December 7, 2021

Invisible hands

In medieval times, Islamic markets weren’t governed by the state, but by religious courts.  They were seen as an extension of the co-operation and mutual aid that is natural to human beings.

So, usury (lending money at interest) was forbidden.  Modest profits weren’t.  They were seen as a fair reward for effort put in and risks taken.  Price-fixing was frowned on (“prices depend on the will of Allah“), and money was viewed not as a store of value, but purely as a unit of exchange.

So merchants mostly used cheques and letters of credit for trade, both nationally and internationally.  These were backed by nothing but the honour and integrity of the merchant issuing them.  They were unenforceable.   To be ‘in trade’ was honourable, because if you were successful, it was because your word was good, and your practices fair.  It’s no accident that many early co-operative ventures called themselves ‘bazaars’.

Contrast this with our current ‘dog eat dog’ view of human beings and markets, seen as an extension of the ‘war of all against all’ that is natural to human beings.  Based on competition, where making money is the object, and ‘putting one over’ is secretly rather admired, like a VIP fast lane.  Where the heroes are those who amass the most cash, however questionable their practices.

Actually, right now, I think both kinds of market operate simultaneously, occasionally interacting with each other.    Most small businesses I know would put themselves clearly on one side of the balance.

It wouldn’t take much to shift it.  If we decided that’s what we wanted.

We are many, they are few.