Muhammad Munir Ahmad Medieval Economy Aiwan-e-Ilm-o-Fan, Lahore, 2020, p. 279, Price Rs. 2000

Mr. Munir Ahmad is a retired senior State Bank official and President of the Institute of Banking and Business Learning (IBBL) Lahore. The book seeks to reform capitalist financial order. He argues that all economic systems including the Islamic system are capitalist in essence. The reforms he proposes are structural and do not recognize the embeddedness of the capitalist economy within the capitalist episteme.

The suggested reforms are divided into two groups: those related to the global financial system and those related to Pakistan. The former are presented in general terms while later are functional and specific – partially influenced by Imran Khan’s “riyasat-e-Madina” project.

The global systemic reforms he advocates are (a) elimination of interest based transactions and its substitution by asset based (through a modest version of the hundred percent reserve system) (b) abolishing of “splendid financing” – i.e. speculative and risk trading arrangements and (c) eradication of monopolistic pricing practices in “free” markets. How these reforms can be implemented on the basis of capitalist moral order is not discussed by Mr. Munir Ahmad.

A fundamental weakness of Mr. Munir Ahmad’s analysis is his misinterpretation of Adam Smith’s Theory of Moral Sentiments. Adam Smith, a leading figure of Scottish Enlightenment was a confirmed atheist and the Theory of Moral Sentiments presented a categorical refutation of the conceptions of charity and poverty both cardinal Christian virtues. Virtue as conceived by Smith is similar to Kant’s conception of universalizability. Smith/Kant’s virtuous man does not reject self-interestedness. He wills the universalization of the commands of his nafs-e-ammra – i.e. he desires for himself that which he can desire for al mankind. In this conception no act is intrinsically good or evil. Justice is merely – what Rowls was to later call – the following of a fair procedure. This is capitalist morality – the obverse of morality as conceived of in Christianity and Islam.

The ultimate good in capitalist moral order is capital accumulation – the endless pursuit not of wealth but of surplus for surpluss/excess/riba enables the universalization of desires. Capital accumulation is an end in itself for it enables man to will anything in and of the world and in capitalist moral order there is no conception of akhirah – life after death. It is this denial of akhira and the refrencing of value to materials (welfare, happiness, abundance) which makes capitalist moral order evil. Mr. Munir Ahmad does not recognize that capitalist morality is the antithesis of the morality of revealed religions, Christianity, Judaism and Islam. Capitalist spirituality as Weber has shown is in and of this world.

Moreover capitalist praxis is necessarily conflictual and contradictory. The capitalist spirit mandates accumulation – the circulation of resources of wealth and labor through circuits of gharar and riba for continuous and endless expansion. This is finance and it is peculiar to capitalist financial markets. The money market and the capital markets have not existed in any other moral order. Abolishing capital and money markets (and Mr. Munir Ahmad does not advocate this) is abolishing not reforming capitalism for surplus accumulation necessarily takes its ultimate form in limitless unperishable finance (and not in wealth).

Abolishing interest within capitalist order is impossible since accumulation of time and information is essential to accumulation and crises have continued to occur throughout capitalism’s history (from the 12th to the 21st century) because commodification of time is necessarily an illogical, arbitrary process guided as Keynes said by “animal spirits”. Rationality (a capitalist invention and obverse of Aqaliyat) necessarily fails to identify a unique path/strategy for the optimal accumulation of capital.

Thus Mr. Munir Ahmad’s picturing of the harm done to capitalist order by “splendid financing” etc. are entirely empirical and not theoretical and capitalism has recovered from the 2007-2009 crisis without a significant “reform” of its financial regulation regime. Currently it is lurching towards its next crisis but capitalism will endure – whatever “reforms” are instituted – as long as capitalist morality – a morality which seeks to create heaven on earth (welfare, prosperity) and refuses to seek admission to the real heaven which exists in the world to come and is not of man’s making.

In any case the reforms suggested by Mr. Munir Ahmad are most unlikely to be taken up by global policymaking due to the decline in population growth rate and the impending environmental crises both of which enhance the attractiveness of financialization as limits to growth need to he imposed on the expansion of the production and service sectors especially in the major capitalist economies.

Capitalist Reforms in Pakistan

In chapter 13 Mr. Munir Ahmad outlines a series of specific reform for “implementation of Madina Economics”. He does not advocate the abolition of interest or the discontinuation of harami banking or the reconstruction of monetary policymaking or of the regulation of markets or the abolishing of securitization or the control of capital transaction or the “reform” of taxation policy. The reforms he suggests are unlikely to have any impact on the macro economy. The reforms he advocates are as follow:

Widening the client base of Islamic banking system

Development of a perfect base benchmark to price Islamic bank products.

Increasing research effort on modarbah and venture capital

Introducing modarba for new products realm such a small business and diminishing finance for low cost housing projects.

Collaboration between madrassah and business schools

Strengthening Bait-al-Maal

Extending modarba contracts by the corporate sectors

Use of modarba sales contracts by business

SBP should facilitate coordination between Islamic banks, madrassahs, business schools and businesses for the promotion of Islamic banking products and enhance training facilities

General public should be encouraged to switch from harami to Islamic banks

This is a recipe for carrying/intensifying business as usual. Mr. Munir Ahmad in his extensive bibliography (124 items and exclusively in English) does not include the landmark 2009 fatwa of the Deobandi Ulema led to Hazrat Moulana Saleemullah Khan equating Islamic banking to conventional banking. Throughout the text no notice is taken of the fatwa or of the extensive literature produced by the Ulema condemning Islamic banking.

The Islamic Revolutionary Response

We are Islamic revolutionaries. We seek the destruction of capitalist moral and social economic order. We are currently involved in supporting the construction of an anti-capitalist economy in Afghanistan. We are arguing for a total nationalization of the tamveeli system in Afghanistan. We argue that the introduction of Islamic banking in Afghanistan could be a step towards subordinating the national economy to global riba and gharar based money and capital markets.

This is because as pointed out in the 2009 fatwa of the Deobandi Ulema Islamic banks like conventional banking also create money as a commodity. Mr. Munir Ahmad does not realize that Islamic banks do not extensively use modarba contracts and do not deal with small firms, small businessmen, youth entrepreneurs because it is not profitable for them to do and they insist on using KIBOR as a benchmark because they are in continuation transactional contact with conventional banks in the same business of making profits through buying and selling money and credit. To abolish the use of money as a commodity finance and financial markets must be abolished. A first step in this direction is the nationalization of all financial institutions, conventional banks, Islamic banks, splendid financers etc. The closure of all money and credit markets and the asseveration of the function currency and credit planning by the Islamic government.

Moreover natural monopolies – information, energy, mining, water – are of crucial importance and pricing in these sectors is necessarily administered. The government is the only agency capable of effectively challenging the price formation strategies of global corporation in these sectors.

Furthermore as Afghanistan has been subjected to imperial dominance during 1979-2021. Imperialism has had considerable opportunities for corrupting the Afghan masses and for propagating capitalist values and delegitimating Islamic values of qana’at, sabr, infaq and tawakkul. Furthermore the current imperialist strategy is to bypass the Islamic government and to directly approach the Afghan masses through market structures and transactions and thus continue to corrupt them. Market and price formation processes cannot be left unregulated in present circumstances – this amounts to signing the death knell of the Islamic revolution.

We recognize – as Mr. Munir Ahmad has repeatedly stressed – that the Islamic ideal is the institutionalization of genuinely free markets. This must be associated with the spread of Islamic values – sabr, qana’at, infaq, tawakul – in society. To achieve such value transformation the rule of the markets in setting limits to price formation ensuring fair trade and promoting Islamic virtues and behavior is essential. We propose that the ulema elaborate the use of state mechanisms on the basis of usu-al-fiqh taking account of the current monopolization of market structures and price formation processes.

Price regulation is a part of the planning process which is essential for governing the market. Today comprehensive planning covering most sectors of the economy and covering consumption, distribution and investment is necessary. However we propose that as the economy becomes nationally self-sufficient and as the values of the masses are transformed – they regard ma’ash as a means for earning falah in ma’ad – the scope of planning is reduced and the system moves gradually towards the Islamic ideal.

Afghanistan is potentially a rich country but at present its accesable resources are very limited. This is especially true as far as the government is concerned which must function as the organizer of production and distribution if a self-sustaining jihadi economy is to be made functional. Significant progress has been made in this regard and tax and non-tax revenue collected during 2021-23 significantly exceeds revenue collected during 2017-2020 by the ghadar regime – a principal source has been import taxes, legitimated on the basis of the example set by Syedina Umer bin Khattab (RA). In present circumstances it seems necessary to incorporate tax as a cost of production in commodity prices.

It is evident that this is khilaf-e-oola – the Prophet (Peace be Upon him) did not do so in Madina (as Mr. Munir Ahmad points out) and refrained from setting prices. But Afghanistan is an exceptional Islamic state, surrounded by a global dar-al-harb and the threat of monopolization of both agricultural and manufacturer markets. Ulema must therefore investigate whether it is permissible/allowed on the basis of usu-al-fiqh to incorporate tax as a cost of production in prices. We may note that in the twelve hundred years of our Khilafat period the role of the muhtasib was to routinely fix maximum and minimum prices in all commodity markets and as Mr. Munir Ahmad has pointed out it was a common practice in the time of the Usmania Khilafat to enforce a general rate of profit to be included in all commodity prices.

As Islamic revolutionaries we are opposed to any attempt to reform capitalism – we seek its elimination. Attempts at promoting capitalist justice lead merely to a subsumption of the Islamic life world within capitalist order. There is scope for the consolidation of an anti-capitalist order by promoting musharka and modarba contracts among businesses that are outside the financial economy and have no interaction with the money and capital markets. Mr. Munir Ahmad advocates this somewhat obliquely in chapter 13 of his book.

Javed Akbar Ansari

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