Capitalism is in deep crisis today, far graver than what the mainstream media makes us to understand. The ongoing debt crises in the US and Europe have proved a lot of books and theories on economics worth trash. A lot will be rewritten in the days to come.
The Occupy Wall Street movement makes us to appreciate the situation even further. Its followers – who claim to be world’s 90 per cent – are saying a categorical “no” to the credit card culture and consumerist growth philosophy. They also want more and better jobs, redistribution of wealth, reform of the credit and interest-based banking system. A lot of Occupy voices are angry about financial markets, saying “only insiders, brokers and its rich players get rich from there.”
America and Europe’s sovereign debt crises and the messages that came out from the European summit at Brussels on Friday have some chilling messages.
Use of beautiful and dignified jargon even in a difficult situation like this is a peculiar characteristic of the European cultures. But, let us admit, at the core of all, three learnings are unmistakable: living beyond one’s means has been a great folly. Excessive and imprudent credit over a long period and speculation has been even worse. And the worst? Interest-based loans, with no legitimate means to repay and a flawed approach to growth.
Guardian’s well-known columnist Timothy Garton Ash summed up the summit like this: There are still huge uncertainties on this continental journey into the unknown!
Tim also quoted a friend describing Euro zone’s agreement on a fiscal union: with the euro area's arteries clogged and its heart on the brink of failure, the European Central Bank (ECB) has said it is not qualified to perform bypass surgery, while the member states have pledged to go on a starvation diet. 
But isn’t all this somewhat similar to what the Quran actually says?
For centuries, Islam’s idea of finance hasn’t received due attention in the mainstream. It is not that Islamic finance was less convincing; the point is that the capitalist financial system was never in a pathetically grave situation as it is today. The world today is desperately looking for alternatives.
As this crisis lingered on, Vatican’s newspaper Osservatore Romano shocked many around the world when in 2009 it wrote that banks “should look at the rules of Islamic finance to restore confidence amongst their clients at a time of global economic crisis.” The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service, the Osservatore Romano said.
A large number of people have misgivings about the practicality of Islam’s financial system. Even Muslims and Muslim countries themselves haven’t embraced this idea fully.
With its assets of nearly $1 trillion globally, Islamic finance remains tiny compared to conventional finance with its tens of trillions of dollars. The market in Islamic bonds, or sukuk, is believed to total about $50 billion, roughly one per cent of global bond issuance.
But things are changing. London and France have already opened legal doors for Islamic banking. More than 20 banks in Britain now offer Islamic finance products and there are five fully Islamic banks in the country. There are some 55 professional institutions offering education in Islamic finance in Britain today.
Deutsche Bank, a global giant, recently estimated that Islamic finance would almost double to $1.8 trillion in assets by 2016, as companies seek alternative financing methods.
A Reuter’s special report on Islamic finance in November said some big western banks, facing tough conditions in the funding markets, are also turning to sukuk. HSBC issued a $500 million sukuk in May and Goldman Sachs announced a $2 billion sukuk programme in October.
Further, Senegal is expected to hold investor meetings soon to issue its first sovereign sukuk, while Nigeria said in June that it planned to issue a debut sovereign sukuk next year.
But there are challenges too. It will take a long time and effort to integrate Islamic financial principles, and make them work, with the deeply entrenched and complex conventional system.
Today a large number of world’s people are convinced that capitalism has failed to deliver. They are looking for alternatives. It will take extraordinary efforts to make people know how Islam’s philosophy of finance is universal and intrinsically just.

The columnist is presently an advisor international development, and based overseas

Lastupdate on : Sat, 10 Dec 2011 21:30:00 Makkah time
Lastupdate on : Sat, 10 Dec 2011 18:30:00 GMT
Lastupdate on : Sun, 11 Dec 2011 00:00:00 IST