ISLAMIC BANKING RECONSTRUCTED

Erle Frayne D. Argonza

 Islamic banking is part of the totality of ‘best practices’ that originated from Asia. Being among the strong proponents of the ‘Asian way’ as the way out of our capitalist economic malaise and crises of our times, I’d share my own notes of hallelujah to Islamic banking.

I am among those development practitioners and social scientists who propose that let’s all undertake a review of Islamic banking. This banking practice is based on zero-interest banking. The challenge is for us to reconstruct the practice to suit the current context of  information society. 

Usury is among the proscriptions of spiritual masters and sages of the East. It is within the context of a non-usurious finance, embedded in spiritually-guided livelihood practices, that Islamic banking emerged in Western Asia. 

Zero-interest financing contributed immensely to accumulating wealth for the Asiatic polities that engaged in them in antiquity. The same wealth was utilized for social services, ambitious projects, building cities, and advancing the arts, sciences, and philosophy. 

Usury is alien to Asia, even as its massive introduction to the continent brought untold miseries to the marginal folks. It had also tied up Asian economies in debt peonage to the financial cartels of the West and their local banking/financial partners. 

Before the Asian economies, notably the emerging markets, will go down the drain and lose their growth gains due to usury and predatory finance, their own stakeholders should rethink their borrowed paradigms. They better review those golden Asiatic economic principles taught by spiritual masters, and make ways to re-carve their financial systems following such principles. 

Asia is indubitably the driver of the global economy today. It is time for Asia to set the trends by beginning with new financial paradigm such as the one offered by Islamic banking. 

[Philippines, 07 June 2010] 

[See: IKONOKLAST: http://erleargonza.blogspot.com,

UNLADTAU: https://unladtau.wordpress.com,

COSMICBUHAY: http://cosmicbuhay.blogspot.com,

BRIGHTWORLD: http://erlefraynebrightworld.wordpress.com,

ARTBLOG: http://erleargonza.wordpress.com,

ARGONZAPOEM: http://argonzapoem.blogspot.com]

‘LATE’ CAPITALISM CRASHING DOWN ITS DEATH BED

Erle Frayne D. Argonza

Good evening!

The events in the Eurozone are now getting to be more alarming. Forecasters are now claiming that another round of recession is in the offing, as the bubble burst that began in Greece will spread to Spain, Ireland, and other member-states of the EU.

Will liberal capitalism continue to live a life that seems to hang in the balance? Or will capitalism need to restore itself through totalitarian means? What’s so wrong with the system that it just can’t be sustained enough?

Let me share to you past blog writings about the subject: ‘mad economics’ and the ‘demise of liberal capitalism.’

[Philippines, 23 May 2010]

‘LATE’ CAPITALISM ENDS IN CRASHING BLOW POST-‘MAD ECONOMICS’

Erle Frayne Argonza

Good afternoon!

At this moment, I’m sipping coffee contained in a pack that is sold for worth P130, or $3.00. The pack is one of the domestic brands of brewed coffee blends, ready for the drip coffee maker, of the Arabica and/or Robusta varieties. In economic parlance, this coffee is a commodity because (a) it was intended for exchange and not for the coffee producer’s consumption alone, and (b) money was used to acquire (purchase) it.

I have such deep fondness for coffee, as I acquired my coffee-drinking behavior as a childhood habit yet. In my hometown of Tuguegarao (city), Cagayan province (North Philippines), coffee beans were grounded into powder form and sold right inside the ‘wet’ market, was brewed using the local decoction techniques, and was consumed by people of all ages from pre-school to senior’s age. That was then, and that was how I learned to drink this beverage at age 5 more or less. I was hooked to the habit since then, even as I continued to drink milk that I still do till now.
Both coffee and milk are among my health formulas, and both are commodities.

The question I’m asking now is, will commodity-based economics survive the times ahead? Both coffee and milk will survive for sure, but will the money economy that underpins them survive as well? As to the broader world system of capitalism, will it survive too or is it in fact on its death knell today?

Capitalism was the last of the world systems that embodied the ‘money economy’ to which it properly belongs. With the opening of the 20th century, the socialist world system appeared on the social landscape and attempted to serve as an alternative to capitalism, but this experienced its early demise as its implementers found out that it cannot be sustained after all. Both capitalism and socialism are embodiments of the ‘money economy’ as it later turned out to be, they are just but two sides of the same coin: the ‘money economy’.

Socialism is gone, and no matter what attempts there may arrive to survive it in some other forms, this variant of the ‘money economy’ is gone. Now capitalism is all alone, and it is getting more real than virtual that it too is bound to crash a catastrophic end, and with its demise, the “last of the (economic) Mojicans” is bound to disappear (my apologies to Mojicans if my note sounds ethnically incorrect). And with capitalism’s demise, the whole of the ‘money economy’ folds up like unto a book that had reached its last chapter, and deserves more to be consigned to the archives of history.

The Frankfurt school thinkers, notably Jurgen Habermas, cogitated that capitalism’s life span was extended somehow, and was dubbed as ‘late’ capitalism in this last phase of the world system. In this phase, state planning and interventionism were infused into the system to extend its life. Before ‘late’ capital came the mercantile, free enterprise, and monopoly phases of this world system. Will there be another phase to capitalism after ‘late’ capital?

Before I answer that extension of life span, let me stress that ‘late’ capitalism shall end in the following process and manner:

· The re-introduction of liberalization—of free market and free trade principles—into ‘late’ capital shifted engagements away from production, the real foundation of the economy, to the sphere of predatory finance, thus producing the gargantuan ‘bubble economy’. The ‘physical economy’ of production transmogrified into the ‘virtual economy’ that produces no real value other than imaginary or delusional values. It is ‘mad economics’ in operation, no longer the ‘rational economics’ of mercantilists, classicists and neo-classicists.

· The ‘mad economics’ led to the yawning gap between actually produced values and the aggregates of financial derivatives and debts combined, to the extent that the former shrinks at a rapid rate relative to the latter. As bubbles burst from one commodity sector to another, leading eventually to a crisis of gargantuan proportion, all the more will production shrink, unable to produce values that can input into the demand functions for fresh money to pay for aggregate credits, primary debts, secondary debt obligations, and so on.

· The crisis will then move on to the further shrinking of production, tightening of credit sources, and hyperinflationary situation in utilities (notably gas & power), food, base metals and other vital commodities. Total economic collapse results from the foregoing.

· The economic collapse then leads to social unrests, turmoil, upheavals, civil wars, food wars, water wars, and possibly intercontinental wars such as another 3rd world war. The clash of world powers and their surrogate emerging markets will become the flames of a possible long war akin to the 30 Years War (c.1618-48).

Let me now end at that instance. Suffice me to proclaim that the death knell of ‘late’ capitalism and the whole of the ‘money economy’ of the last 2000 years or so are ending. The ‘non-cognitive economics’ of the Roman to feudal era, the ‘rational economics’ of the Renaissance to monopoly capital era, and the ‘mad economics’ of ‘late’ capital were markedly the underpinning mediation processes of that entire 2000-year epoch. The epoch and its last phase of capitalism is rapidly drawing to a close.

[Writ 22 August 2008, Quezon City, MetroManila.]

CAPITALISM’S DEMISE: WHAT WENT WRONG?

Erle Frayne Argonza

To all fellow men and women out there who may have deep fondness for the liberal capitalist model of economic adaptation, I hope that you can make some adjustments in your cognitive banks. Capitalism is not a permanent facet of human life, but merely one among various epochs that will come to pass. Only impermanence is sacrosanct in the cosmos, so please refrain from singing hallelujah to a world system that is on its death knell as I articulated in a previous article.

And please refrain from swallowing hook-line-&-sinker the contentious propaganda of Francis Fukuyama about the ‘end of history’, that accordingly history had concluded with the galvanization of liberal capitalism, that history makes no more sense. Fukuyama’s theory is a slapstick narrative of hyper-valuation of the ‘mad economics’ of late capitalism and hypo-statization of reality that has no relation at all to the real in the world out there. Fukuyama had taken as ‘real’ what is actually ‘virtual’, and froze time much like unto a fairy tale of timelessness, of history-less Nietzschean moment that is fit more for infants than for adult humans.

Fukuyama epitomizes the ‘mad economics’ of all those Pied Pipers of the global oligarchy for whom he works, and his discourse is akin to the ‘mad discourse’ so described by the late Michel Foucault. The ‘mad economics’ of Friedman, Hayek, Fukuyama, and all those technocrats who serve as processors and bagmen for the global oligarchy, is precisely symptomatic of that colossal ailment of a world system, and as we all know, madness can never salve ailments but rather hasten the system’s death. Caput! Blow your horns, prepare dirges to this Dead One!

Unless that you yourselves have become maddened by the seemingly infinite monies flowing unto your purses as you are among the beneficiaries of ‘late’ capital, unless that you are indeed now suffering from combined maladies of sociopathy and schizophrenia, unless that sanity had departed from thee forever, please heed the last plea of your own conscience where sanity had retreated: CAPITALISM IS DEAD! No amount of propagandizing, of contorted interpretations, can ever change the course of history at this juncture, as we are all headed for a TOTAL SYSTEM COLLAPSE in the months ahead. Read that please: MONTHS AHEAD, not years ahead.

What went wrong with capitalism? I’m sure all of you fellows knew what went wrong, do I even need to answer that? Your previous thinker mentors, among economists and sociologists, forewarned you all of the forthcoming demise of capitalism, but you paid nary an attention to those brilliant minds as you were so engrossed in your ‘conspicuous consumption’, behaving more like some infantile EATERS or as anthropoids rather than as thinking and spiritually evolving humans. You are all very much human, so please consistently behave like one, and begin by listening to the Inner Voice of your conscience, for that voice is your soul’s.

Let me summarize the diagnostics, forewarnings and/or prophecies of our thinker mentors from the West, and I’d stress WEST because there are some other thinker mentors from the EAST and SOUTH whose peregrinations are so recondite they are not so easily digestible. Let me just stress the WEST as this is what is common to us all. So let me re-echo the thinkers and their theories:

· Karl Marx & Friedrich Engels: The internal contradictions between the private nature of capital (ownership of means of production) and the social nature of production. The ‘crisis of overproduction’ and the ‘law of the falling rate of profit’ are attendant patterns. Social revolution results, then the alternative society will be constructed.

· Max Weber: Industrial capitalism’s granite product, the bureaucracy, led to dehumanization. He never forecast though whether this dehumanizing system can be sustained—but please read between the lines. (His contemporary Emile Durkheim had a similar observation about ‘anomie’ or normless state of urban/industrial society.)

· Thorsten Veblen: The end-phase of industrial capitalism is markedly pathological. ‘Conspicuous consumption’ is the disease of this phase, the toxic behavior from the ruling class that later filtered down to the emerging middle class.

· Joseph Schumpeter: The internal contradiction between the desire for profit and the revolutionary character of innovation. The demise of capitalism will see the possibility of the technical class taking over society and build that alternative system later.

· Daniel Bell: The ‘post-industrial’ society had already been born right inside capitalism. A distinct modality in itself, post-industrialism will eventually prevail in a system that isn’t capitalist (or money economy) but rather knowledge-based. The ‘service worker’ had arrived on the social landscape, the prototype class of the future.

· Theodore Adorno, Jurgen Habermas, Herbert Marcuse: ‘Late’ capital is characterized by the pervasiveness of ‘instrumental reason’, where reason is used to justify the non-rational (‘madness’ in Foucault’s argot), where state planning/intervention was infused into a system that scorned intervention.

· Alvin Toffler: Both capitalism and socialism are based on hoarding, both are variants of the same industrial society of yesteryears, both are based on ‘2nd wave’ capital-intensive technologies and non-renewable energy sources. The ‘post-industrial’ society is altogether distinct, isn’t based on hoarding, production-consumption (‘prosumer’) is based on ‘3rd wave’ knowledge-intensive technologies and renewable energy sources, knowledge cannot be hoarded.

I need not articulate further, do I? They all converged on one theme: capitalism is transitory, it bred social maladies (alienation, dehumanization, anomie, conspicuous consumption,…), is systemically flawed, and will be dismantled at sometime in the future.

No matter how delimited their theories maybe, as they all proceeded from certain perspectives (they were all ‘paradigm’-based in the jargon of Thomas Kuhn), they all proclaimed—in either tacit or explicit fashion—the coming demise of the system. They weren’t as silly as Fukuyama who popularized seemingly ‘satanic verses’ (distorted precepts) about a non-changing, permanent economic landscape called ‘liberal capitalism’, but were rather so adroit at social forecasting that they saw a vision of the future as they were articulating on their empirical observations of the present society.

So, fellows out there, prepare for the months and years ahead. We are headed towards those stormy months, years, maybe even decades. How the future society will come to shape is not easy to forecast. “Something blurs the Force, darkens our sight of the future,” declared a Jedi Master in the Star Wars cinema fame. Let me end right here.

[Writ 22 August 2008, Quezon City, MetroManila.]

‘LATE’ CAPITALISM ENDS IN CRASHING BLOW POST-‘MAD ECONOMICS’

Erle Frayne Argonza

Good afternoon!

At this moment, I’m sipping coffee contained in a pack that is sold for worth P130, or $3.00. The pack is one of the domestic brands of brewed coffee blends, ready for the drip coffee maker, of the Arabica and/or Robusta varieties. In economic parlance, this coffee is a commodity because (a) it was intended for exchange and not for the coffee producer’s consumption alone, and (b) money was used to acquire (purchase) it.

I have such deep fondness for coffee, as I acquired my coffee-drinking behavior as a childhood habit yet. In my hometown of Tuguegarao (city), Cagayan province (North Philippines), coffee beans were grounded into powder form and sold right inside the ‘wet’ market, was brewed using the local decoction techniques, and was consumed by people of all ages from pre-school to senior’s age. That was then, and that was how I learned to drink this beverage at age 5 more or less. I was hooked to the habit since then, even as I continued to drink milk that I still do till now. Both coffee and milk are among my health formulas, and both are commodities.

The question I’m asking now is, will commodity-based economics survive the times ahead? Both coffee and milk will survive for sure, but will the money economy that underpins them survive as well? As to the broader world system of capitalism, will it survive too or is it in fact on its death knell today?

Capitalism was the last of the world systems that embodied the ‘money economy’ to which it properly belongs. With the opening of the 20^th century, the socialist world system appeared on the social landscape and attempted to serve as an alternative to capitalism, but this experienced its early demise as its implementers found out that it cannot be sustained after all. Both capitalism and socialism are embodiments of the ‘money economy’ as it later turned out to be, they are just but two sides of the same coin: the ‘money economy’.

Socialism is gone, and no matter what attempts there may arrive to survive it in some other forms, this variant of the ‘money economy’ is gone. Now capitalism is all alone, and it is getting more real than virtual that it too is bound to crash a catastrophic end, and with its demise, the “last of the (economic) Mojicans” is bound to disappear (my apologies to Mojicans if my note sounds ethnically incorrect). And with capitalism’s demise, the whole of the ‘money economy’ folds up like unto a book that had reached its last chapter, and deserves more to be consigned to the archives of history.

The Frankfurt school thinkers, notably Jurgen Habermas, cogitated that capitalism’s life span was extended somehow, and was dubbed as ‘late’ capitalism in this last phase of the world system. In this phase, state planning and interventionism were infused into the system to extend its life. Before ‘late’ capital came the mercantile, free enterprise, and monopoly phases of this world system. Will there be another phase to capitalism after ‘late’ capital?

Before I answer that extension of life span, let me stress that ‘late’ capitalism shall end in the following process and manner:

·        The re-introduction of liberalization—of free market and free trade principles—into ‘late’ capital shifted engagements away from production, the real foundation of the economy, to the sphere of predatory finance, thus producing the gargantuan ‘bubble economy’. The ‘physical economy’ of production transmogrified into the ‘virtual economy’ that produces no real value other than imaginary or delusional values. It is ‘mad economics’ in operation, no longer the ‘rational economics’ of mercantilists, classicists and neo-classicists.

 

·        The ‘mad economics’ led to the yawning gap between actually produced values and the aggregates of financial derivatives and debts combined, to the extent that the former shrinks at a rapid rate relative to the latter. As bubbles burst from one commodity sector to another, leading eventually to a crisis of gargantuan proportion, all the more will production shrink, unable to produce values that can input into the demand functions for fresh money to pay for aggregate credits, primary debts, secondary debt obligations, and so on.

 

·        The crisis will then move on to the further shrinking of production, tightening of credit sources, and hyperinflationary situation in utilities (notably gas & power), food, base metals and other vital commodities. Total economic collapse results from the foregoing.

 

·        The economic then leads to social unrests, turmoil, upheavals, civil wars, food wars, water wars, and possibly intercontinental wars such as another 3^rd world war. The clash of world powers and their surrogate emerging markets will become the flames of a possible long war akin to the 30 Years War (c.1618-48).  

Let me now end at that instance. Suffice me to proclaim that the death knell of ‘late’ capitalism and the whole of the ‘money economy’ of the last 2000 years or so are ending. The ‘non-cognitive economics’ of the Roman to feudal era, the ‘rational economics’ of the Renaissance to monopoly capital era, and the ‘mad economics’ of ‘late’ capital were markedly the underpinning mediation processes of that entire 2000-year epoch. The epoch and its last phase of capitalism is rapidly drawing to a close.

[Writ 22 August 2008, Quezon City, MetroManila.]  

ADAM SMITH: ‘INTELLECTUAL PROSTITUTE’ FOR BRITISH EAST INDIA & SLAVE TRADERS

Erle Frayne Argonza

Amigos y Amigas, Buenos dias! Magandang umaga! Good morning!

The title of this briefer may come as a shock to all those who pretend to know Adam Smith and, more so, for those who revere Mr. Smith as a cult Icon. Just to clarify to everyone, being a political economist and ‘economic sociologist’, I hold Smith personally in high esteem as an intellectual, and this briefer is not meant to flaunt irreverence on this gentleman. Smith’s place in economic history is already granite rock, no matter if laissez faire or physiocracy has become obsolete before World War II yet.

The thing is, fact of all facts, contemporary thinkers such as those guys from the ‘Chicago school’, led by Nobel notable J. Friedman (weren’t there Nobel winners who were demented, nay demonic in mindset? E.g biologist Watson, who claimed that Blacks are genetically inferior in mental intelligence). The revival of laissez faire, as one can see, was responsible for flawed policy regimes that led to the series of short cycle crisis since the early 70s yet, and which is now leading finally to the Great Depression that will mark the death blow to liberal capitalism that is now on its terminal phase. From this point of time onwards, there can be no more return to laissez faire without bringing back humanity to a catastrophic Dark Age reminiscent of that demonic age of the Medieval Era when sanity fled humanity for nigh 200 year at least.

I used to be a Fellow of the Independent Review circle here in Manila, a circle of eminent and illustrious intellectuals and business leaders (I was the only humble fellow here in the 1990s).  Unfortunately, this group disbanded in 2002, due perhaps to methodological differences (I was active only till 2001 when I left for the USA for about a year). Entry to this group was by invitation, and that was how I got wind up of it: a female student of mine at the De La Salle University (DLSU Manila) had some of my articles (readings in class) read by his father, the Undersecretary Butch Valdez (Dept of Education) who in turn extended the invitation to the Independent Review circle thru her daughter.

Within the circle, it was Butch Valdez, the eminent Principal of the Valdez & Co that is one of the Philippines’ top auditing firms, who studied with intensity the physiocratic paradigm. He came across various readings about the life and works of Adam Smith, and wrote series of articles in the Independent Review (a journal-type magazine) in ‘97 and ‘98. Being among DLSU’s privileged coterie of most brilliant alumni, Valdez’s most revealing inquiry—Smith’s being a paid intellectual for the slave traders—did come as a shock to me, though it doesn’t shock me anymore that intellectuals do prostitute themselves before high paying clients (Antonio Gramsi and Edward Said devoted kilometric pages about intellectuals, both the ‘organic’ and the ‘autonomous’ types).

The research findings of Mr. Valdez concerning Mr. Smith can be summed up as follows:

·         Previous to the years before the ascent to eminence of Smith, slave trade and the British East India Co or BEIC were among the accepted economic modalities. Needless to say, the BEIC was engaged in the trading of slaves. [Actually, my research went beyond that, as the same BEIC was also engaged in the DRUG TRADE, in the opium trade, and had an army of its own separate yet from the King’s army.]

 

·         Physiocracy, which bannered ‘free enterprise’, was especially important for the BEIC and related monopolistic imperial groups since the paradigm promoted ‘free trade’ as well. Laissez faire was in a clash with mercantilism’s dirigist policy regime, remember, as it was also opposed to mercantilism’s promotion of industrialism even as laissez faire championed agriculturalism and the ulterior interests of the landlord class. Needless to say, physiocracy championed the cause of the gentry or big planter landlord and was scornful of the industrial class (in the Philippines there is nary a disjunction between ‘landlord’ and ‘industrial’ interests anyway, they are in conjunct.)

 

·         At that historic juncture when the British Empire was expanding and eclipsing its power, the BEIC desired to optimize its profits from out of diverse trading engagements, most of all for optimizing the slave trade. It need not belabored that slaves were tied up to colonial plantations, and plantation economy was the only modality permitted by the British Monarchy as the definitive economic formation for the ‘4^th world’ peripheries (colonies). The BEIC engagements’ optimization can best be done by procuring the services of intellectual mercenaries who could articulate in sophistical vogue the very doctrinal expectations of the Lords of the BEIC Hierarchy  (a ‘Committee of 300’, per my research findings).

 

·         It was precisely at that juncture of expanded slave trade when the BEIC’s talent scouts eyed the services of a Scottish gentleman, named Adam Smith, who could fit into the mental Pied Piper prototype for BEIC enslavement pursuits.  It would be no wise to contend that Smith was a mental robot or ‘Manchurian Candidate’ controlled by overlords behind the scenes, for Smith was a man of his own mind, and up to the last instance he was indeed that ‘organic intellectual’ for the slave traders. He just couldn’t qualify as ‘independent intellectual’ though, for Smith was, in the yardsticks of the autonomous intellectuals, a ‘prostituted intellectual’ or ‘intellectual prostitute’.

The rest was history. Both the erudite and simpleton among the schooled populations of Earth know what Smith’s economic doctrine is all about. And many folks today are aware that the neo-liberal policy regime of the moment was a rehash of the same Smithian physiocracy.

I do wish that I could converse with Antonio Gramsci face-to-face today and request this noblesse thinker whether the term ‘intellectual prostitute’ is appropriate an inference for Adam Smith. I might have erred in judgement. Mr. Smith was a willing party to the enslavement, plunder and looting by the British oligarchs, and this ‘willing party to’ aspect may cancel out my inference altogether. Sous rapture, to quote Jacques Derrida.

At any rate, I have shared my notes, and thanks to the gentleman Butch Valdez for his inquiries shared to our circle. Thanks to Gramsci and Said too for their recondite peregrinations about intellectuals. Fellows, I hereby leave the inferential option to you, to decide whether Smith was indeed ‘intellectual prostitute’. Have a nice day!

[Writ 21 August 2008, Quezon City, MetroManila.]