Economic Genocide: A Debtly Deception

Credit crunch. Global Financial Crisis. Britain on the brink of recession. We are told we are simply facing the consequences of over-borrowing. But is there a much deeper flaw? Is the monetary system inherently causing an Economic Genocide?

As part of the AhlulBayt Islamic Society’s current campaign to raise awareness about the Economic Crisis, students of all faiths and backgrounds convened in the Clore Lecture Theatre last Thursday to discuss the topic in more depth. We were extremely privileged with the presence of Toufik Machnouk, Executive Director of the Insitute for Policy Research and Development, to clarify the nature of the crisis we are currently in. However, this was not simply a chiding to consumers about overspending, or a scolding of banks for overlending, rather a structured analysis of three important factors often misunderstood by average Joe: the ownership of wealth, the monetary structure, and the Islamic perspective on these two systems.

The talk sent a chilling message, implying that the problem is in the “credit” rather than the “crunch”. Whilst some governments seem to think we can fight fire with fire and “borrow our way out of this”, Mr Machnouk suggested otherwise. The problem, he explained, lies in the ownership of wealth. You know something is wrong when the lower half of the world’s population own just 1% of the world’s wealth, and that the richest three men on the planet are worth the equivalent of the total GDP of the 48 poorest nations.

Combining the wealth ownership inequalities with a flawed monetary structure creates a lethal concoction. So lethal, in fact, that it has led to the deaths of more children than the number of deaths caused by World War I. Interestingly, 97% of “money” is today created by private banks in interest. However, when one pauses to ask where all this money came from, there is an eery silence. In fact, the majority of this money is not in circulation but in the form of digits in computers. No wonder we can’t pay it back. So why has this never been a problem up till now. Economists liken it to a game of musical chairs: so long as the music is playing, everyone is fine. When it stops, somebody has to lose.

The problem is overshadowed globally, with poor countries strangled by unpaid debts in a system set up post-WWII by the States. Unfortunately this perpetual debt can only be sustained by perpetual growth. As the speaker put it, it is like charging you for the air you breathe, whilst simultaneously asking you for a part of your lung for each breath you take. The poor countries are forced into IMF loans, which seem like an idyllic escape at the time. However, the structural adjustment programmes attached to the loans ensure the loan money disappears to private and foreign investors, leaving the impoverished nations to clear up the mess. And pay back the loans, of course. It comes as no surprise that all nations given IMF loans showed a decline in 17 key indicators in the years after they received the loans. It comes as no surprise, therefore, that half of the world’s population now lives in absolute poverty, earning under $2 a day.

Mr Machnouk concluded with the Islamic perspective on the issue. The Arabic word for “Economics” stems from the word “Equality”. In Islam, wealth is nothing but a trust from God, and policies in place attempt to ensure fairness and justice in transactions and the financial system. Be it through the prohibition of hoarding wealth to the public ownership of community resources, the right of financial assistance to the elimination of interest, Islam aims to reach a state where wealth is not the goal, rather a means to satisfaction.

In conclusion, the talk was a huge success in fulfilling the AhlulBayt Society’s aim to raise awareness about the crisis, and its more general aims to encourage dialogue and free thought. The looming discussion on Islamic Finance by guest speaker Prof Rodney Shakespeare looks to be the icing on the cake for the Economic Crisis campaign.