Corrupt capitalism approaching endemic levels
The pervasive corruption in capitalism is fast approaching a scale where the lack of trust will eventually undermine the system itself
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, “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.