Friday 20 July 2012
Monday 16 July 2012
Corrupt capitalism approaching endemic levels
Britain, if not indeed the western world, is in a crisis that
envelops all key influential and decision making institutions –
politics, media, business, in particular the banks – have all been
publicly exposed and humiliated for corrupt, deceptive, highly immoral
and in a tiny few cases illegal practices. Given the deep and widespread
nature of the malaise the fact that only a handful of individuals have
ended up in prison is revealing. Fundamentally, this shows the corrupt
and immoral practices, while reprehensible, were in most cases not
illegal which is an indictment of capitalism and secular society at
large.
Britain’s Barclays bank is the latest institution to hit the
headlines for corrupt practices. Barclays Bank has been fined a
staggering £290 million – the largest banking fine in UK history – for
manipulating a key bank lending rate – LIBOR (London Interbank Offered
Rate). Whilst the commonly known base interest rate is set by the Bank
of England, banks lend to each other using a different metric – the
Libor rate.
This rate is calculated by the British Bankers Association (BBA)
based on what appears to be far from transparent practices – with daily
estimates submitted by the major banks on the cost of their own
interbank lending, a clear recipe for hidden and corrupt practices if
there was any. Subsequently, trillions of pounds of financial
transactions and prices are then set every day across the country based
on the Libor.
Barclays Bank submitted false and misleading figures about the
banks’s financial standing in a bid to boost profits during the peak of
the recession through 2007 and 2009. This was done to disguise the
financial difficulty that Barclays was going through during the economic
downturn and astonishingly but perhaps unsurprisingly may have had the
blessing of the Bank of England – one of the main banking industry
regulators.
With this background in mind we make the following points:
Whilst much is being made out of an impending enquiry into the
Banking industry the reality is criminal charges have not been brought
forward against the bank as technically it did not do anything illegal.
Deception, manipulation and hiding the truth is not illegal in
capitalism. Indeed it seen as perfectly rational capitalist behaviour.
Looking at other recent examples, highly immoral practices were found
in the tax system. The rich, wealthy and celebrities use tax vehicles
and anti-avoidance schemes created within the tax system to avoid paying
taxes. Once again they are not doing anything illegal but something
perfectly rational given a capitalist mindset.
The problem therefore lies not with highly suspect individuals or
institutions but with capitalism itself which creates the mindset that
produces these corrupt behaviours and practices. What is worse is that
some influential and powerful people see this mindset as a virtue, in
spite of the widespread public revulsion when the corruption is exposed.
Deception, manipulation and lies are all within the rules and
motivations of capitalism. In contrast, business and the rules of
trading in Islam are built upon the principles of trust, integrity,
openness and transparency. This is exemplified by the Prophetic
traditions of RasoolAllah (saw) in the following Ahadith:
Reported in Imam Malik’s Mawatta Hadith no: 97 narrated on the the authority of Abu Huraira,
Malik related to me from Abuz-Zinad from al-Araj from Abu Hurayra that the Messenger of Allah, may Allah bless him and grant him peace, said,
Malik related to me from Abuz-Zinad from al-Araj from Abu Hurayra that the Messenger of Allah, may Allah bless him and grant him peace, said,
“Do
not go out to meet the caravans for trade, do not bid against each
other, outbidding in order to raise the price, and a townsman must not
buy on behalf of a man of the desert, and do not tie up the udders of
camels and sheep so that they appear to have a lot of milk, for a person
who buys them after that has two recourses open to him after he milks
them. If he is pleased with them, he keeps them and if he is displeased
with them, he can return them along with a sa of dates.” Malik said,
“The explanation of the words of the Messenger of Allah, may Allah bless
him and grant him peace, according to what we think – and Allah knows
best – ‘do not bid against each other,’ is that it is forbidden for a
man to offer a price over the price of his brother when the seller has
inclined to the bargainer and made conditions about the weight of the
gold and he has declared himself not liable for faults and such things
by which it is recognised that the seller wants to make a transaction
with the bargainer. This is what he forbade, and Allah knows best.” Malik said, “There is no harm, however, in more than one person bidding against each other over goods put up for sale.” He said, “Were
people to leave off haggling when the first person started haggling, an
unreal price might be taken and the disapproved would enter into the
sale of the goods. This is still the way of doing things among us.”
In contrast to capitalism, as the above hadith shows, Islam not only stamps out corrupt actions but the roots of corruption and deception are closed off. This ensures businesses are characterised by good and not falsehood, if this was not stopped it will eventually lead to the breakdown of trust and integrity among all business transactions. The pervasive corruption in capitalism we are seeing exposed is fast approaching a scale where the trust of the masses is being eroded which will eventually undermine the system itself. (Ends)
In contrast to capitalism, as the above hadith shows, Islam not only stamps out corrupt actions but the roots of corruption and deception are closed off. This ensures businesses are characterised by good and not falsehood, if this was not stopped it will eventually lead to the breakdown of trust and integrity among all business transactions. The pervasive corruption in capitalism we are seeing exposed is fast approaching a scale where the trust of the masses is being eroded which will eventually undermine the system itself. (Ends)
Home Sri Lanka Think Tank-UK (Main Link)
Subscribe to:
Posts (Atom)