Umar Moghul. A Socially Responsible Islamic Finance: Character and the Common Good (New York: Palgrave-MacMillan, 2017). 315 pages. $159.99 hardback.
In recent years, Islamic finance and economics continue to occupy an increasingly popular space in business schools and institutes globally. Most recently, the rapid growth in Islamic finance has enhanced demands for degrees and expertise in the field in Europe. Among the most pressing global issues related to wealth and finance generation that still require solutions include solutions to mass poverty, how to accomplish sustainable economic prosperity in developing and emerging economies, the need for more cultivation of environmental consciousness that does not impede developmental progress, and more equitable distribution of wealth across societies. Islamic ethical principles through the lens of various concepts related to property and wealth creation possess effective tools to resolve such pressing global concerns.
Umar Moghul’s 2017 monograph A Socially Responsible Islamic Finance: Character and the Common Good is a total of 315 pages, consists of six chapters, in addition to an introduction and conclusion as well as a selected bibliography and index. A Socially Responsible Islamic Finance is a profound and pioneering contribution in that regard.
“Umar Moghul eloquently maps the landscape of the development and cultivation of positive social and environmental impacts through the fashioning of personal and organizational moral character. In doing so, with fluid clarity of prose, Moghul demonstrates the Islamic moral imperative and ethical connectedness of Islamic finance with the common good and social responsibility.”Moghul’s work introduces a comprehensive framework for integrating Islamic ethics with Islamic banking, finance and economics. Umar Moghul eloquently maps the landscape of the development and cultivation of positive social and environmental impacts through the fashioning of personal and organizational moral character. In doing so, with fluid clarity of prose, Moghul demonstrates the Islamic moral imperative and ethical connectedness of Islamic finance with the common good and social responsibility. Where Moghul is also innovative is in articulating the nature and the integration of Islamic ethics with diverse areas of contemporary Islamic finance and social responsibility.
Moghul’s strength is in the explanation of several kinds of appropriate concepts in Islamic ethical theory and in wedding them to finance and business practice that allow business leaders to become more socially minded, thereby paving the way for more ethically grounded approaches to wealth management and acquisition. Even more innovative is how the work attempts to outline the contours of a new consciousness regarding the potential role of faith in business practice, something that business schools around the country could no doubt benefit from in the training of the next generation of MBA’s.
Chapter one outlines the book’s methodological framework, connecting methods of cultivation of individual good character to financial institutions and other communities, and in turn, to social responsibility, environmental consciousness, and good governance. Moghul outlines and defines concepts such as sustenance and work, renunciation and excellence (ihsan), accountability, self-monitoring and accountability to construct a purpose of business. These principles (and others) become raw materials for a framework in redefining successful productivity, investment, and business. In introducing Islamic spirituality and ethics as a framework and impetus for socially responsible business practice, by revealing that at the heart of the framework is the communal obligation to the material and spiritual welfare and concern for the next and future generations, and through articulating how the Islamic spiritual and ethical tradition reconfigures and develops a new form of consciousness devoted to social responsibility, Moghul audaciously calls for reformation. The second chapter introduces domains, intersections, and divergences between and among Islamic ethics and law, on the one hand, with socially responsible frameworks, on the other. The result is to create new understandings of stakeholders, sustainability, and indebtedness. Principles and practices of each of these realms is suggested to the other in much needed education and dialogue. In particular, Moghul identifies parallels in social responsibility with the Shari’ah and urges their incorporation by contemporary Islamic finance. For frameworks of social responsibility, the author urges consideration of the irresponsibility of interest bearing indebtedness and the inclusivity created by participatory risk-reward and profit sharing paradigms.
“Moghul outlines and defines concepts such as sustenance and work, renunciation and excellence (ihsan), accountability, self-monitoring and accountability to construct a purpose of business. These principles (and others) become raw materials for a framework in redefining successful productivity, investment, and business. In introducing Islamic spirituality and ethics as a framework… “
Chapter three establishes the interconnectivity of good business practice and environmental consciousness as a central component of a socially responsible Islamic approach to finance and banking. The sanctity of money and wealth becomes intrinsically tied to the sanctity of the environment and natural resources. The discussion explores the market potential of an integration between contemporary Islamic capital markets and global socially and ethically responsible markets, as represented by ‘voluntary non-governmental codes, building a pioneering bridge between them, in the context of the issuance of a ‘green’ sukuk (akin to a ‘green’ bond). Moghul’s analysis in this chapter is not confined to the natural environment, however, as he demonstrates critical links among spirituality, responsibility, and the built environment. Consequently, the work seeks to critically reframe sustainability, responsible living, and investment and earning through the language and incorporation of Islamic ethical concepts much of which are ignored by the contemporary Islamic banking and investment framework.
The fourth chapter is a survey and analysis of various Islamic council opinions and decisions (fatwas) from Muslim ethicists regarding instruments and transactions of Islamic finance. Moghul recommends that fatwas be enhanced by the articulation of their evidences and arguments. By so doing scholars fulfill the principle and practice of shura – consultative decision making – a key governance norm. Using systems thinking, these seemingly unrelated subjects are integrated to recommend ‘enhanced’ fatwas, those that transparently explain their rationale, as a balancing feedback mechanism to counter reinforcing feedback actions to increase resilience and self-organizing capabilities – and reputation and market share. Moreover, an enhanced fatwa, Moghul contends, educates and offers ‘space’ for stakeholder engagement.
Chapter five endeavors to restructure the present formalism of Islamic finance’s contracts with a theory that incorporates muraqabah (mindfulness of the Divine). A consequence of the practice of muraqabah, as well as self-assessment and self-accountability (muhasabah), is more transparent and participatory documentation reflective of parties’ intents and purposes. This, Moghul successfully posits, is more responsive to the Shari’ah and stakeholder skepticism surrounding the Islamic finance industry. Form and substance are thus aligned. Finally, Moghul brings design thinking to bear to financial contracts – home finance in particular – to implement forgiveness and forbearance, as reflective of Islamic spiritual praxis.
Chapter six bridges philanthropy, business, and the management of capital in order to recreate a more positive and ethically sound Islamic finance. Given the charge to eliminate riba and the strong ethic of giving, this Chapter recommends institutionalizing partnerships between business and finance with trusts and endowments (waqfs) and other charitable mechanisms to engender social and environmental responsibility.
Service of the common good is at the heart of this work’s passionate and eloquent call for change, for the conditions of unbridled capitalism has not produced socially responsible entrepreneurs. Moghul’s work is not an indictment of the capitalist ideology but instead a critique of empty-capitalism, one that lacks concern for the conditions that give rise to the abundance of very resources it seeks to amass and thereby exploit. Others have written about social responsibility before; however I am not aware of anyone who has argued for it in the terms Moghul has – by outlining the framework for it, tying it to a deep-rooted concern for the next generation, and demonstrating how to reform the psyche in the process, which will affect behavior. This is a persuasive blueprint for profound change and it demonstrates that Islam is not only a faith tradition but a way of living that is able relevant and applicable by people of various faiths and backgrounds. Islamic ethics is introduced in Moghul’s work as a tool for fashioning the human mind into new ways of thinking and acting that have positive, lasting consequences. It is an argument for the fact that proper employment of wealth and finance should be a means to ensure that prosperity is an enduring phenomenon for all, and that the American dream does not become distorted into becoming a social nightmare.
“Overall, the work introduces six domains (the self and psyche, the targets and intersections, the consciousness, ethicists’ viewpoints, the contracts, and the donors), comprising socially responsible Islamic finance. The strengths of Moghuls work is that not only his introduction of the structure itself but the breath of resources that he employs in each domain which truly expands the field of Islamic finance into a far more holistic and broader filed.”
Overall, the work introduces six domains (the self and psyche, the targets and intersections, the consciousness, ethicists’ viewpoints, the contracts, and the donors), comprising socially responsible Islamic finance. The strengths of Moghuls work is that not only his introduction of the structure itself but the breath of resources that he employs in each domain which truly expands the field of Islamic finance into a far more holistic and broader filed. This in reality “inter-disciplinizes” the field of Islamic finance in a manner not previously conceived. This is its intellectual achievement and while no doubt this will not be the end of the matter, Moghul leads the way in pioneering a discussion that will resonate with many others.
The book also opens up new room to consider directions in future research. The reader is left with questions such as: How the framework introduced by the book addresses solutions to wealth inequality, global financial corruption and mass poverty? How a global bank could realign and redefine a portion or all of its core activities in accordance with this framework, while maintaining its status as a global player? How does this framework address and meet the needs of or transform the nature of quality control, supervision and management? How does this framework re-frame or re-imagine recruitment and productivity? While Moghul could have addressed some of these questions in the book, it is hoped that he will continue to engage the issue in future work.
Truly pioneering in its scope, A Socially Responsible Islamic Finance: Character and the Common Good makes a compelling case for how ethics, finance and community may cooperate to enhance well-being for all.