Isnin, 21 Disember 2009

The fallacy of Islamic banking

Entanglement of spurious fiat money banking system.

My philosophy of science teacher, Dr. Adi Setia popped out some important critical analysis upon an article  in BBC News  entitled "How Shariah-compliant is Islamic Banking?". I found it really refreshing therefore would like to invite all of you to ponder about it. After his comments, there follow some fruitful responds that I have received from the mailing list:

1. Much of "Islamic" banking has nothing to do with "partnership" at all,
but rather rent-seeking, cost-plus, mark-ups, etc, which boils down to a
cutting and pasting and mixing of certain classical mu'amalah contractual
categories onto certain operational aspects of neo-liberal capitalist
financial architecture, hence the "fatwa-hunting" syndrome which boils
down to selling the Shari'ah for a song to justify operational ribawi
aspects of secular transactional forms.

2. Conventional banking is not "800 years old" but at most 200-300 years
and only dominantly so globally for the past 150 years at most, and its
present form is a post WW 2 development even post 1970s when the dollar
was unilaterally unpegged from the gold standard, so conventional banking
as we know it now (derivatives, hire-purchase, hedgefunds, bonds, the
whole works) is post 1970s. None of the Islamic banking thinkers as far as
I know had done anything to deconstruct this murky, dark history fed on
ribawi greed. To do so they need to deconstruct the very loaded modern
meanings of "banking," "money," "economy," "trade."

3. The dominant pre-modern (pre-western) "conventional banking" (but
banking is not really the word for it), is/was at least 1,400 years old
and that was/is the Islamic mu'amlah forms of investment and equity and
business partnership financing which did not involve "banks" at all! Hence
Islamic banking is not orgnically rooted conceptually and historically in
Islam and Islamic history at all but in modern European "enlightenment"
economic thinking whose operational aspects were realised fully in the age
of Euroamerican empire building, i.e. in that kind of economic thinking
and doing that destroyed the Ottoman empire when they imbibed it wittingly
or unwittingly.

4. The article does not even question the most fundamental issue at all,
namely, just precisely how do Islamic banking generate the cash to lend to
its borrowers? From deposits or from fractional reserving (fiat money
making) or from a mixture of both?

5. Finally what really counts as "money" according to Mu'amalah? 'Ayn or

All of us have to get REAL and do something concrete on the PERSONAL
level, for the ribawi economy of which IBF is an integral part has
rendered Indonesia an exporter of female slave labor (numbering
500,000 or so of our own MUSLIM sisters and mothers) working 5am to
11pm non-stop everyday in a dead end menial work for meagre pay not
worth the dignity of a slave of older times, many of whom work in
kafir households washing pork and much worse besides (see Prof Wan's
article in Prof Attas's feistschrift).

So if you have an Indonesian maid (or Patani or Cambodian for that
matter)  make sure she eats with you at the same table at the same
time at every meal, give her adequate rest time in the afternoon, and
stop her work by 9 pm latest and begin it no earlier than after Subuh,
and pay her at least RM 700 per month with one month bonus every month
plus other benefits, otherwise you are no better than a bloodsucking
slaver of your own kin in faith.

Better still fix your life and your household so you don't become
party to the neo-liberal slave trading ribawi economy.

Can you do that? No, then forget about mu'amalah. Talk is cheap and
you can keep it to yourself and not waste our time with it.

Dr. Adi Setia

Follow-up responds:

Dr Adi,

Now, put all that into nice scholarly work, like what Prof Murat Cizakca tries to do with "Islamic Capitalism"  or even better.

The majority of the PRACTIONERS , meaning those who really work hard in Islamic Banking and Islamic Financial Institutions  are TOTALLY convinced of their ways.

Some of them are:

[a]  are now those Ustadz with traditonal madarasah training, further educated in al azhar and still  further educated in Lampeter, St Andrews, Edinburgh, Birmingham etc  etc UK.

[2]  a few are PhDs holders and growing in numbers giving them  LEGITIMCAY of their doings [or rather their undoings].

[3] the Shariah Committes  now are composed of Ustadz some with PhDs and a few ex-Professors of UIA, UM, UKM  and still maintain their Professorships!

[4] a few are Lawyers or Advocates & Solicitors of the High Court of Malaya and with additional Shariah Law certification.

[5] they speak Arabic and can quote all the relevant Quranic Verses and  tons of Hadiths to support their contentions ....

and will use all kinds of subterfuge of switching madhabs, even  Shi'ism.

So, Dr Adi Setia  go persuade some of your colleagues to be bold enough to make a stand

[1] theologically  or

[2] philosophically


otherwise, Islamic Banking by Western-Christian and Western-Orientals will continue to explode into the lives of  every citizenry of this world.

NB. the Sheikh Abdal Qadir and his Shadiliyyah-Darqawi followers  may not have done a good work of  challenging the  proponents of Islamic  Banking, Central Banking, Fiat Money etc etc


My  Comments:

I have been following this issue way before I got involved with Attasian  discourse. And now, being equipped even with some basic worldview of Islam that being derived from Attasian framework, this issue has been clearer than ever before. 

Back to basic, I mean really basic which is the epistemology of banking as well as the economy in accordance to the REAL Islamic way of doing things which are muamalat (Islamic transaction) and tadbir al manzil (Islamic economics).

By today, I start to read again a book that was hardly readable for me 3 years ago:

Also try to get this book:

For lazy readers, you can watch the second installment of Money as Debt documentary.

After reading these two and perhaps some of the books written by Dr. Kamal Mydin Meera, I am pretty sure for people with clear conscience and understanding, this issue is THE REAL DEAL than any other socio-politcal issues that keep plaguing us all this while. Of course you will appreciate it better with some historical understanding as well basic principles of worldview of Islam using Attasian framework of Islamization of Contemporary Knowledge. 

A note of caution: 

It is highly NOT RECOMMENDED to use Al-Faruqian and Nasrian version of Islamization of knowlede. As being explained by Prof. Umar Ibrahim Vadillo, theirs are problematic when it comes to discern the real essence of Western-secular capitalism, thus ending up 'capitalizing' Islam (like the one understood by so-called  Muslim libertarians a.k.a Modernist/Reformist) rather than vice versa.

5 ulasan:

Unknown berkata...


berd berkata...


dekat mana agaknya boleh dapatkan buku ni..


KakF berkata...

Enlightening but surely mind-boggling for some (similar to layman reading text full with medical jargons).

I adored Prof Vadillo's work in bringing back the dinar and dirham...
and I know Kelantan govt is TRYING to do something about it.

The least we all should do is upgrade our knowledge in thing fiat money, capitalism, economics thingy (easier said and done thoug)

Teruskan memikir, saudaraku...

Alguz berkata...

I prefer the word 'RESET' where everything build based on the Islamic frame. Dont create something just to adopt islamic in orientalist frame. Always think out of the box. Takbir!

Unknown berkata...

Very interesting...was googling and reading on ISlamic banking and it showed your site....well said comments....Couldnt agree with you more!