How Practical is Islamic Finance?

I think that there is a real big danger of so called islamic finance being used and abused to “save” struggling capitalism. Seeing all the big banks and insurances in the west invest into “sharia-certified” products should lead us as muslims to be really careful.

Although I can not doubt that brothers and sisters doing work in Islamic banks with the best purposes, some questions have to be asked. Is there really a difference between interest and – what Prof. Ramadans guest called – “rent” in house purchases or is it a formalistic view while in reality, both are the same? Why is it so important, that muslims buy houses, when they can live all their life secure with their family in a rented flat/house? The risk does not get lower, once that a house is purchased. On the contrary: if you lose your income due to unemployment etc. and you have to pay back to the bank, your debts are much higher, whether you pay interest or rent. The debt for the house stays the same. The difference is the profit for the bank, islamic or not. And the fact remains, that the islamic bank also makes profit by dealing – indirectly – with money when they finance a house purchase. That might be sharia approved, but who decides that?

I think that we cannot discuss true alternatives to the global economy from an islamic viewpoint without tackling the connection between economy and politics. The question has to be asked, whether or at least how much insurances and/or banks have to be controlled by the (islamic) state to make sure, that they provide what the population needs and not what generates the most profit, sharia certified or not. One of the biggest evils in the western economic system – which is supported by the politicians – is that economic growth and profit stands above everything. That is the point, where islamic ethics have to be applied. Economy first and formeost has to provide for the needs of the people or at least it should not put people in danger.

All that is just my point of view and allah knows better.