Timur Kuran: ‘..Deceit of Islamic Finance’

Posted: July 25, 2013 in Islamic Finance
Tags: , , ,

Another critic of the Islamic Finance industry Timur Kuran, was interviewd in the Financial Times recently. Please read the article here

An extract of this piece highlights the core issue;

” Islamic banking, in its current form, will go down in history as a mighty deceit  based on an operational principle that is simply unfeasible. Islamic banks give  and take interest as a matter of course, though under the guise of commissions,  fees, penalties or profit shares.”

  1. Field Muslim says:

    Peace Be Unto Those Who Follow Right Guidance.

    Kuran states: “The sharia code was suited to the Middle Ages, when it assumed its classical form. At least on matters of economics and finance, it has not advanced measurably since then. To regain economic usefulness, it would have to be modified so extensively as to make it unrecognisable.”

    What is being asserted here is that Shari’a needs to adapt to modernity, however, this assumes that such adaptation is (1) possible and (2) desirable. Kuran covertly interprets “economic usefulness” in capitalist [=RIBA-nomic] terms, viz. as consistent with modernity (which is marked by, yet obscures, colonial power relations).

    If Wael Hallaq, author of The Impossible State: Islam, Politics, and Modernity’s Moral Predicament (2013) is correct, Shari’a CANNOT and SHOULD NOT adapt to modernity-coloniality, i.e. it should not “advance” TO fit capitalist [=RIBA-nomic] criteria of “economic usefulness”.

    Kuran is right to critique Islamic Finance; however, his ‘solution’ is, arguably, identical to the problem.


    • Doux says:

      If you read Timur Kuran’s Great Divergence you will understand how truly and utterly outdated the Islamic “economic system” (to the extent that it exists) is. Islamic law never provided the institutional foundation for industrial development due to its economically destructive laws (such as the inheritence system and the inalienable institutions such as the Waqf). The legal system of islam is medieval and not appropriate for the modern society.

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