Could Islamic finance save capitalism?

Guardian: Is there a place for ethics and morality in the global economy? Should we continue to rely on governments to tweak at the margins of financial regulation, or is there a credible argument that a root and branch reformation is required – a revolution in capitalism?

Anthropologist and co-founder of the Occupy Wall Street movement David Graeber believes – along with an increasing number of leading intellectuals – that the world’s reliance on our current banking system has had a catastrophic impact on society, leading to an increasing divide between rich and poor, an increase in contemporary versions of debt bondage, and perpetuating the idea that credit creation is a mark of human progress.

Other academics support the notion that mainstream economists, bankers and politicians focus on symptoms without questioning the monetary system itself. If banks are given the power to create money and grant credit, then unfettered credit expansion can lead to bad investments, as the last few years have demonstrated. In addition, money creation by central banks to bail out the financial services industry only encourages those banks to take ever greater risks. This is the concept of moral hazard: profits are privatised but losses are socialised.


2 replies

  1. We hear a lot from Muslims that there is an Islamic economic system which is supposed to be a cure for all economic ailments.
    We witnessed the death of capitalism just a few years ago. Nothing has replaced it so far. So here is an opportunity for those who have “Islamic Economic System” to step forward and save the world. This is an opportunity to score. So please inform us of the Islamic Economic System and earn our praise. What is stopping you. We beg your help. Please tell us what is the Islamic Economic System and how we can implement it.
    And yes please do not forget to give us just one example of this marvelous system in action.
    LET US HAVE THE GOODS BEFORE WE START SELLING THEM. (Now here is an Islamic principal!!)

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