NEWHORIZON

BOOK REVIEW
NEWHORIZON October–December 2010
although it is no longer named as
such.
Karim tells us that in the Islamic moral
economy’s market place, Allah or God is
always the other omniscient and necessary
partner in all transactions. According to
Karim, He ‘...sets the prices.’ He does more
than that. He sees all and knows all. He is the
eternal policeman of our deeds and intentions.
He abjures monopolies and unfair dealings,
which imply asymmetrical knowledge, which
in turn gives unfair advantage to one party
against another. Risk and reward should be
shared equally between all parties to a
commercial
transaction
according to the
rules of the
Shari’ah.
Omniscient and
omnipotent
immortality clearly
has its drawbacks
for venal mortals
busy gaining
advantage in the
marketplace. In
fact, after reading
Karim’s critique,
one wonders
whether the
principles of
Shari’ah finance
could ever be
completely realised,
given the vagaries
of human nature in
the marketplace and
the perennial greed
and desire to
accumulate that
drives most of us.
Karim worries not
only about the
applicability of the
obvious rules
governing Shari’ah
financial
transactions, he also
complains about the
lack of ‘...a critical
and holistic
examination of
conventional money, banking, and insurance
models that may or may not be soluble [sic]
with the utopian Islamic moral economy.’ He
calls for a new Shari’ah perspective which is
independent of ‘...conventional money,
banking, or insurance.’
As it is, Shari’ah finance as presently
practised and developed (it is a developing
art, in fact it demonstrates the flexibility of
fiqh, which is time-bound, but based on the
eternal ethical principles of the Shari’ah) is
new and in spite of the existence of a
repertoire of Shari’ah finance contracts,
which Karim analyses with varying degrees
of clarity, it is limited in scope. As presently
constituted it is unable to address the everexpanding
and increasingly sophisticated
plethora of financial products that
constitute the Leviathan – some may call it a
many-headed Hydra – that is the 24/7
casino of contemporary finance.
Recently, Moody’s Investor Service
reported that the global Islamic financial
market is calculated to be worth between
$750bn and $1 trillion USD and may
expand to $2.8 trillion by 2015 according
to an estimate by the Kuala Lumpur-based
Islamic Financial Services Board. Whilst
Islamic finance is moving fast into the
mainstream of global finance, when you
compare those figures with one asset class
of conventional finance – that of FX
trading, – which runs at around $3,981bn a
day, you get a sense of the relative stature of
Islamic finance in the global market. It is
interesting to note also that most FX
trading, which is a high-speed, algorithmic
business, has little to do with either trade or
investment, but is a market for speculators
with an instinct for gambling. It would
never pass muster by the Shari’ah even as a
tolerant practice, never mind being
compliant or dependent.
Karim discusses many issues that cannot be
covered in a short review of his book, he
calls into question the compatibility of
money creation by banks (by way of the
pervasive use of the fractional reserve
models in conventional banking) and by
government with Shari’ah compliance; he
points out the differing stances taken by
various Shari’ah scholars and schools of
thought on many points of law. Opinion is
divided, authority questioned, precedents
are sometimes vague and unreliable. Karim
covers much ground in a concise space. The
book’s short text of 93 pages has a long tail
of a bibliography that runs to 24 pages. It
appears that Karim has thrown in
everything including the kitchen sink and
one wonders who will be served by such a
vast compendium of books. However, the
body is well worth reading and pondering
upon without the distraction of the tail.
40 IIBI www.newhorizon-islamicbanking.com