The CIBAFI has reposted the Wesleyan Argus article on Sh. Taha Abdul-Basser's Dec 2009 lecture at Weslyan University. In light of the current events, it seemed appropriate to post their repost.
In
his lecture on Feb 16, 2009, Taha Abdul-Basser, chaplain of the Harvard
Islamic Society and doctoral candidate in religion at Harvard, proposed
a solution to the current economic crisis that is not often considered:
follow Islamic law, known as Shariah.
The lecture, entitled
“Islamic Finance: Islamic Solution to Global Financial Crisis,” was part
of a series of events scheduled for “Islam in Conversation Week,”
organized by the Muslim Students’ Association (MSA) and the chaplain’s
office. The theme is “Living Shariah in the Contemporary World.”
“We
want to show that Islam is not limited to spirituality or one’s
relationship with God—even though that is an extremely important
concept—but also, how our relationship with humanity is,” said Sister
Marwa Aly, the Univerity’s Muslim Chaplain. “Islam is a way of life, so
it has a stance on the environment, on economics, on politics, on social
justice and even on entertainment.”
Shariah is a frequently used
term, but is often employed without a full understanding of its
meaning. Students in the MSA hope that the talks given throughout the
week will encourage dialogue and help people more fully understand
Shariah.
"Hopefully, organizing a lot of talks about Shariah will
help people better understand what it means,” said MSA member Jourdan
Hussein ’11.
Islamic finance is based on Shariah, which includes
writings from the Qur’an and from Muhammad, and the scholarly teachings
that inform Islamic law. Its underlying precept is the illegality of any
usury—transactions that demand interest from a person receiving a loan.
It
also states that all financial transactions must be done with caution,
and prohibits directing the flow of money itself when no tangible assets
are involved. Thus, under an Islamic system, the complicated packaging
of mortgages partly responsible for the current financial crisis would
never have occurred “The speaker was really informative and had a great
background with which he supported many of his ideas of how Islamic
financial policies and ideas could be beneficial to the falling economy
today,” said Raghu Appasani ’12. “I am glad I [attended] because I did
not even know that there was a whole separate Islamic financial sector
that was so successful.”
Islamic banks use mechanisms that do not
charge interest, which include “lease to own” agreements and
diminishing equity balances, in which two partners would take out a
mortgage with one eventually buying out the other. These financial
systems exist in the Muslim world, such as Saudi Arabia and Malaysia,
but also increasingly in the West, most notably in Great Britain.
Although
Abdul-Basser conceded that the Islamic system is comparably smaller,
these Islamic institutions have better withstood the financial crisis
because they never undertook the risky mortgages and then resold them.
Abdul-Basser
said that many financial systems in the world need structural changes,
instead of continuing the practices that led to the crisis.
The
reforms Abdul-Basser mentioned in his lecture had all been suggested by
secular economists—Islamic reforms need not be necessarily religious. He
cited Joseph Stiglitz, a Nobel Prize-winning economist at Columbia
University, and Nouriel Roubini, a professor at New York University who
predicted many aspects of the financial crisis.
His suggestions,
based on Stiglitz’ work, included creating incentives for executives
that reward thinking beyond short-term gains to form financial product
safety and financial system stability commissions to oversee financial
companies and prevent excessively risky loans, along with other
regulations to limit excessive borrowing. Abdul-Basser also suggested
briefly nationalizing banks in order to reform their practices, before
returning to privatization.
“I thought that if what the lecturer
discussed could be somewhat secularized, it seems as though it could
absolutely work.” said Phil Ross ’12, who attended the lecture. “The
lecturer really got his opinion across that restructuring our system to
encompass certain facets of Shariah-compliant banks would go a long way
towards stopping the bleeding that was caused by excessive lending.”