The world is layered with different forms of inequalities. The rich and the poor, the haves and the have-nots, the educated and uneducated, healthy and malnourished. One can at least try to imagine a place where everybody can lead the lives that are worth living according to their own definitions and just be content. But then the alarm starts ringing, and that was but a dream.
Just three decades ago, welfare economist Amartya Sen juxtaposed deprivation with freedom. He narrates a beautiful proposition about what it takes to be free to pursue the life one desires. Since then, the efforts to fight global poverty has been shifted slightly to a more nuanced understanding of wellbeing.
At the international level, the World Bank is using US$1.90 a day to measure progress of poverty eradication. But can one really survive with US$1.90 a day? Yet the World Data Lab shows that as of today, around 580 million people must survive with a daily income below that threshold. According to United Nations’s Multidimensional Poverty Index (MPI), over a billion people are living without enough income, nutrition, education, and are consequently less healthy than the rest of the population. As of 2018, it is estimated that 1.3 billion people were living in multidimensional poverty. An even scarier figure! Without meeting these basic needs, how can they live a meaningful, purposeful live? How can everyone have the same power over what they can do with their lives? And whose responsibility is it?
Revisiting the Oxfam figure in 2019 where 26 billionaires owned as much as the poorest 50%, it raises a query about the transferability of wealth and the limit of desires. What is it that attracts people to wealth and what is holding them from gaining an even larger control over wealth? If one understands that wealth should be shared and not to be held in its entirety, then we would not be talking about ending poverty, because the problem would never have existed in the first place. So, what kind of stop signs do we need if we were to control desires?
The heart exists not solely as an organ pumping blood. It carries a special function that is rarely used; to determine what is right or wrong. Consider a hypothetical scenario. A businesswoman is looking to expand her business outlet, which is already making billions of dollars. Deep down, the heart might tell her that it’s time to stop; and that she should be focusing on sustaining the current outlet without further expansion. But she still chooses the latter because the heart is just a hollow existence if there’s no faith over what it says.
If faith is what we need to tackle the world’s biggest problem, shouldn’t it exist in our every activities?
In Muslim-majority countries, Islamic finance emerged as the answer to the bad harvest of capitalism. In Islamic finance, faith essentially underpines every transaction and economic activities. Faith that all the things in this life have its limit and that wealth should be shared, and justice should be manifested into every economic activity.
Islamic finance consists of two branches; commercial and social finance. Islamic social finance has made some incredible contributions to human development and was even acknowledged by the United Nations and The World Bank as a potential solution to end poverty and tackle inequality. Sadly, the same spirit and results are not visible in the Islamic commercial finance, which consists of banking and capital markets.
Faith in creating a just economy is suppressed by the lack of understanding of the true values of Islamic finance. Likewise, the complexity of contracts used in Islamic finance only adds to the fees and consequently, made Islamic finance a lavish mode of financing. The industry’s attractiveness also encourages new entrance of players that are benefitting from the fame without fully conforming to the Islamic finance principles. For Islamic finance to serve its purpose as a catalyst of faith-based impacts, it needs to find a way to reform; and that might be through adding technology into the bargain.
Digital disruption is happening in almost every industry, including the business and financial sectors. The depth of control that technology has and will continue to possess over our lives is indescribable. If that’s already happening and will persist for a very long time, shouldn’t Islamic finance adapt to this changing world?
Still, the recurring reality surrounding the early stages of new technologies is the tendency of making false inference. False inference occurs when only a few people understand what it means, and the impact it could create, and when only a few are talking to each other and not to those who do not speak the same language. Even worse, the rise of new technology elevates conflict between those who want to stay in the present and those who are preparing for the future.
It seems as if the lack of faith in new technology stems from its high level of uncertainty. The popular invention known as blockchain is no exception in this case. Although blockchain guarantees transparency and efficiency of transactions, it uses cryptocurrencies, which are unreasonably volatile and makes blockchain a media of gamblers. Some may say it akins to buying shares without guarantee of real assets.
The Matthew-effect can also be observed in both blockchain and Fintech. Although both brings efficiency and gives the unbankable access to finance, the largest shareholders of the impact are those who already hold so much wealth. The poor, for most part, remain in their old seats as an immortal recipient of welfare or charities.
Technology is supposed to create a better future for all, and not just for the privileged few. The flaw of blockchain highlights that truth is not the only thing that matters. If the truth does not bring any good, there is a need to find a positive, better truth. Not that we need falseness, that’s just again, a false inference. But we need a better truth. If blockchain helps efficiency and transparency but uses a volatile, risky mode of transaction; we need to integrate blockchain with an instrument that ensures justice and promotes equality.
While Islamic finance is a sound financial mechanism that lacks efficiency, blockchain is an emerging technology that is inherently faithless. When Islamic finance and blockchain converge, it becomes a beautiful firework of empowerment. Businesses that are transacting through blockchain technology can use Islamic finance to execute contracts or transactions between parties that use Islamic cryptocurrency backed with real assets or a digitalised state currency that are secure and not volatile.
With the innate justice nature of Islamic finance, every transaction aims for socio-economic justice. The marriage between blockchain and Islamic finance creates promising engineering of wealth redistribution with enhanced efficiency, and thus allowing borderless solidarity between people across the globe.
As Joseph Stiglitz pronounced, development of any kind is about transforming the lives of people, not just transforming economies. What would linking technology and faith bring to this apparently unequal world we live in? Well, we better find out, as it’s going to be phenomenal.
