in 5 Arabs.
Did Capitalism lead to material progress? Mr. Khan was certain that it did, but Socialism could claim the same, he reasoned, citing the example of Russia under Stalin.

Nevertheless, avoiding spiritual and humanitarian elements had led to a narrow mindset beset by gauging everything from a material perspective. A distinct lack of political will and ideology dominated. He took the example of the US which currently gives c.$15 billion in aid while c.$900billion is devoted to defence. All this pervades the doctrines of secularism, individualism, where values emerge as un-balanced, thinking appears hedonistic, championed by the media with celebrities attaining pole position in society. With that backdrop, Capitalism could not even begin to tackle the issue of poverty, he challenged.

Mr. Khan linked this to the view that multi-national corporations wielded too much political power, Dick Cheney's Halliburton being a case in point. Obligations to shareholders were the primary concern, which conflicted with the role of government and media supposedly keeping these very corporations in check.

As far as the geo-political tendencies of Capitalism were concerned, there was an uncomfortable tendency to prescribe a one-club solution to all issues viz. increase free trade, which would lead to growth, thereby reducing poverty. Essentially, trickle-down effects were thin when it came to ground reality, he suggested, adding perhaps jokingly that there appeared to be a fanciful notion that the IMF was run by altruistic 'choir boys'.

Channeling the audience onto Islam was the next step in his presentation as he explained that Muslims were given the necessary tools in the 7Th century unlike the Europeans with their 18th century economists/reformers/philosophers etc. with Muslim Spain being a historical testament to material progress.

Thus, spreading the intellectual doctrine of Islam was essential to save the Muslim world from it's current quagmire. Capitalism for Muslims was akin to making the fox look after the chickens, opined Mr. Khan.

Essential policy proposals (on his part) included bringing back the Gold Standard, thereby reducing undue reliance on paper currencies that held no intrinsic value, encourage spending so that society could be liquid, thus, everybody benefiting each other, as well as fulfilling the anti-hoarding message of Islam.

Mr. Sajjad Khan closed by acknowledging that the West had made significant technological advances as a result of creative and hard-working individuals. However, that needed to be shared, with a view to eradicating global poverty.
The Session later moved to and fro between both speakers where admittedly there was a partisan crowd and the target of most questions was Mr. Crook, who I felt deserves recognition for facing up to a crowd that could have potentially been hostile. Nevertheless, questions flew from whether Pareto Optimality was the defining philosophy in Capitalism to whether or not balances and checks in Western society were durable enough to ensure the benefits of capitalism could be enjoyed by all (not just the shareholders of large corporations).