Capitalism and Culture - Islamic Mortgages
These mortgages have also posed some complications for regulators and insurance companies, who have to be persuaded to treat them like standard mortgages (the key difference being that the bank really does own the property not the residents). However, these seem to be getting resolved.
I'd argue that this sort of thing is an excellent example of how market capitalism is not a destroyer of unique cultures creating one"McWorld," but rather a flexible, dynamic set of institutions that can adapt to changes in the culture. It is only within the dynamism of the market that one can adapt ways of doing business that are"traditional" to one culture to the needs of another culture when those needs arise. So not only do we have US banks altering their practices to accommodate a distinct minority demand (something defenders of markets have long argued as one of their strengths), we also have a potential blueprint of how market institutions and practices can emerge in Muslim societies with very different ethical principles.
The best part to me is that these sorts of changes can happen in the market in small pockets and spread through imitation. They don't require extensive discussion and debate. They don't require a political voting process where the majority has to be persuaded to agree with the change. Can you imagine what it would take to make such a change in a world where banks were run by the state? The ecosystem of the market makes it much easier for a thousand flowers to bloom, and to accommodate the needs of a religous group whose numbers remain pretty small within the US.
Oh yeah, it's also another example to combat the belief that Muslims are being systematically discriminated against post 9/11.
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Kenneth R Gregg - 8/7/2005
There have been a number of people within the Islamic community that have taken an interest in Hayek's and E.C. Riegel's alternative monetary theories for this reason. It may be that free market alternatives may have a greater interest from financial interests there than in the U.S. or Europe.
Just a thought.