The Golden Dream of Islamic currency

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Economy

"Ants have no (or little) problems with food and shelter. Ditto with birds and nearly every other species. Humans are bogged down by anxieties over food and shelter. With minds, shouldn't humans be thousands of times ahead, not trailing fractions behind ants?"

This quote from Bala Pillai sparked an interesting train of thought. My reply to it argues that we may well be behind the ants and birds in caring for our own food and shelter, because of our particular brand of "economics", which really is geared to enrich a few at the expense of many.

Comes along another stimulus: Islamic gold dinars and silver dirhams are promoted as a solution to our economic woes in an article by Boudewijn Wegerif, a Swedish monetary economist. While the Islamic sect called Murabitun is spearheading the movement to bring the bimetallic dinar and dirham back into play as the "world currency for all free people", their reasoning does not go all the way.

Gold and silver are the very reason banks could introduce and develop their debt-economy scheme which is ruining our prospects for progress by chaining us to worries over basic needs - food and shelter.

Here is the discussion for those interested in economic matters...

By the way, after writing the article I went out and made some photos of the surroundings. Here's the sunset we enjoyed. Terceira, Azores, 17 August 03:

At 13:28 +0100 11-08-2003, Robin Good wrote:

Dear Sepp, Chris,

"Ants have no (or little) problems with food and shelter. Ditto with birds and nearly every other species. Humans are bogged down by anxieties over food and shelter. With minds, shouldn't humans be thousands of times ahead, not trailing fractions behind ants?"

If your brain is working fine you should have immediate response and reference support facts and authors to shed some light and food for thought by those too easily inebriated by the apparent self-serving optimism of the above statement.

My response to Robin:

Thank you for a stimulating question. As Chris says we don't really take the viewpoint of other species, sometimes because of a conceited attitude - we think we are much better than them. I would add that we also don't care much for their problems, and thus are not good observers, although we probably could learn a few things if we only looked.

I believe it is correct to say that humans are bogged down by anxieties over food and shelter and indeed, having a mind that can identify problems and arrive at solutions, we should be doing much better than we are. But sometimes the mind works also in reverse. Someone smarter than us thinks up a solution that is good for that someone but leaves everyone else out in the cold.

In my view, we humans are anxious over food and shelter, not because there is a real physical problem but because we have chosen to adopt an economic system that caters to the enrichment and empowerment of a comparatively few, while the rest of us are living a life of artificial scarcity. Such a system is completely unknown in the animal kingdom and if introduced, it could well wipe out a species in short order.

Only because of our mind - our inventiveness - have we not yet succumbed to the economic constraints that we believe are an inevitable part of our daily lives. Apparently our type of economy has been inherited from ancient times. From the Sumerians up through history, the idea that "money" must have a value of its own, has been with us quite constantly, with only brief respites here and there.

Economy is the exchange of goods and services. Production and consumption are the end points that are brought to meet by that exchange. As long as the consumer can produce what he/she needs, there is little or no use for exchange, but life would be limited to an extremely primitive condition, not something we would want to even contemplate. So exchange, and therefore some kind of economic system are things we cannot do without.

What is needed for exchange to work is some kind of accounting system. No problem today with computers ready to take the drudgery out of counting, but historically, some physical means - beads, shells, iron bars, copper disks, all manner of "useless" little items have been used to serve the purpose of keeping track of who gave something and therefore should be having a "credit" to receive.

Trouble started when we were sold the idea that the counters must have an intrinsic value, such as silver, gold or other rare merchandise. By this conjuring trick, control over all economic activity and even over governments fell into the hands of those who retained the "valuable" currency in safekeeping. Gold and silver being relatively heavy to lug around, their place was soon taken by receipts of paper, the "bank notes".

The connection of money (bank notes) to precious metals perpetuated a mythical scarcity of the means of exchange. What's more, the banks issuing these "notes", convinced us we were expected to "pay them back", in other words we immediately entered a debt towards the banks every time we wanted to engage in economic activity. We also consented to pay for the privilege of using those notes. That fee we pay for our privilege is called interest. In its extreme form - usury - it was identified as an immoral and detrimental.

Unfortunately, prohibition of interest/usury could not be effective, although just about every major religion condemned the practice. The underlying condition - the intrinsic scarcity of the means of exchange - was never clearly identified and thus continued to be an effective control mechanism. The debt money system and accompanying interest has kept us chained to an insane belief: that we owe our money to someone and that whoever supplies it to us has every right to own us in return.

An efficient system of economic exchange which would not only allow us to catch up with the ants on food and shelter but bring unprecedented economic development and support great personal creativity, would have to work without scarsity and without a debt/interest mechanism.

Proposals in this direction have been made by Silvio Gesell in his work "The Natural Economic Order" and the principle of debt free money has found practical application in LETS (Local Exchange Trading Systems). The officially sanctioned economic control system however has withstood such isolated attempts at challenging its basic premises and has continued to accumulate monetary value and political power in the hands of a few. Time for change?

In reply to this, Robin sent a mindecos newsgroup digest with the following recommendation:
I think it would be worthwhile that you bring in some light and clarification about this appaently alternative and ideal monetary/bank systems that are promoted as being interests- and usury-free.

Here is the more interesting part of that discussion, with an article on Islamic currency

Date: Thu, 14 Aug 2003
From: "Kevin Russell"
Subject: finance globalism, debt slavery, and national bankruptcy that forfeits sovereignty to the creditors

I've just rediscovered this (2001) file by Swedish Monetary Economist Boudewijn Wegerif, which I was reminded of when Andrius mentioned he was looking for "Islamic finanicial institutions" practices etc... a few months ago, then reading Bloom's: Reinventing Capatialism and now again reminded with the post of re: Shoshana Zuboff And James Maxmin: the Support Economy.

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MONEY MATTERS
Islamic "World Currency for Free People"
Boudewijn Wegerif
-- May 2001 --

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I hope you find the .. following article interesting. A slightly abridged version has been translated into Swedish for the next issue of PENGAR (Money), the quarterly journal of monetary reform, of which I am consulting editor. PENGAR is sponsored by the members' owned, interest-free bank JAK, which you may be interested to learn more about, through the English section at www.jak.se.

Please feel free to post the article to others -- note though that I would appreciate knowing where the article has been placed and the lists to which it has been posted.

In friendship,

Boudewijn Wegerif
Monetary Studies Programme
Folkhogskola Vardingeby
150 21 Molnbo, Sweden.

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ISLAMIC DINARS AND DIRHAMS
"A World Currency for Free People"

Boudewijn Wegerif -- May 2001

"A time is certainly coming over mankind in which there will be nothing left that will be of use save a dinar and a dirham" - Ascribed to the prophet Mohammed, as reported by Abu Bakr ibn Abi Maryam and quoted at www.islamicmint.com.

From the beginning of Islam until 1924, with the break-up of the Near Eastern Ottoman Empire and fall of the Khalifate, the basic currency of the Muslims was the gold dinar and silver dirham. Islam was then made subject to western banking practice, with its different paper currencies. However, now Muslims around the world are being encouraged to convert their paper currencies into new 100 percent Islamic gold dinars and silver dirhams. They are also being encouraged to join the 100 percent gold backed e-dinar service, which is linked to e-gold.

The new Islamic dinar and dirham represent the renewal of coins that go back to the beginning of Islam. The weights of the coins (4.3 and 3 grams) and their role in the economy was set by the Shari'a - i.e. the Islamic Law.

A small Islamic sect called Murabitun is spearheading the movement to bring the bimetallic dinar and dirham back into play as the "world currency for all free people".

At www.murabitun.org one may read how in the 12th century the Murabitun were the most feared warriors of a flourishing Islamic Civilisation. They swept North into Southern Spain from West Africa in a devastating wave of conquest and destruction of the feeble and corrupt petty kingdoms of the day. An economically just and socially glorious period of Islam is said to have been engendered in the wake of the fighting.

Now Murabitun is alight again, say the authors of this history.

From his home in Scotland, the Murabitun leader, Shaykh Abdalqadir as-Sufi, travels the world with the basic Murabitun message that Allah and His Messenger have declared war on usury. The renewed Islamic order will come about "not through fighting in the streets against the world's guns" but through taking effective advantage of "the continuing collapse of the paper-money edifice now sinking under mathematical lunacy and inflation."

Perhaps the most telling point in favour of the new gold and silver currency is that it meets the Islamic zakat requirement by which Muslims must give at least 2 percent of their income to the poor in tangible merchandise or "honest money of actual substance", therefore not paper money.

"If the millions of Muslims who now make their payment of zakat in paper money would do it in newly minted dinars and dirhams, they will put in circulation millions of gold and silver coins into the mainstream of daily commercial activities of our communities," is written at www.islamicmint.com. "That single act will become the most important political act of the century, opening the path towards the establishment of our own halal (usury) free currency breaking away from the usurious financial system".

WORLD WITHOUT BANKS

The political leader of Murabitun, Umar Ibrahim Vadillo, has a vision of a world without banks. In a 3,000-word essay on the Islamic Banking Fallacy he dismisses the Islamic banking system as "profoundly contrary to Islam".

Three reasons are given why the Islamic bank is "a totally crypto-usurious institution", which "must